Small Business

In late September 1993, anticipating strong interest in the administration's health care reform proposal, the Small Business Administration (SBA) and the Commerce Department jointly produced a brochure describing how health insurance would be provided and what role small employers would play in financing insurance for their workers under the proposed Health Security Act. GAO concludes that SBA did not violate the statutory prohibition on lobbying by preparing and distributing the brochure. The brochure did not unlawfully lobby for the President's plan because it did not urge businesses to contact Members of Congress to support the plan. Furthermore, SBA has the authority under the Small Business Act to publish and distribute the brochure. When SBA distributed copies of the brochure to the Democratic National Committee (DNC)--one of many recipients of the document--it did not follow customary government procedures for distributing large quantities of agency publications. Government agencies usually do not give large quantities of free publications to private sector organizations; however, SBA initially gave the DNC 10,000 free copies of the brochure. DNC officials later paid SBA $5,000 for copies of the brochure.

GAO found that: (1) SBA did not violate any statutory prohibitions on lobbying by preparing and distributing the brochure; (2) SBA has the authority under the Small Business Act to print and distribute the brochure; (3) there is no statute or regulation that prohibits the White House from working with SBA in developing the brochure; (4) the Office of Advocacy and other SBA staff offices had limited roles in the development of the brochure; (5) the SBA Chief of Staff authorized the development of the brochure, which cost $92,591, because of the desire to provide small businesses with information on the President's plan and its effect on health care costs; (6) SBA did not follow customary government procedures for distributing large quantities of agency publications when it gave DNC 10,000 copies of the brochure free of charge, although DNC later paid SBA $5,000 for the brochures; (7) in general, the SBA brochure accurately describes the Health Security Act and how it would affect small businesses, but some details of the act are inaccurate or missing because the brochure was published before the act was finalized; (8) as the government's chief advocate for small businesses, the SBA Office of Advocacy has monitored health care reform efforts in Congress, has provided small businesses and others with an overview of the major health care plans, and is sponsoring studies of health care issues; and (9) SBA has never activated the health care hotline and computer program because of its high cost but, as an alternative, SBA has developed a self-help worksheet for small businesses to compute their health care costs under the proposed act.