Small businesses and federal agencies. Many small-business owners accept this David versus Goliath battle as part of owning a small business, especially when addressing regulatory enforcement. But the U.S. government and U.S. Small Business Administration (SBA) took a step to stop unfair, burdensome regulatory enforcement by creating the Office of the National Ombudsman, an office with which many small-business owners are unfamiliar.
The roofing industry, however, has become actively involved with the office. Bruce McCrory, chief operating officer and general manager of NRCA member Kiker Corp., Mobile, Ala., is Region IV Small Business Regulatory Fairness Board Advisor to the National Ombudsman. Click here to read "Bruce McCrory's involvement."
The office's mission is "to foster a more small-business-friendly regulatory enforcement environment." This is done by helping small-business owners address repetitive audits or investigations, excessive fines, penalties, threats, retaliation and other unfair enforcement action by federal agencies. The office works to provide compliance information to small businesses and improve federal agencies' attitudes toward them. SBA generally defines small businesses as those that are independently owned and operated with fewer than 500 employees.
Leading the charge to help small businesses is National Ombudsman Michael Barrera. Barrera acts as a neutral liaison between federal agencies and small businesses. Following is how the office was created and how Barrera has responded to Congress's mandate to improve the regulatory enforcement process for small businesses.
SBREFA
In 1996, Congress passed the Small Business Regulatory Enforcement Fairness Act (SBREFA) to address the fact that small businesses face more regulatory costs and burdens than large corporations. According to the SBA Office of Advocacy, federal regulations annually cost small businesses with fewer than 20 employees about $7,000 per employee—60 percent more than large businesses pay. In 2000, federal regulations cost all companies $843 billion.
To make federal agencies more responsive to small businesses, Congress believed cultural changes had to occur in the way federal agencies enforce regulations. Therefore, as part of SBREFA, the Small Business and Agriculture Regulatory Enforcement Ombudsman (National Ombudsman) at SBA was established to "create a more cooperative regulatory environment among agencies and small businesses that is less punitive and more solutions-orientated and make federal regulators more accountable for their enforcement actions by providing small entities with a meaningful opportunity for redress of excessive enforcement."
Barrera, who reports to SBA Administrator Hector Barreto, was appointed by President Bush to begin this task Aug. 24, 2001. The Office of the National Ombudsman consists of seven employees in Washington, D.C., and is backed by 10 regional Regulatory Fairness Boards. Each board consists of five volunteer small-business owners who receive complaints from small-business owners in their regions and perform grassroots tasks, such as attending local hearings, for the office.
Barrera is grateful for the board members' involvement. He says, "I think [business owners] sometimes trust board members more than they trust me because they consider members to be one of them while I still am considered part of the government."
Getting people to trust the government has been one of Barrera's greatest challenges. Barrera says he is amazed that seven years after the Office of the National Ombudsman was created, small-business owners still are afraid to complain about federal agencies in fear of retaliation. Barrera has worked to create a new environment where small-business owners don't have to work in fear.
"We have to get rid of federal agencies' ‘gotcha' attitude and turn it into a ‘help you' attitude," Barrera explains.
Making a complaint
The Office of the National Ombudsman's help you attitude encourages small-business owners to file complaints about federal agencies. Owners' comments are forwarded by the office to the federal agency mentioned in the complaint. The federal agency is requested to respond to the National Ombudsman, and the National Ombudsman strives to forward the agency's decision to the owner in 60 days. Although filing a complaint won't guarantee a perfect outcome, it has helped—fines have been reduced, and decisions have been eliminated. The office says complaints it handles receive a high-level review by agencies but the National Ombudsman cannot always change, stop or delay a federal enforcement.
Comments also are received at Regulatory Enforcement Hearings the National Ombudsman schedules throughout the United States. On average, about 60 small-business owners attend hearings where they can testify about their concerns, file complaints, or receive more information about the office and services it provides. Barrera says SBA is working to publicize the hearings; only two hearings were held in fiscal year 2001, but 22 hearings were conducted in fiscal year 2002. Barrera hopes to hold 23 hearings this fiscal year.
In 2002, the Office of the National Ombudsman received 319 complaints though many were from associations representing several hundred or thousand members. Complaints the office receives are incorporated into an annual report Barrera submits to Congress. The report also features information gathered at hearings; findings about the regulatory enforcement environment; and office-related milestones that occurred throughout a year, such as the office's Web site receiving 1 million hits during 2002.
A federal agency rating conducted by the office also is included in the report. For 2003, federal agencies will be rated on their timeliness in responding to small businesses' comments, quality of responses and nonretaliation policies. Agencies also will be rated on their ability to provide measurable regulatory enforcement compliance assistance, participation in Regulatory Enforcement Fairness Hearings and meetings when issues related to their mission are raised in testimony, and ability to give written and oral notice to small businesses when a citation or notice of regulatory violation is issued. Agencies are rated on a scale from A to F (A being excellent and F being unsatisfactory). An agency can receive a "not applicable" rating if no issues related to its mission are raised.
Making changes
Because agencies annually are rated on how well they cooperate with the Office of the National Ombudsman and interact with small businesses, Barrera says some agencies have begun to change. For instance, the U.S. Department of Health & Human Services' Center for Food Safety and Applied Nutrition now works with SBA and small-business owners before regulations are proposed; the U.S. Department of the Treasury's Employee Benefits Office simplified small-business pension plans; and the U.S. Securities and Exchange Commission included small-business owners in its Government Business Forum on Small Business Capital Formation.
In addition, Barrera has worked to get federal agencies more involved in the regulatory process instead of allowing them to only hand out fines and determinations. Barrera says agencies have responded to this request by attending hearings, creating a movement toward compliance assistance and forming partnerships.
For example, in April 2002, a memorandum of understanding was issued between the Occupational Safety and Health Administration (OSHA), SBA Office of Advocacy and Office of the National Ombudsman. The memorandum's purpose is to help OSHA share its ergonomics program information with small businesses and establish a referral process to help small businesses submit information about industry- and task-specific ergonomics guidelines to OSHA. But such partnerships are relatively new.
"We want to encourage agencies to assist rather than punish," Barrera notes. "Agencies have to help small businesses come into compliance. ... I was surprised agencies do not differentiate between small businesses and large businesses; they have to."
Barrera says his first task as National Ombudsman was to make federal agencies recognize SBREFA is good government and good for small businesses. The next task was getting agencies to comply with the act. As agencies have worked to comply, Barrera says many of them have taken steps to work with small businesses and create comprehensive compliance assistance. But Barrera says many small-business owners still don't know about agencies' efforts. Barrera believes targeted marketing and using trade associations to disseminate information would help.
"Agencies need to find a way to get their information to market," Barrera explains. "Brochures don't do any good sitting in D.C. ... There is so much compliance assistance information out there, and I want [small businesses] to use it."
Barrera's job may have been made easier by working for an administration that supports small-business policies. For example, in August 2002, Bush signed Executive Order 13272 that requires federal agencies to protect small businesses when writing rules and regulations. Bush also has created an economic plan he believes will benefit small businesses.
"I have an active commitment from the president and his office," Barrera adds.
Working for you
If you're wondering why Barrera wanted to become involved with SBA, it is because he spent much of his career as a small-business owner. Barrera's family owned two restaurants in Kansas City, Mo., where he worked.
After graduating from Manhattan-based Kansas State University, Barrera was a marketing representative for Miller Brewing Co., Milwaukee, and helped local distributors with marketing and management tasks in Atlanta and Corpus Christi, Texas. His small-business experience continued when he received his law degree from the University of Texas School of Law, Austin, and opened two law firms in Kansas City.
In addition, Barrera has served as assistant prosecuting attorney for Jackson County, Mo.; chairman and president of the Hispanic Chamber of Commerce of Greater Kansas City; and founder and president of the Hispanic Bar Association of Greater Kansas City.
In his days as an attorney, Barrera says the Office of the National Ombudsman could have helped him but he didn't know about it.
"I wish I had known more about SBA, as well as the Office of the National Ombudsman, to help my clients," Barrera adds. "I think SBREFA has put SBA on the map."
Tell him about it
Bush says, "The role of the government is not to create wealth, but to create an environment where entrepreneurs can flourish."
Barrera has taken his small-business experience and done just that.
"I help entrepreneurs flourish by freeing up their time and resources," Barrera says. "Money they save [from fines and determinations] can be put back into their businesses. They can buy insurance for their employees and spend more time with their families."
Barrera is passionate about letting small-business owners know his office was established to help them. And his message to owners is simple.
"Let us know what's wrong," Barrera pleas. "We can't help unless we know."
Kate Gawlik is associate editor of Professional Roofing magazine.
To file a complaint with the Office of the National Ombudsman, visit its Web site, www.sba.gov/ombudsman; send a complaint to the Office of the National Ombudsman, U.S. Small Business Administration, 409 Third St. S.W. MC2120, Washington, D.C. 20416-0005; or call (888) REG-FAIR (734-3247). Send a copy of your complaint and supporting evidence to NRCA, as well.
Small-business facts
National Ombudsman Michael Barrera believes small businesses have survived because of their tenacity.
"Small businesses have taken a lot of hits," Barrera explains. "They have absorbed the economy and effects of Sept. 11, 2001."
Small businesses' tenacious natures may have helped them play a major role in the U.S. economy and work force. According to the U.S. Small Business Administration Office of Advocacy, the 25.5 million U.S. small businesses:
NRCA member Kiker Corp., Mobile, Ala., was having problems with its local Occupational Safety and Health Administration (OSHA) office. A compliance officer's behavior and other incidents led Bruce McCrory, Kiker's chief operating officer and general manager, to discuss his regulatory problems with Craig Brightup, NRCA's vice president of government relations. Brightup suggested McCrory look into becoming a board advisor to the National Ombudsman. There are 10 Small Business Regulatory Fairness Boards throughout the United States; each consists of five volunteer small-business owners.
McCrory, who admits he didn't know about the Office of the National Ombudsman, investigated the position on the office's Web site and decided it was a great way for his business to assist the government with the regulatory process.
"We were trying to find a way to get some help with regulations outside of the standard legal methods," McCrory says. "In searching for an alternative method, I found out about the National Ombudsman."
McCrory, who was appointed in August 2002, is serving a three-year term for Region IV's Small Business Regulatory Fairness Board. As a board member, McCrory receives complaint forms from small-business owners in his region, holds follow-up meetings with small-business owners to discuss complaints, reports significant enforcement issues to the National Ombudsman and includes concerns in the National Ombudsman's annual report to Congress. In addition, McCrory attends several meetings and Regulatory Enforcement Fairness Hearings per year.
"I have the responsibility to hear from small businesses when they have complaints, direct them to the Office of the National Ombudsman and let as many of them as possible know about the office," McCrory adds.
While working as a board member for the past 10 months, McCrory has learned his company was among several small businesses having problems with federal regulations.
McCrory explains, "Most businesses want to comply but have trouble understanding certain rules and may not even be aware of the rules."
Not every small-business owner who has problems with federal agencies and regulatory enforcement will become as involved with the Office of the National Ombudsman as McCrory. But McCrory stresses the importance of small-business owners helping to improve the regulatory enforcement environment by filing complaints with the National Ombudsman—it is a way to make Congress aware of federal agencies' enforcement tactics.
McCrory notes: "The office can [send] complaints directly to Congress. And it is working—many agencies have begun to work with the National Ombudsman."
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