Common Repository for Small Businesses Act

— 751 — Small Business Administration implement relevant initiatives to reach small businesses. Programs would be nonduplicative and implemented on a first-come, first-served basis. l A modern, revamped, and streamlined SBA that better utilizes current technology and platforms for operations, for reporting, and in its programs to reach, service, and engage small businesses. l An Office of Advocacy that is strengthened by a renewed mandate and additional resources to protect against overregulation along with a research agenda that includes measuring the total cost that federal regulation imposes on small businesses. Accountability and Managerial Practice. The SBA lacks accountability and managerial practices to measure the effectiveness, success, and integrity of its various programs. As a future Administration evaluates agency structure and the particulars of how the SBA is spending appropriated funds, it should immediately require actions and procedures to compel a culture of accountability and perfor- mance. Specifically: l Require performance metrics and internal procedures to safeguard taxpayer dollars and program integrity. As noted in an October 2022 IG report, failure to adopt procedures that would reliably capture data and information for various programs, coupled with significant challenges and weaknesses regarding IT investments, systems development, and security controls, presents significant risks to program integrity and increased risk of waste, fraud, and abuse.34 Addressing these shortcomings and risks should be a priority challenge and action item for the next Administration. As underscored by the Inspector General in his introduction to the report, “Pandemic response has, in many instances, magnified the challenging systemic issues in SBA’s mission-related work.”35 l Review all internal government watchdog recommendations and require that SBA management implement or address outstanding and ongoing OIG and GAO recommendations within a specified time frame (ideally within 90 days of a recommendation) and on an ongoing basis. Strengthening the Office of Advocacy. The SBA Office of Advocacy (Advo- cacy) is “an independent office” within the SBA.36 It accounts for about one one-thousandth of SBA spending and 0.75 percent of SBA personnel. Under the Regulatory Flexibility Act, both under its current authority and with suggested — 752 — Mandate for Leadership: The Conservative Promise reforms, the Office of Advocacy could be a powerful weapon against the adminis- trative state’s regulatory extremism. l Amend the RFA so that all agencies are required to provide a copy of any proposed rule (other than bona fide emergency rules) along with initial regulatory flexibility analysis to the Office of Advocacy at least 60 days before a notice of proposed rulemaking is submitted for publication in the Federal Register. The Office of Advocacy would submit comments to agencies within 30 days, and each agency would have to consider these comments, make changes in the proposed rule based on those comments, or explain in a revised regulatory flexibility analysis why it chose not to change the proposed rule. The Office of Advocacy’s pre-proposing comments would be published on the agencies’ and its own websites. RFA economic analysis should be expanded to include indirect costs along with direct costs. In addition, the next Administration should require other agencies to seek Advocacy’s input. Currently, other agencies deny Advocacy the ability to enforce their duty to consider the effect of regulations on small entities by construing their regulations as not having significant economic impact, which would otherwise serve as a trigger for Advocacy’s input. Congress should presumptively exempt small businesses from new agency rules to force agencies to seek Advocacy’s input and permit new rules to apply to small businesses only with Advocacy signoff under specified criteria. l Increase the Office of Advocacy’s budget by at least 50 percent ($4.6 million). This would allow Advocacy to hire approximately 25 attorneys, economists, and scientists and enhance its role in the regulatory process. l Explicitly direct federal agencies to comply with the RFA. This would be similar to the approach adopted by President Trump in his January and February 2017 executive orders directing agencies to relieve the cost and burden of regulation on business.37 Advocacy should organize regional roundtables, onsite small-business visits, and an online platform to hear directly from small businesses and entities as it did from June 2017 through September 2018.38 This activity produced 26 letters to federal agencies and highlighted specific regulations that need reform and how Congress had addressed the most burdensome rules through the Congressional Review Act.39

— 704 — Mandate for Leadership: The Conservative Promise Congress should make the Department of Defense (DOD) a CFIUS co-chair with the Department of Treasury. Making DOD an official CFIUS co-chair along with Treasury will establish a balanced committee process by elevating national security interests to an equal stature. The committee is currently imbalanced toward the interests of corporate America because Treasury is the sole chair of CFIUS and, in practice, runs a process that is not fully transparent and which biases it from the national security interests represented by DOD and the Intelligence Community (IC). For example, Treasury representatives will consult with the Commerce Depart- ment and the United States Trade Representative—which tend to favor permitting covered transactions to occur with little to no mitigation requirements—and these representatives will then obscure the results and purposes of such sidebar meet- ings from DOD and IC representatives. This hampers DOD, IC, and sometimes even State Department representatives from full participation in the process or from advocating national security interests as well as they should. Greenfield Investments. Congress should close the loophole on greenfield investments and require CFIUS review of investments in U.S.-based greenfield assets by Chinese-controlled entities to assess any potential harm to U.S. national and economic security. In the 2018 Foreign Risk and Review Modernization Act (FIRRMA),51 one important category of foreign transactions left out of the bill was greenfield investments, particularly by Chinese state-owned enterprises (SOEs). Greenfield investments by Chinese SOEs pose a unique threat, and they should be met with the highest scrutiny by all levels of government. Greenfield investments result in the control of newly built facilities in the U.S., and they were not addressed in FIRRMA primarily because governors and state governments embrace them. That is understandable; they typically bring the promise of creating American jobs. However, the goal of such Chinese SOEs is to siphon assets, technological innovation, and influence away from U.S. businesses in order to expand the global presence of the Chinese Communist Party. While the Chinese government keeps its domestic markets largely insulated from foreign influence, it regularly invests in the U.S. and other countries under the “green- field” model. Firms fully owned by China’s Communist regime are increasingly buying land, building factories, and taking advantage of state and local tax breaks on American soil. Treasury should examine creating a school of financial warfare jointly with DOD. If the U.S. is to rely on financial weapons, tools, and strategies to prosecute international defensive and offensive objectives, it must create a specially trained group of experts dedicated to the study, training, testing, and preparedness of these deterrents. Recent experience has demonstrated that the U.S. cannot depend on the rapid development and deployment of untested, academically developed finan- cial actions, stratagems, and weapons on an ad hoc basis. — 705 — Department of the Treasury Treasury must also seriously evaluate U.S. foreign direct investment in China. Particular focus should be paid to investments in CCP or other state-owned enter- prises, investments that result in technology transfers from the U.S. to China, investments that enhance China’s military capacity, and investments that pose risks to critical U.S. supply chains by sourcing critical components or feedstocks in China. An enhanced reporting system is warranted, and greater legal authority and restrictions are appropriate. IMPROVED FINANCIAL REGULATION One of the priorities of the incoming Administration should be to restructure the outdated and cumbersome financial regulatory system in order to promote financial innovation, improve regulator efficiency, reduce regulatory costs, close regulatory gaps, eliminate regulatory arbitrage, provide clear statutory authority, consolidate regulatory agencies or reduce the size of government, and increase transparency. Merging Functions. The new Administration should establish a more stream- lined bank and supervision by supporting legislation to merge the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Reserve’s non-monetary supervisory and regulatory functions. U.S. banking law remains stuck in the 1930s regarding which functions finan- cial companies should perform. It was never a good idea either to restrict banks to taking deposits and making loans or to prevent investment banks from taking deposits. Doing so makes markets less stable. All financial intermediaries function by pooling the financial resources of those who want to save and funneling them to others that are willing and able to pay for additional funds. This underlying principle should guide U.S. financial laws. Policymakers should create new charters for financial firms that eliminate activ- ity restrictions and reduce regulations in return for straightforward higher equity or risk-retention standards. Ultimately, these charters would replace government regulation with competition and market discipline, thereby lowering the risk of future financial crises and improving the ability of individuals to create wealth. Dodd–Frank Revisions. Congress should repeal Title I, Title II, and Title VIII of the Dodd–Frank Act.52 Title I of Dodd–Frank created the Financial Stability Oversight Council, a kind of super-regulator tasked with identifying so-called systemically important financial institutions and singling them out for especially stringent regulation. The problem, of course, is that this process effectively iden- tifies those firms regulators believe are “too big to fail.”53 Title VIII of Dodd–Frank gives the FSOC similarly broad special-designation authority for specialized financial companies known as financial market utilities.54 Title II of Dodd–Frank established the controversial provision known as orderly

— 96 — Mandate for Leadership: The Conservative Promise relevant. This allows the acquisition community to focus on portfolio management and move money around more easily instead of being locked into inflexible, multiyear procurement cycles. 2. The President should examine the recommendations of the congressionally mandated Commission on Planning, Programming, Budgeting, and Execution Reform4 and develop a strategy for implementing those that the Administration considers to be in the best interests of the American people. The commission’s final report is due on September 1, 2023. 3. Develop legislation or other means of providing funding outside the traditional PPBE process for the prototyping and experimentation of emerging technologies that are deemed essential to modernization and future conflict. Consider creating a “fast track” for projects that satisfy the most pressing national security needs. 4. Require the Under Secretary of Defense for Acquisition and Sustainment, the Under Secretary for Research and Engineering, and all service secretaries to conduct “Night Court” and use existing authorities to terminate outdated or underperforming programs so that money can be used for what works and will work. Require the Under Secretaries and service secretaries to brief the Secretary annually on the results. 5. Require the Office of the Secretary of Defense to research and report on the acquisition processes used by America’s adversaries to improve our understanding of how they are often able to innovate and field new technologies on a faster timeline. l Strengthen America’s defense industrial base. 1. Replenish and maintain U.S. stockpiles of ammunition and other equipment that have been depleted as a result of U.S. support to Ukraine. This will strengthen the defense industry supply chain and ensure that adequate inventory exists if it is needed for a future conflict. 2. Collaborate with industry to develop a prioritized list of reforms that the DOD and Congress can enact and implement to incentivize industry to help America’s military innovate and field needed capabilities. — 97 — Department of Defense 3. Strengthen the ability of acquisition authorities to engage in multiyear procurements and block buys. This will improve private-sector rates of return, thereby incentivizing defense contractors to partner with the government. It will also reduce government overhead by reducing the number of procurement competitions. 4. Prioritize the U.S. and allies under the “domestic end product” and “domestic components” requirements of the Build America, Buy America Act.5 Currently, defense companies are required to manufacture defense items for the U.S. government that are 100 percent domestically produced and at least 50 percent composed of domestically produced components. However, there are loopholes that allow companies to manufacture these items overseas. This can create supply chain and other issues, especially in wartime. Manufacturing components and end products domestically and with allies spurs factory development, increases American jobs, and builds resilience in America’s defense industrial base. 5. Review the sectors currently prioritized for onshoring or “friendshoring” of manufacturing (kinetic capabilities, castings and forgings, critical materials, microelectronics, space, and electric vehicle batteries); evaluate them according to the strategic landscape; and expand or reprioritize the list as appropriate. 6. Help small businesses to become medium-size and large vendors, which encourages a more resilient industrial base and fosters competition. Encourage and plan for durable supply chains for small businesses so they also have commercial/private-sector customers and are not solely dependent on defense orders, which can be highly specialized, expensive, and irregular. 7. Increase external engagement among small businesses to inform them of DOD’s needs and how they could work with DOD to meet national security priorities. l Optimize the DOD acquisition community. 1. Create incentives to emphasize speed and agility in decision-making for prototyping and program-of-record starts and terminations. Most bureaucrats would rather follow a checklist and fail than go outside the procedures and win because failure means negative