[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4474 Introduced in House (IH)]







109th CONGRESS
  1st Session
                                H. R. 4474

     To enhance the section 8(a) program of the Small Business Act.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 8, 2005

  Mr. Barrow (for himself, Ms. Velazquez, Ms. Moore of Wisconsin, Ms. 
  Eddie Bernice Johnson of Texas, Mr. Davis of Alabama, Mr. Clay, Mr. 
Scott of Georgia, Mrs. Christensen, Mrs. Jones of Ohio, Mr. Owens, Mr. 
    Grijalva, Ms. Bordallo, Mr. Towns, Mr. Wynn, Ms. Kilpatrick of 
 Michigan, Mr. Meeks of New York, Mr. Conyers, Ms. Millender-McDonald, 
  Mr. Case, Mr. Davis of Illinois, Ms. Corrine Brown of Florida, Ms. 
Jackson-Lee of Texas, Mr. Ford, Mr. Cummings, Mr. Lewis of Georgia, Mr. 
 Al Green of Texas, Mr. Butterfield, Mr. Udall of New Mexico, Ms. Lee, 
  Ms. Bean, Mr. Michaud, Mr. Lipinski, Ms. McKinney, and Ms. Linda T. 
    Sanchez of California) introduced the following bill; which was 
              referred to the Committee on Small Business

_______________________________________________________________________

                                 A BILL


 
     To enhance the section 8(a) program of the Small Business Act.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Minority-Owned 
Venture Empowerment Act of 2005''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
                        TITLE I--PRE-8(A) PHASE

Sec. 101. Purpose.
Sec. 102. Technical assistance program.
                TITLE II--MODIFICATIONS TO 8(A) PROGRAM

Sec. 201. Purpose.
Sec. 202. Administration of section 8(a) program.
                    TITLE III--POST-8(A) ASSISTANCE

Sec. 1. Purpose.
Sec. 2. Retention of status after completion of 8(a) program.
Sec. 3. Restricted competition for small businesses owned and 
                            controlled by socially and economically 
                            disadvantaged individuals.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Minority-owned businesses play a vital role in shaping 
        the Nation's economy, having an impact in communities across 
        the country, generating $700,000,000 in revenue, and employing 
        nearly 5,000,000 people.
            (2) Businesses owned by minorities have a rapid growth 
        rate, as much as 8.5 percent annually, which is three times 
        higher than the average for United States firms, and minority 
        owned firms represent 15 percent of all United States 
        businesses.
            (3) Despite the phenomenal growth of minority 
        entrepreneurship, it lags behind mainstream businesses, facing 
        numerous barriers and obstacles.
            (4) While the purchasing power of the Federal Government is 
        an effective way to expand entrepreneurship, minority business 
        owners continue to have limited opportunities to break into the 
        Federal marketplace, largely due to several factors including a 
        lack of credit, denial of contracts, and unequal treatment by 
        large contractors.
            (5) The section 8(a) program of the Small Business 
        Administration acts as an important catalyst for helping 
        minority entrepreneurs overcome these barriers and aiding in 
        their overall growth and development.
            (6) From its inception, the program has been responsible 
        for the growth of more than 20,000 companies in every State 
        across the Nation, including the District of Columbia, Puerto 
        Rico and the Virgin Islands, which have received over $100 
        billion in government contracts and are currently employing 
        more than 200,000 people.
            (7) In the nearly 20 years since the last comprehensive 
        modernization of the 8(a) program, the Federal marketplace has 
        changed significantly.
            (8) The changes in the buying strategies of Federal 
        agencies have cost minority entrepreneurs billions of dollars 
        in lost contracting opportunities, and last year alone the 
        section 8(a) program suffered a record loss of $2,400,000,000, 
        a drop of one-fifth in the program level leaving a significant 
        number of minority business owners locked out of the Federal 
        marketplace.
            (9) The section 8(a) program, which bridges the 
        entrepreneurial divide, is important to minority business 
        development, and to operate at its fullest potential, it must 
        be supported by agency heads, modernized by Congress on a 
        regular basis, and adequately funded.

                        TITLE I--PRE-8(a) PHASE

SEC. 101. PURPOSE.

    The purpose of this title is as follows:
            (1) To establish a developmental training initiative to 
        provide small business concerns with the technical assistance 
        necessary to navigate the Federal marketplace.
            (2) To ensure that owners of small business concerns are 
        adequately prepared to perform contracts upon entrance into the 
        Federal marketplace.

SEC. 102. TECHNICAL ASSISTANCE PROGRAM.

    (a) Establishment.--The Administrator of the Small Business 
Administration shall establish a program to be know as the ``Pre-8(a) 
Program'' (in this section referred to as the ``Program'') to provide 
technical assistance to small business concerns with respect to the 
receipt and performance of Federal procurement contracts.
    (b) Eligibility.--
            (1) Ownership and net worth.--To be eligible to participate 
        in the Program under this section, a small business concern 
        shall--
                    (A) be owned and controlled by one or more socially 
                and economically disadvantaged individual; and
                    (B) have a net worth that does not exceed the 
                maximum level specified pursuant to subsection (g).
            (2) Application.--To participate in the Program under this 
        section, a small business concern shall submit an application 
        describing the ownership, control, and social and economic 
        disadvantage of the small business concern.
            (3) Nonapplicability of other factors.--In approving a 
        small business concern for participation in the Program, the 
        Administrator shall not consider the following factors:
                    (A) The length of time for which the small business 
                concern has been in business in its primary industry 
                classification.
                    (B) The prospects for success of the small business 
                concern in competing in the private sector.
                    (C) The access to credit and capital of the small 
                business concern.
                    (D) The technical and managerial experience of the 
                managers of the small business concern.
                    (E) The operating history of the small business 
                concern.
                    (F) The demonstrated technical knowledge of the 
                small business concern.
                    (G) The record of performance on Federal and 
                private sector contracts of the small business concern.
                    (H) The financial history of the small business 
                concern.
                    (I) Any outside employment of the owner of the 
                small business concern.
    (c) Needs Assessment.--
            (1) Assessment required.--Not less than once every two 
        years, the Administrator shall conduct a needs assessment of 
        each small business concern participating in the Program under 
        this section. Such needs assessment shall include the 
        following:
                    (A) An assessment of the training and skills of the 
                owner of the small business concern (including business 
                management training, marketing, accounting, 
                bookkeeping, and Federal contracting).
                    (B) A determination of the likelihood that the 
                small business concern will receive Federal prime 
                contracts in its primary industry or in associated 
                industry areas through technical assistance and 
                development provided through the Program.
            (2) Termination of participation.--If the Administrator 
        determines, pursuant to a needs assessment, that a 
        participating small business concern is not making progress 
        toward financial soundness and participation in Federal 
        contracts, the Administrator may terminate the participation of 
        the small business concern in the Program.
    (d) Noneligibility for Sole Source or Competitive Contracts.--A 
small business concern participating in the Program shall not be 
eligible to be awarded a Federal contract awarded using procedures 
other than competitive procedures or a contract awarded using 
competitive procedures under section 8(a) of the Small Business Act (15 
U.S.C. 637(a)).
    (e) Agreement for Facilitation of Training.--In order to facilitate 
the provision of technical assistance under the Program, the 
Administrator shall enter into an agreement with the Secretary of 
Defense regarding the use of Procurement Technical Assistance Centers. 
The Administrator may enter into such other agreements with other 
providers of technical assistance as the Administrator finds 
appropriate.
    (f) Completion of Program Participation.--A small business concern 
shall have completed the Program if the Administrator determines that 
it is financially sound and has successfully performed a Federal 
contract.
    (g) Net Worth Requirements.--
            (1) Establishment of maximum levels.--Not later than 180 
        days, the Administrator shall establish, for each industry 
        classification, a maximum level of net worth for a small 
        business entering the Program. In establishing such maximum 
        levels, the Administrator shall take into consideration the 
        capital needs of each industry.
            (2) Treatment of real estate.--In determining the net worth 
        of a small business concern for purposes of this subsection, 
        the Administrator shall not include the value of any real 
        estate owned by the owner of the small business concern.
            (3) Transitional rule.--Until the Administrator establishes 
        maximum net worth levels pursuant to paragraph (1), the maximum 
        net worth of a small business eligible to enter the Program 
        shall not exceed $750,000.

                TITLE II--MODIFICATIONS TO 8(a) PROGRAM

SEC. 201. PURPOSE.

    The purpose of this title is as follows:
            (1) to ensure that the section 8(a) program of the Small 
        Business Act continues as an effective developmental business 
        tool that aids in the further growth of minority entrepreneurs.
            (2) To enhance the section 8(a) program to accurately 
        reflect the dynamics of the modern procurement system so as to 
        better equip minority small businesses to obtain contracts.

SEC. 202. ADMINISTRATION OF SECTION 8(A) PROGRAM.

    (a) Modifications to 8(a) Program.--Notwithstanding any provision 
of the Small Business Act (15 U.S.C. 631 et seq.), the Administrator 
shall administer the program under section 8(a) of such Act with the 
following modifications:
            (1) Program participation requirement.--
                    (A) Requirement.--No small business concern shall 
                be eligible to participate in the program under section 
                8(a) of the Small Business Act (15 U.S.C. 637(a)) 
                before completing the Program established under section 
                2
                    (B) Waiver of participation requirement.--The 
                requirement under subparagraph (A) may be waived if the 
                Administrator determines that a small business concern 
                is financially sound and has successfully completed a 
                Federal contract.
            (2) Limitation on aggregate value of contracts.--The 
        aggregate value of the contracts a participant in the program 
        under such section may enter into shall not exceed 
        $100,000,000.
            (3) Economic disadvantage.--
                    (A) Deadline for determination of maximum levels of 
                net worth.--Not later than 180 days after the date of 
                the enactment of this Act, the Administrator shall 
                establish, for each industry classification, a maximum 
                level of net worth for an economically disadvantaged 
                individual. In establishing such maximum levels, the 
                Administrator shall take into consideration the capital 
                needs of each industry.
                    (B) Determination for term of program.--For the 
                purpose of this section, an individual who has been 
                determined by the Administrator to be economically 
                disadvantaged at the time of program entry shall be 
                deemed to be economically disadvantaged for the term of 
                the program.
                    (C) Personal net worth.--In determining personal 
                net worth for the purpose of program entry, the 
                Administrator shall exclude from such determination the 
                following:
                            (i) The value of any investment of a 
                        disadvantaged owner have in the small business 
                        concern, except that such value shall be taken 
                        into account under this paragraph when 
                        comparing such concerns to other concerns in 
                        the same business area that are owned by other 
                        than socially disadvantaged persons.
                            (ii) The equity of a disadvantaged owner in 
                        a primary personal residence.
                    (D) Maximum net worth.--The Administrator shall not 
                establish a maximum net worth that prohibits program 
                entry of less than $750,000.
    (b) Modifications to Developmental Phase.--
            (1) Eligibility for restricted competition contracts.--A 
        small business concern participating in the developmental phase 
        of such program, shall be eligible to enter into a contract 
        awarded using procedures other than competitive procedures 
        that--
                    (A) is assigned an industrial classification code 
                for manufacturing and is valued at not more than 
                $10,000,000; or
                    (B) is assigned an industrial classification code 
                other than a code for manufacturing and is valued at 
                not more than $6,000,0000.
            (2) Duration of phase.--A small business concern 
        participating in such program shall complete the developmental 
        phase of the program in six years.
    (c) Modifications to Transitional Phase.--
            (1) Reduction of sole source contracts.--In each year of 
        the transitional phase, a small business concern participating 
        in such program shall--
                    (A) reduce by 25 percent the aggregate value of the 
                contracts it performs that are awarded using procedures 
                other than competitive procedures; and
                    (B) increase the aggregate value of the contracts 
                (awarded under this section or otherwise) it performs 
                that are awarded using competitive procedures.
            (2) Eligibility for restricted competition contracts.--A 
        small business concern participating in the transitional phase 
        of such program, shall be eligible to enter into a contract 
        awarded using procedures other than competitive procedures 
        that--
                    (A) is assigned an industrial classification code 
                for manufacturing and is valued at not more than 
                $10,000,000; or
                    (B) is assigned an industrial classification code 
                other than a code for manufacturing and is valued at 
                not more than $6,000,0000.
    (d) Effective Date for Modifications to the 8(a) Program.--
            (1) In general.--This Act shall apply with respect to small 
        business concerns that apply to the program under section 8(a) 
        of the Small Business Act after the date of the enactment of 
        this Act.
            (2) Transitional rule.--A small business concern 
        participating in the program under section 8(a) of the Small 
        Business Act (15 U.S.C. 637(a)) may participate for not more 
        than ten years.

                    TITLE III--POST-8(a) ASSISTANCE

SEC. 1. PURPOSE.

    The purpose of this title is as follows:
            (1) To provide a restricted contracting competition program 
        limited to small business concerns that have successfully 
        graduated from the section 8(a) program and certified small 
        disadvantaged businesses.
            (2) To enable 8(a) program graduates to utilize the 
        expertise they have developed during the program.
            (3) To increase minority business representation in the 
        Federal marketplace.

SEC. 2. RETENTION OF STATUS AFTER COMPLETION OF 8(A) PROGRAM.

    A small business concern that successfully completes the program 
under section 8(a) of the Small Business Act (15 U.S.C. 637(a)) shall 
be considered a small disadvantaged business for purposes of Government 
contracting unless the ownership or control of the small business 
concern changes.

SEC. 3. RESTRICTED COMPETITION FOR SMALL BUSINESSES OWNED AND 
              CONTROLLED BY SOCIALLY AND ECONOMICALLY DISADVANTAGED 
              INDIVIDUALS.

    (a) Authority to Restrict Competition.--Section 8 of the Small 
Business Act (15 U.S.C. 637(a)) is amended by adding at the end the 
following new subsection:
    ``(o) Restricted Competition for Small Businesses Owned and 
Controlled by Socially and Economically Disadvantaged Individuals.--
            ``(1) Authority to restrict competition.--In accordance 
        with this subsection, a contracting officer may restrict 
        competition for any contract for the procurement of goods or 
        services by the Federal Government to small business concerns 
        owned and controlled by socially and economically disadvantaged 
        individuals, if--
                    ``(A) each of the concerns is not less than 51 
                percent owned by one or more socially and economically 
                disadvantaged individuals (and such ownership is 
                determined without regard to any community property 
                law);
                    ``(B) the contracting officer has a reasonable 
                expectation that two or more small business concerns 
                owned and controlled by socially and economically 
                disadvantaged individuals will submit offers for the 
                contract;
                    ``(C) the contract is for the procurement of goods 
                or services with respect to an industry identified by 
                the Secretary of Commerce as underrepresented by small 
                business concerns owned and controlled by socially and 
                economically disadvantaged individuals;
                    ``(D) the anticipated award price of the contract 
                (including options) does not exceed--
                            ``(i) $10,000,000, in the case of a 
                        contract assigned an industrial classification 
                        code for manufacturing; or
                            ``(ii) $6,000,000, in the case of all other 
                        contracts;
                    ``(E) in the estimation of the contracting officer, 
                the contract award can be made at a fair and reasonable 
                price; and
                    ``(F) each of the concerns--
                            ``(i) is certified by a Federal agency, a 
                        State government, or a national certifying 
                        entity approved by the Administrator, as a 
                        small business concern owned and controlled by 
                        socially and economically disadvantaged 
                        individuals; or
                            ``(ii) certifies to the contracting officer 
                        that it is a small business concern owned and 
                        controlled by socially and economically 
                        disadvantaged individuals and provides adequate 
                        documentation, in accordance with standards 
                        established by the Administration, to support 
                        such certification.
            ``(2) Enforcement; penalties.--
                    ``(A) Verification of eligibility.--In carrying out 
                this subsection, the Administrator shall establish 
                procedures relating to--
                            ``(i) the filing, investigation, and 
                        disposition by the Administration of any 
                        challenge to the eligibility of a small 
                        business concern to receive assistance under 
                        this subsection (including a challenge, filed 
                        by an interested party, relating to the 
                        veracity of a certification made or information 
                        provided to the Administration by a small 
                        business concern under paragraph (1)(F)); and
                            ``(ii) verification by the Administrator of 
                        the accuracy of any certification made or 
                        information provided to the Administration by a 
                        small business concern under paragraph (1)(F).
                    ``(B) Examinations.--The procedures established 
                under subparagraph (A) may provide for program 
                examinations (including random program examinations) by 
                the Administrator of any small business concern making 
                a certification or providing information to the 
                Administrator under paragraph (1)(F).
                    ``(C) Penalties.--In addition to the penalties 
                described in section 16(d), any small business concern 
                that is determined by the Administrator to have 
                misrepresented the status of that concern as a small 
                business concern owned and controlled by socially and 
                economically disadvantaged individuals for purposes of 
                this subsection, shall be subject to--
                            ``(i) section 1001 of title 18, United 
                        States Code; and
                            ``(ii) sections 3729 through 3733 of title 
                        31, United States Code.
            ``(3) Provision of data.--Upon the request of the 
        Administrator, the head of any Federal department or agency 
        shall promptly provide to the Administrator such information as 
        the Administrator determines to be necessary to carry out this 
        subsection.
            ``(4) Definitions.--In this subsection, the following 
        definitions apply:
                    ``(A) Contracting officer.--The term `contracting 
                officer' has the meaning given such term in section 
                27(f)(5) of the Office of Federal Procurement Policy 
                Act (41 U.S.C. 423(f)(5)).
                    ``(B) Small business concern owned and controlled 
                by socially and economically disadvantaged 
                individuals.--The term `small business concern owned 
                and controlled by socially and economically 
                disadvantaged individuals' has the meaning given such 
                term under subsection (d)(3)(C).''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to a contracts announced after the date of the 
enactment of this Act.
                                 <all>