[Congressional Record Volume 149, Number 99 (Tuesday, July 8, 2003)]
[Senate]
[Pages S9051-S9057]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself and Mr. Kerry):
  S. 1375. A bill to provide for the reauthorization of programs 
administered by the Small Business Administration, and for other 
purposes; to the Committee on Small business and Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to introduce the ``Small 
Business Administration 50th Anniversary Reauthorization Act of 2003,'' 
a bill to reauthorize the U.S. Small Business Administration, SBA, and 
its programs for the next three years. While reauthorization 
legislation is a significant event, this year it is particularly 
auspicious since we are celebrating the 50th anniversary of the 
agency--a full half century of helping to create, assist, and guide 
small businesses.
  As the Chair of the Committee on Small Business and Entrepreneurship, 
I began developing this legislation just after assuming the leadership 
of the Committee in January. The bill I introduce today is the product 
of considerable effort and vetting, and I am very pleased to be joined 
by the Committee's Ranking Member, Senator Kerry, in this process. 
Through his contributions and those of other Members of my Committee, 
this is truly bipartisan bill.
  Over the past several months, we have held a series of hearings and 
roundtables to examine virtually every aspect of the SBA and the wide 
array of programs and services it provides to the country's small 
enterprises. As we started that process, we looked back on the SBA's 
history to learn from its past in order to set a path for its future.
  More than 50 years ago, congressional efforts began to focus on the 
specific needs of small businesses--to create a ``level playing 
field''--and to develop Federal small business assistance programs. One 
of the objectives was to

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ensure that small businesses could develop management and marketing 
skills to compete with big business for their share of government 
contracts.
  In May of 1953, the Small Business Act was introduced, and it became 
law on July 30 of that year with President Eisenhower's signature. 
Since 1953, Congress and the various administrations have responded to 
the needs of small businesses by creating a fair but competitive 
environment for those who choose entrepreneurship. The SBA has evolved 
from a direct lender and provider of management assistance to a 
nationwide delivery system of resources offering a complete menu of 
small business tools, professional counseling assistance, business 
education and training programs, Federal procurement opportunities, and 
loan guaranty programs.
  Today, the agency faces enormous challenges. Each year, there are 3 
to 4 million new businesses start-ups--one in 25 adult Americans is 
taking steps to start a business. One quarter of existing small 
business owners intend to form another business. And, small businesses 
account for approximately two-thirds of the net new jobs in our 
country. So while the SBA has had a tremendous impact on the success of 
small businesses over the past 50 years, it is critical that we ensure 
the agency is well positioned to produce even better results in the 
next 50 years.
  My goal in developing this bill has been to ascertain what works 
among SBA programs, why it works, and apply that approach to other 
programs so there is more consistent success within the SBA portfolio 
of products and services. In the end, I hope this bill will lead to a 
renewed SBA, rededicated to improving the environment or leveling the 
playing field for small business ownership in America.
  While the particulars of this bill are extensive, I want to highlight 
three of its most critical, key areas--
  In terms of financing programs for small businesses, during this 
reauthorization process, I have focused extensively on improving the 
credit and venture capital resources that the SBA provides for small 
enterprises. These programs--including the 7(a), 504, and Microloan 
programs as well as the SBIC, New Markets Venture Capital, and Surety 
Bond programs provide vital capital for America's small businesses. In 
addition, looking just at the lending programs, they alone are 
responsible for helping small businesses create and retain more than 
1.3 million jobs in just the past 3 years!
  That is why I held two Committee roundtables on these financing 
programs so I could hear firsthand from small business, lenders, and 
the SBA about ways these programs can increase access to capital for 
small businesses. To start, we are proposing to continue the growth of 
the financing programs through reasonable increases in their 
authorization levels. The bill also increases the amount that small 
businesses can borrow subject to the SBA's guarantee, so that the SBA's 
loan sizes will keep pace with what it actually costs to start and 
operate a small business in today's economy. And we make improvements 
to the SBA's loan programs that will benefit fast-growing contributors 
and vital elements of our economy including women-owned and veteran-
owned businesses and small business exporters.
  Moreover, the bill addresses access to capital by helping SBA's 
lending partners. A new initiative that holds great promise will allow 
for the pooling of small business loans not guaranteed by the SBA. This 
pilot program was recommended by participants at our roundtable on 
April 30, 2003, and has been under consideration by the SBA. By pooling 
these non-guaranteed loans together and offering them as securities on 
the secondary market with a partial SBA guarantee on the pool, banks 
will be able to free-up capital for additional small business lending. 
As a result, they will be able to provide even greater resources for 
small businesses struggling to secure the necessary capital to start 
up, operate, and grow.
  Similarly, the new National Preferred Lenders Pilot Program will 
allow qualified SBA lenders to be licensed on a nationwide basis. 
Currently, Preferred Lenders must qualify in every region where they do 
business, which is both cumbersome and costly. This initiative will 
streamline that process for the premier lenders who qualify for a 
nationwide license and enable them to provide capital more efficiently 
and effectively to small businesses across the nation.
  In addition, the bill includes a proposal by Senator Kerry to permit 
non-profit child-care centers to qualify for 504 loans. I believe the 
growing need for child care in this country warrants testing this idea 
as a pilot program, even as I continue to have reservations about this 
initiative's effect on the availability of loans under the 504 program 
for other for-profit borrowers and the expansion of this loan program 
to non-profit entities. Accordingly, we have limited the loan volume 
under the pilot to 7 percent of the overall 504 loans to ensure that 
this initiative does not bar qualifying for-profit businesses from 
obtaining necessary financing.

  Finally in the area of financing programs, we have also focused on 
improving the SBA's procedures for overseeing lenders participating in 
the credit programs. By improving this oversight, we can protect 
against improper lending practices, produce a more consistent system 
for lenders, and provide taxpayers with better protection of their tax 
dollars.
  In the area of entrepreneurial development, we set out to ensure that 
the SBA's programs continue to provide the products and services 
essential to small businesses, which in turn create a return on our 
investment in these programs through successful business ownership and 
job creation. Recognizing the tremendous accomplishments by women 
entrepreneurs, I introduced the Women's Small Business Improvement Act 
of 2003 (S. 1154) earlier this year to improve the SBA's Office of 
Women's Business Ownership, the Women's Business Centers Program, the 
National Women's Business Council, and the Interagency Committee on 
Women's Business Enterprise. I have incorporated those provisions into 
the bill before us in order to provide a universal approach to all of 
SBA's sponsored programs and services for women.
  A cornerstone of this effort involves making the Women's Business 
Center Program a permanent program that will offer opportunities for 
new centers and renewal grants for existing centers on a competitive 
basis. By replacing the pilot Sustainability Program, which expires at 
the end of the current fiscal year, with a fair and balanced grant 
program, the bill will correct the funding constraints that have 
plagued the program in 2003. The bill will also provide for the 
creation of new centers and the continuation of current operating 
centers through renewal grants. This structure will reward successful 
centers with continuation funding and weed out failing centers to make 
room for new ones with greater potential for serving the needs of 
women-owned businesses.
  The National Women's Business Council will also be given greater 
control of its mission, and I am proposing the full funding of $1 
million for each Fiscal Year for this program. The Interagency 
Committee on Women's Business Enterprise will be reenergized by 
providing interim leadership and a shared focus with the National 
Women's Business Council, the Women's Business Centers, and the Office 
of Women's Business Ownership. These programs hold great potential for 
women-owned businesses, but they must be coordinated so that their 
limited resources are dedicated to a focused goal.
  In addition, the SBA's entrepreneurial development partners--the 
Small Business Development Centers and the Service Corps of Retired 
Executives--continue to provide quality training and free counseling 
through almost 2,000 locations and are limited only by funding and 
their geographic locations. Therefore, in addition to minor technical 
changes in these programs, I propose that we increase the authorization 
level for these programs to support the increased demand for their 
services.
  And we have included the Native American Small Business Development 
Program in the bill. This initiative will provide entrepreneurial 
assistance to Tribal Governments and Colleges, Small Business 
Development Centers in Native American communities, and small 
businesses located on or near Tribal Lands. Complementing the SBA's 
Office of Native American Affairs, this initiative will strengthen the

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SBA's efforts to help Native Americans start, operate and grow small 
businesses.
  Finally, one of the most serious problems facing small business is 
their inability to participate fully in Federal contracts, on either a 
prime or subcontract basis. In the last 10 years, contract bundling has 
forced more than 50 percent of small businesses out of the Federal 
marketplace. Steps clearly must be taken to ensure that small 
businesses have the opportunity to compete for the business of the 
nation's largest consumer--the Federal government.
  President Bush recognizes the inequity that contract bundling 
represents. He also understands the damage it does to both small 
businesses and the Federal procurement process by denying the 
government the benefits of more robust competition, small business 
efficiencies, and small business innovations. He has spoken out against 
this practice, and I applaud his commitment to addressing this problem.
  To achieve that objective, the SBA reauthorization bill addresses the 
practice of Federal contract bundling by limiting its use and giving 
small businesses access to Federal contracts and a fair opportunity to 
compete for them. By requiring studies to be done for all 
consolidations worth more than $5 million for the Department of Defense 
and $2 million for all other agencies, the bill also holds agencies to 
a higher level of accountability than exists under current law.
  Those who support the practice of bundling allege that denying small 
businesses access to prime contracts can be offset by ensuring that 
such firms receive more subcontracts from the large firms that are 
awarded prime contracts. However, small businesses continue to 
experience difficulties at the subcontract level as well. This bill 
contains strong language that strengthens oversight and enforcement of 
small business subcontracting plans to ensure small business 
subcontractors are not neglected.
  Furthermore, we have included provisions to encourage contracting 
opportunities for women-owned businesses--one of the fastest growing 
segments of the small business sector of our economy. Despite their 
success, women-owned small businesses have testified before the Small 
Business Committee about how difficult it is to do business with the 
Federal Government. Three years ago Congress created a Procurement 
Program for Women-Owned Small Business Concerns. That legislation 
required the promulgation of regulations to help implement new small 
business procurement set-asides for women-owned businesses.
  The legislation, however, conditioned the regulations by first 
requiring a study to be conducted to justify the disparate treatment of 
women in various procurement instances. At the Small Business 
Committee's roundtable on April 9, 2003, women-owned small businesses 
expressed their frustration that it has taken so long to conduct the 
study and implement the program. This bill directs the GAO to complete 
that study by December 31, 2003 to ensure that the women's procurement 
program is finally implemented.
  Finally, the bill contains improvements to the HUBZone program, which 
are intended, in part, to address the serious consequences that 
military base closings pose for our local communities. Closing a 
military base adversely affects the towns and communities surrounding 
the installation due to loss of tax revenue, defense income, base 
transition costs and clean-up costs.
  Successful recovery from a base closing has been tied to public and 
private reinvestment in these communities. While Congress has taken 
action in the past to ease the transition for individuals and spur 
reinvestment, this bill supports faster redevelopment by expanding the 
HUBZone Program to include communities affected by base closures. It 
provides an incentive, through Federal government contracts, for small 
businesses to operate in these communities and to provide employment to 
these military and civilian personnel.
  This year's SBA reauthorization bill paves the way to a stronger SBA 
able to meet the needs and concerns of the country's entrepreneurs. The 
future of our country is inextricably tied to the future of small 
business--and by enhancing the conditions that support small business, 
we will ensure a more prosperous future for all. I urge all my 
colleagues to support this important legislation on behalf of the 
nation's small businesses and entrepreneurs.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
 Mr. KERRY. Mr. President, today, as Ranking Democrat on the 
Committee on Small Business and Entrepreneurship, I join the 
Committee's Chair, Senator Olympia Snowe in introducing a three-year 
reauthorization bill for the Small Business Administration's programs. 
These programs help small businesses, often called the engine of the 
American economy, with access to capital, business advice and training 
and Federal procurement opportunities. But before I speak more 
specifically about the provisions of the bill, I would like to thank 
Chair Snowe for working hand-in-hand with me on this, my third, 
reauthorization of the Small Business Administration. Having worked 
closely on two previous reauthorizations, and as a member of the Small 
Business and Entrepreneurship Committee for over 18 years, I can tell 
you that the SBA reauthorization process takes diligence and a strong 
attention to detail. I want to commend Senator Snowe for taking the 
initiative to draft legislation that makes such important and necessary 
changes to the SBA during this reauthorization process and for showing 
great leadership in her first seven months as Chair of the Committee on 
Small Business and Entrepreneurship.
  Our bill will strengthen the SBA and dramatically improve the 
agency's ability to deliver services to small businesses in every 
state. It is based on a sound Committee record. In addition to holding 
two hearings and three roundtables to specifically address SBA's 
programs and related reauthorization issues, our Committee met and 
spoke with numerous constituents, program directors and small business 
advocates. It is through this correspondence, research and input that 
our Committee has been able to prepare a comprehensive piece of 
legislation that will likely serve the Small Business Administration 
and the entire small-business community well past even the next 
reauthorization period.
  Over the past three years, as Chairman and Ranking Member of this 
Committee, I have seen this administration reduce government funding 
and transfer that money to the wealthy with tax cut after tax cut, 
resulting in a significant loss of revenue for essential programs aimed 
at fostering small businesses and the economic activity they bring 
about. While many of us like to note that small businesses are the 
engine of economic growth and should be bolstered by our government, 
this administration has given small businesses more words than action.
  The need for small business programs--for access to capital, for 
training and counseling, for assistance in gaining access to the 
Federal marketplace--runs counter cyclical to the economy. When the 
economy is slumping, as it now is, small businesses and entrepreneurs 
need the SBA even more. Our Committee has heard from the small-business 
community that demand for training and assistance and access to capital 
is up, yet this administration has proposed freezing funding for 
virtually all SBA programs for six years. Their proposal includes no 
adjustment for inflation or demand, despite SBA's own numbers that show 
demand is up for its programs.
  It is carrying out our legislative and oversight responsibilities 
that Chair Snowe and I raised a number of concerns regarding the SBA's 
reauthorization proposal and the overall management and direction of 
many of the agency's programs through hearings, and roundtables and in 
letters and phone calls to the administration. And after hearing from 
the community and working with small business experts in the field, 
Senator Snowe and I came to the conclusion that many of the proposals 
put forth by the Small Business Administration would not help the 
agency's programs but ultimately hinder them.

  This administration and small businesses across this Nation will 
find, however, that our prescription for small businesses in a flailing 
economy

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is quite different. Our reauthorization legislation embraces the 
programs that have worked for years, redirects those that have 
struggled and sets the SBA and up for continued success.
  Although banks have plenty of cash to lend, small businesses are 
still having a problem getting access to credit. For the past few years 
as the economy has fizzled, the Federal Reserve has reported that banks 
have cut back on lending to small businesses, making it harder and more 
expensive to get loans. And who has been there to pick up the slack? 
The Small Business Administration and its lending partners.
  Lending is up in SBA's largest lending program for working capital. 
Lending is up in SBA's microloan program, which serves those with the 
least access to capital through the private sector. And SBA's venture 
capital programs account for a significant role--more than 50 percent--
in this country's investment in our fastest-growing small businesses. 
Last year these loans pumped about $20 billion into the economy, 
leveraged millions more from the private sector, fed the local tax base 
as the Federal government cut back, and created at least 400,000 jobs.
  As the Committee reviewed SBA's programs for reauthorization, these 
facts figured largely into establishing the program levels. I thank our 
Chair, Senator Snowe, for working with me to set the levels for SBA's 
lending and venture capital programs at increasing levels for the next 
three years. I am particularly pleased with the increased funding 
levels for the microloan programs.
  I disagree with the administration's proposals over the past few 
years to cut back its investment in microloans and training assistance 
to micro-entrepreneurs. And I disagree with the Adminstration's 
contention that these borrowers are being served through the 7(a) loan 
program. The small borrower in the microloan program is different than 
the small borrower being served through the 7(a) loan program. Both are 
important, but they are different, and one is not a substitute for the 
other.
  And who are these borrowers being served through the microloan 
program? Thirty percent are African American. Eleven percent are 
Hispanic. Thirty-seven percent are women. And anywhere from 30 to 40 
percent go to small businesses in rural areas. Banks turn these 
borrowers away, and yet the administration proposed cutting the 
microloan program by 36 percent in its most recent budget. SBA needs to 
fully fund these programs and put more resources into the office that 
manages the program. Four people is not enough to manage 1,400 loans 
and 180 grants.
  Aside from setting the levels for each small business financial 
assistance program, we made important program changes and started new 
initiatives. In the 7(a) loan program, SBA's largest loan program, 
which provides working capital to small businesses with long terms of 
up to 25 years, we made permanent the reduction in the fees borrowers 
and lenders pay. We are testing a proposal that allows the most 
proficient 7(a) lenders in good standing to lend in every state. 
Lenders have complained that applying for lending autonomy in each of 
the 70 district office and branches is administratively burdensome, 
both for them and for the Agency staff, and that some district offices 
have taken advantage of the power to approve or disapprove lenders when 
they apply for this special lending status.

  I want to make clear while I want to avoid unnecessary paperwork and 
eliminate reported abuses, I do not want the lenders to take this as 
authority to quit working with the district directors. It is important 
to have a local connection and for the SBA and the lenders to work 
together to maximize service to the small businesses. For this purpose 
I have included a provision which directs the SBA to consider the 
recommendations and comments of any district directors and regional 
administrators when reviewing a lender for national lending authority.
  To increase the value of 7(a) loans sold in the secondary market, the 
Committee has included a provision to allow SBA to pool and sell the 
guaranteed portion of loans with varied rates. Currently SBA has the 
authority to only sell those loans with identical rates. This should 
create efficiencies in market and bring down borrowing costs for the 
small business borrower. At Senator Snowe's request, in order to reach 
more under-served small businesses, we have enhanced the Low-Doc 
program, allowing lenders to use the simplified application form for 
loans up to $250,000 from $100,000, making it the same as the SBA 
Express program. We have also expanded the incentives for lenders to 
provide financing to export small businesses, and proposed letting 7(a) 
borrowers use a simplified size standard when determining if an 
applicant is a small business.
  To improve the 504 loan program, which makes long-term loans of up to 
20 years to small, growing businesses to buy equipment and buildings, 
we have also raised the debenture size to keep pace with the rising 
cost of commercial real estate and equipment. We have brought the job 
requirement standard up from $35,000 to $50,000 after ten or twelve 
years. We have directed SBA to simplify the application and 
documentation process of applying for and closing 504 loans, long a 
goal of this Committee and made a priority based on the testimony of 
one of our witnesses during the reauthorization process. We have 
created two alternatives for 504 lenders to use when establishing a 
loan loss reserve to cover potential losses.
  I am particularly pleased that we have included S. 822, the Child 
Care Lending Pilot Act in the reauthorization bill. It allows small, 
non-profit childcare businesses access to 504 loans. I thank Senator 
Snowe and my colleagues for agreeing to try this for three years, 
similar to what we have done with the microloan program. And I thank 
the trade association of 504 lenders, the National Association of 
Certified Development Companies, and other 504 lenders for their 
endorsement of an input on the pilot.
  The more research I've done, the more I've come to realize how 
vitally important it is that we give non-profit day care providers the 
same opportunities as for-profits to expand their businesses. Non-
profit day care centers are often the only child care suppliers 
available in needy areas, from the most urban to the most rural. Giving 
these businesses access to 504 loans for three years will allow us to 
gauge whether this valuable loan program is the best way to aid these 
valuable providers of care to our Nation's children. I have taken note 
of states like Oregon, where 79 percent of day care providers are non-
profit, Michigan, where that number jumps to 86 percent, Iowa with 77 
percent, my own State of Massachusetts with 90 percent, Ohio with 62 
percent, and the list goes on and on. I've learned that in State after 
State families are waiting for affordable day care; from more than one 
thousand families on the waiting list in Nevada and Maine to more than 
thirty thousand on the list in Texas. These parents are waiting for 
quality day care they can afford, and making available affordable loans 
to all licensed child care providers may increase access to care and 
cut down those waiting lists.

  I understand the concerns of those who are concerned about the 
precedent of SBA lending to non-profits. And I agree it should not be 
expanded to all industries. However, this is a very unique industry 
that in many States is delivered mostly through non-profits, and the 
only way to penetrate the market is to reach both for-profit and non-
profit. Further, non-profits are usually the providers that care for 
the neediest kids. I have added provisions to ensure the underwriting 
standards are just as tough, if not more so, as those applied to for-
profit centers. The loans must be personally guaranteed, the collateral 
must be owned outright by the child care provider, and it must be able 
to make its loan payments and cover normal operating expenses from the 
revenue generated from its clients. With these protections, the loans 
to non-profits should perform just as well as those made to for-
profits, and if there is a problem, the loans should be collateralized 
sufficiently to cover the losses.
  The bill defines a small, non-profit child care business to mean an 
entity organized as a 501(c)(3), but not just any organization. It must 
be a licensed child care provider; it must meet the size standard for a 
small business; and it must provide care to infants, toddlers and pre-
kindergarten and older children after school. At Senator Snowe's 
request, the pilot is limited to

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7 percent allowed for pilots under SBA's 7(a) guaranteed business loan 
program. I feel that the agreed upon cap should allow for sufficient 
lending under the pilot to adequately test whether lending to non-
profit childcare providers is effective in increasing access to 
affordable childcare, and whether it protects the general 504 program, 
which is vital to the financing of small businesses in this country.
  The bill also includes a comprehensive study by the GAO to track and 
monitor the impact of this program both on the industry and the 
program. Last, I want to remind my colleagues that the 504 program is 
funded entirely through fees and does not require appropriations.
  Also included in this bill is S. 318, the Small Business Drought 
Relief Act. This simply reinforces in legislation something which SBA 
should already be doing. You see, the SBA doesn't treat all drought 
victims the same. The Agency only helps those small businesses whose 
income is tied to farming and agriculture. However, farmers and 
ranchers are not the only small business owners whose livelihoods are 
at risk when drought hits their communities. The impact can be just as 
devastating to the owners of rafting businesses, marinas, and bait and 
tackle shops. Sadly, at present these small businesses cannot get help 
through the SBA's disaster loan program because of something taxpayers 
hate about government--bureaucracy.
  The SBA denies these businesses access to disaster loans because its 
lawyers say drought is not a sudden event and therefore it is not a 
disaster by definition. However, contrary to the Agency's position that 
drought is not a disaster, as of July 16, 2002, the day this 
legislation was introduced last year, the SBA had in effect drought 
disaster declarations in 36 states. That number had grown to 48 the 
beginning of this year, demonstrating that problem had gotten worse and 
even more small businesses were in need.
  As I have said time and again, the SBA has the authority to help all 
small businesses hurt by drought in declared disaster areas, but the 
Agency won't do it. For years the Agency has been applying the law 
unfairly, helping some and not others, and it is out of compliance with 
the law. The Small Business Drought Relief Act of 2003 would force SBA 
to comply with existing law, restoring fairness to an unfair system, 
and get help to small business drought victims that need it. I thank 
Senator Bond for working with me on this when he was the Ranking Member 
of the Committee on Small Business & Entrepreneurship, and I thank 
Senator Snowe and her staff for all their help and support. While we 
might have had a lot of rain recently in the Northeast, there are areas 
like Lake Mead in Arizona where it is so dry that the water level is 
down and small businesses are losing business and making expensive 
changes to extend docks to reach the water.

  In this bill are also provisions to shore up SBA's venture capital 
programs--the Small Business Investment Company Debenture and 
Participating Securities programs, and the New Markets Venture Capital 
Program. We have balanced investment incentives with soundness issues 
and allowed small businesses to receive more SBIC financing than 
currently permissible if they also have a 504 or 7(a) loan. We have 
improved the arrangement for distributing payments from successful 
SBICs so that SBA and the investors are treated more fairly and the 
taxpayers has more protection for realizing repayment on the 
investments. We have put in place conforming amendments to make the New 
Markets Venture Capital program work with the New Markets Tax Credit, 
as Congress intended. We have clarified that new markets venture 
capital companies have two years to raise their matching capital, as 
Congress intended. The Committee has been troubled by the Agency's 
interpretation of the NMVC statute which they viewed as permitting SBA 
to choose how much time it can give conditionally approved NMVCs to 
raise the private-sector matching money. The chosen time frames were 
unreasonable and not what Congress intended.
  We have also included many measures to strengthen SBA's oversight of 
lenders, responding to findings by the General Accounting Office and 
the Office of Inspector General. And we have reauthorized and clarified 
the law for surety bond guarantees to help small businesses get 
government contracts.
  While no one would deny the importance access to capital plays in the 
success of small businesses, as SBA Administration Hector Barreto and 
past SBA Administrators have acknowledged time and again, debt is not 
always the answer. In the SBA's FY 2004 budget request, there is 
reference to information from the Ewing Marion Kauffman Foundation and 
Dun & Bradstreet that indicates ``80 percent of new businesses 
discontinue operation within five years because of lack of `knowledge' 
of key business skills.'' Despite the recognized importance of such 
assistance, the SBA's funding request for FY 2004 and its legislative 
proposal to implement that request would freeze funding levels for 
virtually all Agency programs, without even accounting for inflation, 
for a six-year period. If enacted, that would severely hamstring this 
nation's small businesses and their ability to effectively compete and 
prosper in the national economy.
  Cuts to or inadequate funding of the SBA's entrepreneurial 
development programs are often attributed to vague and unfounded claims 
of duplication. Such claims mistake a common mission of training and 
counseling for duplication, ignoring the reality that small businesses 
vary greatly, are often at very different stages of development, and 
have many different needs. Just as it would be ineffective to only have 
one type of loan or venture capital financing structure for the 25 
million small businesses in this country, it would be futile to water 
down specialized management and training programs to impose a one-size-
fits-all approach.
  I want to commend Chair Snowe for giving women entrepreneurs such a 
prominent place in the reauthoziation process. Rarely do women 
entrepreneurs get the recognition and attention they deserve for their 
contributions to our economy: 18 million Americans would be without 
jobs today if it weren't for these entrepreneurs who had the courage 
and the vision to strike out of their own. During my tenure as a 
member, Chair, and lead Democrat of the Senate Committee on Small 
Business and Entrepreneurship, I have worked to increase and improve 
the opportunities for enterprising entrepreneurial women in a variety 
of ways, leading to greater earning power, financial independence and 
asset accumulation--and I am glad that Senator Snowe is joining me in 
this endeavor.

  As Chair Snowe expressed when she introduced the Women's Small 
Business Programs Improvement Act--and when Senator Snowe and I passed 
the Women's Business Center's Preservation Act--protecting the 
extremely effective and well-established Women's Business Center 
network was a high priority in this reauthorization. For that reason, 
we make permanent the Women's Business Center Sustainability Pilot 
Program by creating three-year ``renewal'' grants for those centers 
with sustainability grants and four-year ``initial'' grants for new 
centers; increase the program's authorization levels; and direct the 
Office of Women's Business Ownership, OWBO, to make all Women's 
Business Center grants at $150K and to consult with the associations of 
Women's Business Centers when making improvements to the program. Other 
changes to the Women's Business Center Program include streamlining the 
data collection and the grant application and selection criteria, 
protecting the privacy of Women's Business Council, WBC, clients, and 
providing for a smooth transition from sustainability to the newly 
established WBC program. Our legislation will not only secure the 
future of the Women's Business Center Program, but it will connect all 
SBA-related women's initiatives with a unified mission, similar 
guidance and training. These changes were coupled with minor, yet 
significant, changes to the National Women's Business Council, NWBC, 
and the Interagency Committee on Women's Business Enterprise. Senator 
Snowe and I included provisions to give the NWBC cosponsorship 
authority, to allow more flexibility in the way the Council uses funds, 
and to direct the Council to serve as a clearinghouse for historical 
data. Each of these things will enable the Council to become a better 
resource for the Administration, Congress and the entire small-business

[[Page S9056]]

community. To bolster the representation of women business owners in 
the federal government, our bill re-establishes the Interagency 
Committee on Women's Business Enterprise, directs the Deputy 
Administrator of the SBA to serve as acting chairperson of the 
Interagency Committee until a chairperson is appointed, establishes a 
Policy Advisory Group to assist the Committee's chairperson in 
developing policies and programs under this Act and creates three 
subcommittees similar to those created under the National Women 
Business Council.
  This bill also supports and protects the Small Business Development 
Center network, which has served 9 million small-business owners since 
its inception more than 20 years ago. It should also be noted that in 
2001, SBDCs helped small businesses create or retain over 80,000 jobs, 
generate $3.9 billion in sales and obtain $2.7 billion in financing. 
For every dollar spent on an SBDC, $2.09 in tax revenue was returned to 
the Federal Government. Numbers aside, the nationwide network of SBDCs 
provide important counseling services to small-business owners that are 
unable to afford private consulting, many of whom are women and 
minority clients. The SBDC program has grown to serve 1.25 million 
small-business owners and entrepreneurs each year, and there are nearly 
1,000 centers serving every State in Nation.
  While this bill rejects the potentially detrimental changes proposed 
by the SBA to the SBDC network, it does address concerns expressed by 
the centers and small businesses. Included in our bill are increased 
authorization levels to keep up with increased demand and a provision 
to protect the privacy of the program's clients and a provision to help 
SBDCs that have been adversely affected by poor economic conditions or 
government downsizing.
  Also, included in the entrepreneurial development section of our bill 
is a provision to increase to $7 million annually the authorization 
level for the Service Corps of Retired Executives, SCORE, which has 
nearly 11,000 volunteers, and a technical change to allow SCORE to keep 
its modest staff of fourteen employees.
  I want to thank Senator Snowe for working with me to include, as 
introduced, the Native American Small Business Development Act, which I 
reintroduced earlier this year together with Senator Johnson and 
Senator Smith to address the SBA's growing lack of commitment to the 
Native American community. According to a report released by the U.S. 
Census Bureau, the ``three year average poverty rate for American 
Indians and Alaska Natives [from 1998-2000] was 25.9 percent; higher 
than for any other race groups.'' With an unemployment rate well above 
the national average and household income at just three-quarters of the 
national average, Native American communities need a commitment from 
the Federal government that we will help them, particularly during 
these difficult economic times. To reaffirm this commitment, the 
Johnson-Kerry-Smith bill provides Native Americans the resources they 
need to take advantage of the opportunities of entrepreneurship.
  The Native American Small Business Development Act, as included in 
our reauthorization bill, will ensure that the SBA's programs to assist 
Native American communities cannot be dissolved by making the SBA's 
Office of Native American Affairs, ONAA, and its Assistant 
Administrator permanent. Our legislation would also create a statutory 
grant program, known as the Native American Development grant program, 
to assist Native Americans. It would also establish two pilot programs 
to try new means of assisting Native American communities and require 
Native American communities to be consulted regarding the future of SBA 
programs designed to assist them. In short, this legislation will 
ensure that our Native American communities receive the adequate 
assistance they need to help start and grow small businesses.
  To address the growing business development needs of veterans, 
Senator Snowe and I reauthorized the Advisory Committee on Veterans 
Affairs, expanded veterans outreach grants from just service-disable 
veterans, to veterans, reservists and service-disable veterans. 
Further, we increase the funding for the Office of Veterans Business 
Development to enable that office to better deal with the demand by 
veterans for outreach and development services.
  We continue to receive reports of the detrimental effects of the 
Administration's policy of reduced staffing and resources for essential 
programs aimed at allowing small businesses to thrive. Week after week, 
the Federal Times reports on the decline in contracts being allocated 
to small businesses, small businesses losing ground in the federal 
marketplace, and most recently, on the awarding of more big contracts 
with less oversight from Federal agencies. With agencies awarding 
larger, more complex and more costly contracts with less staff 
performing oversight, this nation's small businesses and its tax payers 
are the ones shouldering the burden when small business goals continue 
to be unmet. In addition to helping small businesses obtain access to 
procurement opportunities, these goals are meant to help the government 
benefit from the cost-savings and innovations small business 
contractors can often provide.
  Significant improvements to the on-going problem of contract 
bundling, also called contract consolidation, are included in this 
bill. The first provision creates a two-tiered approach to preventing 
unnecessary contract consolidation. Civilian agencies will be required 
to meet specific standards if they attempt to consolidate contracts 
above $2 million and additional requirements for those contracts above 
$5 million. The Department of Defense is required to meet two types of 
similar requirements for contracts above $5 million and $7 million. The 
bill also eliminates the use of the term ``contract bundling'' and 
expands the definition of ``contract consolidation,'' closing a 
loophole that has been widely used and has detrimentally affected small 
businesses.

  The second provision increases in the number of Procurement Center 
Representatives (PCRs) stationed throughout the country. These 
representatives advocate on behalf of small businesses in cases 
directly affecting contracting, such as the bundling or consolidation 
of contracts. In the bill, we have increased the number of PCRs to 
ensure that every state and every major procurement center is allocated 
at least one PCR. Meanwhile, we have also ensured that these PCRs are 
not burdened with responsibilities that were previously the duties of 
Breakout PCRs and Commercial Marketing Representatives. These two 
improvements will dramatically increase the efficacy and efficiency of 
all three positions and allow proper review of the approximately 40 
percent of Federal contracts, nearly $90 billion, that are currently 
not being reviewed by PCRs. This should increase small business's 
access to Federal contract opportunities.
  The bill would also create a reporting requirement for the 
BusinessLINC program, which has been showing promise in creating real 
teaming opportunities for small businesses in the private sector. 
Although the Administration recommended elimination of the program, the 
reports this Committee received regarding the overwhelming success of 
the existing nine programs made it clear that the SBA did not have 
sufficient information about BusinessLINC to make an informed decision 
on its effectiveness. The Committee's bill would ensure that the SBA 
offers the proper level of oversight and would foster the continued 
success of the program. I would like to thank Senator Snowe for working 
with me to find a compromise to preserve this successful program.
  At each of this Committee's three Roundtables on Reauthorization and 
the hearing on contract bundling, the small business community 
reiterated the need for accountability for small business contracting 
at the agency level. I applaud Senator Snowe on her efforts to ensure 
that Federal agencies be held accountable for fully utilizing small 
businesses and to allow a greater amount of Congressional oversight of 
the implementation of agency procurement strategies. Provisions within 
this bill will ensure that the heads of Federal agencies identify a 
specific portion of their budget request that will be awarded to small 
businesses in their strategic plan and their annual budget

[[Page S9057]]

submission to Congress; will hold senior executives and senior program 
managers accountable in their annual performance evaluations for small 
business utilization in Federal contract awards.
  In addition to increasing opportunities for prime contracts, this 
bill addresses another serious problem: small businesses have been 
severely hamstrung by dishonest practices by some businesses that have 
prime contracts with the Federal Government and receive preference over 
other prime contractors due to their superior subcontracting plans. 
Senator Snowe and I have worked closely to address the concerns of 
small businesses regarding delays in payment, false reporting and the 
use of ``bait and switch'' tactics by prime contractors.
  This bill holds prime contractors responsible for the validity of 
subcontracting data, requiring the CEO to certify to the accuracy of 
the subcontracting report under penalty of law. It also expands the 
penalties for falsifying data included in subcontracting reports to 
match the $500,000 penalty for businesses that falsify their status as 
a small and disadvantaged business. If one intentionally falsifies data 
as a part of a subcontracting report to a Federal agency, he is 
defrauding the United States government and will be punished to the 
full extent of the law. I commend Senator Snowe for her diligence in 
creating these strict penalties and her efforts to create a bipartisan 
response to protect small businesses.
  I want to thank Chairwoman Snowe and her able staff for all of their 
hard work over the past several months. I also want to express my 
gratitude to all members of the Committee and urge them and my other 
Senate colleagues to support the Small Business Administration 50th 
Anniversary Reauthorization Act of 2003.
                                 ______