[Congressional Record Volume 149, Number 134 (Friday, September 26, 2003)]
[Senate]
[Pages S12060-S12095]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS ADMINISTRATION 50TH ANNIVERSARY REAUTHORIZATION ACT OF
2003
Mr. FRIST. I ask unanimous consent that the Senate proceed to the
immediate consideration of Calendar 248, S. 1375.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (S. 1375) to provide for the reauthorization of
programs administered by the Small Business Administration,
and for other purposes.
There being no objection, the Senate proceeded to consider the
bill which had been reported from the Committee on Small Business and
Entrepreneurship, with amendments, as follows:
[Strike the parts shown in black brackets and insert the
part shown in italic.]
S. 1375
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 ``Small
Business Administration 50th Anniversary Reauthorization Act
of 2003''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Effective date.
TITLE I--GENERAL PROVISIONS
Subtitle A--Administration Accountability
Sec. 101. Document retention and investigations.
Sec. 102. Management of the Small Business Administration.
Subtitle B--Authorizations
Sec. 111. Program authorization levels.
Sec. 112. Additional reauthorizations.
TITLE II--FINANCIAL ASSISTANCE
Subtitle A--7(a) Loan Guarantee Program
Sec. 201. National Preferred Lenders Pilot Program.
Sec. 202. Extension of program participation fees.
Sec. 203. Loans sold in secondary market.
Sec. 204. Clarification of eligibility for veterans.
Sec. 205. Enhancement of low documentation loan program.
Sec. 206. Increased loan amounts for exporters.
Subtitle B--Microloan Program
Sec. 211. Microloan program improvements.
Subtitle C--Lender Oversight
Sec. 221. Examination and review fees.
Sec. 222. Enforcement authority for Small Business Lending Companies
and non-federally regulated SBA lenders.
Sec. 223. Definitions for Small Business Lending Companies and non-
federally regulated SBA lenders.
Subtitle D--Disaster Assistance Loan Program
Sec. 231. Conforming amendment for disaster assistance loan program.
Sec. 232. Disaster relief for small business concerns damaged by
drought.
Sec. 233. Disaster mitigation pilot program.
Subtitle E--504 Loan Program
Sec. 241. Extension of user fees.
Sec. 242. Amortized loan loss reserve fund.
Sec. 243. Alternative loss reserve for certain premier certified
lenders.
Sec. 244. Debenture size.
Sec. 245. Job creation or retention standards.
Sec. 246. Simplified applications.
Sec. 247. Child care lending pilot program.
Sec. 248. Definition of rural area.
Subtitle F--Surety Bond Program
Sec. 251. Clarification of maximum surety bond guarantee.
Sec. 252. Authorization of Preferred Surety Bond Guarantee Program.
Subtitle G--Miscellaneous
Sec. 261. Coordination of SBA loans.
Sec. 262. Leasing options for 7(a) and 504 borrowers.
Sec. 263. Calculation of financing limitation for small business
investment companies.
Sec. 264. Establishing alternative size standard.
Sec. 265. Pilot program for guarantees on pools of non-SBA loans.
Subtitle H--New Markets Venture Capital
Sec. 271. Time frame for raising private capital.
Sec. 272. Definition of low-income geographic area.
Subtitle I--Small Business Investment Company Program
Sec. 281. Investment of excess funds.
Sec. 282. Maximum prioritized payment rate.
Sec. 283. Improved distribution requirements.
Subtitle J--Small Business Intermediary Lending Pilot Program
Sec. 291. Short title.
Sec. 292. Findings.
Sec. 293. Small Business Intermediary Lending Pilot Program.
TITLE III--ENTREPRENEURIAL DEVELOPMENT PROGRAMS
Subtitle A--Office of Entrepreneurial Development
Sec. 301. Service Corps of Retired Executives.
Sec. 302. Small Business Development Center Program.
Sec. 303. PRIME reauthorization and transfer to the Small Business Act.
Subtitle B--Women's Small Business Ownership Programs
Sec. 311. Office of Women's Business Ownership.
Sec. 312. Women's Business Center Program.
Sec. 313. National Women's Business Council.
Sec. 314. Interagency Committee on Women's Business Enterprise.
Sec. 315. Preserving the independence of the National Women's Business
Council.
Subtitle C--Office of Native American Affairs
Sec. 321. Short title.
Sec. 322. Native American Small Business Development Program.
Sec. 323. Pilot programs.
Subtitle D--Office of Veterans Business Development
Sec. 331. Advisory Committee on Veterans Business Affairs.
Sec. 332. Outreach grants for veterans.
Sec. 333. Authorization of appropriations.
TITLE IV--SMALL BUSINESS PROCUREMENT OPPORTUNITIES
Sec. 401. Contract consolidation.
[[Page S12061]]
Sec. 402. Agency accountability.
Sec. 403. Small business participation in prime contracting.
Sec. 404. Small business participation in subcontracting.
Sec. 405. Evaluating subcontract participation in awarding contracts.
Sec. 406. Direct payments to subcontractors.
Sec. 407. Women-owned small business industry study.
Sec. 408. [A]HUBZone authorizations.
Sec. 409. Definition of [HUBzone] HUBZone; treatment of certain former
military installation lands as [HUBzones] HUBZones.
Sec. 410. Definition of [HUBzone] HUBZone small business concern.
Sec. 411. Acquisition regulations.
TITLE V--MISCELLANEOUS
Sec. 501. Minority Small Business and Capital Ownership Development
Program.
Sec. 502. Extension of [program] authority for technology assistance
programs.
Sec. 503. [R]BusinessLINC report to Congress.
SEC. 2. EFFECTIVE DATE.
(a) In General.--This Act and the amendments made by this
Act shall take effect on October 1, 2003.
(b) Rulemaking Authority.--
(1) Proposed regulations.--Except as otherwise specifically
provided in this Act, not later than 180 days after the date
of enactment of this Act, the Administrator of the Small
Business Administration (referred to in this Act as the
``Administrator'' and the ``Administration'', respectively)
shall publish proposed regulations to carry out the
provisions of this Act and the amendments made by this Act.
(2) Final regulations.--Except as otherwise specifically
provided in this Act, not later than 300 days after the date
of enactment of this Act, the Administrator shall issue final
regulations to carry out the provisions of this Act and the
amendments made by this Act.
TITLE I--GENERAL PROVISIONS
Subtitle A--Administration Accountability
SEC. 101. DOCUMENT RETENTION AND INVESTIGATIONS.
Section 10(e) of the Small Business Act (15 U.S.C. 639(e))
is amended by striking the matter preceding paragraph (2) and
inserting the following:
``(e) Document Retention; Investigations.--
``(1) Document retention.--The [Administration]
Administrator and the Inspector General of the Administration
shall--
``(A) retain all documents and records, including
correspondence, records of inquiry, memoranda (including
those relating to all investigations conducted by or for the
Administration), reports, studies, analyses, contracts,
agreements, opinions, computer entries, e-mail messages,
forms, manuals, briefing materials, press releases, and
books for a period of not less than 2 years from the date
such documents are created;
``(B) keep the items described in subparagraph (A)
available at all times for inspection and examination by the
Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of the House of
Representatives, or their duly authorized representatives;
and
``(C) upon the written request of the Committee on Small
Business and Entrepreneurship of the Senate or the Committee
on Small Business of the House of Representatives pursuant to
subparagraph (B), the Administrator or the Inspector General,
as applicable, shall make such documents or records available
to the requesting committee or its duly authorized
representative within 5 business days of the request, and if
a document or record cannot be made available within such
timeframe, the Administrator or the Inspector General, as
applicable, shall provide the requesting committee with a
written explanation stating the reason that each document or
record requested has not been provided and a date certain for
its production.''.
SEC. 102. MANAGEMENT OF THE SMALL BUSINESS ADMINISTRATION.
Section 4 of the Small Business Act (15 U.S.C. 633) is
amended--
(1) by striking ``Sec. 4.'' and inserting the following:
``SEC. 4. MANAGEMENT OF THE SMALL BUSINESS ADMINISTRATION.'';
(2) in subsection (a), by striking ``(a)'' and inserting
the following:
``(a) Establishment.--'';
(3) in subsection (b)--
(A) by striking ``(b)(1)'' and inserting the following:
``(b) Authority of Administrator.--
``(1) In general.--
``(A) Appointment.--'';
(B) in paragraph (1)--
(i) by striking ``The Administrator shall not engage'' and
inserting the following:
``(B) Sole employment.--The Administrator shall not
engage'';
(ii) by striking ``In carrying out'' and inserting the
following:
``(C) Nondiscrimination; special consideration for
veterans.--In carrying out''; and
(iii) by striking ``The President'' and inserting the
following:
``(D) Appointment of deputy administrator; associate
administrators.--The President''; and
(C) in paragraph (2), by striking ``the Administrator
also'' and inserting ``Responsibilities of Administrator.--
The Administrator''; and
(4) by adding at the end the following:
``(g) Office of Lender Oversight.--The Director of the
Office of Lender Oversight shall--
``(1) formulate, execute, and promote policies and
procedures of the Administration that provide adequate and
effective oversight and review of lenders participating in,
or applying to participate in, the loan and loan guaranty
programs for small business concerns under this Act and the
Small Business Investment Act of 1958 (15 U.S.C. 661 et
seq.); and
``(2) report directly to the Chief Operating Officer of the
Administration.''.
Subtitle B--Authorizations
SEC. 111. PROGRAM AUTHORIZATION LEVELS.
Section 20 of the Small Business Act (15 U.S.C. 631 note)
is amended--
(1) in subsection (a)(1), by striking ``certification''
each place that term appears and inserting ``accreditation'';
(2) by striking subsections (c) through (h) and inserting
the following:
``(c) Disaster Mitigation Pilot Program.--The following
program levels are authorized for loans under section
7(b)(1)(C):
``(1) $15,000,000 for fiscal year 2003.
``(2) $15,000,000 for fiscal year 2004.
``(3) $15,000,000 for fiscal year 2005.
``(4) $15,000,000 for fiscal year 2006.'';
(3) by redesignating subsection (i) as subsection (d); and
(4) by adding at the end the following:
``(e) Fiscal Year 2004.--
``(1) Program levels.--The following program levels are
authorized for fiscal year 2004:
``(A) For the programs authorized by this Act, the
Administration is authorized to make--
``(i) $70,000,000 in technical assistance grants, as
provided in section 7(m); and
``(ii) $100,000,000 in direct loans, as provided in section
7(m).
``(B) For the programs authorized by this Act, the
Administration is authorized to make $21,550,000,000 in
deferred participation loans and other financings. Of such
sum, the Administration is authorized to make--
``(i) $16,000,000,000 in general business loans, as
provided in section 7(a);
``(ii) $5,000,000,000 in certified development company
financings, as provided in section 7(a)(13) of this Act and
section 504 of the Small Business Investment Act of 1958;
``(iii) $500,000,000 in loans, as provided in section
7(a)(21); and
``(iv) $50,000,000 in loans, as provided in section 7(m).
``(C) For the programs authorized by title III of the Small
Business Investment Act of 1958, the Administration is
authorized to make--
``(i) $4,000,000,000 in purchases of participating
securities; and
``(ii) $3,000,000,000 in guarantees of debentures.
``(D) For the programs authorized by part B of title IV of
the Small Business Investment Act of 1958, the Administration
is authorized to enter into guarantees not to exceed
$6,000,000,000, of which not more than 50 percent may be in
bonds approved pursuant to section 411(a)(3) of that Act.
``(E) The Administration is authorized to make grants or
enter into cooperative agreements for a total amount of
$7,000,000 for the Service Corps of Retired Executives
program authorized by section 8(b)(1).
``(2) Additional authorizations.--
``(A) There are authorized to be appropriated to the
Administration for fiscal year 2004 such sums as may be
necessary to carry out the provisions of this Act not
elsewhere provided for, including administrative expenses and
necessary loan capital for disaster loans pursuant to section
7(b), and to carry out title IV of the Small Business
Investment Act of 1958, including salaries and expenses of
the Administration.
``(B) Notwithstanding any other provision of this
paragraph, for fiscal year 2004--
``(i) no funds are authorized to be used as loan capital
for the loan program authorized by section 7(a)(21) except by
transfer from another Federal department or agency to the
Administration, unless the program level authorized for
general business loans under paragraph (1)(B)(i) is fully
funded; and
``(ii) the Administration may not approve loans on its own
behalf or on behalf of any other Federal department or
agency, by contract or otherwise, under terms and
conditions other than those specifically authorized under
this Act or the Small Business Investment Act of 1958,
except that it may approve loans under section 7(a)(21) of
this Act in gross amounts of not more than $2,000,000.
``(f) Fiscal Year 2005.--
``(1) Program levels.--The following program levels are
authorized for fiscal year 2005:
``(A) For the programs authorized by this Act, the
Administration is authorized to make--
``(i) $75,000,000 in technical assistance grants, as
provided in section 7(m); and
``(ii) $105,000,000 in direct loans, as provided in 7(m).
``(B) For the programs authorized by this Act, the
Administration is authorized to make $22,300,000,000 in
deferred participation loans and other financings. Of such
sum, the Administration is authorized to make--
``(i) $16,500,000,000 in general business loans, as
provided in section 7(a);
``(ii) $5,250,000,000 in certified development company
financings, as provided in section
[[Page S12062]]
7(a)(13) of this Act and section 504 of the Small Business
Investment Act of 1958;
``(iii) $500,000,000 in loans, as provided in section
7(a)(21); and
``(iv) $50,000,000 in loans, as provided in section 7(m).
``(C) For the programs authorized by title III of the Small
Business Investment Act of 1958, the Administration is
authorized to make--
``(i) $4,250,000,000 in purchases of participating
securities; and
``(ii) $3,250,000,000 in guarantees of debentures.
``(D) For the programs authorized by part B of title IV of
the Small Business Investment Act of 1958, the Administration
is authorized to enter into guarantees not to exceed
$6,000,000,000, of which not more than 50 percent may be in
bonds approved pursuant to section 411(a)(3) of that Act.
``(E) The Administration is authorized to make grants or
enter into cooperative agreements for a total amount of
$7,000,000 for the Service Corps of Retired Executives
program authorized by section 8(b)(1).
``(2) Additional authorizations.--
``(A) There are authorized to be appropriated to the
Administration for fiscal year 2005 such sums as may be
necessary to carry out the provisions of this Act not
elsewhere provided for, including administrative expenses and
necessary loan capital for disaster loans pursuant to section
7(b), and to carry out title IV of the Small Business
Investment Act of 1958, including salaries and expenses of
the Administration.
``(B) Notwithstanding any other provision of this
paragraph, for fiscal year 2005--
``(i) no funds are authorized to be used as loan capital
for the loan program authorized by section 7(a)(21) except by
transfer from another Federal department or agency to the
Administration, unless the program level authorized for
general business loans under paragraph (1)(B)(i) is fully
funded; and
``(ii) the Administration may not approve loans on its own
behalf or on behalf of any other Federal department or
agency, by contract or otherwise, under terms and conditions
other than those specifically authorized under this Act or
the Small Business Investment Act of 1958, except that it may
approve loans under section 7(a)(21) of this Act in gross
amounts of not more than $2,000,000.
``(g) Fiscal Year 2006.--
``(1) Program levels.--The following program levels are
authorized for fiscal year 2006:
``(A) For the programs authorized by this Act, the
Administration is authorized to make--
``(i) $80,000,000 in technical assistance grants, as
provided in section 7(m); and
``(ii) $110,000,000 in direct loans, as provided in 7(m).
``(B) For the programs authorized by this Act, the
Administration is authorized to make $23,050,000,000 in
deferred participation loans and other financings. Of such
sum, the Administration is authorized to make--
``(i) $17,000,000,000 in general business loans, as
provided in section 7(a);
``(ii) $5,500,000,000 in certified development company
financings, as provided in section 7(a)(13) of this Act and
section 504 of the Small Business Investment Act of 1958;
``(iii) $500,000,000 in loans, as provided in section
7(a)(21); and
``(iv) $50,000,000 in loans, as provided in section 7(m).
``(C) For the programs authorized by title III of the Small
Business Investment Act of 1958, the Administration is
authorized to make--
``(i) $4,500,000,000 in purchases of participating
securities; and
``(ii) $3,500,000,000 in guarantees of debentures.
``(D) For the programs authorized by part B of title IV of
the Small Business Investment Act of 1958, the Administration
is authorized to enter into guarantees not to exceed
$6,000,000,000, of which not more than 50 percent may be in
bonds approved pursuant to section 411(a)(3) of that Act.
``(E) The Administration is authorized to make grants or
enter into cooperative agreements for a total amount of
$7,000,000 for the Service Corps of Retired Executives
program authorized by section 8(b)(1).
``(2) Additional authorizations.--
``(A) There are authorized to be appropriated to the
Administration for fiscal year 2006 such sums as may be
necessary to carry out the provisions of this Act not
elsewhere provided for, including administrative expenses and
necessary loan capital for disaster loans pursuant to section
7(b), and to carry out title IV of the Small Business
Investment Act of 1958, including salaries and expenses of
the Administration.
``(B) Notwithstanding any other provision of this
paragraph, for fiscal year 2006--
``(i) no funds are authorized to be used as loan capital
for the loan program authorized by section 7(a)(21) except by
transfer from another Federal department or agency to the
Administration, unless the program level authorized for
general business loans under paragraph (1)(B)(i) is fully
funded; and
``(ii) the Administration may not approve loans on its own
behalf or on behalf of any other Federal department or
agency, by contract or otherwise, under terms and conditions
other than those specifically authorized under this Act or
the Small Business Investment Act of 1958, except that it may
approve loans under section 7(a)(21) of this Act in gross
amounts of not more than $2,000,000.''.
SEC. 112. ADDITIONAL REAUTHORIZATIONS.
(a) Drug-Free Workplace Program Assistance.--Section
21(c)(3)(T) of the Small Business Act (15 U.S.C.
648(c)(3)(T)) is amended by striking ``October 1, 2003'' and
inserting ``October 1, 2006''.
(b) Paul D. Coverdell Drug-Free Workplace Program.--Section
27(g)(1) of the Small Business Act (15 U.S.C. 654(g)(1)) is
amended by striking ``2001 through 2003'' and inserting
``2004 through 2006''.
(c) Small Business Development Centers.--Section
21(a)(4)(C) of the Small Business Act (15 U.S.C.
648(a)(4)(C)) is amended--
(1) by amending clause (vii) to read as follows:
``(vii) Authorization of appropriations.--There are
authorized to be appropriated to carry out this
subparagraph--
``(I) $125,000,000 for fiscal year 2004;
``(II) $130,000,000 for fiscal year 2005; and
``(III) $135,000,000 for fiscal year 2006.'';
(2) by redesignating clause (viii) as clause (ix); and
(3) by inserting after clause (vii) the following:
``(viii) Limitation.--From the funds appropriated pursuant
to clause (vii), the Administration shall reserve not less
than $1,000,000 in each fiscal year to develop portable
assistance for startup and sustainability non-matching grant
programs to be conducted by eligible small business
development centers in communities that are economically
challenged as a result of a business or government facility
downsizing or closing, which has resulted in the loss of jobs
or small business instability. A non-matching grant under
this clause shall not exceed $100,000, and shall be used for
small business development center personnel expenses and
related small business programs and services.''.
TITLE II--FINANCIAL ASSISTANCE
Subtitle A--7(a) Loan Guarantee Program
SEC. 201. NATIONAL PREFERRED LENDERS PILOT PROGRAM.
Section 7(a)(2) of the Small Business Act (15 U.S.C.
636(a)(2)(C)) is amended by adding at the end the following:
``(E) National preferred lenders pilot program.--
``(i) Establishment.--There is established the National
Preferred Lenders Pilot Program, a 3-year pilot program in
which a participant in the Preferred Lenders Program may
operate as a preferred lender in any State if such lender
meets the criteria established by the Administration.
``(ii) Eligibility criteria.--For purposes of clause (i),
criteria established by the Administration shall include--
``(I) demonstrated proficiency in the Preferred Lenders
Program for not less than 3 years;
``(II) annual loan approvals of a minimum number of 7(a)
Preferred Lenders Program loans, excluding SBA Express loans,
as determined by the Administration;
``(III) operation by the lender in not less than 5 States
or 10 Small Business Administration districts;
``(IV) satisfactory centralized approval, loan servicing,
and loan liquidation functions and processes; and
``(V) consideration of any comments and recommendations
that may be received from any District Director or Regional
Administrator relating to the performance of the applicant.
``(iii) Terms and conditions.--Applicants shall be approved
under the following terms and conditions:
``(I) Term.--Each participant approved under this
subparagraph shall be eligible to make loans for up to 1 year
under the program established under this subparagraph.
``(II) Renewal.--At the expiration of the term described in
subclause (I), the authority of a participant to make loans
under this subparagraph may be renewed based on a review of
performance during the initial term.
``(III) Effect of failure.--Failure to meet the criteria
under this subparagraph shall not effect the eligibility of a
participant to continue as a preferred lender in States or
districts in which it is in good standing.''.
SEC. 202. EXTENSION OF PROGRAM PARTICIPATION FEES.
Section 7(a) of the Small Business Act (15 U.S.C. 636(a))
is amended--
(1) in paragraph (12) by striking ``(b)'' and inserting the
following:
``(B)'';
(2) in paragraph (18)--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``2 percent'' and inserting
``1 percent''; and
(ii) in clause (ii), by striking ``3 percent'' and
inserting ``2.5 percent''; and
(B) by striking subparagraph (C); and
(3) in paragraph (23)(A), by striking ``0.5 percent'' and
all that follows through ``equal to''.
SEC. 203. LOANS SOLD IN SECONDARY MARKET.
Section 5(g) of the Small Business Act (15 U.S.C. 634(g))
is amended by adding at the end the following:
``(6) Trust certificates issued pursuant to this subsection
may be comprised of a pool of loans, guaranteed by the
Administration, with varying interest rates. The interest
rate paid by such certificates shall be equal to the weighted
average of the interest rates of the loans in the pool. The
Administration shall prescribe the maximum amount of
variation in the loan characteristics in order to enhance the
marketability of the pool.''.
[[Page S12063]]
SEC. 204. CLARIFICATION OF ELIGIBILITY FOR VETERANS.
Section 7(a)(8) of the Small Business Act (15 U.S.C.
636(a)(8)) is amended to read as follows:
``(8) The Administration may make loans under this
subsection to--
``(A) small business concerns owned and controlled by
veterans (as defined in section 101(2) of title 38, United
States Code);
``(B) small business concerns owned and controlled by
disabled veterans (as defined in section 4211(3) of title 38,
United States Code); and
``(C) small business concerns owned and controlled by
members of Reserve components of the Armed Forces (as defined
in section 101(c)(6) of title 10, United States Code).''.
SEC. 205. ENHANCEMENT OF LOW DOCUMENTATION LOAN PROGRAM.
Section 7(a)(25)(C) of the Small Business Act (15 U.S.C.
636(a)(25)(C)) is amended by striking ``$100,000'' and
inserting ``$250,000''.
SEC. 206. INCREASED LOAN AMOUNTS FOR EXPORTERS.
Section 7(a) of the Small Business Act (15 U.S.C. 636(a))
is amended--
(1) in paragraph (3)--
(A) in subparagraph (A), by inserting before the semicolon
at the end the following: ``and paragraph (14)''; and
(B) in subparagraph (B), by striking ``$1,250,000'' and
inserting ``$1,300,000''; and
(2) in paragraph (14), by adding at the end the following:
``(D) The total amount of financings under this paragraph
that are outstanding and committed (by participation or
otherwise) to the borrower from the business loan and
investment fund established under this Act may not exceed
$1,300,000 and the gross loan amount under this paragraph may
not exceed $2,600,000.''.
Subtitle B--Microloan Program
SEC. 211. MICROLOAN PROGRAM IMPROVEMENTS.
(a) Intermediary Eligibility Requirements.--Section 7(m)(2)
of the Small Business Act (15 U.S.C. 636(m)(2)) is amended--
(1) in subparagraph (A), by striking ``in paragraph (10);
and'' and inserting ``of the term `intermediary' under
paragraph (11);''; and
(2) in subparagraph (B)--
(A) by striking ``(B) has at least'' and inserting the
following:
``(B) has--
``(i) at least''; and
(B) by striking the period at the end and inserting the
following: ``; or
``(ii) a full-time employee who has not less than 3 years
experience making microloans to startup, newly established,
or growing small business concerns; and
``(C) has at least 1 year experience providing, as an
integral part of its microloan program, intensive marketing,
management, and technical assistance to its borrowers.''.
(b) Conforming Change in Average Smaller Loan Size.--
Section 7(m)(3)(F)(iii) of the Small Business Act (15 U.S.C.
636(m)(3)(F)(iii)) is amended by striking ``$7,500'' and
inserting ``$10,000''.
(c) Limitation on Third Party Technical Assistance.--
Section 7(m)(4)(E)(ii) of the Small Business Act (15 U.S.C.
636(m)(4)(E)(ii)) is amended--
(1) by striking ``Technical assistance'' and inserting
``Third party technical assistance''; and
(2) by striking ``25 percent'' and inserting ``30
percent''.
(d) Loan Terms.--Section 7(m)(1)(B)(i) of the Small
Business Act (15 U.S.C. 636(m)(1)(B)(i)) is amended by
striking ``short-term''.
(e) Report on Transferred Amounts.--Section 7(m)(9)(B) of
the Small Business Act (15 U.S.C. 636(m)(9)(B)) is amended--
(1) by striking ``The Administration'' and inserting the
following:
``(i) In general.--The Administration'';
(2) by striking the period after ``financing''; and
(3) by adding at the end the following:
``(ii) Report.--The Administration shall report, in its
annual budget request and performance plan to Congress, on
the performance by the Administration of the requirements of
clause (i).''.
(f) Accurate Subsidy Model.--Section 7(m) of the Small
Business Act (15 U.S.C. 636(m)) is amended by adding at the
end the following:
``(14) Improved subsidy model.--The Administrator shall
develop a subsidy model for the microloan program under this
subsection, to be used in the fiscal year 2005 budget, that
is more accurate than the subsidy model in effect on the day
before the date of enactment of this paragraph.''.
(g) Increased Flexibility for Providing Technical
Assistance to Potential Borrowers.--Section 7(m)(4)(E)(i) of
the Small Business Act (15 U.S.C. 636(m)(4)(E)(i) is amended
by striking ``25 percent'' and inserting ``30 percent''.
Subtitle C--Lender Oversight
SEC. 221. EXAMINATION AND REVIEW FEES.
Section 5(b) of the Small Business Act (15 U.S.C. 634(b))
is amended--
(1) in the matter preceding paragraph (1), by striking
``(b) In the performance'' and inserting the following:
``(b) Authority of Administrator.--In the performance'';
(2) in paragraph (12), by striking ``and'' at the end;
(3) in paragraph (13), by striking the period at the end
and inserting ``; and''; and
(4) by adding at the end the following:
``(14) require lenders participating in the program
authorized by section 7(a), including Small Business Lending
Companies, to pay reasonable examination and review fees,
which shall be--
``(A) deposited in the account for salaries and expenses of
the Administration; and
``(B) made available only for the costs of examinations,
reviews, and other lender oversight activities concerning
lenders participating in the program authorized by section
7(a).''.
SEC. 222. ENFORCEMENT AUTHORITY FOR SMALL BUSINESS LENDING
COMPANIES AND NON-FEDERALLY REGULATED SBA
LENDERS.
The Small Business Act (15 U.S.C. 631 et seq.) is amended--
(1) by redesignating section 36 as section 37; and
(2) by inserting after section 35 the following new
section:
``Sec. 36. ENFORCEMENT AUTHORITY FOR SMALL BUSINESS LENDING COMPANIES
AND NON-FEDERALLY REGULATED SBA LENDERS
``(a) Defined Term.--In this section the term `management
official' means an officer, director, general partner,
manager, employee, agent, or other participant in the
management or conduct of the affairs of a Small Business
Lending Company or non-federally regulated SBA lender under
section 7(a).
``(b) Authorization.--
``(1) Small business lending companies.--The Administration
is authorized to--
``(A) supervise the safety and soundness of Small Business
Lending Companies;
``(B) set capital standards for, regulate, examine, and
enforce laws relating to Small Business Lending Companies;
and
``(C) prescribe regulations governing the operations,
oversight, and enforcement of Small Business Lending
Companies, in accordance with the purposes of this Act.
``(2) Non-federally regulated sba lenders.--The
Administration is authorized to--
``(A) supervise the safety and soundness of non-federally
regulated SBA lenders;
``(B) regulate, examine, and enforce laws relating to
lending by non-federally regulated SBA lenders under section
7(a); and
``(C) prescribe regulations governing the operations,
oversight, and enforcement of non-federally regulated SBA
lenders, in accordance with the purposes of this Act.
``(c) Capital Directives.--The Administration may--
``(1) deem the failure of a Small Business Lending Company
to maintain capital at or above the minimum capital level
established by the Administration as an unsafe and unsound
practice; and
``(2) in addition to, or in lieu of, any other action
authorized by law, issue a directive to a Small Business
Lending Company that fails to return or maintain capital at
or above its required level, as established by the
Administration.
``(d) Forfeiture of Authority for Noncompliance.--
``(1) In general.--Subject to the provisions of subsection
(g), if any Small Business Lending Company violates any of
the provisions of this Act, or any related regulation, such
company shall forfeit all of the rights, privileges, and
franchises under this Act.
``(2) Adjudication.--A company under paragraph (1) shall
not forfeit its rights, privileges, and franchises under this
Act, unless a court of the United States, with jurisdiction
over the judicial district in which the principal place of
business of such company is located, determines, in a suit
brought by, or on behalf of, the Administrator, that such
company violated this Act, or regulations promulgated
pursuant to this Act.
``(e) Revocation or Suspension of Authority.--
``(1) In general.--Subject to the provisions of subsection
(g), the Administration may revoke or suspend the authority
of a participating lender to make, service, or liquidate
business loans under section 7(a) if the participating
lender--
``(A) knowingly makes false statements in any written
statement required under this Act or any regulation issued
under this Act;
``(B) fails to state, in any written statement required
under this Act or any regulation issued under this Act, a
material fact necessary in order to make the statement not
misleading in the light of the circumstances under which the
statement was made;
``(C) willfully or repeatedly violates--
``(i) any provision of this Act;
``(ii) any rule or regulation issued under this Act; or
``(iii) any condition imposed by the Administration with
any application, request, or agreement; or
``(D) violates any cease and desist order issued by the
Administration under this section.
``(2) Length of suspension.--The suspension under paragraph
(1) shall remain in full force and effect until the
Administration issues a written notice of termination.
``(3) Notification.--If the lending authority of a lender
is revoked under paragraph (1), the lender shall send
notification, not later than 30 days after such revocation,
to all existing borrowers that such authority has been
revoked and that a new servicer has been appointed to service
their loans. If the lender fails to provide such notification
before the deadline, the aAdministration shall provide such
notification to borrowers.
[[Page S12064]]
``(4) Delegation.--The Administration may delegate the
authority to suspend a participating lender's authority to
make loans under section 7(a), but shall not delegate the
authority to revoke a participating lender's authority to
make such loans.
``(f) Cease and Desist Orders.--If a participating lender
or management official has violated, or is about to violate
any provision of this Act, or any related regulation, the
Administration, subject to the provisions of subsection (g),
may--
``(1) order the participating lender or management official
to--
``(A) cease and desist from such violation; and
``(B) take, or refrain from, such action as the
Administration deems necessary to ensure compliance with the
Act and related regulations; and
``(2) suspend the authority of such participating lender
pending full compliance with all orders issued under
paragraph (1).
``(g) Process for Revocation or Suspension of Authority or
Cease and Desist Orders.--
``(1) Notice.--Before revoking or suspending the authority
of a participating lender pursuant to subsection (e) or
issuing a cease and desist order pursuant to subsection (f),
the Administration shall--
``(A) provide notice to the participating lender that such
action is contemplated; and
``(B) provide the participating lender with an opportunity
to show cause why such action should not be taken.
``(2) Contents.--A notice under paragraph (1) shall
contain--
``(A) a statement of the matters of fact and law asserted
by the Administration;
``(B) a description of the legal authority and jurisdiction
under which a hearing is to be held; and
``(C) the time and place of the hearing that will be held
before the Administration.
``(3) Hearing.--
``(A) In general.--A hearing under this subsection shall
take place before the Office of Hearings and Appeals of the
Administration.
``(B) Subpoena.--The Administration may require by
subpoena--
``(i) the attendance and testimony of witnesses; and
``(ii) the production of all books, papers, e-mails, faxes,
and documents relating to the hearing under this paragraph.
``(C) Enforcement of subpoena.--If a party disobeys a
subpoena issued under subparagraph (B), the Administration,
or any party to a proceeding before the Administration, may
invoke the aid of any court of the United States to require--
``(i) the attendance and testimony of witnesses; and
``(ii) the production of books, papers, e-mails, faxes, and
documents.
``(D) Witness fees.--Witnesses summoned before the
Administration shall be paid, by the party at whose instance
they were called, the same fees and mileage that are paid
witnesses in the courts of the United States.
``(4) Issuance of order.--
``(A) In general.--If the Administration, after a hearing,
or a waiver thereof, determines on the record that an order
revoking or suspending the authority of a participating
lender under section 7(a) or a cease and desist order should
be issued, the Administration shall promptly issue such order
to the participating lender and any other person involved.
``(B) Contents.--The order issued under subparagraph (A)
shall contain--
``(i) a statement of the findings of the Administration;
``(ii) the reasons therefore; and
``(iii) the effective date of the order.
``(C) Effective date.--
``(i) Cease and desist order.--A cease and desist order
issued under this paragraph shall become effective on the
date specified therein.
``(ii) Revocation or suspension.--An order revoking or
suspending the authority of a participating lender under
section 7(a) shall be final and conclusive 30 days after the
date of issuance of such order unless the participating
lender files an appeal under paragraph (5).
``(5) Appeal.--
``(A) Appeal by right.--Not later than 30 days after an
order is issued under paragraph (4), a participating lender
may appeal such order by filing a petition requesting that
the Administration's order be set aside or modified with the
clerk of the United States district court for the judicial
district in which such participating lender has its principal
place of business.
``(B) Leave of court.--After the expiration of the period
described in subparagraph (A), a participating lender may
file a petition of appeal only by leave of court and upon a
showing of reasonable grounds for failure to timely file such
petition.
``(C) Delivery of petition.--Upon receiving a petition
under this paragraph, the clerk of the court shall
immediately deliver a copy of the petition to the
Administration, which shall certify and file in the court a
transcript of the record upon which the order complained of
was entered.
``(D) Amendment of petition.--If the Administration amends
or sets aside its order, in whole or in part, before the
record is filed under subparagraph (C), the petitioner may
amend the petition within such time as the court may
determine, on notice to the Administration.
``(E) Effect of petition.--The filing of a petition for
review shall not affect the operation of the order of the
Administration, but the district court may restrain or
suspend, in whole or in part, the operation of the order
pending the final hearing and determination of the petition.
``(F) Authority of court.--
``(i) In general.--Except as provided under clause (ii),
the district court may affirm, modify, or set aside any order
of the Administration issued under this subsection.
``(ii) Limitation.--The district court shall not consider
an objection to an order of the Administration unless such
objection was presented to the Administration or there were
reasonable grounds for failure to do so.
``(G) Additional evidence.--
``(i) In general.--If the district court determines that
the just and proper disposition of the case requires the
taking of additional evidence, the court may take additional
evidence and findings of fact, or may order the
Administration to reopen the hearing for the taking of such
evidence, in such manner and upon such terms and conditions
as the court determines to be proper.
``(ii) Modification of findings.--The Administration may
modify its findings as to the facts, or make new findings, by
reason of the additional evidence so taken, and it shall file
its modified or new findings and the amendments, if any, of
its order, with the record of such additional evidence.
``(6) Enforcement of order.--
``(A) In general.--If any participating lender or other
person against which an order is issued under this section
fails to obey the order, the Administration may file an
application with the United States district court within the
judicial district where the participating lender has its
principal place of business, for the enforcement of the order
by filing a transcript of the record upon which the disobeyed
order was entered.
``(B) Notice.--Upon the receipt of the application filed
under subparagraph (A), the court shall notify the
participating lender or other person of such enforcement
action.
``(C) Procedure.--The evidence to be considered, the
procedure to be followed, and the jurisdiction of the court
shall be the same as is provided in paragraph (5) for
applications to set aside or modify orders.
``(h) Removal or Suspension of Management Officials.--
``(1) Removal of management officials.--
``(A) Notice of removal.--The Administrator may serve upon
any management official a written notice of its intention to
remove that management official if, in the opinion of the
Administrator such management official--
``(i) has willfully and knowingly committed any substantial
violation of--
``(I) this Act;
``(II) any regulation issued under this Act;
``(III) a cease-and-desist order which has become final; or
``(IV) any agreement by the management official or the
participating lender; or
``(ii) has willfully and knowingly committed or engaged in
any act, omission, or practice which constitutes a
substantial breach of a fiduciary duty of that person as a
management official if the violation or breach of fiduciary
duty involves personal dishonesty on the part of such
management official.
``(B) Contents of notice.--A notice provided under
subparagraph (A) shall contain--
``(i) a statement of the facts constituting the grounds for
the removal of the management official; and
``(ii) the time and place at which a hearing will be held
to determine if the management official should be removed
from office.
``(C) Hearings.--
``(i) Timing.--A hearing described in subparagraph (B)
shall take place not earlier than 30 days nor later than 60
days after the date on which notice is provided under
subparagraph (A), unless an earlier or later date is set by
the Administrator at the request of--
``(I) the management official, for good cause shown; or
``(II) the Attorney General of the United States.
``(ii) Consent.--If the management official fails to
appear, in person or by a duly authorized representative, at
a hearing under this paragraph, that management official
shall be deemed to have consented to the issuance of an order
of removal under subparagraph (A).
``(D) Issuance of order of removal.--
``(i) In general.--The Administrator may issue an order of
removal from office if--
``(I) consent is deemed under subparagraph (C)(ii); or
``(II) the Administrator finds, upon the record of the
hearing described in this subsection, that any of the grounds
specified in the notice of removal has been established.
``(ii) Effectiveness.--An order under clause (i) shall--
``(I) become effective on the expiration of the date which
is 30 days after the date that notice is provided to the
participating lender and the management official concerned
(except in the case of an order issued upon consent as
described in [clause] subparagraph (C)(ii), which shall
become effective at the time specified in such order); and
``(II) remain effective and enforceable, except to the
extent it is stayed, modified, terminated, or set aside by
action of the Administrator or a reviewing court, in
accordance with this section.
``(2) Authority to suspend or prohibit participation.--
[[Page S12065]]
``(A) In general.--The Administrator may--
``(i) if necessary to protect the Small Business Lending
Company or interests of the Administration, suspend from
office any management official described in paragraph (1), or
temporarily prohibit such official from further participating
in the management or conduct of the affairs of the Small
Business Lending Company; and
``(ii) if necessary to protect the interests of the
Administration, suspend from office any management official
described in paragraph (1) or prohibit from further
participation a non-federally regulated SBA lender or any
management official described in paragraph (1) in any
activities related to the making, servicing, review,
approval, or liquidation of any loan made under section 7(a).
``(B) Effectiveness.--A suspension or prohibition under
subparagraph (A)--
``(i) shall become effective upon service of notice under
paragraph (1); and
``(ii) unless stayed by a court in proceedings under
subparagraph (C), shall remain in effect--
``(I) pending the completion of the administrative
proceedings pursuant to a notice under paragraph (1); and
``(II) until the Administrator dismisses the charges
specified in the notice, or, if an order of removal or
prohibition is issued against the management official, until
the effective date of any such order.
``(C) Judicial review.--Not later than 10 days after any
management official has been suspended from office or
prohibited from participation in the management or conduct of
the affairs of a participating lender, the management
official may apply for a stay of the suspension or
prohibition, pending the completion of the administrative
proceedings under this subsection, to--
``(i) the United States district court for the judicial
district in which the home office of the participating lender
is located; or
``(ii) the United States District Court for the District of
Columbia.
``(3) Authority to suspend on criminal charges.--
``(A) In general.--If a management official is charged, in
any information, indictment, or complaint authorized by a
United States attorney or a State prosecutor, with the
commission of a felony involving dishonesty or breach of
trust, or has been convicted of any felony, the Administrator
may suspend that management official from office or prohibit
that management official from further participation in the
management or conduct of the affairs of the participating
lender.
``(B) Effectiveness.--A suspension or prohibition under
paragraph (A) shall remain in effect until the subject
information, indictment, or complaint is finally disposed of,
or until terminated by the Administrator.
``(C) Authority upon conviction.--
``(i) In general.--If a judgment of conviction with respect
to an offense described in paragraph (A) is entered against a
management official and is no longer subject to appellate
review, the Administrator may issue an order removing that
management official from office.
``(ii) Notice.--A copy of the order issued under clause (i)
shall be delivered to the management official and the
participating lender for which such official was employed.
``(iii) Effective date.--The order of removal under clause
(i) shall take effect upon the delivery of a copy of the
order to the participating lender.
``(D) Authority upon dismissal or other disposition.--A
finding of not guilty or other disposition of charges
described in subparagraph (A) shall not preclude the
Administrator from initiating proceedings to suspend or
remove the management official from office, or to temporarily
prohibit the management official from participation in the
management or conduct of the affairs of any participating
lender.
``(4) Procedural provisions; judicial review.--
``(A) Hearing venue.--Any hearing under this subsection
shall be--
``(i) held in the Federal judicial district or in the
territory in which the principal office of the participating
lender is located, unless the party afforded the hearing
consents to another place; and
``(ii) conducted in accordance with the provisions of
chapter 5 of title 5, United States Code.
``(B) Issuance of orders.--After a hearing under this
subsection, and not later than 90 days after the
Administrator has notified the parties that the case has been
submitted for final decision, the Administrator shall--
``(i) render a decision in the matter, which shall include
findings of fact upon which its decision is predicated; and
``(ii) issue and serve upon each party to the proceeding an
order or orders consistent with the provisions of this
section.
``(C) Authority to modify orders.--The Administrator may
modify, terminate, or set aside any order issued under this
section--
``(i) at any time, upon such notice, and in such manner as
the Administrator may prescribe, until a petition for review
is timely filed with a United States district court, in
accordance with subparagraph (D)(ii) and a record of the
proceeding has been filed in accordance with subparagraph
(D)(iii); and
``(ii) after the filing of the record under subparagraph
(D)(iii), with permission of the court.
``(D) Judicial review.--
``(i) In general.--Judicial review of an order issued under
this section shall be limited to the provisions of this
subsection.
``(ii) Petition for judicial review.--Any party to a
hearing under this section may obtain a review of any order
issued pursuant to subparagraph (B) (other than an order
issued with the consent of the management official concerned
or an order issued under subsection (d)), by filing, not
later than 30 days after the date of service of such order,
in the United States district court for the judicial district
in which the principal office of the licensee is located or
in the United States District Court for the District of
Columbia, a written petition requested that the order be
modified, terminated, or set aside.
``(iii) Notice to administration.--The clerk of the court
receiving a petition under [subparagraph] clause (ii) shall
transmit a copy of the petition to the Administrator, who
shall submit to the court the record of the proceeding, in
accordance with section 2112 of title 28, United States Code.
``(iv) Jurisdiction.--
``(I) Exclusive.--Upon the filing of the record under
clause (iii), the district court described in clause (ii)
shall have exclusive jurisdiction to affirm, modify,
terminate, or set aside, in whole or in part, the order of
the Administrator, except as provided under paragraph
(2)(B)(ii)(II).
``(II) Review.--The review of any proceeding under
subclause (I) shall be in accordance with chapter 7 of title
5, United States Code.
``(v) Judicial review not a stay.--The commencement of
proceedings for judicial review under this paragraph shall
not, unless specifically ordered by the district court,
operate as a stay of any order issued by the Administrator
under this section.
``(i) Injunctions.--
``(1) Application.--If, in the judgment of the
Administrator, a participating lender or any other person has
engaged, or is about to engage, in any acts or practices
which violate any provision of this Act, any rule or
regulation under this Act, or any order issued under this
Act, the Administrator may apply to the proper district
court of the United States, or a United States court of
any place subject to the jurisdiction of the United
States, for an order to--
``(A) enjoin such acts or practices; or
``(B) enforce compliance with such provision, rule,
regulation, or order.
``(2) Jurisdiction.--A court under paragraph (1) shall have
jurisdiction over any action under paragraph (1).
``(3) Issuance.--Upon a showing by the Administrator that a
participating lender or other person has engaged, or is about
to engage, in any act or practice described in paragraph (1),
the court shall issue, without bond--
``(A) a permanent or temporary injunction;
``(B) a restraining order; or
``(C) any other appropriate order.
``(j) Appointment of Receivers.--In any injunction
proceeding under subsection (i), the district court may--
``(1) seize the assets of 1 or more Small Business Lending
Companies; and
``(2) appoint the Administration, or another receiver, to
hold or administer the assets seized under paragraph (1)
under the direction of the court.
``(k) Possession of Assets.--
``(1) Small business lending companies.--If a Small
Business Lending Company is insolvent, out of compliance with
capital requirements under this section, or otherwise
operating in an unsafe or unsound condition, the
Administration may take possession of--
``(A) the portfolio of loans guaranteed by the
Administration and sell such loans to a third party through a
receiver appointed under subsection (j)(2); and
``(B) servicing activities of loans that are guaranteed by
the Administration and sell such servicing rights to a third
party through a receiver appointed under subsection (j)(2).
``(2) Non-federally regulated sba lenders.--If a non-
federally regulated SBA lender is insolvent or otherwise
operating in an unsafe and unsound condition, the
Administration may take possession of--
``(A) the portfolio of loans guaranteed by the
Administration and sell such loans to a third party; and
``(B) servicing activities of loans that are guaranteed by
the Administration and sell such servicing rights to a third
party.
``(l) Penalties and Forfeitures.--
``(1) In general.--Except as provided under paragraph (3),
a Small Business Lending Company or a non-federally regulated
SBA lender that violates any regulation or written directive
issued by the Administrator regarding the filing of any
regular or special report shall pay to the United States a
civil penalty of not more than $5,000 for every day after the
due date in which the lender fails to file such report,
unless such failure is due to reasonable cause and not
willful neglect.
``(2) Recovery of civil penalty.--The civil penalty
provided for in this section shall accrue to the United
States and may be recovered in a civil action brought by the
Administration.
``(3) Exemption.--The Administrator may, by regulation,
order, or upon the application of an interested party, at any
time before a report is due under paragraph (1) and after
notice and opportunity for hearing, exempt, in whole or in
part, any Small Business Lending Company from the provisions
of paragraph (1), upon such terms and conditions and for such
period of time as the Administrator determines to be
appropriate, if the Administrator finds that such action is
consistent with the public interest or the protection of the
Administration.
[[Page S12066]]
``(4) Alternative requirements.--If an exemption is granted
under paragraph (3), the Administrator may, for the purposes
of this section, make any alternative requirements
appropriate to the situation.''.
SEC. 223. DEFINITIONS FOR SMALL BUSINESS LENDING COMPANIES
AND NON-FEDERALLY REGULATED SBA LENDERS.
Section 3 of the Small Business Act (15 U.S.C. 632) is
amended--
(1) in subsection (l), by striking ``Act--
``(1) the term'' and inserting ``Act, the term''; and
(2) by adding at the end the following:
``(r) Small Business Lending Company.--In this Act, the
term `Small Business Lending Company' means a non-depository
financial institution that is licensed, supervised, examined,
and regulated by the Administration to only make loans under
section 7.
``(s) Non-Federally Regulated SBA Lender.--In this Act, the
term `non-federally regulated SBA lender' means a financial
institution, other than a Small Business Lending Company,
that makes loans under section 7 and is not regulated by--
``(1) the Farm Credit Administration;
``(2) the Federal Financial Institution Examination
Council;
``(3) the Board of Governors of the Federal Reserve System;
``(4) the Office of the Comptroller of the Currency;
``(5) the Federal Deposit Insurance Corporation;
``(6) the Office of Thrift Supervision; or
``(7) the National Credit Union Administration.''.
Subtitle D--Disaster Assistance Loan Program
SEC. 231. CONFORMING AMENDMENT FOR DISASTER ASSISTANCE LOAN
PROGRAM.
Section 7(c)(6) of the Small Business Act (15 U.S.C.
636(c)(6)) is amended--
(1) by striking ``$500,000'' each place it appears and
inserting ``$1,500,000''; and
(2) by inserting ``commencing on or after April 1, 1993,''
before ``unless an applicant''.
SEC. 232. DISASTER RELIEF FOR SMALL BUSINESS CONCERNS DAMAGED
BY DROUGHT.
(a) Drought Disaster Authority.--
(1) Definition of disaster.--Section 3(k) of the Small
Business Act (15 U.S.C. 632(k)) is amended--
(A) by inserting ``(1)'' after ``(k)''; and
(B) by adding at the end the following:
``(2) For purposes of section 7(b)(2), the term `disaster'
includes--
``(A) drought; and
``(B) below average water levels in the Great Lakes, or on
any body of water in the United States that supports commerce
by small business concerns.''.
(2) Drought disaster relief authority.--Section 7(b)(2) of
the Small Business Act (15 U.S.C. 636(b)(2)) is amended--
(A) by inserting ``(including drought), with respect to
both farm-related and nonfarm-related small business
concerns,'' before ``if the Administration''; and
(B) in subparagraph (B), by striking ``the Consolidated
Farmers Home Administration Act of 1961 (7 U.S.C. 1961)'' and
inserting the following: ``section 321 of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1961), in which
case, assistance under this paragraph may be provided to
farm-related and nonfarm-related small business concerns,
subject to the other applicable requirements of this
paragraph''.
(b) Limitation on Loans.--From funds otherwise appropriated
pursuant to section 20 for loans under section 7(b) of the
Small Business Act (15 U.S.C. 636(b)), not more than
$9,000,000 may be used during fiscal year 2004 to provide
drought disaster loans to nonfarm-related small business
concerns.
(c) Prompt Response to Disaster Requests.--Section
7(b)(2)(D) of the Small Business Act (15 U.S.C. 636(b)(2)(D))
is amended by striking ``Upon receipt of such certification,
the Administration may'' and inserting ``Not later than 30
days after the date of receipt of such certification by a
Governor of a State, the Administration shall respond in
writing to that Governor on its determination and the reasons
therefore, and may''.
(d) Rulemaking.--Not later than 45 days after the date of
enactment of this section, the Administrator shall promulgate
final rules to carry out this section and the amendments made
by this section.
SEC. 233. DISASTER MITIGATION PILOT PROGRAM.
Section 7(b)(1)(C) of the Small Business Act (15 U.S.C.
636(b)(1)(C)) is amended by striking ``2000 through 2004''
and inserting ``2003 through 2006''.
Subtitle E--504 Loan Program
SEC. 241. EXTENSION OF USER FEES.
Section 503(f) of the Small Business Investment Act of 1958
(15 U.S.C. 697(f)) is amended by striking ``October 1, 2003''
and inserting ``October 1, 2006''.
SEC. 242. AMORTIZED LOAN LOSS RESERVE FUND.
Paragraph (6) of section 508(c) of the Small Business
Investment Act of 1958 (15 U.S.C. 697e(c)) is amended--
(1) by striking ``The Administration'' and inserting the
following:
``(A) In general.--The Administration''; and
(2) by adding at the end the following new subparagraph:
``(B) Temporary reduction based on outstanding balance.--
Notwithstanding subparagraph (A), the Administration shall
allow the certified development company to withdraw from the
loss reserve such amounts as are in excess of 1 percent of
the aggregate outstanding balances of debentures to which
such loss reserve relates. The preceding sentence shall not
apply with respect to any debenture before 100 percent of the
contribution described in paragraph (4) with respect to such
debenture has been made.''.
SEC. 243. ALTERNATIVE LOSS RESERVE FOR CERTAIN PREMIER
CERTIFIED LENDERS.
(a) In General.--Subsection (c) of section 508 of the Small
Business Investment Act of 1958 (15 U.S.C. 697e) is amended
by adding at the end the following:
``(7) Alternative loss reserve.--
``(A) Election.--With respect to any eligible calendar
quarter, any qualified high loss reserve PCL may elect to
have the requirements of this paragraph apply in lieu of the
requirements of paragraphs (2) and (4) for such quarter.
``(B) Contributions.--
``(i) Ordinary rules inapplicable.--Except as provided
under clause (ii) and paragraph (5), a qualified high loss
reserve PCL that makes the election described in subparagraph
(A) with respect to a calendar quarter shall not be required
to make contributions to its loss reserve during such
quarter.
``(ii) Based on loss.--A qualified high loss reserve PCL
that makes the election described in subparagraph (A) with
respect to any calendar quarter shall, before the last day of
such quarter, make such contributions to its loss reserve as
are necessary to ensure that the amount of the loss reserve
of the PCL is--
``(I) not less than $100,000; and
``(II) sufficient, as determined by a qualified independent
auditor, for the PCL to meet its obligations to protect the
Federal Government from risk of loss.
``(iii) Certification.--Before the end of any calendar
quarter for which an election is in effect under
subparagraph (A), the head of the PCL shall submit to the
Administrator a certification that the loss reserve of the
PCL is sufficient to meet such PCL's obligation to protect
the Federal Government from risk of loss. Such
certification shall be in such form and submitted in such
manner as the Administrator may require and shall be
signed by the head of such PCL and the auditor making the
determination under clause (ii)(II).
``(C) Disbursements.--
``(i) Ordinary rule inapplicable.--Paragraph (6) shall not
apply with respect to any qualified high loss reserve PCL for
any calendar quarter for which an election is in effect under
subparagraph (A).
``(ii) Excess funds.--At the end of each calendar quarter
for which an election is in effect under subparagraph (A),
the Administration shall allow the qualified high loss
reserve PCL to withdraw from its loss reserve the excess of--
``(I) the amount of the loss reserve, over
``(II) the greater of $100,000 or the amount which is
determined under subparagraph (B)(ii) to be sufficient to
meet the PCL's obligation to protect the Federal Government
from risk of loss.
``(D) Recontribution.--If the requirements of this
paragraph apply to a qualified high loss reserve PCL for any
calendar quarter and cease to apply to such PCL for any
subsequent calendar quarter, such PCL shall make a
contribution to its loss reserve in such amount as the
Administrator may determine provided that such amount does
not exceed the amount which would result in the total amount
in the loss reserve being equal to the amount which would
have been in such loss reserve had this paragraph never
applied to such PCL. The Administrator may require that such
payment be made as a single payment or as a series of
payments.
``(E) Risk management.--If a qualified high loss reserve
PCL fails to meet the requirement of subparagraph (F)(iii)
during any period for which an election is in effect under
subparagraph (A) and such failure continues for 180 days, the
requirements of paragraphs (2), (4), and (6) shall apply to
such PCL as of the end of such 180-day period and such PCL
shall make the contribution to its loss reserve described in
subparagraph (D). The Administrator may waive the
requirements of this subparagraph.
``(F) Qualified high loss reserve pcl.--The term `qualified
high loss reserve PCL' means, with respect to any calendar
year, any premier certified lender designated by the
Administrator as a qualified high loss reserve PCL for such
year. The Administrator shall not designate a company under
the preceding sentence unless the Administrator determines
that--
``(i) the amount of the loss reserve of the company is not
less than $100,000;
``(ii) the company has established and is utilizing an
appropriate and effective process for analyzing the risk of
loss associated with its portfolio of PCLP loans and for
grading each PCLP loan made by the company on the basis of
the risk of loss associated with such loan; and
``(iii) the company meets or exceeds 4 or more of the
specified risk management benchmarks as of the most recent
assessment by the Administration or the Administration has
issued a waiver with respect to the requirement of this
clause.
``(G) Specified risk management benchmarks.--For purposes
of this paragraph, the term `specified risk management
benchmarks' means the following rates, as determined by the
Administrator:
``(i) Currency rate.
[[Page S12067]]
``(ii) Delinquency rate.
``(iii) Default rate.
``(iv) Liquidation rate.
``(v) Loss rate.
``(H) Qualified independent auditor.--For purposes of this
paragraph, the term `qualified independent auditor' means any
licensed auditor who--
``(i) is compensated by the qualified high loss reserve
PCL;
``(ii) is independent of such PCL; and
``(iii) has been approved by the Administrator during the
preceding year.
``(I) PCLP loan.--For purposes of this paragraph, the term
`PCLP loan' means any loan guaranteed under this section.
``(J) Eligible calendar quarter.--For purposes of this
paragraph, the term `eligible calendar quarter' means--
``(i) the first calendar quarter that begins after the end
of the 90-day period beginning with the date of the enactment
of this paragraph; and
``(ii) the [7] 11 succeeding calendar quarters.
``(K) Calendar quarter.--For purposes of this paragraph,
the term `calendar quarter' means--
``(i) the period which begins on January 1 and ends on
March 31 of each year;
``(ii) the period which begins on April 1 and ends on June
30 of each year;
``(iii) the period which begins on July 1 and ends on
September 30 of each year; and
``(iv) the period which begins on October 1 and ends on
December 31 of each year.
``(L) Regulations.--Not later than 45 days after the date
of the enactment of this paragraph, the Administrator shall
publish in the Federal Register and transmit to Congress
regulations to carry out this paragraph. Such regulations
shall include provisions relating to--
``(i) the approval of auditors under subparagraph (H); and
``(ii) the designation of qualified high loss reserve PCLs
under subparagraph (F), including the determination of
whether a process for analyzing risk of loss is appropriate
and effective for purposes of subparagraph (F)(ii).''.
(b) Increased Reimbursement for Losses Related to
Debentures Issued During Election Period.--Subparagraph (C)
of section 508(b)(2) of the Small Business Investment Act of
1958 (15 U.S.C. 697e(b)(2)) is amended by inserting ``(15
percent in the case of any such loss attributable to a
debenture issued by the company during any period for which
an election is in effect under subsection (c)(7) for such
company)'' before ``; and''.
(c) Conforming Amendments.--
(1) Subparagraph (D) of section 508(b)(2) of the Small
Business Investment Act of 1958 (15 U.S.C. 697e(b)(2)) is
amended by striking ``subsection (c)(2)'' and inserting
``subsection (c)''.
(2) Paragraph (5) of section 508(c) of the Small Business
Investment Act of 1958 (15 U.S.C. 697e(c)) is amended by
striking ``10 percent''.
(d) Study and Report.--
(1) In general.--The Administrator shall enter into a
contract with a Federal agency experienced in community
development lending and financial regulation or with a member
of the Federal Financial Institutions Examinations Council to
study and prepare a report regarding--
(A) the extent to which statutory requirements have caused
over capitalization in the loss reserves maintained by
certified development companies participating in the Premier
Certified Lenders Program established under section 508 of
the Small Business Investment Act of 1958 (15 U.S.C. 697e);
and
(B) alternatives for establishing and maintaining loss
reserves that are sufficient to protect the Federal
Government from the risk of loss associated with loans
guaranteed under such Program.
(2) Transmission of report.--The report described in
paragraph (1) shall be transmitted to the Committee on Small
Business of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate not later
than 180 days after the date of the enactment of this Act.
(3) Limitation.--The amount of the contract described in
paragraph (1) shall not exceed $75,000.
SEC. 244. DEBENTURE SIZE.
Section 502(2) of the Small Business Investment Act of 1958
(15 U.S.C. 696) is amended to read as follows:
[(1) by striking ``The Administration may,'' and inserting
the following:
``(a) In General.--The Administration may,'';
(2) by striking ``: Provided, however, That the foregoing
powers'' and inserting the following:
``(b) Conditions.--The authority under subsection (a)'';
and
(3) in subsection (b) (as designated by paragraph (2)), by
amending paragraph (2) to read as follows:]
``(2) Maximum amount.--Loans made by the Administration
under this section shall be limited to--
``(A) $1,500,000 for each small business concern if the
loan proceeds will not be directed toward a goal or project
described in subparagraph (B) or (C);
``(B) $2,000,000 for each small business concern if the
loan proceeds will be directed toward 1 or more of the public
policy goals described under section 501(d)(3); and
[``(C) $2,000,000 for each small business concern if the
loan proceeds will be directed toward manufacturing
projects.''.]
``(C) $4,000,000 for each small business concern if the
loan proceeds will be directed toward manufacturing
projects.''.
SEC. 245. JOB CREATION OR RETENTION STANDARDS.
Section 501 of the Small Business Investment Act of 1958
(15 U.S.C. 695) is amended by striking the undesignated
paragraph at the end and inserting the following:
``(e) Job Creation or Retention.--
[``(1) In general.--A project being funded by the debenture
is deemed to satisfy the job creation or retention
requirement under subsection (d)(1) if the project creates or
retains 1 job opportunity for every $50,000 guaranteed by the
Administration.]
``(1) In general.--A project being funded by the debenture
is deemed to satisfy the job creation or retention
requirement under subsection (d)(1) if the project creates or
retains--
``(A) 1 job opportunity for every $50,000 guaranteed by the
Administration; or
``(B) in the case of a manufacturing project, 1 job
opportunity for every $100,000 guaranteed by the
Administration.
``(2) Temporary job creation waiver.--
``(A) In general.--If a development company fails to meet
the job creation and retention requirements under this
section, the company may apply for a temporary waiver from
the Administration. Not later than 30 days after the request
for such waiver, the Administration shall respond to the
request and may temporarily waive the requirement if the
development company shows reasonable cause for its failure to
meet the job creation and retention requirements under
this section and demonstrates how it intends to attain
such requirements in the future.
``(B) Aggregation of goals and objectives.--If a project
meets the economic development objectives or public policy
goals under paragraphs (2) and (3) of subsection (d), the
project does not need to meet the individual job creation or
retention requirements for that particular project if the
outstanding portfolio of the development company meets or
exceeds the job creation or retention criteria under
subsection (d)(1).''.
SEC. 246. SIMPLIFIED APPLICATIONS.
(a) Loans of $400,000 or Less.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Administrator shall develop a
shorter, more concise, and simplified application form for
loan guarantees involving not more than $400,000 authorized
under section 504 of the Small Business Investment Act of
1958 (15 U.S.C. 697a).
(2) Availability to certified development companies.--The
form developed under paragraph (1) shall be made available to
certified development companies not later than 180 days after
the date of enactment of this Act.
(b) All Other Loans.--
(1) In general.--Not later than 270 days after the date of
enactment of this Act, the Administrator shall develop a
shorter, more concise, and simplified application form for
all loan guarantees authorized under section 504 of the Small
Business Investment Act of 1958 (15 U.S.C. 697a), including
those described in subsection (a).
(2) Availability to certified development companies.--The
form developed under paragraph (1) shall be made available to
certified development companies not later than 270 days after
the date of enactment of this Act.
SEC. 247. CHILD CARE LENDING PILOT PROGRAM.
(a) Loans Authorized.--Section 502 of the Small Business
Investment Act of 1958 (15 U.S.C. 696) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``The Administration'' and inserting the
following:
``(a) Authorization.--The Administration'';
(B) by striking ``and such loans'' and inserting ``. Such
loans'';
(C) by striking ``: Provided, however, That the foregoing
powers shall be subject to the following restrictions and
limitations:'' and inserting a period; and
(D) by adding at the end the following:
``(b) Restrictions and Limitations.--The authority under
subsection (a) shall be subject to the following restrictions
and limitations:''; and
(2) in paragraph (1)--
(A) by inserting after ``Use of pro-
ceeds.--'' the following:
``(A) In general.--''; and
(B) by adding at the end the following:
``(B) Loans to small, nonprofit child care businesses.--
``(i) In general.--Notwithstanding subsection (a)(1), the
proceeds of any loan described in subsection (a) may be used
by the certified development company to assist small,
nonprofit child care businesses, provided that--
``(I) the loan will be used for a sound business purpose
that has been approved by the Administration;
``(II) each such business receiving financial assistance
meets all of the same eligibility requirements applicable to
for-profit businesses under this title, except for status as
a for-profit business;
``(III) 1 or more individuals has personally guaranteed the
loan;
``(IV) the small, non-profit child care business has clear
and singular title to the collateral for the loan; and
``(V) the small, non-profit child care business has
sufficient cash flow from its operations to meet its
obligations on the loan
[[Page S12068]]
and its normal and reasonable operating expenses.
``(ii) Limitation on volume.--Not more than 7 percent of
the total number of loans guaranteed in any fiscal year under
this title may be awarded under the pilot program.
``(iii) Defined term.--For purposes of this subparagraph,
the term `small, non-profit child care business' means an
establishment that--
``(I) is organized in accordance with section 501(c)(3) of
the Internal Revenue Code of 1986;
``(II) is primarily engaged in providing child care for
infants, toddlers, pre-school, or pre-kindergarten children
(or any combination thereof), may provide care for older
children when they are not in school, and may offer pre-
kindergarten educational programs;
``(III) including its affiliates, has tangible net worth
that does not exceed $7,000,000, and has average net income
(excluding any carryover losses) for the preceding 2
completed fiscal years that does not exceed $2,500,000; and
``(IV) is licensed as a child care provider by the District
of Columbia, the insular area, or the State in which it is
located.''.
``(iv) Sunset provision.--This subparagraph shall remain in
effect until September 30, 2006, and shall apply to all loans
authorized under this subparagraph that are applied for,
approved, or disbursed during the period beginning on the
date of enactment of the Small Business Administration 50th
Anniversary Reauthorization Act of 2003 and ending on
September 30, 2006.''.
(b) Reports.--
(1) Small business administration.--
(A) In general.--Not later than 6 months after the date of
enactment of this Act, and every 6 months thereafter until
September 30, 2006, the Administrator shall submit a report
on the implementation of the program under subsection (a)
to--
(i) the Committee on Small Business and Entrepreneurship of
the Senate; and
(ii) the Committee on Small Business of the House of
Representatives.
(B) Contents.--The report under subparagraph (A) shall
contain--
(i) the date on which the program is implemented;
(ii) the date on which the rules are issued pursuant to
subsection (c); and
(iii) the number and dollar amount of loans under the
program applied for, approved, and disbursed during the
previous 6 months--
``(I) with respect to nonprofit child care business; and
``(II) with respect to for profit child care business.
(2) General accounting office.--
(A) In general.--Not later than March 31, 2006, the
Comptroller General of the United States shall submit a
report on the child care small business loans authorized by
section 502(b)(1)(B) of the Small Business Investment Act of
1958, as added by this Act, to--
(i) the Committee on Small Business and Entrepreneurship of
the Senate; and
(ii) the Committee on Small Business of the House of
Representatives.
(B) Contents.--The report under subparagraph (A) shall
contain information gathered during the first 2 years of the
loan program, including--
(i) an evaluation of the timeliness of the implementation
of the loan program;
(ii) a description of the effectiveness and ease with which
certified development companies, lenders, and small
businesses have participated in the loan program;
(iii) a description and assessment of how the loan program
was marketed;
(iv) by location (State, insular area, and District of
Columbia) and in total, the number of child care small
businesses, categorized by status as a for-profit or non-
profit business, that--
(I) applied for loans under the program (and whether it was
a new or expanding child care provider);
(II) were approved for loans under the program; and
(III) received loan disbursements under the program (and
whether they are a new or expanding child care provider); and
(v) with respect to the businesses described under clause
(iv)(III)--
(I) the number of such businesses in each State, insular
area, and District of Columbia, as of the year of enactment
of this Act;
(II) the total amount loaned to such businesses under the
program;
(III) the total number of loans to such businesses under
the program;
(IV) the average loan amount and term;
(V) the currency rate, delinquencies, defaults, and losses
of the loans;
(VI) the number and percent of children served who receive
subsidized assistance; and
(VII) the number and percent of children served who are low
income.
(C) Access to information.--
(i) In general.--The Administration shall collect and
maintain such information as may be necessary to carry out
this paragraph from certified development centers and child
care providers, and such centers and providers shall comply
with a request for information from the Administration for
that purpose.
(ii) Provision of information to gao.--The Administration
shall provide information collected under this subparagraph
to the Comptroller General of the United States for purposes
of the report required by this paragraph.
(c) Rulemaking Authority.--Not later than 120 days after
the date of enactment of this Act, the Administrator shall
issue final rules to carry out the loan program authorized by
section 502(b)(1)(B) of the Small Business Investment Act of
1958, as added by this Act.
SEC. 248. DEFINITION OF RURAL AREA.
Section 501 of the Small Business Investment Act of 1958
(15 U.S.C. 695) is amended by adding at the end the
following:
``(f) Definition of Rural Area.--For purposes of this
title, the term `rural area' means any area other than--
``(1) a city or town with a population of not less than
50,000 inhabitants; or
``(2) the urbanized area adjacent to a city or town under
subparagraph (A).''.
Subtitle F--Surety Bond Program
SEC. 251. CLARIFICATION OF MAXIMUM SURETY BOND GUARANTEE.
(a) In General.--Section 411(a)(1) of the Small Business
Investment Act of 1958 (15 U.S.C. 694b(a)(1)) is amended by
striking ``contract up to'' and inserting ``total work order
or contract amount at the time of bond execution that does
not exceed''.
SEC. 252. AUTHORIZATION OF PREFERRED SURETY BOND GUARANTEE
PROGRAM.
Section 411(a) of the Small Business Investment Act of 1958
(15 U.S.C. 694b(a)) is amended by adding at the end the
following: ``This paragraph shall remain in effect through
September 30, 2006.''.
Subtitle G--Miscellaneous
SEC. 261. COORDINATION OF SBA LOANS.
Section 7(a)(3) of the Small Business Act (15 U.S.C.
636(a)(3)) is amended--
(1) by inserting ``Total amount of
loans.--'' before ``No loan''; and
(2) by amending subparagraph (A) to read as follows:
``(A) if the total amount outstanding and committed (by
participation or otherwise) to the borrower under section
7(a) would exceed $1,000,000 (or if the gross loan amount
would exceed $2,000,000), except as provided in subparagraph
(B), plus an amount not to exceed the maximum amount of a
development company financing under title V of the Small
Business Investment Act of 1958 (15 U.S.C. 695 et seq.), and
the Administration shall report to Congress in its annual
budget request and performance plan on the number of small
business concerns that have financings under both section
7(a) and under title V of the Small Business Investment Act
of 1958, and the total amount and general performance of such
financings.;''.
SEC. 262. LEASING OPTIONS FOR 7(A) AND 504 BORROWERS.
(a) 7(a) Loans.--Section 7(a)(28) of the Small Business Act
(15 U.S.C. 636(a)(28)) is amended to read as follows:
``(28) Leasing.--In addition to such other lease
arrangements as may be authorized by the Administration, a
borrower under this section may lease, permanently or for a
short term, to 1 or more tenants, not more than 40 percent of
any property purchased or constructed as part of a project
financed under this section if the borrower permanently
occupies and uses not less than 60 percent of the total
business space of the property.''.
(b) 504 Loans.--Subsection (b)(5) of section 502 of the
Small Business Investment Act of 1958 (15 U.S.C. 696), as
redesignated by this Act, is amended to read as follows:
``(5) Leasing.--In addition to such other lease
arrangements as may be authorized by the Administration, a
borrower under this title may lease, permanently or for a
short term, to 1 or more tenants, not more than 40 percent of
any property purchased or constructed as part of a project
financed under this title if the borrower permanently
occupies and uses not less than 60 percent of the total
business space of the property.''.
SEC. 263. CALCULATION OF FINANCING LIMITATION FOR SMALL
BUSINESS INVESTMENT COMPANIES.
Section 306 of the Small Business Investment Act of 1958
(15 U.S.C. 686) is amended by inserting after subsection (a)
the following:
``(b) In calculating the 20 percent limitation under
subsection (a) or any guarantee required of a small business
investment company by the Administration, only 50 percent of
the value of any loans issued under either section 7(a) of
the Small Business Act or title V of this Act, which are
received by the enterprise in which the small business
investment company has issued commitments, shall be taken
into consideration, but for any 1 such enterprise, a small
business investment company may not simultaneously take
advantage of this discounted calculation for loans under both
section 7(a) of the Small Business Act (15 U.S.C. 636(a)) and
title V of this Act.''.
SEC. 264. ESTABLISHING ALTERNATIVE SIZE STANDARD.
Section 3(a)(3) of the Small Business Act (15 U.S.C.
632(a)(3) is amended--
(1) by striking ``When establishing'' and inserting the
following: ``Establishment of Size Standards.--
``([1]A) In general.--When establishing''; and
(2) by adding at the end the following:
``([2]B) Alternative size standard.--The Administrator
shall establish an alternative size standard pursuant to
paragraph (2), which--
``([A]i) shall be applicable to loan applicants under
section 7(a) of this Act or title V of the Small Business
Investment Act of 1958 (15 U.S.C. 695 et seq.); and
``([B]ii) shall utilize the maximum net worth and maximum
net income of the pro-
[[Page S12069]]
spective borrower as an alternative to the use of industry
standards.''.
SEC. 265. PILOT PROGRAM FOR GUARANTEES ON POOLS OF NON-SBA
LOANS.
Title IV of the Small Business Investment Act of 1958 (15
U.S.C. 692 et seq.) is amended by adding at the end the
following:
``Part C--Credit Enhancement Guarantees
``Sec. 420. (a) The Administration is authorized, upon such
terms and conditions as it may prescribe, in order to
encourage lenders to increase the availability of small
business financing by improving such lenders' access to
reasonable sources of funding, to provide a credit
enhancement guarantee, or commitment to guarantee, of the
timely payment of a portion of the principal and interest on
securities issued and managed by not less than 2 and not more
than 5 qualified entities authorized and approved by the
Administration.
``(b)(1) The Administration may provide its credit
enhancement guarantees in respect of securities that
represent interests in, or other obligations issued by, a
trust, pool, or other entity whose assets (other than the
Administration's credit enhancement guarantee and credit
enhancements provided by other parties) consist of loans
made to small business concerns.
``(2) All loans under paragraph (1) shall be originated,
purchased, or assembled and managed consistent with
requirements prescribed by the Administration in connection
with this credit enhancement guarantee program.
``(3) The Administration shall prescribe requirements to be
observed by the issuers and managers of the securities
covered by credit enhancement guarantees to ensure the safety
and soundness of the credit enhancement guarantee program.
``(4) The Administration may authorize affiliates of
lenders designated as Preferred Lenders (as defined in the
Small Business Act) to become issuers and managers of
securities covered by credit enhancement guarantees if not
more than 50 percent of the voting and economic ownership
interests of any such issuer or manager are owned, directly
or indirectly, by any single Preferred Lender or any person
directly or indirectly controlling such Preferred Lender.
``(c) The full faith and credit of the United States is
pledged to the payment of all amounts the Administration may
be required to pay as a result of credit enhancement
guarantees under this section.
``(d)(1) The Administration may issue an amount of credit
enhancement guarantees in any fiscal year not exceeding the
amount of the business loan and development company debenture
guarantee authority available to the Administration for such
year under this Act and the Small Business Act.
``(2) The Administration shall set the percentage and
priority of each credit enhancement guarantee on issued
securities so that the amount of the Administration's
anticipated net loss (if any) as a result of such guarantee
is fully reserved in a credit subsidy account funded in whole
or in part by fees collected by the Administration.
``(3) The Administration shall charge and collect a fee
from the issuer based on the Administration's guaranteed
amount of issued securities, but the amount of such fee may
not exceed the estimated credit subsidy cost of the
Administration's credit enhancement guarantee.
``(e) Reporting and Analysis.--
``(1) Reporting.--During the development and implementation
of the pilot program, the Administrator shall provide a
report on the status of the pilot program under this section
to Congress in each annual budget request and performance
plan.
``(2) Analysis and report.--Not later than December 30,
2005, the Comptroller General shall--
``(A) conduct an analysis of the pilot program under this
section; and
``(B) submit a report to Congress that contains a summary
of the analysis conducted under subparagraph (A) and a
description of any effects, not attributable to other causes,
of the pilot program on the lending programs under section
7(a) of the Small Business Act (15 U.S.C. 636(a)) and title V
of this Act.
``(3) Implementation.--
``(A) Report.--After completing operational guidelines to
carry out the pilot program under this section, the
Administration shall submit a report, which describes the
method in which the pilot program will be implemented, to--
``(i) the Committee on Small Business and Entrepreneurship
of the Senate; and
``(ii) the Committee on Small Business of the House of
Representatives.
``(B) Timing.--The Administration shall not implement the
pilot program under this section until the date that is 50
days after the report has been submitted under subparagraph
(A).
``(f) Sunset Provision.--This section shall remain in
effect until September 30, 2006.''.
Subtitle H--New Markets Venture Capital
SEC. 271. TIME FRAME FOR RAISING PRIVATE CAPITAL.
Section 354(d) of the Small Business Investment Act of 1958
(15 U.S.C. 689c(d)) is amended--
(1) by redesignating paragraphs (1) and (2) as paragraphs
(2) and (3), respectively; and
(2) by striking ``The Administrator shall'' and all that
follows through ``following requirements:'' and inserting the
following:
``(1) In general.--The Administrator shall give each
conditionally approved company 2 years to satisfy the
requirements under this subsection. If a conditionally
approved company meets these requirements before the end of
such 2-year period, the Administrator shall proceed to final
approval according to the [following] requirement[:] under
subsection (e).''.
SEC. 272. DEFINITION OF LOW-INCOME GEOGRAPHIC AREA.
Section 351(3)(A)(ii)[(II)](I) of the Small Business
Investment Act of 1958 (15 U.S.C. 689(3)(A)(ii)[(II)](I)) is
amended by striking ``[household income] 50 percent or more''
and all that follows and inserting ``[family] the median
household income for such tract does not exceed 80 percent of
the greater of the statewide median [family] household income
or metropolitan area median [family] household income.''.
Subtitle I--Small Business Investment Company Program
SEC. 281. INVESTMENT OF EXCESS FUNDS.
Section 308(b) of the Small Business Investment Act of 1958
(15 U.S.C. 687(b)) is amended by striking the last sentence
and inserting the following: ``Such companies with
outstanding financings are authorized to invest funds not
reasonably needed for their operations in--
``(1) direct obligations of, or obligations guaranteed as
to principal and interest by, the United States;
``(2) in [savings account or] certificates of deposit
maturing within 1 year [that are issued] after issuance by
any institution, whose accounts are [F]federally insured, or
in savings accounts of such institution; or
``(3) in such other investment securities, mutual funds, or
instruments that solely consist of, invest in, or are
supported by the instruments described in paragraphs (1) and
(2).''.
SEC. 282. MAXIMUM PRIORITIZED PAYMENT RATE.
Section 303(g) of the Small Business Investment Act of 1958
(15 U.S.C. 683(g)) is amended--
(1) in the matter preceding paragraph (1),
[(A)] by striking ``In order'' and inserting ``Guarantees
of Participating Securities.--In order''; and
[(B) by striking ``For purposes of this section,'' and all
that follows through ``the extent of earnings.''; and]
(2) in paragraph (2), by striking ``1.38 percent'' and
inserting ``1.7 percent''.
SEC. 283. IMPROVED DISTRIBUTION REQUIREMENTS.
Section 303(g)(9) of the Small Business Investment Act of
1958 (15 U.S.C. 683(g)(9)) is amended to read as follows:
``(9) After making any distribution pursuant to paragraph
(8), a company with participating securities outstanding may
distribute the balance of income to its investors if--
``(A) there are no accumulated and unpaid prioritized
payments;
``(B) any amounts received by the Administration under this
paragraph and paragraph (8) are first applied as prepayment
of the principal amount of the outstanding participating
securities or debentures of the company at the time of such
distribution and then applied to the profit participation
under paragraph (11); and
``(C) any distributions under this paragraph are made to
private investors and to the Administration in the ratio of
private capital to leverage as of the date immediately
preceding the distribution until the outstanding
participating securities or debentures of the company have
been paid in full, after which any remaining distributions
under this paragraph are made to private investors and to the
Administration in the ratio provided for the distribution of
profits under paragraph (11).''.
Subtitle J--Small Business Intermediary Lending Pilot Program
SEC. 291. SHORT TITLE.
This subtitle may be cited as the ``Small Business
Intermediary Lending Pilot Program Act of 2003''.
SEC. 292. FINDINGS.
Congress finds the following:
(1) Small and emerging businesses, particularly startups
and businesses that lack sufficient or conventional
collateral, continue to face barriers accessing mid-sized
loans in amounts between $35,000 and $200,000, with
affordable terms and conditions.
(2) Consolidation in the banking industry has resulted in a
decrease in the number of small, locally controlled banks
with not more than $100,000,000 in assets and has changed the
method by which banks make small business credit decisions
with--
(A) credit scoring techniques replacing relationship-based
lending, which often works to the disadvantage of small or
startup businesses that do not conform with a bank's
standardized credit formulas; and
(B) less flexible terms and conditions, which are often
necessary for small and emerging businesses.
(3) In the environment described in paragraphs (1) and (2),
non-profit intermediary lenders, including community
development corporations, providing financial resources that
serve to supplement the small business lending and
investments of a bank by--
(A) providing riskier, up front, or subordinated capital;
(B) offering flexible terms and underwriting procedures;
and
(C) providing technical assistance to businesses in order
to reduce the transaction costs and risk exposure of banks.
(4) Several Federal programs, including the Microloan
Program under section 7(m) of the
[[Page S12070]]
Small Business Act (15 U.S.C. 636(m)) and the Intermediary
Relending Program of the Department of Agriculture, have
demonstrated the effectiveness of working through non-profit
intermediaries to address the needs of small business
concerns that are unable to access capital through
conventional sources.
(5) More than 1,000 non-profit intermediary lenders in the
United States are--
(A) successfully providing financial and technical
assistance to small and emerging businesses;
(B) working with banks and other lenders to leverage
additional capital for their business borrowers; and
(C) creating employment opportunities for low income
individuals through their lending and business development
activities.
SEC. 293. SMALL BUSINESS INTERMEDIARY LENDING PILOT PROGRAM.
(a) In General.--Section 7(l) of the Small Business Act (15
U.S.C. 636(l)) is amended to read as follows:
``(l) Small Business Intermediary Lending Program.--
``(1) Definitions.--For purposes of this subsection--
``(A) the term `intermediary' means an entity that seeks to
borrow, or has borrowed, funds from the Administration to
make mid-size loans to small business concerns under this
subsection that is a private, nonprofit entity, including--
``(i) a private, nonprofit community development
corporation;
``(ii) a consortium of private, nonprofit organizations or
nonprofit community development corporations;
``(iii) a quasi-governmental economic development entity
(such as a planning and development district), other than a
State, county, or municipal government; and
``(v) an agency of or nonprofit entity established by a
Native American Tribal Government; and
``(B) the term `mid-size loan' means a fixed rate loan of
not less than $35,000 and not more than $200,000, made by an
intermediary to a startup, newly established, or growing
small business concern.
``(2) Establishment.--There is established a 3-year small
business intermediary lending pilot program (referred to in
this section as the ``Program''), under which the
Administration may make direct loans to eligible
intermediaries, for the purpose of making fixed interest rate
mid-size loans to startup, newly established, and growing
small business concerns.
``(3) Purposes.--The purposes of the small business
intermediary lender pilot program are--
``(A) to assist small business concerns in those areas
suffering from a lack of credit due to poor economic
conditions;
``(B) to create employment opportunities for low-income
individuals;
``(C) to establish a mid-size loan program to be
administered by the Small Business Administration to make
loans to eligible intermediaries to enable such
intermediaries to provide small-scale loans, particularly
loans in amounts averaging not more than $150,000, to
startup, newly established, or growing small business
concerns for working capital or the acquisition of materials,
supplies, or equipment;
``(D) to test the effectiveness of non-profit
intermediaries--
``(i) as a delivery system for a mid-size loan program; and
``(ii) in addressing the credit needs of small businesses
and leveraging other sources of credit; and
``(E) to determine the advisability and feasibility of
implementing a mid-size loan program nationwide.
``(4) Eligibility for participation.--An intermediary shall
be eligible to receive loans if the intermediary has at least
1 year of experience making loans to startup, newly
established, or growing small business concerns.
``(5) Loans to intermediaries.--
``(A) Application.--Each intermediary desiring a loan under
this subsection shall submit an application to the
Administration, which describes--
``(i) the type of small business concerns to be assisted;
``(ii) the size and range of loans to be made;
``(iii) the geographic area to be served and its economic,
poverty, and unemployment characteristics;
``(iv) the status of small business concerns in the area to
be served and an analysis of the availability of credit; and
``(v) the qualifications of the applicant to carry out the
purpose of this subsection.
``(B) Loan limits.--Notwithstanding subsection (a)(3), no
loan may be made under this subsection if the total amount
outstanding and committed to an intermediary from the
business loan and investment fund established by this Act
would, as a result of such loan, exceed $1,000,000 during the
participation of the intermediary in the Program.
``(C) Loan duration.--Loans made by the Administration
under this subsection shall be for a maximum term of 20
years.
``(D) Applicable interest rates.--Loans made by the
Administration to an intermediary under the Program shall
bear an annual interest rate equal to 1.00 percent.
``(E) Fees; collateral.--The Administration may not charge
any fees or require collateral with respect to any loan made
to an intermediary under this subsection.
``(F) Leverage.--Any loan to a small business concern shall
not exceed 75 percent of the total cost of the project, with
the remaining funds being leveraged from other sources,
including--
``(i) banks or credit unions;
``(ii) community development financial institutions; and
``(iii) other sources with funds available to the
intermediary lender.
``(G) Delayed payments.--The Administration shall not
require the repayment of principal or interest on a loan made
to an intermediary under this section during the first 2
years of the loan.
``(6) Program funding for mid-size loans.--
``(A) Number of participants.--Under the Program, the
Administration may provide loans, on a competitive basis, to
not more than 20 intermediaries.
``(B) Equitable distribution of intermediaries.--The
Administration shall select and provide funding under the
Program to such intermediaries as will ensure geographic
diversity and representation of urban and rural communities.
``(7) Report to congress.--
``(A) Initial report.--Not later than 30 months after the
date of enactment of the Small Business Administration 50th
Anniversary Reauthorization Act of 2003, the Administration
shall submit a report containing an evaluation of the
effectiveness of the Program to--
``(i) the Committee on Small Business and Entrepreneurship
of the Senate; and
``(ii) the Committee on Small Business of the House of
Representatives.
``(B) Annual report.--Not later than 12 months after the
date of enactment of the Small Business Administration 50th
Anniversary Reauthorization Act of 2003, and each year
thereafter, the Administration shall submit an annual report
containing an evaluation of the effectiveness of the Program
to the Committees described in subparagraph (A).
``(C) Contents.--The reports submitted under subparagraphs
(A) and (B) shall include--
``(i) the numbers and locations of the intermediaries
receiving funds to provide mid-size loans;
``(ii) the amounts of each loan to an intermediary;
``(iii) the numbers and amounts of mid-size loans made by
intermediaries to small business concerns;
``(iv) the repayment history of each intermediary;
``(v) a description of the loan portfolio of each
intermediary, including the extent to which it provides mid-
size loans to small business concerns in rural and
economically depressed areas;
``(vi) an estimate of the number of low-income individuals
who have been employed as a direct result of the Program; and
``(vii) any recommendations for legislative changes that
would improve the operation of the Program.''.
(b) Rulemaking Authority.--Not later than 180 days after
the date of enactment of this Act, the Administrator shall
issue regulations to carry out the amendment made by
subsection (a).
(c) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated
such sums as may be necessary for each of the fiscal years
2004 through 2006 to provide $20,000,000 in loans under
section 7(l) of the Small Business Act, as amended by
subsection (a).
(2) Availability.--Any amounts appropriated pursuant to
paragraph (1) shall remain available until expended.
TITLE III--ENTREPRENEURIAL DEVELOPMENT PROGRAMS
Subtitle A--Office of Entrepreneurial Development
SEC. 301. SERVICE CORPS OF RETIRED EXECUTIVES.
(a) In General.--Section 8(b)(1)(B) of the Small Business
Act (15 U.S.C. 637(b)(1)(B)) is amended--
(1) by striking ``this Act; and to'', and inserting ``this
Act. To'';
(2) by striking ``may maintain at its headquarters'' and
all that follows through ``That any'' and inserting ``shall
maintain at its headquarters and pay the salaries, benefits,
and expenses of a volunteer and professional staff to manage
and oversee the program. Any''; and
(3) by striking the period at the end and inserting the
following: ``and the management of the contributions
received.''.
(b) Regulations.--The Administration shall, not later than
180 days after the date of enactment of this Act, promulgate
regulations to carry out the amendments made by subsection
(a).
(c) Extension of Cosponsorship Authority.--Section
401(a)(2) of the Small Business Administration
Reauthorization and Amendments Act of 1994 (15 U.S.C. 637
note, 108 Stat. 4190) is amended by striking ``September 30,
2003'' and inserting ``September 30, 2006''.
SEC. 302. SMALL BUSINESS DEVELOPMENT CENTER PROGRAM.
(a) Term Change.--Section 21(k) of the Small Business Act
(15 U.S.C. 648(k)) is amended--
(1) by striking ``Certification'' each place it appears and
inserting ``Accreditation''; and
(2) by striking ``certification'' each place it appears and
inserting ``accreditation''.
(b) Privacy Requirements.--Section 21(a) of the Small
Business Act is amended by adding at the end the following:
``(7) Privacy requirements.--
``(A) In general.--A small business development center,
consortium of small business development centers, or
contractor or agent of a small business development center
may not disclose the name, address, or telephone number of
any individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(i) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
[[Page S12071]]
``(ii) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a small business development center, but a disclosure under
this clause shall be limited to the information necessary for
such audit.
``(B) Administration use of information.--This section
shall not--
``(i) restrict Administration access to program activity
data; or
``(ii) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(C) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under subparagraph (A)(ii).''.
(c) Conforming Amendment.--Section 20(a)(1) of the Small
Business Act (15 U.S.C. 631 note) is amended by striking
``certification'' each place it appears and inserting
``accreditation''.
SEC. 303. PRIME REAUTHORIZATION AND TRANSFER TO THE SMALL
BUSINESS ACT.
(a) Program Reauthorization.--Subtitle C of title I of the
Riegle Community Development and Regulatory Improvement Act
of 1994 (15 U.S.C. 6901 note) is amended to read as follows:
``SEC. 37. PROGRAM FOR INVESTMENT IN MICROENTREPRENEURS.
``(a) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Administration.--The term `Administration' means the
Small Business Administration.
``(2) Administrator.--The term `Administrator' means the
Administrator of the Small Business Administration.
``(3) Capacity building services.--The term `capacity
building services' means services provided to an organization
that is, or that is in the process of becoming, a
microenterprise development organization or program, for the
purpose of enhancing its ability to provide training and
services to disadvantaged entrepreneurs.
``(4) Collaborative.--The term `collaborative' means 2 or
more nonprofit entities that agree to act jointly as a
qualified organization under this section.
``(5) Disadvantaged entrepreneur.--The term `disadvantaged
entrepreneur' means a microentrepreneur that--
``(A) is a low-income person;
``(B) is a very low-income person; or
``(C) lacks adequate access to capital or other resources
essential for business success, or is economically
disadvantaged, as determined by the Administrator.
``(6) Indian tribe.--The term `Indian tribe' has the same
meaning as in section 4(a) of the Indian Self-Determination
and Education Assistance Act.
``(7) Intermediary.--The term `intermediary' means a
private, nonprofit entity that seeks to serve microenterprise
development organizations and programs, as authorized under
subsection (d).
``(8) Low-income person.--The term `low-income person'
means having an income, adjusted for family size, of not more
than--
``(A) for metropolitan areas, 80 percent of the area median
income; and
``(B) for nonmetropolitan areas, the greater of--
``(i) 80 percent of the area median income; or
``(ii) 80 percent of the statewide nonmetropolitan area
median income.
``(9) Microentrepreneur.--The term `microentrepreneur'
means the owner or developer of a microenterprise.
``(10) Microenterprise.--The term `microenterprise' means a
sole proprietorship, partnership, or corporation that--
``(A) has fewer than 5 employees; and
``(B) generally lacks access to conventional loans, equity,
or other banking services.
``(11) Microenterprise development organization or
program.--The term `microenterprise development organization
or program' means a nonprofit entity, or a program
administered by such an entity, including community
development corporations or other nonprofit development
organizations and social service organizations, that provides
services to disadvantaged entrepreneurs.
``(12) Training and technical assistance.--The term
`training and technical assistance' means services and
support provided to disadvantaged entrepreneurs, such as
assistance for the purpose of enhancing business planning,
marketing, management, financial management skills, and
assistance for the purpose of accessing financial services.
``(13) Very low-income person.--The term `very low-income
person' means having an income, adjusted for family size, of
not more than 150 percent of the poverty line (as defined in
section 673(2) of the Community Services Block Grant Act (42
U.S.C. 9902(2)), including any revision required by that
section).
``(b) Establishment of Program.--The Administrator shall
establish a microenterprise technical assistance and capacity
building grant program to provide assistance from the
Administration in the form of grants to qualified
organizations in accordance with this section.
``(c) Uses of Assistance.--A qualified organization shall
use grants made under this section--
``(1) to provide training and technical assistance to
disadvantaged entrepreneurs;
``(2) to provide training and capacity building services to
microenterprise development organizations and programs and
groups of such organizations to assist such organizations and
programs in developing microenterprise training and services;
``(3) to aid in researching and developing the best
practices in the field of microenterprise and technical
assistance programs for disadvantaged entrepreneurs; and
``(4) for such other activities as the Administrator
determines are consistent with the purposes of this section.
``(d) Qualified Organizations.--For purposes of eligibility
for assistance under this section, a qualified organization
shall be--
``(1) a nonprofit microenterprise development organization
or program (or a group or collaborative thereof) that has a
demonstrated record of delivering microenterprise services to
disadvantaged entrepreneurs;
``(2) an intermediary;
``(3) a microenterprise development organization or program
that is accountable to a local community, working in
conjunction with a State or local government or Indian tribe;
or
``(4) an Indian tribe acting on its own, if the Indian
tribe can certify that no private organization or program
referred to in this subsection exists within its
jurisdiction.
``(e) Allocation of Assistance; Subgrants.--
``(1) Allocation of assistance.--
``(A) In general.--The Administrator shall allocate
assistance from the Administration under this section to
ensure that--
``(i) activities described in subsection (c)(1) are funded
using not less than 75 percent of amounts made available for
such assistance; and
``(ii) activities described in subsection (c)(2) are funded
using not less than 15 percent of amounts made available for
such assistance.
``(B) Limit on individual assistance.--No single person may
receive more than 10 percent of the total funds appropriated
under this section in a single fiscal year.
``(2) Targeted assistance.--The Administrator shall ensure
that not less than 50 percent of the grants made under this
section are used to benefit very low-income persons,
including those residing on Indian reservations.
``(3) Subgrants authorized.--
``(A) In general.--A qualified organization receiving
assistance under this section may provide grants using that
assistance to qualified small and emerging microenterprise
organizations and programs, subject to such rules and
regulations as the Administrator determines to be
appropriate.
``(B) Limit on administrative expenses.--Not more than 7.5
percent of assistance received by a qualified organization
under this section may be used for administrative expenses in
connection with the making of subgrants under subparagraph
(A).
``(4) Diversity.--In making grants under this section, the
Administrator shall ensure that grant recipients include both
large and small microenterprise organizations, serving urban,
rural, and Indian tribal communities serving diverse
populations.
``(5) Prohibition on preferential consideration of certain
sba program participants.--In making grants under this
section, the Administrator shall ensure that any application
made by a qualified organization that is a participant in the
program established under section 7(m) of the Small Business
Act does not receive preferential consideration over
applications from other qualified organizations that are not
participants in such program.
``(f) Matching Requirements.--
``(1) In general.--Financial assistance under this section
shall be matched with funds from sources other than the
Federal Government on the basis of not less than 50 percent
of each dollar provided by the Administration.
``(2) Sources of matching funds.--Fees, grants, gifts,
funds from loan sources, and in-kind resources of a grant
recipient from public or private sources may be used to
comply with the matching requirement in paragraph (1).
``(3) Exception.--
``(A) In general.--In the case of an applicant for
assistance under this section with severe constraints on
available sources of matching funds, the Administrator may
reduce or eliminate the matching requirements of paragraph
(1).
``(B) Limitation.--Not more than 10 percent of the total
funds made available from the Administration in any fiscal
year to carry out this section may be excepted from the
matching requirements of paragraph (1), as authorized by
subparagraph (A) of this paragraph.
``(g) Applications for Assistance.--An application for
assistance under this section shall be submitted in such form
and in accordance with such procedures as the Administrator
shall establish.
``(h) Recordkeeping and Reporting.--
``(1) In general.--Each organization that receives
assistance from the Administration in accordance with this
section shall--
``(A) submit to the Administration not less than once in
every 18-month period, financial statements audited by an
independent certified public accountant;
``(B) submit an annual report to the Administration on its
activities; and
``(C) keep such records as may be necessary to disclose the
manner in which any assistance under this section is used.
``(2) Access.--The Administration shall have access upon
request, for the purposes of determining compliance with this
section, to any records of any organization that receives
assistance from the Administration in accordance with this
section.
``(3) Data collection.--Each organization that receives
assistance from the Administration in accordance with this
section shall collect information relating to, as
applicable--
``(A) the number of individuals counseled or trained;
``(B) the number of hours of counseling provided;
``(C) the number of startup small business concerns formed;
``(D) the number of small business concerns expanded;
``(E) the number of low-income individuals counseled or
trained; and
[[Page S12072]]
``(F) the number of very low-income individuals counseled
or trained.
``(i) Authorization.--There are authorized to be
appropriated to the Administrator, to carry out the
provisions of this section, to remain available until
expended--
``(1) $15,000,000 for fiscal year 2004;
``(2) $15,000,000 for fiscal year 2005; and
``(3) $15,000,000 for fiscal year 2006.''.
(b) Transfer Provisions.--
(1) Small business act amendments.--The Small Business Act
(15 U.S.C. 631 et seq.) is amended by redesignating section
37, as added by this Act, as section 38.
(2) Transfer.--Section 37 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (15 U.S.C.
6901 note), as so designated by subsection (a) of this
section, is transferred to, and inserted after, section 36 of
the Small Business Act, as added by this Act.
(c) References.--All references in Federal law to the
``Program for Investment in Microentrepreneurs Act of 1999''
or the ``PRIME Act'' shall be deemed to be references to
section 37 of the Small Business Act, as added by this
section.
(d) Rule of Construction.--Nothing in this section or the
amendments made by this section shall affect any grant or
assistance provided under the Program for Investment in
Microentrepreneurs Act of 1999, before the date of enactment
of this Act, and any such grant or assistance shall be
subject to the Program for Investment in Microentrepreneurs
Act of 1999, as in effect on the day before the date of
enactment of this Act.
Subtitle B--Women's Small Business Ownership Programs
SEC. 311. OFFICE OF WOMEN'S BUSINESS OWNERSHIP.
Section 29(g) of the Small Business Act (15 U.S.C. 656(g))
is amended--
(1) in paragraph (2)--
(A) in subparagraph (B)(i), by striking ``in the areas''
and all that follows through the end of subclause (I), and
inserting the following: ``to address issues concerning
operations, manufacturing, technology, finance, retail and
product sales, international trade, and other disciplines
required for--
``(I) starting, operating, and growing a small business
concern;''; and
(B) in subparagraph (C), by inserting ``, the National
Women's Business Council, and any association of women's
business centers, as defined in subsection (a)'' before the
period at the end; and
(2) by adding at the end the following:
``(3) Programs and services for women-owned small
businesses.--The Assistant Administrator, in consultation
with the National Women's Business Council, the Interagency
Committee on Women's Business Enterprise, and 1 or more
associations of women's business centers, shall develop
programs and services for women-owned businesses (as defined
in section 408 of the Women's Business Ownership Act of 1988
(15 U.S.C. 631 note)) in business areas, which may include--
``(A) manufacturing;
``(B) technology;
``(C) professional services;
``(D) retail and product sales;
``(E) travel and tourism;
``(F) international trade; and
``(G) Federal Government contract business development.
``(4) Training.--The Administration shall provide annual
programmatic and financial oversight training for women's
business ownership representatives and district office
technical representatives of the Administration to enable
these representatives to carry out their responsibilities
under this section.
``(5) Grant program improvement.--The Administration shall
improve the women's business center grant proposal process
and the programmatic and financial oversight process by--
``(A) providing notice to the public of each women's
business center grant announcement for an initial and renewal
grant, not later than 6 months before awarding such grant;
``(B) providing notice to grant applicants and recipients
of program evaluation criteria, not later than 12 months
before any such evaluation;
``(C) reducing paperwork and reporting requirements for
grant applicants and recipients;
``(D) standardizing the oversight and review process of the
Administration; and
``(E) providing to each women's business center, not later
than 30 days after the completion of a site visit at that
center, a copy of site visit reports and evaluation reports
prepared by district office technical representatives or
Administration officials.''.
SEC. 312. WOMEN'S BUSINESS CENTER PROGRAM.
(a) Women's Business Center Grants Program.--Section 29 of
the Small Business Act (15 U.S.C. 656) is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (2), (3), and (4), as
paragraphs (3), (4), and (5), respectively; and
(B) by inserting after paragraph (1) the following:
``(2) the term `association of women's business centers'
means an organization that represents not less than 30
percent of the women's business centers that are
participating in a program under this section and whose
primary purpose is to represent women's business centers;'';
and
(2) by striking subsections (b) through (f) and inserting
the following:
``(b) Grants Authorized.--
``(1) In general.--The Administration may award initial and
renewal grants of not more than $150,000 per year, which
shall be known as `women's business center grants', to
private nonprofit organizations to conduct projects for the
benefit of small business concerns owned and controlled by
women. At the end of the initial 4-year grant period, and
every 3 years thereafter, the grant recipient may apply to
renew the grant in accordance with this subsection and
subsection (e)(2). In the event that the Administration has
insufficient funds to provide grants of $150,000, for each
eligible women's business center, available funds shall be
allocated evenly to eligible centers, unless any center
requests a lower amount than the allocable amount.
``(2) Cooperative agreement authority.--
``(A) In general.--The Administration may enter into
Federal cooperative agreements with grant recipients under
this subsection to perform the services described under
paragraph (3) only to the extent and in the amount provided
by appropriated funds.
``(B) Termination.--
``(i) In general.--If any grant recipient under this
subsection does not fulfill its grant obligations, after
advanced notification, during the period of the grant, the
Administration may terminate the grant.
``(ii) Exception.--Notwithstanding a grant recipient's
violation of a grant obligation under this section, the
Administration may continue to fund the grant if the grant
recipient is making a good faith effort to comply with such
obligation.
``(3) Use of funds.--Grants awarded under paragraph (1) may
be used to provide training and counseling in the areas of--
``(A) pre-business, business startup, and business
operations;
``(B) financial planning assistance;
``(C) procurement assistance;
``(D) management assistance; and
``(E) marketing assistance.
``(4) Matching requirement.--
``(A) Women's business center grants.--As a condition of
receiving financial assistance under this section, the grant
recipient shall agree to obtain, after its application has
been approved and notice of award has been issued, cash
contributions from non-Federal sources as follows:
``(i) In the first and second years, 1 non-Federal dollar
for each 2 Federal dollars provided under the 4-year grant.
``(ii) In the third and fourth years, 1 non-Federal dollar
for each Federal dollar provided under the 4-year grant.
``(iii) In each renewal period, 1 non-Federal dollar for
each Federal dollar provided under the 3-year grant.
``(B) Form of non-federal contributions.--Not more than \1/
2\ of the non-Federal sector matching assistance may be in
the form of in-kind contributions that are budget line items
only, including office equipment and office space.
``(C) Failure to obtain non-federal funding.--
``(i) Advance disbursements.--If any grant recipient fails
to obtain the required non-Federal contribution during any
project year, it shall not be eligible for advance
disbursements pursuant to subparagraph (D) during the
remainder of that project year.
``(ii) Ability to obtain non-federal funding.--Before
approving assistance to a grant recipient that has failed to
obtain the required non-Federal contribution for any other
projects under this Act, the Administration shall require the
grant recipient to certify that it will be able to obtain the
requisite non-Federal funding and enter a written finding
setting forth the reasons for making such determination.
``(D) Form of federal contributions.--The financial
assistance authorized pursuant to this section may be made by
grant or cooperative agreement and may contain such
provision, as necessary, to provide for payments in lump sum
or installments, and in advance or by way of reimbursement.
The Administration may disburse up to 25 percent of each
year's Federal share awarded to a grant recipient after
notice of the award has been issued and before the non-
Federal sector matching funds are obtained.
``(5) Application for an initial grant.--Each organization
desiring an initial grant under this subsection, shall submit
to the Administration an application that contains--
``(A) a certification that the applicant--
``(i) is a private nonprofit organization;
``(ii) has designated an executive director or program
manager, who may be compensated from grant funds or other
sources, to manage the center; and
``(iii) as a condition of receiving a grant under this
subsection, agrees--
``(I) to receive a site visit as part of the final
selection process;
``(II) to undergo an annual programmatic and financial
examination; and
``(III) to the maximum extent practicable, to remedy any
problems identified pursuant to the site visit or examination
under subclauses (I) and (II);
``(B) information demonstrating that the applicant has the
ability and resources to meet the needs of the market to be
served by the women's business center site for which an
initial grant is sought, including the ability to comply with
the matching requirement under paragraph (4);
``(C) information relating to assistance to be provided by
the women's business center site for which an initial grant
is sought in the area in which the site is located;
``(D) information demonstrating the effective experience of
the applicant in--
[[Page S12073]]
``(i) conducting financial, management, and marketing
assistance programs, as described under paragraph (3), which
are designed to teach or upgrade the business skills of women
who are business owners or potential business owners;
``(ii) providing training and services to a representative
number of women who are both socially and economically
disadvantaged; and
``(iii) using resource partners of the Administration and
other entities, such as universities;
``(E) a 4-year plan that projects the ability of the
women's business center site for which an initial grant is
sought--
``(i) to serve women business owners or potential owners in
the future by improving training and counseling activities;
and
``(ii) to provide training and services to a representative
number of women who are both socially and economically
disadvantaged; and
``(F) any additional information that the Administration
may reasonably require.
``(6) Review and approval of applications for an initial
grant.--
``(A) In general.--The Administration shall--
``(i) review each application submitted under paragraph (5)
based on the information provided in such paragraph and the
criteria set forth under subparagraph (B); and
``(ii) as part of the final selection process, conduct a
site visit at each women's business center for which an
initial grant is sought.
``(B) Selection criteria.--
``(i) In general.--The Administration shall evaluate
applicants in accordance with predetermined selection
criteria that shall be stated in terms of relative
importance. Such criteria and their relative importance shall
be made publicly available and stated in each solicitation
for applications made by the Administration.
``(ii) Required criteria.--The selection criteria for an
initial grant under clause (i) shall include--
``(I) the experience of the applicant in conducting
programs or ongoing efforts designed to teach or upgrade the
business skills of women business owners or potential owners;
``(II) the ability of the applicant to commence a project
within a minimum amount of time;
``(III) the ability of the applicant to provide training
and services to a representative number of women who are both
socially and economically disadvantaged; and
``(IV) the location for the women's business center site
proposed by the applicant.
``(C) Record retention.--The Administration shall maintain
a copy of each application submitted under this paragraph for
not less than 7 years.
``(7) Application for a renewal grant.--Each organization
desiring a renewal grant under this subsection, shall submit
to the Administration, not later than 3 months before the
expiration of an existing grant under this subsection, an
application that contains--
``(A) a certification that the applicant--
``(i) is a private nonprofit organization;
``(ii) has designated an executive director or program
manager to manage the center; and
``(iii) as a condition of receiving a grant under this
subsection, agrees--
``(I) to receive a site visit as part of the final
selection process;
``(II) to submit, for the preceding 2 years, annual
programmatic and financial examination reports or certified
copies of the applicant's compliance supplemental audits
under OMB Circular A-133; and
``(III) to the maximum extent practicable, to remedy any
problems identified pursuant to the site visit or examination
under subclauses (I) and (II);
``(B) information demonstrating that the applicant has the
ability and resources to meet the needs of the market to be
served by the women's business center site for which a
renewal grant is sought, including the ability to comply with
the matching requirement under paragraph (4);
``(C) information relating to assistance to be provided by
the women's business center site for which a renewal grant is
sought in the area in which the site is located;
``(D) information demonstrating the utilization of resource
partners of the Administration and other entities;
``(E) a 3-year plan that projects the ability of the
women's business center site for which a renewal grant is
sought--
``(i) to serve women business owners or potential owners in
the future by improving training and counseling activities;
and
``(ii) to provide training and services to a representative
number of women who are both socially and economically
disadvantaged; and
``(F) any additional information that the Administration
may reasonably require.
``(8) Review and approval of applications for a renewal
grant.--
``(A) In general.--The Administration shall--
``(i) review each application submitted under paragraph (7)
based on the information provided in such paragraph and
the criteria set forth under subparagraph (B); and
``(ii) as part of the final selection process, conduct a
site visit at each women's business center for which a
renewal grant is sought.
``(B) Selection criteria.--The Administration shall
evaluate applicants in accordance with predetermined
selection criteria that shall be stated in terms of relative
importance. Such criteria and their relative importance shall
be made publicly available and stated in each solicitation
for applications made by the Administration.
``(C) Conditions for continued funding.--In determining
whether to renew a grant or cooperative agreement with a
women's business center, the Administration--
``(i) shall consider the results of the most recent
evaluation of the center, and, to a lesser extent, previous
evaluations; and
``(ii) may withhold such renewal, if the Administration
determines that the center has failed to provide the
information required to be provided under this subsection, or
the information provided by the center is inadequate.
``(D) Continuing grant and cooperative agreement
authority.--
``(i) In general.--The authority of the Administrator to
enter into grants or cooperative agreements under this
subsection shall be in effect for each fiscal year only to
the extent and in the amounts as are provided in advance in
appropriations Acts.
``(ii) Renewal.--After the Administrator has entered into a
grant or cooperative agreement with any women's business
center under this subsection, it shall not suspend,
terminate, or fail to renew or extend any such grant or
cooperative agreement unless the Administrator provides the
center with written notification setting forth the reasons
therefore and affords the center an opportunity for a
hearing, appeal, or other administrative proceeding under
chapter 5 of title 5, United States Code.
``(E) Record retention.--The Administration shall maintain
a copy of each application submitted under this paragraph for
not less than 7 years.
``(9) Data collection.--Consistent with the annual report
to Congress under subsection (g), each women's business
center site that is awarded an initial or renewal grant shall
collect information relating to--
``(A) the number of individuals counseled or trained;
``(B) the number of hours of counseling provided;
``(C) the number of workshops conducted;
``(D) the number of startup small business concerns formed;
and
``(E) the number of jobs created or maintained at assisted
small business concerns.
``(10) Privacy requirements.--
``(A) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern unless--
``(i) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(ii) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a small business development center, but a disclosure under
this clause shall be limited to the information necessary for
such audit.
``(B) Administration use of information.--This section
shall not--
``(i) restrict Administration access to program activity
data; or
``(ii) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(C) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under subparagraph (A)(ii).
``(11) Transition rules.--
``(A) In general.--Notwithstanding any other provision of
law, a grant or cooperative agreement that was awarded as an
eligible sustainability grant, from amounts appropriated for
fiscal year 2003, to operate a women's business center, shall
remain in full force and effect under the terms, and for the
duration, of such agreement, subject to the grant limitation
in paragraph (1).
``(B) Extension.--If the sustainability grant under
subparagraph (A) is scheduled to expire not later than June
30, 2005, a 1-year extension shall be granted without any
interruption of funding, subject to the grant limitation in
paragraph (1).
``(C) Effect on certain existing projects and renewal
authority.--A project being conducted by a women's business
center under this subsection on the day before the date of
enactment of the Small Business Administration 50th
Anniversary Reauthorization Act of 2003--
``(i) as a 5-year project, shall remain in full force and
effect under the terms and for the duration of that
agreement; and
``(ii) shall be eligible to apply for a 3-year renewal
grant funded at a level equal to not more than $150,000 per
year.
``(c) Associations of Women's Business Centers.--
``(1) Recognition.--The Administration shall recognize the
existence and activities of any association of women's
business centers established to address matters of common
concern.
``(2) Consultation.--The Administration shall consult with
each association of women's business centers (as defined in
subsection (a)) to develop--
``(A) a training program for the staff of the women's
business centers and the Administration; and
``(B) recommendations to improve the policies and
procedures for governing the general operations and
administration of the Women's Business Center Program,
including
[[Page S12074]]
grant program improvements under subsection (g)(5).''.
(b) Conforming Amendments.--Section 29 of the Small
Business Act (15 U.S.C. 656) is amended--
(1) by redesignating subsections (g), (h), (i), (j), and
(k) as subsections (d), (e), (f), (g), and (h), respectively;
(2) in subsection (e)(2), as redesignated by paragraph (1)
of this subsection, by striking ``to award a contract (as a
sustainability grant) under subsection (l) or'';
(3) in subsection (g)(1), as redesignated by paragraph (1)
of this subsection, by striking ``The Administration'' and
inserting ``Not later than November 1st of each year, the
Administration'';
(4) in subsection (h), as redesignated by paragraph (1) of
this subsection--
(A) by amending paragraph (1) to read as follows:
``(1) In general.--There are authorized to be appropriated
to carry out the provisions of this section, to remain
available until expended--
``(A) $15,000,000 for fiscal year 2004, of which $500,000
may be used to provide supplemental sustainability grants to
women's business centers, except that no such center may
receive more than a total of $125,000 in grant funding for
the grant period beginning on July 1, 2003 and ending on June
30, 2004;
``(B) $16,000,000 for fiscal year 2005; and
``(C) $17,500,000 for fiscal year 2006.'';
(B) by amending paragraph (2) to read as follows:
``(2) Use of amounts.--Amounts made available under this
subsection may only be used for grant awards and may not be
used for costs incurred by the Administration in connection
with the management and administration of the program under
this section.''; and
(C) by striking paragraph (4); and
(5) by striking subsection (l).
SEC. 313. NATIONAL WOMEN'S BUSINESS COUNCIL.
(a) Cosponsorship Authority.--Section 406 of the Women's
Business Ownership Act of 1988 (15 U.S.C. [631 note]7106) is
amended by adding at the end the following:
``(f) Cosponsorship Authority.--The Council is authorized
to enter into agreements as cosponsors with public and
private entities, in the same manner as is provided in
section 8(b)(1)(A) of the Small Business Act (15 U.S.C.
637(b)(1)(A)), to carry out its duties under this section.''.
(b) Membership.--Section 407(f) of the Women's Business
Ownership Act of 1988 (15 U.S.C. [631 note]7107(f)) is
amended by adding at the end the following:
``(3) Representation of member organizations.--
Notwithstanding subsection (b), a national women's business
organization or small business that is represented on the
Council may, in consultation with the chairperson of the
Council, replace its representative member on the Council at
any time during the service term to which that member was
appointed.''.
(c) Establishment of Committees.--[The]Title IV of the
Women's Business Ownership Act of 1988 (15 U.S.C. [631
note]7101 et seq.) is amended by inserting after section
[407]410, the following new section:
``SEC. [408]411. COMMITTEES.
``(a) Establishment.--There are established within the
Council--
``(1) the Committee on Manufacturing, Technology, and
Professional Services;
``(2) the Committee on Travel, Tourism, Product and Retail
Sales, and International Trade; and
``(3) the Committee on Federal Procurement and Contracting.
``(b) Duties.--The Committees established under subsection
(a) shall perform such duties as the chairperson shall
direct.''.
(d) Clearinghouse for Historical Documents.--Section 409 of
the Women's Business Ownership Act of 1988 (15 U.S.C. 631
note7109) is amended by adding at the end the following:
``(c) Clearinghouse for Historical Documents.--The Council
shall serve as a clearinghouse for information on small
businesses owned and controlled by women, including research
conducted by other organizations and individuals relating to
ownership by women of small businesses in the United
States.''.
(e) Authorization of Appropriations.--Section 410(a) of the
Women's Business Ownership Act of 1988 (15 U.S.C. [631
note]7110(a)) is amended by striking ``2001 through 2003, of
which $550,000'' and inserting ``2004 through 2006, of which
at least 30 percent''.
SEC. 314. INTERAGENCY COMMITTEE ON WOMEN'S BUSINESS
ENTERPRISE.
(a) Chairperson.--Section 403(b) of the Women's Business
Ownership Act of 1988 (15 U.S.C. [631 note]7103(b)) is
amended--
(1) by striking ``Not later'' and inserting the following:
``(1) In general.--Not later''; and
(2) by adding at the end the following:
``(2) Vacancy.--In the event that a chairperson is not
appointed under paragraph (1), the Deputy Administrator of
the Small Business Administration shall serve as acting
chairperson of the Interagency Committee until a chairperson
is appointed under paragraph (1).''.
(b) Policy Advisory Group.--Section 401 of the Women's
Business Ownership Act of 1988 (15 U.S.C. [631 note]7101) is
amended--
(1) by striking ``There'' and inserting the following:
``(a) In General.--There''; and
(2) by adding at the end the following:
``(b) Policy Advisory Group.--
``(1) Establishment.--There is established a Policy
Advisory Group to assist the chairperson in developing
policies and programs under this Act.
``(2) Membership.--The Policy Advisory Group shall be
composed of 7 policy making officials, of whom--
``(A) 1 shall be a representative of the Small Business
Administration;
``(B) 1 shall be a representative of the Department of
Commerce;
``(C) 1 shall be a representative of the Department of
Labor;
``(D) 1 shall be a representative of the Department of
Defense;
``(E) 1 shall be a representative of the Department of the
Treasury; and
``(F) 2 shall be representatives of the National Women's
Business Council.''.
(c) Establishment of Subcommittees.--Section 401 of the
Women's Business Ownership Act of 1988 (15 U.S.C. [631
note]7101), as amended by subsection (b), is further amended
by adding at the end the following:
``(c) Subcommittees.--
``(1) Establishment.--There are established--
``(A) the Subcommittee on Manufacturing, Technology, and
Professional Services;
``(B) the Subcommittee on Travel, Tourism, Product and
Retail Sales, and International Trade; and
``(C) the Subcommittee on Federal Procurement and
Contracting.
``(2) Duties.--The Subcommittees established under
paragraph (1) shall perform such duties as the chairperson
shall direct.
``(3) Meetings.--The Interagency Committee shall meet not
less frequently than 3 times each year to--
``(A) plan activities for the new fiscal year;
``(B) track year-to-date agency contracting goals; and
``(C) evaluate the progress during the fiscal year and
prepare an annual report.''.
SEC. 315. PRESERVING THE INDEPENDENCE OF THE NATIONAL WOMEN'S
BUSINESS COUNCIL.
(a) Short Title.--This section may be cited as the
``National Women's Business Council Independence Preservation
Act of 2003''.
(b) Findings.--Congress finds the following:
(1) The National Women's Business Council provides an
independent source of advice and policy recommendations
regarding women's business development and the needs of women
entrepreneurs in the United States to--
(A) the President;
(B) Congress;
(C) the Interagency Committee on Women's Business
Enterprise; and
(D) the Administrator of the Small Business Administration.
(2) The members of the National Women's Business Council
are small business owners, representatives of business
organizations, and representatives of women's business
centers.
(3) The chair and ranking member of the Committee on Small
Business and Entrepreneurship of the Senate and the Committee
on Small Business of the House of Representatives make
recommendations to the Administrator to fill 8 of the
positions on the National Women's Business Council. Four of
the positions are reserved for small business owners who are
affiliated with the political party of the President and 4 of
the positions are reserved for small business owners who are
not affiliated with the political party of the President.
This method of appointment ensures that the National Women's
Business Council will provide Congress with nonpartisan,
balanced, and independent advice.
(4) In order to maintain the independence of the National
Women's Business Council and to ensure that the Council
continues to provide Congress with advice on a nonpartisan
basis, it is essential that the Council maintain the
bipartisan balance established under section 407 of the
Women's Business Ownership Act of 1988 (15 U.S.C. 7107).
(c) Maintenance of Partisan Balance.--Section 407(f) of the
Women's Business Ownership Act of 1988 (15 U.S.C. 7107(f)) is
amended--
(1) by striking ``A vacancy'' and inserting the following:
``(1) In general.--A vacancy''; and
(2) by adding at the end the following:
``(2) Partisan balance.--When filling vacancies under
paragraph (1), the Administrator shall, to the extent
practicable, ensure that there are an equal number of members
on the Council from each of the 2 major political parties.
``(3) Accountability.--If a vacancy is not filled within
the 30-day period required under paragraph (1) or if there
exists an imbalance of party-affiliated members on the
Council for a period exceeding 30 days, the Administrator
shall submit a report, not later than 10 days after the
respective 30-day deadline, to the Committee on Small
Business and Entrepreneurship of the Senate and the Committee
on Small Business of the House of Representatives,
that explains why the respective deadline was not met and
provides an estimated date on which any vacancies will be
filled.''.
Subtitle C--Office of Native American Affairs
SEC. 321. SHORT TITLE.
This subtitle may be cited as the ``Native American Small
Business Development Act''.
SEC. 322. NATIVE AMERICAN SMALL BUSINESS DEVELOPMENT PROGRAM.
The Small Business Act (15 U.S.C. 631 et seq.) is amended--
(1) by redesignating section 36 as section 37; and
(2) by inserting after section 35 the following:
``SEC. 36. NATIVE AMERICAN SMALL BUSINESS DEVELOPMENT
PROGRAM.
``(a) Definitions.--In this section--
[[Page S12075]]
``(1) the term `Alaska Native' has the same meaning as the
term `Native' in section 3(b) of the Alaska Native Claims
Settlement Act (43 U.S.C. 1602(b));
``(2) the term `Alaska Native corporation' has the same
meaning as the term `Native Corporation' in section 3(m) of
the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m));
``(3) the term `Assistant Administrator' means the
Assistant Administrator of the Office of Native American
Affairs established under subsection (b);
``(4) the terms `center' and `Native American business
center' mean a center established under subsection (c);
``(5) the term `Native American business development
center' means an entity providing business development
assistance to federally recognized tribes and Native
Americans under a grant from the Minority Business
Development Agency of the Department of Commerce;
``(6) the term `Native American small business concern'
means a small business concern that is owned and controlled
by--
``(A) a member of an Indian tribe or tribal government;
``(B) an Alaska Native or Alaska Native corporation; or
``(C) a Native Hawaiian or Native Hawaiian organization;
``(7) the term `Native Hawaiian' has the same meaning as in
section 625 of the Older Americans Act of 1965 (42 U.S.C.
3057k);
``(8) the term `Native Hawaiian organization' has the same
meaning as in section 8(a)(15) of this Act;
``(9) the term `tribal college' has the same meaning as the
term `tribally controlled college or university' has in
section 2(a)(4) of the Tribally Controlled Community College
Assistance Act of 1978 (25 U.S.C. 1801(a)(4));
``(10) the term `tribal government' has the same meaning as
the term `Indian tribe' has in section 7501(a)(9) of title
31, United States Code; and
``(11) the term `tribal lands' means all lands within the
exterior boundaries of any Indian reservation.
``(b) Office of Native American Affairs.--
``(1) Establishment.--There is established within the
Administration the Office of Native American Affairs, which,
under the direction of the Assistant Administrator, shall
implement the Administration's programs for the development
of business enterprises by Native Americans.
``(2) Purpose.--The purpose of the Office of Native
American Affairs is to assist Native American entrepreneurs
to--
``(A) start, operate, and grow small business concerns;
``(B) develop management and technical skills;
``(C) seek Federal procurement opportunities;
``(D) increase employment opportunities for Native
Americans through the start and expansion of small business
concerns; and
``(E) increase the access of Native Americans to capital
markets.
``(3) Assistant administrator.--
``(A) Appointment.--The Administrator shall appoint a
qualified individual to serve as Assistant Administrator of
the Office of Native American Affairs in accordance with this
paragraph.
``(B) Qualifications.--The Assistant Administrator
appointed under subparagraph (A) shall have--
``(i) knowledge of the Native American culture; and
``(ii) experience providing culturally tailored small
business development assistance to Native Americans.
``(C) Employment status.--The Assistant Administrator shall
be a Senior Executive Service position under section
3132(a)(2) of title 5, United States Code, and shall serve as
a noncareer appointee, as defined in section 3132(a)(7) of
title 5, United States Code.
``(D) Responsibilities and duties.--The Assistant
Administrator shall--
``(i) administer and manage the Native American Small
Business Development program established under this section;
``(ii) recommend the annual administrative and program
budgets for the Office of Native American Affairs;
``(iii) consult with Native American business centers in
carrying out the program established under this section;
``(iv) recommend appropriate funding levels;
``(v) review the annual budgets submitted by each applicant
for the Native American Small Business Development program;
``(vi) select applicants to participate in the program
under this section;
``(vii) implement this section; and
``(viii) maintain a clearinghouse to provide for the
dissemination and exchange of information between Native
American business centers.
``(E) Consultation requirements.--In carrying out the
responsibilities and duties described in this paragraph, the
Assistant Administrator shall confer with and seek the advice
of--
``(i) Administration officials working in areas served by
Native American business centers and Native American business
development centers;
``(ii) the Bureau of Indian Affairs of the Department of
the Interior;
``(iii) tribal governments;
``(iv) tribal colleges;
``(v) Alaska Native corporations; and
``(vi) Native Hawaiian organizations.
``(c) Native American Small Business Development Program.--
``(1) Authorization.--
``(A) In general.--The Administration, through the Office
of Native American Affairs, shall provide financial
assistance to tribal governments, tribal colleges, Native
Hawaiian organizations, and Alaska Native corporations to
create Native American business centers in accordance with
this section.
``(B) Use of funds.--The financial and resource assistance
provided under this subsection shall be used to overcome
obstacles impeding the creation, development, and expansion
of small business concerns, in accordance with this section,
by--
``(i) reservation-based American Indians;
``(ii) Alaska Natives; and
``(iii) Native Hawaiians.
``(2) 5-year projects.--
``(A) In general.--Each Native American business center
that receives assistance under paragraph (1)(A) shall conduct
5-year projects that offer culturally tailored business
development assistance in the form of--
``(i) financial education, including training and
counseling in--
``(I) applying for and securing business credit and
investment capital;
``(II) preparing and presenting financial statements; and
``(III) managing cash flow and other financial operations
of a business concern;
``(ii) management education, including training and
counseling in planning, organizing, staffing, directing, and
controlling each major activity and function of a small
business concern; and
``(iii) marketing education, including training and
counseling in--
``(I) identifying and segmenting domestic and international
market opportunities;
``(II) preparing and executing marketing plans;
``(III) developing pricing strategies;
``(IV) locating contract opportunities;
``(V) negotiating contracts; and
``(VI) utilizing varying public relations and advertising
techniques.
``(B) Business development assistance recipients.--The
business development assistance under subparagraph (A) shall
be offered to prospective and current owners of small
business concerns that are owned by--
``(i) American Indians or tribal governments, and located
on or near tribal lands;
``(ii) Alaska Natives or Alaska Native corporations; or
``(iii) Native Hawaiians or Native Hawaiian organizations.
``(3) Form of federal financial assistance.--
``(A) Documentation.--
``(i) In general.--The financial assistance to Native
American business centers authorized under this subsection
may be made by grant, contract, or cooperative agreement.
``(ii) Exception.--Financial assistance under this
subsection to Alaska Native corporations or Native Hawaiian
organizations may only be made by grant.
``(B) Payments.--
``(i) Timing.--Payments made under this subsection may be
disbursed in an annual lump sum or in periodic installments,
at the request of the recipient.
``(ii) Advance.--The Administration may disburse not more
than 25 percent of the annual amount of Federal financial
assistance awarded to a Native American small business center
after notice of the award has been issued.
``(iii) No matching requirement.--The Administration shall
not require a grant recipient to match grant funding received
under this subsection with non-Federal resources as a
condition of receiving the grant.
``(4) Contract and cooperative agreement authority.--A
Native American business center may enter into a contract or
cooperative agreement with a Federal department or agency
to provide specific assistance to Native American and
other under-served small business concerns located on or
near tribal lands, to the extent that such contract or
cooperative agreement is consistent with the terms of any
assistance received by the Native American business center
from the Administration.
``(5) Application process.--
``(A) Submission of a 5-year plan.--Each applicant for
assistance under paragraph (1) shall submit a 5-year plan to
the Administration on proposed assistance and training
activities.
``(B) Criteria.--
``(i) In general.--The Administration shall evaluate and
rank applicants in accordance with predetermined selection
criteria that shall be stated in terms of relative
importance.
``(ii) Public notice.--The criteria required by this
paragraph and their relative importance shall be made
publicly available, within a reasonable time, and stated in
each solicitation for applications made by the
Administration.
``(iii) Considerations.--The criteria required by this
paragraph shall include--
``(I) the experience of the applicant in conducting
programs or ongoing efforts designed to impart or upgrade the
business skills of current or potential owners of Native
American small business concerns;
``(II) the ability of the applicant to commence a project
within a minimum amount of time;
``(III) the ability of the applicant to provide quality
training and services to a significant number of Native
Americans;
[[Page S12076]]
``(IV) previous assistance from the Small Business
Administration to provide services in Native American
communities; and
``(V) the proposed location for the Native American
business center site, with priority given based on the
proximity of the center to the population being served and to
achieve a broad geographic dispersion of the centers.
``(6) Program examination.--
``(A) In general.--Each Native American business center
established pursuant to this subsection shall annually
provide the Administration with an itemized cost breakdown of
actual expenditures incurred during the preceding year.
``(B) Administration action.--Based on information received
under subparagraph (A), the Administration shall--
``(i) develop and implement an annual programmatic and
financial examination of each Native American business center
assisted pursuant to this subsection; and
``(ii) analyze the results of each examination conducted
under clause (i) to determine the programmatic and financial
viability of each Native American business center.
``(C) Conditions for continued funding.--In determining
whether to renew a grant, contract, or cooperative agreement
with a Native American business center, the Administration--
``(i) shall consider the results of the most recent
examination of the center under subparagraph (B), and, to a
lesser extent, previous examinations; and
``(ii) may withhold such renewal, if the Administration
determines that--
``(I) the center has failed to provide adequate information
required to be provided under subparagraph (A), or the
information provided by the center is inadequate; or
``(II) the center has failed to provide adequate
information required to be provided by the center for
purposes of the report of the Administration under
subparagraph (E).
``(D) Continuing contract and cooperative agreement
authority.--
``(i) In general.--The authority of the Administrator to
enter into contracts or cooperative agreements in accordance
with this subsection shall be in effect for each fiscal year
only to the extent and in the amounts as are provided in
advance in appropriations Acts.
``(ii) Renewal.--After the Administrator has entered into a
contract or cooperative agreement with any Native American
business center under this subsection, it shall not suspend,
terminate, or fail to renew or extend any such contract or
cooperative agreement unless the Administrator provides the
center with written notification setting forth the reasons
therefore and affords the center an opportunity for a
hearing, appeal, or other administrative proceeding under
chapter 5 of title 5, United States Code.
``(E) Management report.--
``(i) In general.--The Administration shall prepare and
submit to the Committee on Small Business and
Entrepreneurship of the Senate and the Committee on Small
Business of the House of Representatives an annual report on
the effectiveness of all projects conducted by Native
American business centers under this subsection and any pilot
programs administered by the Office of Native American
Affairs.
``(ii) Contents.--Each report submitted under clause (i)
shall include, with respect to each Native American business
center receiving financial assistance under this subsection--
``(I) the number of individuals receiving assistance from
the Native American business center;
``(II) the number of startup business concerns created;
``(III) the number of existing businesses seeking to expand
employment;
``(IV) jobs created or maintained, on an annual basis, by
Native American small business concerns assisted by the
center since receiving funding under this Act;
``(V) to the maximum extent practicable, the capital
investment and loan financing utilized by emerging and
expanding businesses that were assisted by a Native American
business center; and
``(VI) the most recent examination, as required under
subparagraph (B), and the subsequent determination made by
the Administration under that subparagraph.
``(7) Annual report.--Each entity receiving financial
assistance under this subsection shall annually report to the
Administration on the services provided with such financial
assistance, including--
``(A) the number of individuals assisted, categorized by
ethnicity;
``(B) the number of hours spent providing counseling and
training for those individuals;
``(C) the number of startup small business concerns created
or maintained;
``(D) the gross receipts of assisted small business
concerns;
``(E) the number of jobs created or maintained at assisted
small business concerns; and
``(F) the number of Native American jobs created or
maintained at assisted small business concerns.
``(8) Record retention.--
``(A) Applications.--The Administration shall maintain a
copy of each application submitted under this subsection for
not less than 7 years.
``(B) Annual reports.--The Administration shall maintain
copies of the information collected under paragraph (6)(A)
indefinitely.
``(d) Authorization of Appropriations.--There are
authorized to be appropriated $5,000,000 for each of the
fiscal years 2004 through 2008, to carry out the Native
American Small Business Development Program, authorized under
subsection (c).''.
SEC. 323. PILOT PROGRAMS.
(a) Definitions.--In this section, the following
definitions shall apply:
(1) Incorporation by reference.--The terms defined in
section 36(a) of the Small Business Act (as added by this
Act) have the same meanings as in that section 36(a) when
used in this section.
(2) Joint project.--The term ``joint project'' means the
combined resources and expertise of 2 or more distinct
entities at a physical location dedicated to assisting the
Native American community.
(b) Native American Development Grant Pilot Program.--
(1) Authorization.--
(A) In general.--There is established a 4-year pilot
program under which the Administration is authorized to award
Native American development grants to provide culturally
tailored business development training and related services
to Native Americans and Native American small business
concerns.
(B) Eligible organizations.--The grants authorized under
subparagraph (A) may be awarded to--
(i) any small business development center; or
(ii) any private, nonprofit organization that--
(I) has members of an Indian tribe comprising a majority of
its board of directors;
(II) is a Native Hawaiian organization; or
(III) is an Alaska Native corporation.
(C) Amounts.--The Administration shall not award a grant
under this subsection in an amount which exceeds $100,000 for
each year of the project.
(D) Grant duration.--Each grant under this subsection shall
be awarded for not less than a 2-year period and not more
than a 4-year period.
(2) Conditions for participation.--Each entity desiring a
grant under this subsection shall submit an application to
the Administration that contains--
(A) a certification that the applicant--
(i) is a small business development center or a private,
nonprofit organization under paragraph (1)(B)(i);
(ii) employs an executive director or program manager to
manage the facility; and
(iii) agrees--
(I) to a site visit as part of the final selection process;
(II) to an annual programmatic and financial examination;
and
(III) to the maximum extent practicable, to remedy any
problems identified pursuant to that site visit or
examination;
(B) information demonstrating that the applicant has the
ability and resources to meet the needs, including cultural
needs, of the Native Americans to be served by the grant;
(C) information relating to proposed assistance that the
grant will provide, including--
(i) the number of individuals to be assisted; and
(ii) the number of hours of counseling, training, and
workshops to be provided;
(D) information demonstrating the effective experience of
the applicant in--
(i) conducting financial, management, and marketing
assistance programs designed to impart or upgrade the
business skills of current or prospective Native American
business owners;
(ii) providing training and services to a representative
number of Native Americans;
(iii) using resource partners of the Administration and
other entities, including universities, tribal governments,
or tribal colleges; and
(iv) the prudent management of finances and staffing;
(E) the location where the applicant will provide training
and services to Native Americans; and
(F) a multiyear plan, corresponding to the length of the
grant, that describes--
(i) the number of Native Americans and Native American
small business concerns to be served by the grant;
(ii) in the continental United States, the number of Native
Americans to be served by the grant; and
(iii) the training and services to be provided to a
representative number of Native Americans.
(3) Review of applications.--The Administration shall--
(A) evaluate and rank applicants under paragraph (2) in
accordance with predetermined selection criteria that is
stated in terms of relative importance;
(B) include such criteria in each solicitation under this
subsection and make such information available to the public;
and
(C) approve or disapprove each completed application
submitted under this subsection not more than 60 days after
submission.
(4) Annual report.--Each recipient of a Native American
development grant under this subsection shall annually report
to the Administration on the impact of the grant funding,
including--
(A) the number of individuals assisted, categorized by
ethnicity;
(B) the number of hours spent providing counseling and
training for those individuals;
(C) the number of startup small business concerns created
or maintained with assistance from a Native American business
center;
[[Page S12077]]
(D) the gross receipts of assisted small business concerns;
(E) the number of jobs created or maintained at assisted
small business concerns; and
(F) the number of Native American jobs created or
maintained at assisted small business concerns.
(5) Record retention.--
(A) Applications.--The Administration shall maintain a copy
of each application submitted under this subsection for not
less than 7 years.
(B) Annual reports.--The Administration shall maintain
copies of the information collected under paragraph (4)
indefinitely.
(c) American Indian Tribal Assistance Center Grant Pilot
Program.--
(1) Authorization.--
(A) In general.--There is established a 4-year pilot
program, under which the Administration shall award not less
than 3 American Indian Tribal Assistance Center grants to
establish joint projects to provide culturally tailored
business development assistance to prospective and current
owners of small business concerns located on or near tribal
lands.
(B) Eligible organizations.--
(i) Class 1.--Not fewer than 1 grant shall be awarded to a
joint project performed by a Native American business center,
a Native American business development center, and a small
business development center.
(ii) Class 2.--Not fewer than 2 grants shall be awarded to
joint projects performed by a Native American business center
and a Native American business development center.
(C) Amounts.--The Administration shall not award a grant
under this subsection in an amount which exceeds $200,000 for
each year of the project.
(D) Grant duration.--Each grant under this subsection shall
be awarded for a 3-year period.
(2) Conditions for participation.--Each entity desiring a
grant under this subsection shall submit to the
Administration a joint application that contains--
(A) a certification that each participant of the joint
application--
(i) is either a Native American business center, a Native
American business development center, or a small business
development center;
(ii) employs an executive director or program manager to
manage the center; and
(iii) as a condition of receiving the American Indian
Tribal Assistance Center grant, agrees--
(I) to an annual programmatic and financial examination;
and
(II) to the maximum extent practicable, to remedy any
problems identified pursuant to that examination;
(B) information demonstrating an historic commitment to
providing assistance to Native Americans--
(i) residing on or near tribal lands; or
(ii) operating a small business concern on or near tribal
lands;
(C) information demonstrating that each participant of the
joint application has the ability and resources to meet the
needs, including the cultural needs of the Native Americans
to be served by the grant;
(D) information relating to proposed assistance that the
grant will provide, including--
(i) the number of individuals to be assisted; and
(ii) the number of hours of counseling, training, and
workshops to be provided;
(E) information demonstrating the effective experience of
each participant of the joint application in--
(i) conducting financial, management, and marketing
assistance programs, as described above, designed to impart
or upgrade the business skills of current or prospective
Native American business owners; and
(ii) the prudent management of finances and staffing; and
(F) a plan for the length of the grant, that describes--
(i) the number of Native Americans and Native American
small business concerns to be served by the grant; and
(ii) the training and services to be provided.
(3) Review of applications.--The Administration shall--
(A) evaluate and rank applicants under paragraph (2) in
accordance with predetermined selection criteria that is
stated in terms of relative importance;
(B) include such criteria in each solicitation under this
subsection and make such information available to the public;
and
(C) approve or disapprove each application submitted under
this subsection not more than 60 days after submission.
(4) Annual report.--Each recipient of an American Indian
tribal assistance center grant under this subsection shall
annually report to the Administration on the impact of the
grant funding received during the reporting year, and the
cumulative impact of the grant funding received since the
initiation of the grant, including--
(A) the number of individuals assisted, categorized by
ethnicity;
(B) the number of hours of counseling and training provided
and workshops conducted;
(C) the number of startup business concerns created or
maintained with assistance from a Native American business
center;
(D) the gross receipts of assisted small business concerns;
(E) the number of jobs created or maintained at assisted
small business concerns; and
(F) the number of Native American jobs created or
maintained at assisted small business concerns.
(5) Record retention.--
(A) Applications.--The Administration shall maintain a copy
of each application submitted under this subsection for not
less than 7 years.
(B) Annual reports.--The Administration shall maintain
copies of the information collected under paragraph (4)
indefinitely.
(d) Authorization of Appropriations.--There are authorized
to be appropriated--
(1) $1,000,000 for each of the fiscal years 2004 through
2007, to carry out the Native American Development Grant
Pilot Program, authorized under subsection (b); and
(2) $1,000,000 for each of the fiscal years 2004 through
2007, to carry out the American Indian Tribal Assistance
Center Grant Pilot Program, authorized under subsection (c).
Subtitle D--Office of Veterans Business Development
SEC. 331. ADVISORY COMMITTEE ON VETERANS BUSINESS AFFAIRS.
(a) Retention of Duties.--Section 33(h) of the Small
Business Act (15 U.S.C. 657c(h)) is amended by striking
``October 1, 2004'' and inserting ``October 1, 2006''.
(b) Extension of Authority.--Section 203(h) of the Veterans
Entrepreneurship and Small Business Development Act of 1999
(15 U.S.C. 657b note) is amended by striking ``September 30,
2004'' and inserting ``September 30, 2006''.
SEC. 332. OUTREACH GRANTS FOR VETERANS.
Section 8(b)(17) of the Small Business Act (15 U.S.C.
637(b)(17)) is amended by inserting before the period at the
end the following: ``, veterans, and members of a reserve
component of the Armed Forces''.
SEC. 333. AUTHORIZATION OF APPROPRIATIONS.
Section 32 of the Small Business Act (15 U.S.C. 657b) is
amended by adding at the end the following:
``(c) Authorization of Appropriations.--There are
authorized to be appropriated for carrying out the provisions
of this section--
``(1) $1,000,000 for fiscal year 2004;
``(2) $1,500,000 for fiscal year 2005; and
``(3) $2,000,000 for fiscal year 2006.''.
TITLE IV--SMALL BUSINESS PROCUREMENT OPPORTUNITIES
SEC. 401. CONTRACT CONSOLIDATION.
(a) Definitions.--Section 3(o) of the Small Business Act
(15 U.S.C. 632(o)) is amended to read as follows:
``(o) Definitions Relating to Consolidation of Contract
Requirements.--In this Act--
``(1) the terms `consolidation of contract requirements'
and `consolidation', with respect to contract requirements of
a military department, Defense Agency, Department of Defense
Field Activity, or any other Federal department or agency
having contracting authority mean a use of a solicitation to
obtain offers for a single contract or a multiple award
contract to satisfy 2 or more requirements of that
department, agency, or activity for goods or services that--
``(A) have previously been provided to or performed for
that department, agency, or activity under 2 or more separate
contracts that are smaller in cost than the total cost of the
contract for which the offers are solicited; or
``(B) are of a type capable of being provided or performed
by a small business concern for that department, agency, or
activity under 2 or more separate contracts that are smaller
in cost than the total cost of the contract for which the
offers are solicited;
``(2) the term `multiple award contract' means--
``(A) a contract that is entered into by the Administrator
of General Services under the multiple award schedule program
referred to in section 2302(2)(C) of title 10, United States
Code;
``(B) a multiple award task order contract or delivery
order contract that is entered into under the authority of
sections 2304a through 2304d of title 10, United States Code,
or sections 303H through 303K of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C. 253h through
253k); and
``(C) any other indeterminate delivery, indeterminate
quantity contract that is entered into by the head of a
Federal agency with 2 or more sources pursuant to the same
solicitation; and
``(3) the term `senior procurement executive' means--
``(A) with respect to a military department, the official
designated under section 16(3) of the Office of Federal
Procurement Policy Act (41 U.S.C. 414(3)) as the senior
procurement executive for the military department;
``(B) with respect to a Defense Agency or a Department of
Defense Field Activity, the official so designated for the
Department of Defense; and
``(C) with respect to a Federal department or agency other
than those referred to in subparagraphs (A) and (B), the
official so designated by that department or agency.''.
(b) Procurement Strategies.--Section 15(e) of the Small
Business Act (15 U.S.C. 644(e)) is amended--
(1) in paragraph (2)--
(A) by striking ``.--
``(A) In general''; and
(B) by striking subparagraphs (B) and (C); and
(2) by striking paragraph (3) and inserting the following:
[[Page S12078]]
``(3) Limitation on use of acquisition strategies involving
consolidation.--
``(A) Certain defense contract requirements.--An official
of a military department, defense agency, or Department of
Defense Field Activity shall not execute an acquisition
strategy that includes a consolidation of contract
requirements of the military department, agency, or activity
with a total value in excess of $5,000,000, unless the senior
procurement executive first--
``(i) conducts market research;
``(ii) identifies any alternative contracting approaches
that would involve a lesser degree of consolidation of
contract requirements; and
``(iii) determines that the consolidation is necessary and
justified.
``(B) Certain civilian agency contract requirements.--The
head of a Federal agency not described in subparagraph (A)
that has contracting authority shall not execute an
acquisition strategy that includes a consolidation of
contract requirements of the agency with a total value in
excess of $2,000,000, unless the senior procurement executive
of the agency first--
``(i) conducts market research;
``(ii) identifies any alternative contracting approaches
that would involve a lesser degree of consolidation of
contract requirements; and
``(iii) determines that the consolidation is necessary and
justified.
``(C) Additional requirements for higher value consolidated
contracts.--In addition to meeting the requirements under
subparagraph (A) or (B), a procurement strategy by a civilian
agency that includes a consolidated contract valued at more
than $5,000,000, or by a defense agency that includes a
consolidated contract valued at more than $7,000,000 shall
include--
``(i) an assessment of the specific impediments to
participation by small business concerns as prime contractors
that will result from the consolidation;
``(ii) actions designed to maximize small business
participation as prime contractors, including provisions that
encourage small business teaming for the consolidated
requirement;
``(iii) actions designed to maximize small business
participation as subcontractors (including suppliers) at any
tier under the contract or contracts that may be awarded to
meet the requirements; and
``(iv) the identification of the alternative strategies
that would reduce or minimize the scope of the consolidation
and the rationale for not choosing those alternatives.
``(D) Necessary and justified.--A senior procurement
executive may determine that an acquisition strategy
involving a consolidation of contract requirements is
necessary and justified for purposes of subparagraph (A),
(B), or (C), if the benefits of the acquisition strategy
substantially exceed the benefits of each of the possible
alternative contracting approaches identified under clause
(ii) of any of those subparagraphs, as applicable. However,
savings in administrative or personnel costs alone do not
constitute, for such purpose, a sufficient justification for
a consolidation of contract requirements in a procurement,
unless the total amount of the cost savings is expected to be
substantial in relation to the total cost of the procurement.
``(E) Benefits.--Benefits considered for purposes of this
paragraph may include cost and, regardless of whether
quantifiable in dollar amounts--
``(i) quality;
``(ii) acquisition cycle;
``(iii) terms and conditions; and
``(iv) any other benefit directly related to national
security or homeland defense.''.
(c) Report Requirements.--Section 15(p)(4)(B) of the Small
Business Act (15 U.S.C. 644(p)(4)(B)) is amended--
(1) in clause (i), by striking ``and'' at the end;
(2) in clause (ii), by striking the period at the end and
inserting the following: ``; and''; and
(3) by adding at the end the following:
``(iii) a description of best practices for maximizing
small business prime and subcontracting opportunities.''.
(d) Procurement Center Representatives.--Section 15(l) of
the Small Business Act (15 U.S.C. 644(l)) is amended--
(1) by striking ``(l)(1)'' and inserting ``(2)'';
(2) by redesignating paragraphs (2) through (7) as
paragraphs (3) through (8), respectively;
(3) by inserting before paragraph (2), as so redesignated,
the following:
``(l)(1) The Administration shall assign not fewer than 1
procurement center representative at each major procurement
center, in addition to no less than 1 for each State.'';
(4) in paragraph (2), as redesignated, by striking ``to the
representative referred to in subsection (k)(6)'' and
inserting ``to the traditional procurement center
representative and the commercial market representative, with
each such position filled by a different individual, and each
such representative having separate and distinct duties and
responsibilities.''; and
(5) by striking ``paragraph (2)'' each place that term
appears and inserting ``paragraph (3)''.
(e) Additional to Technical Advisers.--Section 15(k)[(8)]
of the Small Business Act (15 U.S.C. 644(k)[(8)]) is
amended--
(1) in paragraph (5), by striking ``bundled contract'' and
inserting ``consolidated contract''; and
(2) in paragraph (8), by striking ``representative--'' and
inserting ``representative at each major procurement center
under subsection (l)(1)--''.
(f) Conforming Amendments.--Section 15(p) of the Small
Business Act (15 U.S.C. 644(p)) is amended--
(1) in the subsection heading, by striking ``Bundled
Contracts'' and inserting ``Consolidated Contracts'';
(2) in paragraph (1), in the paragraph heading, by striking
``Bundled contract'' and inserting ``Consolidated contract'';
(3) in paragraph (4), in the paragraph heading, by striking
``contract bundling'' and inserting ``contract
consolidation'';
(4) by striking ``bundled contracts'' each place that term
appears and inserting ``consolidated contracts'';
(5) by striking ``bundled contract'' each place that term
appears and inserting ``consolidated contract'';
(6) by striking ``bundling of contract requirements'' each
place that term appears and inserting ``consolidation of
contract requirements'';
(7) in paragraph (4)(B)(ii), by striking ``previously
bundled'' and inserting ``previously consolidated'';
(8) in paragraph (4)(B)(ii)(I), by striking ``were
bundled'' and inserting ``were consolidated'';
(9) in paragraph (4)(B)(ii)(II)(bb), by striking ``bundling
the contract requirements'' and inserting ``the consolidation
of contract requirements''; and
(10) in paragraph (4)(B)(ii)(II)(cc), by striking ``bundled
status'' and inserting ``consolidated status''.
(g) GAO Study and Report.--
(1) Feasibility study required.--The Comptroller General of
the United States shall conduct a study of the feasibility of
setting thresholds, based on industry category, for
permitting the consolidation of contract requirements to
proceed without being subject to the additional benefit
analyses required by the amendments made by this section.
(2) Considerations.--The study conducted under paragraph
(1) shall include consideration of thresholds based on--
(A) the dollar value of the overall prime contract at issue
(including the average dollar value of a prime contract in
each industry category);
(B) the portion of such prime contract amounts that could
potentially include small business participation as
subcontractors;
(C) the availability of small business concerns in each
industry that have the capabilities and resources to fulfill
prime contract requirements; and
(D) such other criteria that the Comptroller determines
relevant.
(3) Report.--Not later than June 30, 2004, the Comptroller
General shall submit a report to Congress and the
Administration on the results of the study conducted under
this subsection, together with any recommendations with
legislative or regulatory action.
SEC. 402. AGENCY ACCOUNTABILITY.
(a) Agency Responsibilities.--Section 15(g)(2) of the Small
Business Act (15 U.S.C. 644(g)(2)) is amended--
(1) by inserting ``(A)'' after ``(2)'';
(2) by striking ``shall, after consultation'' and inserting
the following: ``shall--
``(i) after consultation'';
(3) by striking ``agency. Goals established'' and inserting
the following: ``agency;
``(ii) identify a percentage of the procurement budget of
the agency to be awarded to small business concerns, in
consultation with the Office of Small and Disadvantaged
Business Utilization of the agency, which information shall
be included in the strategic plan required under section 306
of title 5, United States Code, and the annual budget
submission to Congress by that agency, and, upon request, in
any testimony provided by that agency before the Congress in
connection with the budget process; and
``(iii) report, as part of its annual performance plan,
required under section 1115 of title 31, United States Code,
the extent to which the agency achieved the goals referred to
in clause (ii), and appropriate justification for any failure
to do so.
``(B) Goals established'';
(4) by striking ``Whenever'' and inserting the following:
``(C) Whenever'';
(5) by striking ``For the purpose of'' and inserting the
following:
``(D) For the purpose of'';
(6) in the last sentence--
(A) by striking ``(A) contracts'' and inserting ``(i)
contracts''; and
(B) by striking ``(B) contracts'' and inserting ``(ii)
contracts''; and
(7) by adding at the end the following:
``(E)(i) Each procurement employee described in clause
(iii)--
[``(I) shall have as an annual performance evaluation
factor, where appropriate, the success of that procurement
employee in small business utilization, in accordance with
the goals established under this subsection; and]
[``(II)](I) shall communicate to their subordinates the
importance of achieving small business goals.; and
``(II) shall have as an annual performance evaluation
factor, where appropriate, the success of that procurement
employee in small business utilization, in accordance with
the goals established under this subsection.
``(ii) An appropriate percentage of any performance-related
bonus awarded to a procurement employee described in clause
(iii) shall be withheld, where appropriate, for failure to
achieve the goals established under this subsection.
[[Page S12079]]
``(iii) A procurement employee described in this clause is
a senior procurement executive, senior program manager, or
small and disadvantaged business utilization manager of a
Federal agency having contracting authority.''.
(b) Small and Disadvantaged Business Utilization.--Section
15(k)(3) of the Small Business Act (15 U.S.C. 644(k)(3)) is
amended to read as follows:
``(3) be responsible only to, and report directly to, the
head of such agency, except that the Director of Small and
Disadvantaged Business Utilization for the Department of
Defense shall be responsible only to, and report directly to,
the Undersecretary of Defense for Acquisition, Technology,
and Logistics,''.
(c) Reports on Small Business Utilization.--Section 10(d)
of the Small Business Act (15 U.S.C. 639(d)) is amended--
(1) by inserting ``and each agency that is a member of the
President's Management Council (or any successor thereto)''
after ``Department of Defense'' the first place that term
appears; and
(2) by inserting ``or that agency'' after ``Department of
Defense'' the second place that term appears.
(d) Technical Correction.--
(1) In general.--Section 502(b) of the Veterans
Entrepreneurship and Small Business Development Act of 1999
(Public Law 106-50, 113 Stat. 248) is amended by striking
``Section 15'' and inserting ``Section 15(g)(2)''.
(2) Effect.--The amendment made by paragraph (1) shall be
deemed to have the same effective date as section 502(b) of
the Veterans Entrepreneurship and Small Business Development
Act of 1999.
SEC. 403. SMALL BUSINESS PARTICIPATION IN PRIME CONTRACTING.
(a) Participation in Multiple Award Contracts.--Section
15(g) of the Small Business Act (15 U.S.C. 644(g)) is amended
by adding at the end the following:
``(3) The governmentwide goal for participation by small
business concerns in any multiple award contract shall be
established at not less than 23 percent of the total dollar
value of all awards under that contract.''.
(b) Reserved Contracts.--Section 15(j) of the Small
Business Act (15 U.S.C. 644(j)) is amended--
(1) in paragraph (1), by inserting ``, including any order
of 1 or more Federal Supply Schedule items,'' after ``goods
and services''; and
(2) by adding at the end the following:
``(4) Any adjustment to the simplified acquisition
threshold (as defined in section 4(11) of the Office of
Federal Procurement Policy Act (41 U.S.C. 403(11))), shall be
immediately matched by an identical adjustment to the small
business reserve for purposes of this subsection.''.
SEC. 404. SMALL BUSINESS PARTICIPATION IN SUBCONTRACTING.
(a) Certifications Required.--Section 8(d)(6) of the Small
Business Act (15 U.S.C. 637(d)(6)) is amended--
(1) in subparagraph (E), by striking ``and'' at the end;
(2) in subparagraph (F), by striking the period at the end
and inserting a semicolon; and
(3) by adding at the end the following:
``(G) the name and signature of the individual that is the
president, chief executive officer, or head of the entity,
certifying that subcontracting data provided are accurate and
complete; and
``(H) certification that the offeror or bidder will acquire
articles, equipment, supplies, services, or materials, or
obtain the performance of construction work from small
business concerns in the amount and quality used in preparing
the bid or proposal, unless such small business concerns are
no longer in business or can no longer meet the quality,
quantity, or delivery date.''.
(b) Penalties for False Certifications.--Section 16(f) of
the Small Business Act (14 U.S.C. 645(f)) is amended by
inserting ``or 8(d)(6)(G))'' before ``of this Act''.
SEC. 405. EVALUATING SUBCONTRACT PARTICIPATION IN AWARDING
CONTRACTS.
(a) Significant Factors.--Section 8(d)(4)(G) of the Small
Business Act (15 U.S.C. 637(d)(4)(G)) is amended by striking
``a bundled'' and inserting ``any''.
(b) Evaluation Reports.--Section 8(d)(10) of the Small
Business Act (15 U.S.C. 637(d)(10)) is amended--
(1) by striking ``is authorized to'' and inserting
``shall'';
(2) in subparagraph (B), by striking ``and'' at the end;
(3) in subparagraph (C), by striking the period at the end
and inserting ``; and''; and
(4) by adding at the end the following:
``(D) report the results of each evaluation under
subparagraph (C) to the appropriate contracting officers.''.
(c) Centralized Database; Payments Pending Reports.--
Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) is
amended--
(1) by redesignating paragraph (11) as paragraph (13); and
(2) by inserting after paragraph (10) the following:
``(11) Centralized database.--The results of an evaluation
under paragraph (10)(C) shall be included in a national
centralized governmentwide database.
``(12) Payments pending reports.--Each Federal agency
having contracting authority shall ensure that the terms of
each contract for goods and services includes a provision
allowing the contracting officer of an agency to withhold an
appropriate amount of payment with respect to a contract
(depending on the size of the contract) until the date of
receipt of complete, accurate, and timely subcontracting
reports in accordance with paragraph (6)(G).''.
(d) Referral of Material Breach to Inspectors General.--
Section 8(d)(8) of the Small Business Act (15 U.S.C.
637(d)(8)) is amended by adding at the end the following: ``A
material breach described in this paragraph shall be referred
for investigation to the Inspector General (or the
equivalent) of the affected agency.''.
SEC. 406. DIRECT PAYMENTS TO SUBCONTRACTORS.
(a) In General.--Section 8(d) of the Small Business Act (15
U.S.C. 637(d)), as amended by section 405, is further amended
by adding at the end the following:
``(14) Timely payment to small business subcontractors.--
``(A) In general.--Subject to subparagraph (B), the failure
of a civilian agency prime contractor, as defined in
subparagraph (D), to make a timely payment, as determined by
the contract with the subcontractor, to a subcontractor that
is a small business concern shall be a material breach of the
contract with the Federal agency.
``(B) Consideration of performance.--Before making a
determination under subparagraph (A), the contracting officer
shall consider all reasonable issues regarding the
performance, or lack of performance, of the subcontractor.
``(C) Withholding of payments.--Not later than 30 days
after the date on which a material breach under subparagraph
(A) is determined by the contracting officer, the Federal
agency may withhold any amounts due and owing the
subcontractor from payments due to the prime contractor and
pay such amounts directly to the subcontractor.
``(D) Defined term.--As used in this paragraph, the term
`civilian agency prime contractor' means a prime contractor
that offers any combination of services or manufactured goods
to Federal agencies other than the Department of Defense or
agencies with responsibility for homeland security or
national security.''.
(b) Sunset.--The amendment made by this section shall
remain in effect during the period beginning on the date of
enactment of this Act and ending on September 30, 2006.
SEC. 407. WOMEN-OWNED SMALL BUSINESS INDUSTRY STUDY.
Section 8(m)(4) of the Small Business Act (15 U.S.C.
637(m)(4)) is amended to read as follows:
``(4) GAO identification of industries.--
``(A) Study.--The Comptroller General of the United States
shall conduct a study to identify industries in which small
business concerns owned and controlled by women are
underrepresented with respect to Federal procurement
contracting.
``(B) Report to congress.--Not later than December 31,
2003, the Comptroller General shall submit a report to
Congress on the results of the study conducted under
subparagraph (A), together with any recommendations for
legislative action.
``(C) Assistance from other agencies.--The Comptroller
General may request of any Federal agency, and such agency
shall provide, such information as the Comptroller General
determines necessary in carrying out this paragraph, to the
extent otherwise permitted by law.''.
SEC. 408. HUBZONE AUTHORIZATIONS.
Section 31(d) of the Small Business Act (15 U.S.C. 657a(d))
is amended--
(1) by striking ``2001'' and inserting ``2004''; and
(2) by striking ``2003'' and inserting ``2006''.
SEC. 409. DEFINITION OF HUBZONE; TREATMENT OF CERTAIN FORMER
MILITARY INSTALLATION LANDS AS HUBZONES.
(a) Base Closure Areas.--Section 3(p)(1) of the Small
Business Act (15 U.S.C. 632(p)(1)) is amended--
(1) in subparagraph (C), by striking ``or'' at the end;
(2) in subparagraph (D), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(E) base closure areas.''.
(b) Definition.--Section 3(p)(4) of the Small Business Act
(15 U.S.C. 632(p)(4)) is amended by adding at the end the
following:
``(D) Base closure area.--The term `base closure area'
means lands within the external boundaries of a military
installation that were closed through a privatization process
under the authority of--
``(i) the Defense Base Closure and Realignment Act of 1990
(part A of title XXIX of Division B of Public Law 101-510; 10
U.S.C. 2687 note);
``(ii) title II of the Defense Authorization Amendments and
Base Closure and Realignment Act (Public Law 100-526; 10
U.S.C. 2687 note);
``(iii) section 2687 of title 10, United States Code; or
``(iv) any other provision of law authorizing or directing
the Secretary of Defense or the Secretary of a military
department to dispose of real property at the military
installation for purposes relating to base closures of
redevelopment, while retaining the authority to enter into a
leaseback of all or a portion of the property for military
use.''.
SEC. 410. DEFINITION OF HUBZONE SMALL BUSINESS CONCERN.
Section 3(p) of the Small Business Act (15 U.S.C. 632(p))
is amended--
(1) by redesignating paragraphs (4) through (7) as
paragraphs (5) through (8), respectively; and
[[Page S12080]]
(2) by inserting after paragraph (3) the following:
``(4) Rule of construction relating to ownership.--For
purposes of paragraph (3)(A), the term `person' includes any
small business investment company, specialized small business
investment company, New Markets Venture Capital company (as
those terms are defined in sections 103 and 351,
respectively, of the Small Business Investment Act of 1958
(15 U.S.C. 662, 689), or other similar investment company, as
determined by the Administrator, if any such company
comprises not more than 15 percent of the ownership of the
subject small business concern.''.
SEC. 411. ACQUISITION REGULATIONS.
Not later than 180 days after the date of enactment of this
Act, the [G]governmentwide procurement regulations issued
under sections 6(a) and 25(c) of the Office of Federal
Procurement Policy Act (41 U.S.C. 405(a) and 421(c)) and the
procurement regulations described in section 25(c)(2) of the
Office of Federal Procurement Policy Act (41 U.S.C.
421(c)(2)) that are issued by the Department of Defense shall
be amended as necessary to carry out this title and the
amendments made by this title.
TITLE V--MISCELLANEOUS
SEC. 501. MINORITY SMALL BUSINESS AND CAPITAL OWNERSHIP
DEVELOPMENT PROGRAM.
(a) Name Change.--Sections 4(b), 7(j), and 8(a) of the
Small Business Act (15 U.S.C. 633(b), 636(j), and 637(a)) are
amended by striking ``Minority Small Business and Capital
Ownership Development'' each place it appears and inserting
``Business Development''.
(b) Conforming Amendments.--The Small Business Act (15
U.S.C. 631 et seq.) is amended--
(1) in section 2(d)(2)(B)(ii), by striking ``small business
and capital ownership development program'' and inserting
``small business development program'';
(2) in section 7(j)(10), by striking ``small business and
capital ownership development program'' and inserting ``small
business development program'';
(3) in section 7(j)(12)(A), by striking ``Capital Ownership
Development Program'' and inserting ``Business Development
Program''; and
(4) in section 8(a)(21)(B)(v)(I), by striking ``Capital
Ownership Development Program'' and inserting ``Business
Development Program.
(c) Annual Report.--Section 8(a)(20)(A) of the Small
Business Act (15 U.S.C. 637(a)(20)(A)) is amended by striking
``semiannually report to their assigned Business Opportunity
Specialist'' and inserting ``annually submit, to their
assigned Business Opportunity Specialist, a report, which
shall include''.
SEC. 502. EXTENSION OF [PROGRAM] AUTHORITY FOR TECHNOLOGY
ASSISTANCE PROGRAM.
(a) Rural Outreach.--Section 9(s)(2) of the Small Business
Act (15 U.S.C. 638(s)(2)) is amended by striking ``2005'' and
inserting ``2006''.
(b) FAST Program.--Section 34 of the Small Business Act (15
U.S.C. 657d) is amended--
(1) in subsection (h), by striking ``2005'' each place it
appears and inserting ``2006''; and
(2) by striking ``September 30, 2005'' and inserting
``September 30, 2006''.
SEC. 503. BUSINESSLINC REPORT TO CONGRESS.
Section 8(n) of the Small Business Act (15 U.S.C. 637(n))
is amended by adding at the end the following:
``(4) Annual report.--
``(A) In general.--The Associate Administrator of Business
Development shall collect data on the BusinessLINC program
and submit an annual report by April 30 of each year on the
effectiveness of the program to the Committee on Small
Business and Entrepreneurship of the Senate and the Committee
on Small Business of the House.
``(B) Contents.--The report submitted under subparagraph
(A) shall include--
``(i) the number of programs administered in each State;
``(ii) the corresponding grant awards and the date of each
award;
``(iii) the dollar amount of the contracts in effect in
each State as a result of the BusinessLINC program; and
``(iv) the number of teaming arrangements or partnerships
created as a result of the BusinessLINC program.''.
Ms. SNOWE. Mr. President, I rise today to seek unanimous consent for
the passage of the Small Business Administration 50th Anniversary
Reauthorization Act of 2003, S. 1375, a bill to reauthorize the U.S.
Small Business Administration, SBA and its programs for the next 3
years, together with a managers' amendment.
As the chair of the Committee on Small Business and Entrepreneurship,
I am pleased to report that this legislation passed the Committee on
July 10, 2003, by a unanimous vote. It is the product of significant
contributions by the members of my committee, and I am grateful for the
efforts of the committee's ranking member, Senator Kerry, to make this
a truly bipartisan bill.
The challenge for today's SBA is enormous. Each year, there are 3 to
4 million new business start-ups--1 in 25 adult Americans is taking
steps to start a business. And, small businesses account for
approximately two-thirds of the net new jobs in our country.
We began the reauthorization process this year with a series of
hearings, roundtables, and discussions to develop a bill that would
improve the SBA programs that provide counseling and training for
entrepreneurs--and to improve the SBA's financial assistance and
Government procurement programs that enable small businesses to prosper
and expand. While the particulars of this bill are extensive, let me
highlight a few of its key areas.
In terms of financing programs for small businesses, I have focused
extensively on improving the credit and venture capital resources that
the SBA provides for small businesses. These programs are the
centerpiece of the SBA's efforts to help entrepreneurs get started and
assist small businesses to prosper. In fact, in just the past 3 years
alone, the SBA's lending programs made it possible for small businesses
to create or retain more than 1.3 million jobs.
Nevertheless, access to capital continues to rank as a primary
concern for small business owners. So, we are proposing to continue the
growth of the financing programs through reasonable increases in the
authorization levels of the 7(a), 504 and Microloan programs. The bill
also increases the amount that small businesses can borrow subject to
the SBA's guarantee, so that the SBA's loan sizes realistically reflect
what it costs to start and operate a small business in today's economy.
Moreover, the bill addresses access to capital by helping SBA's lending
partners--for instance, through the new National Preferred Lenders
Pilot Program.
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. Recognizing the tremendous
accomplishments by women entrepreneurs, I have included the Women's
Small Business Improvement Act of 2003, which I introduced earlier this
year, to integrate and better leverage the spectrum of women's business
programs that the SBA provides for women entrepreneurs.
A cornerstone of these improvements involves making the Women's
Business Center Program a permanent program that will offer
opportunities for the creation of 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.
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. As a result, in addition to minor
technical changes in these programs, the bill reauthorizes these
critical programs for the next three years.
Finally, one of the most serious problems facing small businesses 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. The bill addresses the practice of Federal contract
bundling by changing the definition of ``contract bundling'' to limit
its use so that small businesses have better access to Federal
contracts and a fair opportunity to compete for them.
Furthermore, the bill implements the Procurement Program for Women-
owned Small Business Concerns, which will give contracting officers the
tools necessary to help women-owned small businesses compete in the
Federal marketplace more effectively. The bill also contains
improvements to the HUBZone program, including the designation of a
closed military base as a HUBZone for 5 years to reduce the serious
consequences that military base closings pose for our local
communities.
With this bill, I am offering a managers' amendment, which is co-
sponsored by Senator Kerry, to address several issues that have risen
since the
[[Page S12081]]
committee's markup of the bill. In working with several of my
colleagues, on and off of the Small Business Committee, I believe the
changes encompassed in this amendment address certain concerns and
strengthen particular aspects of the bill so that it provides the
greatest benefit to small businesses and entrepreneurs in this country.
Let me highlight several of these changes.
First, the amendment removes section 265, which would have authorized
the SBA to develop and implement an innovative 3-year pilot program in
which the SBA would provide a partial guarantee on pools of securitized
small business loans that are not otherwise guaranteed by the SBA.
When the President's Fiscal Year 2004 budget request was transmitted
to the Congress this past February, it stated that the SBA was
exploring a possible new approach to expand the opportunities of small
businesses to access capital markets by facilitating the securitization
of conventional small business loans that were not already guaranteed
by the SBA. Increasing access to capital is a high priority of small
businesses, and has been one of the Committee's priorities throughout
its history. We are always seeking innovative ways to increase access
to capital for small businesses, while at the same time measuring the
cost and risk of loss that the Federal Government must incur to
facilitate such financing. Accordingly, I recognized the potential
benefits of this proposal for small businesses across the Nation.
At our roundtable on April 30, 2003, the committee examined the loan-
pooling proposal in greater detail. The SBA reported that it had been
exploring this type of program for some time, and thought the idea had
considerable merit. The agency, however, was uncertain if it had the
authority to develop and implement such a program, absent legislative
authorization. After the roundtable, we consulted with the SBA and with
participants in the small business financing industry to determine the
program's appropriate elements.
In addition to the support the SBA expressed for the proposal in its
budget request, at the committee's roundtable, and in subsequent
discussions with committee staff, the SBA took other steps to help make
the proposal a success. For example, the agency entered into a contract
with Dun & Bradstreet and with Fair, Isaacs, Co., to create a credit-
scoring model for small businesses, similar to individual consumer
credit scores, to help small businesses gauge their credit quality. The
scoring model will assist the pooling proposal by providing uniformity
of pricing, thus reducing a primary obstacle to the securitization of
non-SBA small business loans. The SBA also helped build support for the
proposal by publicizing the need to take the foundational steps to
build a secondary market for small business loans, rather than later
trying to create such a market in one step when economic pressures
called for an immediate response.
The SBA is not alone in its support for a program to securitize small
business loans. The Board of Governors of the Federal Reserve System,
in its September 2002 Report to the Congress on the Availability of
Credit to Small Businesses, stated that the securitization of small
business loans could ``substantially influence the availability of
credit'' to small businesses. The Federal Reserve noted that one
primary benefit of a secondary market would be that small business
borrowers could enjoy lower financing costs. In addition to the Federal
Reserve report, other studies have shown that small businesses could
benefit from an efficient secondary market for small business loans.
The Federal Reserve report noted that a primary obstacle to a wide-
spread secondary market for small business loans was the lack of
standardized information to evaluate small business loans for re-sale.
As noted, the SBA has exercised foresight by securing the contract with
Dun & Bradstreet and Fair, Isaacs to attack this problem. With the
information provided by this new credit-scoring model, the
securitization of non-SBA small business loans will be far more
feasible.
The committee has received support for the pilot program from
representatives of thousands of small businesses that believe the
program could improve access to capital, and could improve the terms of
loans received, for many small businesses, particularly those without
significant real estate property to use as collateral. Significant
support for the program has been expressed particularly by small
businesses that are owned by minorities or by women. For these small
businesses, which often have less real estate collateral, on average,
than other small businesses, the pilot program holds great potential
for creating capital resources to meet their financing needs.
Financial firms currently involved in the pooling and securitization
of SBA 7(a) and 504 loans have also expressed their support for the
program, and have stated their belief that it will increase small
businesses' access to effective capital.
With this input from the SBA, small businesses, and financial firms
in hand, and having considered many studies regarding small business
credit and the effectiveness of secondary markets, we included Section
265 in S. 1375, which was approved unanimously by the committee.
Section 265 authorized, but did not require, the SBA to develop the
pilot program if the SBA determined that it could be practically
implemented.
The rationale for this proposal is to increase effective liquidity
for small businesses by improving the quality and amount of loans
available to them. The pooling structure is based on similar
arrangements for home mortgages, credit card loans, and car loans,
which have active secondary markets. This program would allow lenders,
including community banks, to benefit from the increased liquidity of
small business loans and to utilize capital that is otherwise locked
into existing loans, and therefore provide better terms on loans to
small businesses, as well as to make more small business loans.
This proposal, as embodied in Section 265, is not a departure from
the SBA's current practice of guaranteeing loans and regulating the
securitization of those loans. The SBA already regulates the
securitization of both guaranteed portions of loans provided to small
businesses and non-guaranteed portions of the same loans. These loans
are made both by Federally-regulated lenders and by lenders that are
not Federally regulated. In Fiscal Year 2002, the SBA regulated the
securitization of $3.4 billion in Government-guaranteed small business
loans made under Section 7(a) of the Small Business Act. When the
guaranteed portions of the 7(a) loans are securitized separately from
the non-guaranteed portions, the SBA is guaranteeing 100 percent of the
loan pools.
The new proposal presents a much more measured SBA involvement than
is involved with the SBA's current financing programs. Under the pilot
program, financial firms approved by the SBA would pool loans not
individually guaranteed by the SBA. These pooling entities would then
issue securities offering returns based upon the returns from the loans
in the pool. The securities would be rated by a rating agency and sold
to investors.
The pooling entity would also offer a partial ``first-loss''
guarantee to investors on the securities' returns. If the loans had
insufficient returns to pay the expected returns on the securities, the
pooling entity's guarantee would be the first guarantee called into
performance to pay investors. The SBA would issue partial, not
complete, ``second loss'' guarantees on the return from the securities,
but not on individual loans within the pool. The agency's guarantees
would thus be available only after the first-loss guarantees offered by
the pool issuers are exhausted. In addition, the SBA will only need to
provide guarantees at a much lower percentage level than is currently
the case for the SBA's guarantees on individual loans. Finally, and
perhaps most importantly, the cost of the SBA guarantees will be fully
funded by fees paid by the loan poolers, so no Federal appropriations
will be necessary.
The proposed program also requires three separate types of reports.
The SBA must provide to the committee and to the Committee on Small
Business of the House of Representatives a report detailing the pooling
program before it is implemented, and wait 50 days after submitting the
report before implementing the program. In addition, the SBA must file
with the Congress, in the SBA's Budget Request and
[[Page S12082]]
Performance Plan, an annual report about the program's performance.
Finally, the GAO is required to study the program, if implemented, and
report on the program's performance, including any effects the program
may have on the 504 or 7(a) programs, before calendar year 2006.
Working with Senator Pryor and with other colleagues, both on and off
the committee, we endeavored to provide greater specificity in the
instructions the provision gives the SBA regarding the pilot program,
so as to ensure that the pooling proposal provides the greatest benefit
to small businesses in need of capital while limiting risk to the
Federal Government. I believe those modifications would have greatly
improved the pilot program and increased its potential to provide
increased access to capital on terms that are beneficial to small
businesses.
Access to credit for small businesses is often a challenge, and the
committee has consistently believed that encouraging more lending to
small businesses that have a likelihood to succeed, grow, and create
new jobs is a sound national policy. The pilot program takes advantage
of the successful example of the prior securizations of SBA small
business loans, and of changes in the investment community, to
facilitate lending in the small business community for years to come.
However, while I continue to recognize the merits of this measure and
believe that it should be included in this bill, the administration has
now taken a contrary position. In the interest of expediting the
passage of S. 1375 before the SBA's current authorizing legislation
expires, I am reluctantly removing this provision to focus on those
elements of the bill that must be enacted.
While I am disappointed to have to remove this section, it is clear
that this bill must move forward as quickly as possible. I want to be
clear, however, that I continue to appreciate the benefits of this
pilot program, and will introduce this provision as a separate bill in
the near future. With the support this proposal already has, I am
confident we can implement this innovative program, and I look forward
to the benefits it can provide for small businesses as we try to assist
small businesses to prosper, create more jobs, and pull the economy out
of its current doldrums.
The amendment also modifies the provisions of the bill relating to
the New Markets Venture Capital Program and the definition of ``low-
income geographic area,'' in which New Markets Venture Capital
companies are to invest most of their funds. In order to coordinate the
definition of ``low-income geographic area'' used in the SBA's New
Markets Venture Capital Program and that used for the New Markets Tax
Credit under the tax code, the managers' amendment specifies that the
Small Business Act's definition will be based on median family income,
rather than median household income as under current law.
This change will eliminate confusion that has resulted from the use
of different definitions for two related programs. More importantly, by
significantly broadening the definition of those areas in which
investment is permitted under the New Markets Venture Capital program,
this change will increase the flexibility that New Markets Venture
Capital companies have in choosing small businesses in which to invest.
As a result, we should see stronger New Markets Venture Capital
companies and more small businesses being served through this venture
capital program.
The third part of the managers' amendment modifies several provisions
in the bill relating to government contracting opportunities for small
businesses. In 1994, Congress enacted the Federal Acquisition
Streamlining Act, FASA, to streamline Federal procurement processes.
FASA included an amendment to the Small Business Act that created an
exclusive reservation for small businesses consisting of contracts
valued at more than $2,500 but not more than $100,000. And, while it
had the chance to classify purchases under multiple-award schedule
contracts, including Federal Supply Schedule, within this reserve at
that time, the Congress expressly excluded these sales from small
business set-aside rules. Accordingly, rules on small business set-
asides do not apply to Federal Supply Schedule purchases, and, instead,
contracting officers are required to give a ``preference'' to small
businesses.
Although reports now indicate that the level of small business
participation on schedule contracts is growing and is relatively higher
than the share small businesses receive on non-schedule contracts,
small businesses continue to report to the committee that they invest
time and money to negotiate a schedule contract successfully with the
General Services Administration or an executive agent managing a
Government-wide Acquisition Contract, and then they never receive the
benefit of an order placed against that contract. Small businesses
further report that the Government relies on a limited and preferred
list of larger firms to meet its requirements for goods and services.
Small businesses deserve to have a fair opportunity to compete for
those orders. The Small Business Administration 50th Anniversary
Reauthorization Act would protect small businesses and ensure that they
continue to have access to, and the opportunity to compete for,
multiple-award and schedule purchases. Specifically, the bill restricts
competition of schedule orders valued between $2,500 and $100,000 for
small businesses.
I know that some of my colleagues believe that by setting aside
schedule orders under $100,000, thousands of small firms that supply
and sell through contracts held by large firms may significantly be
harmed. They also question the need for action if small businesses are
successfully competing for and winning schedule orders each day.
Finally, they assert that scheduled contracts are a faster, easier,
more flexible way for agencies to meet their needs and any change that
reduces that ease should be challenged.
In my view, if small businesses enjoy a majority share of schedule
contracts--which they do--should not their participation in these
contracts reflect their representation on the supply schedule?
Currently, small businesses represent more than 70 percent of the
companies listed on the Federal Supply Schedule, yet these small
businesses are receiving just under 30 percent of the awards under the
schedule.
The intent of multiple-award contacting was not to have a majority of
orders awarded on a sole-source basis. Rather, it was designed to be a
streamlined acquisition process to achieve competition without
increasing the government's risk. Including small business helps to
ensure the Federal Government is getting the best products and services
at the best prices.
Nevertheless, in order to ensure the timely passage of this important
reauthorization legislation, I have agreed to modify the bill's
provision that would have allowed small business set-asides of awards
on multiple-award contracts, to require, instead, that contracting
officers review the offers of at least two small businesses when
completing orders on multiple-award contacts. While I had hoped to
provide stronger provisions for small businesses seeking to contract
with the Federal Government, I believe this compromise will still lead
to greater procurement opportunities for small enterprises.
This modification anticipates that a contracting officer will give
serious consideration to small businesses seeking to provide goods and
services to the Federal Government. As an example, when placing orders
for supplies with contractors on the General Services Administration's
Federal Supply Schedule, contracting officers should consider the
information available on the GSA Advantage on-line shopping service or
other catalogs and price lists of at least two small business multiple-
award-schedule contractors that provide the supplies that are being
purchased.
Placing orders for services, however, may be more complex at times.
In these instances, contracting officers purchasing from Government-
wide acquisition contacts, multi-agency contracts, or the Federal
Supply Schedule should include at least two small businesses when they
solicit offers. These actions will ensure that small business multiple-
award contractors have a fair opportunity to be considered for orders.
To ensure the necessary steps are taken to establish clear guidance
and that agencies follow these established procedures to implement this
compromise, my committee will closely
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monitor competition and small business participation on multiple-award
contracts. Specifically, the amendment mandates the U.S. General
Accounting Office, GAO, to report bi-annually to the Committees on
Small Business on the number of actions and dollars awarded to small
business under multiple-award contracts and help to achieve the level
of competition in Federal contracting that Congress envisioned. In
addition, the existing provisions in the bill require the GAO to
conduct periodic reviews of small business participation in multiple-
award contracts, which will help Congress to ensure these provisions
are implemented appropriately.
Responding to additional concerns raised by my colleagues, the
managers' amendment withdraws language that references the authority of
agencies to withhold a portion of a performance-related bonus awarded
to procurement officials for failure to achieve small business goals.
The committee believes measures that hold agency officials
accountable for their performance will drive results. Therefore,
language in the bill, as reported, would have held agency procurement
officials accountable for small business goals. It directed agencies to
include in the annual performance evaluation for agency procurement
officials a factor that measures the success of that official in small
business utilization.
It further required agencies to factor the performance of procurement
officials in achieving these small business goals into any monetary
rewards under consideration. In order to avoid delaying the entire bill
for this provision, I have reluctantly agreed to withdraw this latter
provision. Nevertheless, my committee will continue to monitor the
extent to which agencies are meeting their small business goals and
look for every opportunity to hold failing agencies accountable to our
small business constituency.
With respect to subcontracting opportunities, once a contract that
contains a small business subcontracting plan has been awarded by a
Federal agency, the prime contractor is required to submit reports
periodically to the Government that include information on the prime
contractor's achievement of its subcontracting goals and the dollars
awarded to small business subcontractors. While the U.S. General
Accounting Office indicates that most contractors that the GAO reviewed
make good faith efforts to comply with their subcontracting plans,
small businesses report to my committee that not only do prime
contractors fail to comply with subcontracting plans, but they also
fail to submit complete and accurate subcontracting reports. Therefore,
this managers' amendment contains a technical correction to clarify
that the company president or the head of the entity must certify that
data contained in subcontracting compliance evaluation reports provided
to the government is accurate and complete.
In addition, under current language in the bill, a contracting
officer must first consider ``all reasonable issues regarding the
subcontractor's performance, or lack of performance, before making a
determination that the prime contractor failed in its responsibility to
timely pay a small business subcontractor.'' Some of my colleagues,
however, have raised concerns that this language limits the contracting
officer's discretion to issues regarding only the performance of the
subcontractor, and that other issues that might legitimately cause non-
payment, such as disputes over off-sets, could not be considered. That
was never the intent of the bill reported by the committee.
In light of these concerns, the managers' amendment modifies the
language to ensure that a contracting officer can consider ``all
reasonable issues regarding the circumstances surrounding the failure
to make timely payment to a small business subcontractor'' before
making a determination to make a direct payment to the subcontractor
under a pilot program to test direct payments to small business
contractors.
The committee also recognizes the economic ramifications that
military base closures can have on our local communities and economies.
We believe the SBA's Historically Underutilized Business Zone, HUBZone,
program can harness the strength and the creativity of the small
business sector by providing these firms with incentives to relocate to
areas suffering from the effects of a military base closure. Therefore,
we included language in the bill to designate base closure areas as
HUBZones, and the managers' amendment clarifies that such designation
will apply to military bases closed after the date of enactment for a
period of 5 years in order to attract small businesses to areas
affected by base closure where there are customers and a skilled
workforce. The committee believes that new business and new jobs
created through HUBZone small businesses means new life for areas
affected by base closure.
Lastly, our colleague from New Mexico, Senator Bingaman, has
requested an adjustment to the Program for Investment in
Microentrepreneurs, PRIME, which the bill reauthorizes for 3 years. To
accommodate this request, the managers' amendment authorizes $2 million
under the PRIME program to be spent to provide grants to intermediaries
to assist disadvantaged Native American entrepreneurs. This
modification enhances the bill's provisions that encourage Native
American-owned businesses and new Native American entrepreneurs.
Mr. President, I will close by noting that this is one of the most
expansive SBA reauthorization bills in the 50-year history of the
agency. The SBA estimates that reauthorizing the agency will result in
3.3 million jobs over the next 5 years, with the SBA and its programs
predicted to support over 1 million jobs over that same period through
prime contracts and subcontracts.
This bill is based on the deliberative, methodical, and systematic
approach that this committee has taken to review the spectrum of SBA
programs, building on those that are working and fixing those that are
not. How can we do anything less for the economic engine of our
economy--small business--which holds the greatest hope for this
country's recovery from the current economic doldrums?
I urge my colleagues to support this important legislation.
(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 bringing to the floor for
final Senate consideration, a 3-year reauthorization bill for the Small
Business Administration's programs.
These programs help small businesses 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 since becoming
ranking member in 1997. Having worked close 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 9 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 the 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 should serve the Small Business Administration and the
entire small-business community well past even the next reauthorization
period.
Over the past 3 years, as chairman and ranking member of this
committee, I have seen this administration
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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 initiatives aimed at fostering small businesses and the job
creation and economic activity they bring about. While many of 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 cyclically 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 6 years. Their proposal includes no
adjustment for inflation or demand, despite the SBA's own numbers that
show demand is up for its programs. The SBA's largest lending programs
would have run out of money this year had the SBA not taken the drastic
step of capping the size of loans. Both the problem of
imminent shutdown and the SBA's solution of a cap would have been bad
for struggling small businesses. But for additional funding of more
than $3 billion made available by Congress, the SBA's solution would
have disrupted many small businesses' access to otherwise unattainable
capital. Again, the problem and its solution could have been avoided
had the administration properly funded this important program.
It is in 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 rather would ultimately hinder them.
This administration and small businesses across this Nation will
find, however, that our prescription for small businesses in a flailing
economy is quite different. Our reauthorization legislation embraces
the initiatives that have worked for years, redirects those that have
struggled, and sets the SBA and our small business sector up for
continued success.
Although banks have plenty of cash to lend, many small businesses
still have a problem getting access to credit. Either the terms are
unreasonable, or they can not get a loan at all. 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 37 percent in the SBA's largest lending program for
working capital. Lending is up 22 percent in the SBA's loan program for
small businesses that are growing and need money to buy equipment and
buildings. Lending is up in the SBA's microloan program, which serves
those with the least access to capital through the private sector. And
the SBA's venture capital programs play a significant role in this
country's investment in our fastest-growing small businesses,
accounting for more than 50 percent of all U.S. venture investments.
Last year these loans and investments 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 or retained
more than 400,000 jobs.
As the committee reviewed the 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 the SBA's lending and venture capital programs at increasing levels
for the next 3 years. I am particularly pleased with the increased
funding levels for the microloan program.
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 administration'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
lending vehicles 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--fiscal year
2004. The SBA needs to fully fund these programs and put more resources
into the office that manages the program. Four people are not enough to
manage 1,400 loans and 180 grants.
Not only is the program level for microloans troublesome, but also
the level for the agency's largest small business lending program, the
7(a) program. In the report that accompanies S. 1375, the committee
notes that our duty as members of this committee, as well as that of
the SBA itself, is not simply to maintain these programs but to monitor
the demand and adjust the programs accordingly to meet the needs of
small businesses. According to SBA's testimony before the committee on
April 30, 2003, the agency estimates demand only by looking backwards--
what has happened in the past year. However, there are other important
factors to consider: changes in loan volume, trends in the economy, and
initiatives and program changes that will affect loan volume. For
example, the agency often enters into memoranda of understanding with
trade and ethnic associations in order to help their members who own
small businesses, and recently the SBA opened its lending programs to
all credit unions, which number 10,000. Both of these changes are
intended to raise awareness of the SBA's services, which ultimately
will affect demand. In a press release from the SBA regarding credit
unions, the agency stated that delivery of SBA loans through credit
unions, ``Represents a possible increase of nearly 30 percent in the
overall number of institutions where entrepreneurs can seek capital for
their businesses.'' That possibility, if it becomes a reality, will
almost certainly increase demand for 7(a) loans. Therefore, it should
be factored into the SBA's estimate of programs demand for fiscal year
2004 and beyond, and aligned in its annual appropriations requests and
legislative proposals.
Aside from setting the level for each small business financial
assistance program, our SBA reauthorization makes important program
changes and starts some important, new initiatives. In the SBA's
microloan program, we have adopted many of the provisions we passed
last year as part of S. 174, which Senator Snowe and I introduced and
the committee and the full Senate voted to pass by unanimous consent. I
thank the Association for Enterprise Opportunity, AEO, as well as the
participants of the reauthorization roundtable on April 30, 2003--Mary
Mathews of Minnesota's Northeast Entrepreneur Fund, Zach Gast of AEO in
Washington, D.C., Alan Corbet of Missouri's Go Connection, and Blake
Brown of Maine's Coastal Enterprises--for representing the microloan
industry so convincingly and educating the committee on the
inextricable correlation between technical assistance, lending and
successful businesses that can repay their loans. I thank them for
illustrating so vividly how they serve borrowers that would not
otherwise have access to capital--because their loans are not
profitable enough to appeal to traditional lenders, and because the
efficiencies of credit scoring work against these small borrowers, even
those with repayment ability. The SBA's microloans represent their only
credit option to help them achieve economic independence and become
bankable in the future.
Picking up where we left off last year, and even the year before when
we
[[Page S12085]]
made important changes to the microloan program, S. 1375 will make it
possible for lenders to offer small business ``short-term'' loans. This
will benefit small businesses, the lenders and the SBA because it will
eliminate repeated paperwork and administrative oversight from those
small businesses, such as carpenters, who need revolving loans to
finance the jobs as they come in, rather than taking multiple little
fixed-term loans. Rather than tying eligibility to the expertise of the
entity, we have made it possible for new entities to qualify as the SBA
microlending intermediaries if they have staff with this unique lending
and technical assistance expertise. We have made a conforming change
regarding the average smaller size of microloans, increasing it from
$7,500 to $10,000, to make it consistent with similar changes enacted
in December 2000.
Unlike the provisions we considered in 2000 and again last year with
S. 174, this bill does not go as far to eliminate the restrictions on
lenders contracting out the technical assistance or assistance before a
loan is made. Instead, we raise from 25 percent to 30 percent the
amount of TA funds an intermediary can contract with an outside expert
and the amount of grants a lender can use to counsel prospective
borrowers. The latter change does not go as far as I would like, but
represents a compromise. Although there is a perception that pre-loan
assistance means that TA money is used on microentrepreneurs who never
get loans, in actuality the small-business owner in many cases needs
help getting the loan more than assistance running the business after
he or she gets the loan. Also, unlike the last two microloan bills,
instead of including a provision authorizing the SBA to fund peer-to-
peer mentoring among microloan lenders and TA providers, the
microlenders asked the committee to increase the oversight of an
existing statutory provision that requires the SBA to contract out 7
percent of its loan dollars for training of intermediaries.
Now the SBA will have to report annually on this specific provision
to highlight what they have done to comply with the law. Last, S. 1375
requires the SBA to develop an improved subsidy rate model to determine
the cost of microloans because the one they have used since the
program's inception does not reflect the performance of the program.
For example, last year, in Fiscal Year 2003, the administration's
budget doubled the subsidy rate, which is the Government's cost of the
program, from 6.78 percent to 13.05 percent, even though the program
had not experienced any loss of Federal funds since the first loan was
made in 1992. This broken method of calculating the cost of these loans
is a waste of taxpayer money because Congress has to appropriate
unnecessary funds to run the program.
In the 7(a) loan program, the SBA's largest loan program, which
provides loans to small businesses for working capital 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 offices 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.
Let me be clear--while I want to avoid unnecessary paperwork and
eliminate reported abuses, I do not want the lenders to take this as a
signal to quit working with the district directors and district staff.
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.
We need to maximize resources to reach not only as many small
businesses as possible, but also those populations that most need
access to affordable capital. It would be unreasonable to continue
holding district directors accountable for lending goals in their areas
without building in a mechanism to encourage interaction. There are
concerns that allowing lenders to make loans on a nationwide basis and
bypass the local SBA staff to work only with SBA staff in Washington,
DC, could undermine the local infrastructure and the SBA's ability to
meet the individual needs of local small businesses. For this purpose I
have included a provision that 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 the SBA to pool and sell
the guaranteed portion of loans with varied rates. Currently, the SBA
has the authority to only sell those loans with identical rates.
Proponents argue that this will create efficiencies in the market and
strengthen the program by bringing it into line with what the private
sector has been doing for years.
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 from 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 raised the debenture size to keep peace with the rising cost of
commercial real estate and equipment. We have raised the job
requirement standard up from $35,000 to $50,000. This is reasonable
given the increase in the Consumer Price Index since the last time the
job requirement was changed in 1990. We have directed the 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 compelling testimony of some of our witnesses during the
reauthorization process. We have also 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 3 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,
and input on, the pilot.
The more research I have done, the more I have 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 childcare suppliers
available in needy areas, from the most urban to be most rural. 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 1,000 families on the waiting list in both
Nevada and Maine to more than 30,000 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 there is concern about the precedent of the SBA lending
to non-profits. Right now it is done in only limited circumstances--
microloans, physical disaster loans and economic injury disaster loans
in the areas affected by the terrorist attacks of 9/11. And I agree it
should not be expanded to all industries. However, this is a very
unique industry whose critically important services in many States are
delivered mostly through non-profits, and the only way to increase
facilities to provide the child care is to reach both for-profit and
non-profit child care providers. Further, non-profits are usually the
providers that care for the neediest kids. I have added provisions to
the pilot program to ensure that the underwriting
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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 businesses as 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 care to older children after school. This makes
assistance available to eligible entities that offer Head Start
services. At Senator Snowe's request, the pilot is limited to seven
percent of the number of loans guaranteed by the 504 program overall,
which is less than the 10 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.
Before I move on to discuss another important provision in the bill,
I want to thank all the members of the Advisory Committee on Child Care
and Small Business in Massachusetts who not only identified the need
for this policy change but also developed many innovative ideas to
coordinate Federal and State business services and child welfare
services to expand the availability of quality, affordable child care
and strengthen the businesses of child care of child care providers.
The bill also includes a comprehensive study by the GAO to track and
monitor the impact of this program both on child care industry and the
504 program. Last, I want to remind my colleagues that the 504 program
is funded entirely through fees and does not require appropriations.
Further, when the Congressional Budget Office reviewed the
reauthorization act and estimated its cost and the impact the
provisions would have on the programs, CBO assessed no cost increase to
the 504 program, its subsidy rate, or the agency by enacting the child
care lending pilot provision.
Also included in this bill is S. 318, the Small Business Drought
Relief Act. This simply reinforces in legislation something that the
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. Despite numerous requests, written and verbal,
for a copy of this legal opinion, the SBA delayed compliance for 6
months. The delay jeopardized enactment of emergency legislation during
the 107th Congress, leaving small business drought victims without
assistance. 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 drought disaster declarations in effect in 36
States. That number had grown to 48 by the beginning of this year,
demonstrating that the problem had gotten worse and even more small
businesses were in need.
As I have said time and again, the SBA already has the authority to
help all small businesses hurt by drought in declared disaster areas,
but the agency will not 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 the SBA to comply with existing law, restoring fairness to
an unfair system, and would get help to small business drought victims
that need it. I thank former Governor Jim Hodges of South Carolina, and
his staffer Lane Hudson, for bringing this to the committee's
attention. They served the needy small businesses of their State
extremely well, and I am sorry that politics kept this common sense and
much needed provision from being enacted. I thank the other 15
Governors who fought for their constituents, too. And I thank Senator
Bond for working with me on this when he was the ranking member of the
Committee on Small Business & Entrepreneurship, and 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 and Nevada where it is so dry that the water level is down and
small businesses are losing business and having to make expensive
changes, such as extending docks to reach the water in order to stay in
business.
In this bill are also provisions to strengthen the 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 financial
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 the SBA and the investors are treated more
fairly and the taxpayer 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. And we have clarified that New Markets
Venture Capital companies have 2 years to raise their matching capital,
as Congress intended. The committee has been troubled by the agency's
interpretation of the NMVC statute, which SBA viewed as permitting the
agency to choose how much time it could give conditionally approved
NMVCs to raise the private-sector matching money. The SBA's chosen time
frames were unreasonable and not what Congress intended.
I very much regret that the managers' amendment that we are
considering today does not include a change to the New Markets Venture
Capital Program which would better align allowable investments with
repayment obligations. Right now the repayment and profit participation
schedules are out of sync. Experts argue that this situation could
force NMVCs to liquidate promising small businesses in order to raise
repayment money. It would be unfortunate if this were to occur,
particularly for the employees of small businesses in these high-
unemployment areas who will be hard-pressed in this economy to find
another job with sustainable wages and benefits. I do not have an SBA
NMVC in my State, but there are about 20 States with NMVCs which would
have benefited from this proposed change--Maine, New Hampshire,
Vermont, Kentucky, Maryland, West Virginia, Ohio, Delaware, New Jersey,
Pennsylvania, Arizona, and Washington, DC. I am sorry that we could not
reach a compromise and I hope for the sake of existing NMVCs and the
small businesses they assist that the experts are not right.
I thank the many experts who have advised this committee over the
years on developing and implementing the new markets venture capital
program. My colleagues on the committee and I are grateful for their
help. It is a great service to the taxpayers and businesses and the
communities that will benefit from this innovative investment. In no
particular order, I thank Dr. Julia Rubin who helped us when she was at
Harvard, at Brown and now at Rutgers University. I thank Saunders
Miller, now himself a small business owner of Peaq Funds in Manhattan,
who was a principal developer of this program and may other venture
capital initiatives for the many years he worked at the SBA. I thank
Don Christensen, the former head of the SBA's investment
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division, where he served this nation and president Clinton extremely
well. And to the many developmental venture capitalists who routinely
impart their expertise and wisdom to this committee, such as Elyse
Cherry of the Boston Community Venture Fund and Ray Moncrief of
Kentucky Highlands.
Responding to findings by the General Accounting Office and the SBA's
Office of Inspector General, this legislation includes many measures to
strengthen the SBA's oversight of lenders. 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 that access to capital plays
in the success of small businesses, as SBA Administrator 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 5 years because of lack of `knowledge' of
key business skills.'' Despite the recognized importance of such
assistance, the SBA's funding request for fiscal year 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 6-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. For this
reason, Senator Snowe and I took a comprehensive approach to supporting
and improving the SBA's entrepreneurial development programs, while
rejecting proposals put forth that would undermine their success.
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 reauthorization process. Rarely do women
entrepreneurs get the recognition and attention they deserve for their
contributions to our economy: Eighteen million Americans would be
without jobs today if it were not for these entrepreneurs who had the
courage and the vision to strike out on 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 3-year ``renewal'' grants for those centers with
sustainability grants and 4-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 Center, 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 community. Since its inception, the NWBC
has provided Congress, the Small Business Administration, and the
Interagency Committee on Women's Business Enterprise with independent
advice and policy recommendations on issues facing women in business.
In recognition of the council's importance to policy making and women
in business, Senator Landrieu offered and the committee adopted an
amendment identical to her National Women's Business Council
Independence Preservation Act of 2003, which seeks to maintain the
bipartisan balance on the NWBC. The structure of the NWBC helps to
maintain its independence. It has 15 members. The chair is appointed by
the President and must be a prominent business woman. Six members are
representatives of women's business organizations, including
representatives of women's business center sites, and the remaining
eight are members appointed by the SBA administrator based upon
recommendations of the chair and ranking members of the Senate Small
Business and Entrepreneurship Committee and the House Small Business
Committee. Of these eight ``party-affiliated'' members, four come from
the same political party as the President and four members who are not
from the President's party; all of them must be small business owners.
The bipartisan balance in the NWBC's membership helps to ensure that
any policy recommendations will reflect the needs of women in business
and not the political agenda of one political party over another.
Vacancies on the NWBC are supposed to be filled no later than 30 days
after the position becomes open; however, in the past 2 years, the SBA
has failed to meet this 30-day statutory deadline. The NWBC Chair was
vacant from May 29, 2001, to May 21, 2002, a period of 11 months and 22
days. Of the party-affiliated slots reserved for the President's party,
one was vacant for 3 months, two were vacant for a period of 7 months;
and one was vacant for 21 months. Two of the seats reserved for members
who are not from the President's party were vacant for nearly 2 years,
one seat was vacant for 7 months, and the fourth seat remains vacant.
At one point during the past 2 years the NWBC had a severe partisan
imbalance. There were three Republican members on the NWBC and no
Democratic members. The committee is concerned that these vacancies
undermine the effectiveness of the NWBC, and that the lack of
bipartisan balance will subject any policy positions taken by the NWBC
to criticism as being motivated by partisan interests.
Senator Landrieu's amendment, which was approved unanimously by the
committee, requires that vacancies in the party-affiliated slots will
be filled to maintain a bipartisan balance on the NWBC. The provision
also ensures accountability by requiring the administration to report
to Congress on vacancies that remain unfilled for more than 30 days.
The committee expects the report to cite the reasons for the vacancies,
what is causing any delays in filling the positions, whether nominees
were available for consideration, at what stage in the vetting process
nominees are, whether there are any objections to the nominees and what
those objections are, an estimate for when the vacancies will be
filled, and any other relevant information relating to the vacancies.
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
[[Page S12088]]
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's Business Council.
This bill also supports and protects the Small Business Development
Center network, which has served millions of 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 provides 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 the 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. Our bill increases 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 the SBDCs that
have been adversely affected by poor economic conditions or government
downsizing. Also included is a portability provision proposed by
Senator Snowe to provide supplemental assistance to State SBDC networks
that have been adversely affected by a military base or industrial site
closure which has lead to a loss of jobs and severe economic harm. If
implemented correctly, portability has the potential to help States,
reeling in the aftermath of a sudden economic change, to provide the
necessary small business assistance to quell the economic injury to a
particular area.
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
10,500 volunteers, and technical change to allow SCORE to keep its
modest staff of 14 employees. For more than 38 years, SCORE has been
one of the SBA's greatest and most efficient successes. In 2002, SCORE
volunteers held over 300,000 counseling sessions and put in nearly 1.4
million volunteer hours. To keep up with an our nonstop national
economy, SCORE has dramatically advanced the outreach of its online
services to reach clients 24 hours a day, seven days a week. Last year,
for $5 million, SCORE volunteers provided small business owners an
estimated $170.8 million worth of professional business advice. It is
safe to say that in this down economy, SCORE is one investment that
will be paying dividends for years to come.
I 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 the
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.
Senator Bingaman and I have worked closely to develop a provision for
inclusion in a joint managers' amendment to the reported bill, which
will expand the Program for Investment in Microentrepreneurs, PRIME,
with a separate $2 million authorization to provide direct, in-depth
technical assistance and counseling to disadvantaged Native American
small business owners. The provision will complement the Native
American Business Centers created in the Native American Small Business
Development Act by following the PRIME model, which provides technical
assistance through microenterprise entities that have extensive
experience helping the least experienced entrepreneurs in low-income
communities. The rationale for amending the PRIME Act, rather than
creating a separate program, is that PRIME is currently operational and
simply needs additional funding so it can better address the needs of
the Native American entrepreneurial community. The provision follows
the existing Small Business Administration's approach and terminology
for implementing the PRIME Act to enhance the possibility of economic
development through entrepreneurship in Native American communities.
The Bingaman provision will strengthen the three-pronged approach the
Senator Johnson and I designed in the Native American Small Business
Development Act to find a solution to the longterm economic handicap
existing in Native American communities nationwide. There are a number
of microenterprise organizations in states across the country that are
willing and prepared to take on the additional challenge of assisting
disadvantaged Native American entrepreneurs, and there are a number of
Native American communities that are eager to take a different path to
economic development. However, there are currently a limited amount of
funds to allow that to happen. I commend Senator Bingaman for his
attention to this matter, for his continued support of my small
business legislation, and for his foresight and vision for Native
Americans in New Mexico and across the country. The Native American
communities across our nation will be better off with the assistance
that this provision makes possible. Were it not for the persistence of
Senator Bingaman, this provision would not be part of SBA's tools to
help Native American entrepreneurs. I also want to thank Senator Snowe
for working with Senator Bingaman and me to include this provision in
the managers' amendment.
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 solely serving disabled
veterans, to serving all veterans, reservists and service-disabled
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.
Included in a joint Snowe-Kerry amendment, which was unanimously
approved at the Committee markup, is a reauthorization of PRIME at $15
million. SBA Administrator Hector Barreto has stated, ``The PRIME
program was created to help the smallest of small businesses. These are
entrepreneurs at the most basic stage of starting a business and who
typically require the greatest amount of committed service and
guidance. In order to succeed, they require training and technical
assistance that must be accessible.''
PRIME is a powerful investment that provides critical assistance to
struggling, distressed communities. It's engineered to help low-income
and very low-income families, defined as those at 150 percent of the
poverty line or below. A very low-income family of
[[Page S12089]]
four earns about $23,000 a year. The International Labor Organizations
estimates that the return on investment in microenterprise development
through resources like PRIME ranges from $2.06 to $2.72 for every
dollar invested. Microenterprise contributes to our national economy
through public tax revenues, private income increases, and reduced
dependence on public assistance, such as welfare. Small Business
Development Centers define a ``client'' as someone who has received two
hours of training. On average, however, PRIME organizations spend 10
hours with low-income and very low-income entrepreneurs.
Many often confuse PRIME assistance with the microloan technical
assistance. Unlike the microloan program's technical assistance, which
is directly tied to helping microentrepreneurs obtain access to capital
through microlenders, the PRIME program is designed to help
microentrepreneurs who may not be credit-worthy or don't need or want
loans, but do need intensive technical assistance.
Currently, there are fewer than 80 organizations with PRIME grants,
yet the need for PRIME assistance is now greater than ever. While
access to credit is vital for many microentrepreneurs, for low-income
individuals, there is a severe gap between being credit-worthy and
receiving the technical assistance needed to be successful in business.
The PRIME program addresses this gap. for these reason, Senator Snowe
and I reauthorized the program for three years. Our bill also moves
PRIME's statutory language to the Small Business Act and includes a
data collection provision.
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 fewer 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 contact bundling,
also called contract consolidation, are included in this bill. One
provision included in this legislation that will make a significant
impact on small businesses' ability to compete is the method we have
adopted to address the ongoing problem of contract bundling. This
language is a prime example of the effectiveness of bipartisanship,
diligence and compromise. This approach incorporates language from an
amendment to the Department of Defense reauthorization offered by
Senator Collins and Senator Talent, language from my contract bundling
bill, S. 633 and the President's initiative on contract bundling.
The first provision creates a two-tiered threshold in order to
prevent unnecessary contract consolidation. Civilian agencies will be
required to meet specific standards if they attempt to consolidate
contracts above $2 million and $5 million. The Department of Defense is
required to meet similar requirements for contracts above $5 million
and $7 million. The bill also further expands the definition of
contract bundling to include contract consolidation, closing a loophole
in the definition that has been widely used and detrimentally affecting
small businesses.
The second provision increases in the number of procurement center
representatives, PCRs. These representatives advocate on behalf of
small businesses in cases directly affecting contracting, such as the
bundling or consolidation of contracts. Unfortunately, the number of
PCRs has been reduced from over 200 at its peak in the late 1980s to
the current level of just 47. In addition to reducing the number of
traditional PCRs, the administration has also eliminated the Breakout
PCRs, specially trained advocates that analyze highly technical large
contracts and ``unbundle'' contracts and break out portions that are
appropriate for small businesses. Their responsibilities have been
rolled into that of traditional PCRs, even though the number of PCRs
continued to decline. Often, the role of commercial marketing
representatives, CMRs, was also incorporated into the responsibilities
of traditional PCRs. CMRs are responsible for identifying opportunities
and developing marketing strategies for small businesses to appeal to
large prime contractors. The SBA's attempt to streamline their offices
and replace trained individuals with electronic systems has resulted in
the disenfranchisement of small businesses and hindered the SBA's
ability to maintain a proper level of oversight over Federal
contracting.
In the bill, we have increased the number of procurement center
representatives to ensure that every State and every major procurement
center is allocated a 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 the Committee's roundtable on non-credit programs 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 submission to Congress. The bill
also gives senior procurement executives and senior program managers
additional authority to educate their staff regarding the importance of
meeting the government-wide goals for small business utilization and
allows for greater accountability in annual performance evaluations. I
would like to thank the members of the Senate committee on Government
Affairs for working with Senator Snowe and me on these provisions to
ensure that agency officials have the authority, as well as the
flexibility, to efficiently and effectively meet the goals we have
placed before them.
In addition to increasing opportunities for prime contracts, this
bill addresses another serious problem: Small businesses have been
severely hampered by dishonest practices by some businesses that have
prime contracts with the Federal Government and have received
preference over other prime contractors due to their superior small
business 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.
The 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 or 10
[[Page S12090]]
years in prison 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.
During the committee's reauthorization roundtables, we heard numerous
accounts of subcontractors receiving late payments or partial payments
from their prime contractors. Small firms do not have the luxury of
waiting for their payments when they have invested time and money to
provide their products and services to the prime contractor. To address
this concern, the bill directs the SBA to create a three-year pilot
program, which tests the feasibility of direct payment to
subcontractors from the Federal agencies that are receiving the
contracts and or services.
In 2000, Congress passed legislation to implement a limited
competition, set-aside program for women-owned businesses, intended to
assist agencies to increase contracting to these firms and help to meet
the five percent government-wide goal. The original bill amended the
Small Business Act in section 8(m)(4) to require the SBA Administrator
to complete a study to identify industries in which women-owned
businesses are under-represented and report to Congress. The original
study has been completed, but has been delayed by a subsequent study of
the original study's ``methodology,'' causing the program to be delayed
indefinitely rather than be implemented in 2002, as it should have
been. This bill expedites the implementation of the already overdue
program by reassigning the responsibility of the study from the SBA to
the GAO and giving the Comptroller a deadline of December 31, 2003, to
report his findings to Congress.
During this time of economic downturn, we must ensure that long-term
strategies of reorganization and restructuring do not have immediate
negative impacts on our communities. One example of this is the
economic impact on surrounding areas when a military base is closed.
The loss of contracts to small businesses, jobs and resources can
cripple a community's economy. To reduce the impact on these regions,
this bill utilizes a contracting program, called the HUBZone program,
intended to target under-served areas and maintain the profitability of
the firms located within these areas. This bill will allow military
installations that are closed after passage of this legislation to
receive HUBZone status. Senator Snowe and I have included a further
provision within the managers' amendment of S. 1375, which would limit
this special classification for 5 years after the closure of the base.
The intent of the immediate qualification of these areas is to allow
for a smoother transition of the base to commercial use by encouraging
small businesses to relocate to those facilities, through Federal
contracting opportunities, and employing the workers in that area.
Additional options for assistance for these areas are available through
the SBA if these areas do not receive continued economic stability
following the expiration of the 5-year HUBZone status.
I want to thank Chair Snowe and her able staff for all of their
cooperation over the past several months. I would like to thank the
members of the Senate Committees on Armed Services and Government
Reform for working closely with me and my staff to ensure that this
bill meets the needs of the Federal Government's diverse procurement
offices as they work to ensure that the government receives the
essential goods and services it requires. I also want to express my
gratitude to all the members of the committee for their diligent
efforts to improve this legislation and urge them and my other Senate
colleagues to support the Small Business Administration 50th
Anniversary Reauthorization Act of 2003.
Mr. BOND. Mr. President, I rise today in recognition of S. 1375, the
Small Business Administration 50th Anniversary Reauthorization Act of
2003. This bill revitalizes existing SBA programs and brings to life
new pilot programs, all of which promote the demands and growth of the
small business community. I commend the chair, Senator Snowe, for
passing this bill through the Small Business Committee with unanimous
support.
Upon final passage of this bill, we will take a giant step toward
improving and refining the SBA and its programs. With the new
provisions that enhance agency record-keeping and realign program
operations under a more appropriate department, it is clear that agency
accountability and oversight will be strengthened. In addition, small
businesses will benefit from improvements in the leading programs,
greater access to capital, new innovations in the entrepreneurial
programs, expansion of procurement programs, and improved training and
assistance provisions.
According to the SBA's Office of Advocacy, small businesses represent
more than 99.7 percent of all employers, employ more than half of all
private sector employees, and generate 60 to 80 percent of net new jobs
annually. Given these statistics and the difficult financial times we
face in today's economy, I urge Congress to continue to nurture the
needs of the small business community. We must show enthusiastic
support for this bill, which I am confident will provide the SBA with
greater tools to keep pace with the ever-changing global economy and to
serve the small business community in a more effective and efficient
manner. To act otherwise could jeopardize this Nation's much needed job
growth and innovation.
Before I yield the floor, I refer to an important small business
program titled the Historically Underutilized Business Zone Contracting
Program, or as it is commonly referred to, the HUBZone program. This
small-business program was one of my personal priorities as former
chairman of the Senate Small Business Committee. It was established in
1997 with the intent to create jobs in severely economically distressed
communities, both rural and urban. In addition, the HUBZone program
provides a Federal contracting preference as an incentive for small
businesses to locate in these low-income areas. The jobs created by the
HUBZone program bring money to those blighted areas and create a demand
for more goods and services, which leads to the creation of more small
businesses and increased commerce in the area. Little by little, the
community's economic base is reborn.
Today, there are over 8,378 small businesses that are HUBZone
certified, and the Government has procured approximately $1.7 billion
in HUBZone contracting this year. The SBA reports that in FY 2001, each
dollar spent on the program yielded a return of $288 in contract awards
and as a result, the program helped to create 12,782 jobs in the United
States, approximately 8,974 of which were located in distressed areas.
Based on FY 2001 procurement statistics, HUBZone firms increased
employment 33 percent to 50 percent as a result of contract awards.
Nearly 50 percent of HUBZone firms increased capital expenditures as a
result of receiving contracts in FY 2001. As our economy struggles
during these difficult times, this vital program will continue to bring
jobs to our Nation's inner cities, poor rural counties, and Indian
reservations.
I urge Congress to support the HUBZone program in its current form
along with the new amendments provided in the Senate's version of the
SBA Reauthorization Act of 2003. Any additional changes not supported
by the full Senate Committee on Small Business could seriously
undermine the original intent of the program.
Thank you for the opportunity to speak today on behalf of the small
business community. I encourage my colleagues to support Senator Snowe
and S. 1375, the Small Business Administration 50th Anniversary
Reauthorization Act of 2003.
Mr. LEVIN. Mr. President, the Small Business Administration 50th
Anniversary Reauthorization Act of 2003 reflects a bipartisan effort
that passed the Senate Small Business and Entrepreneurship Committee
unanimously. This bill reauthorizes many Small Business Administration,
SBA, programs for 3 years as well as authorizes a number of pilot
programs.
The reauthorization bill is a great improvement over the President's
proposal which would have frozen SBA programs at fiscal year 2003
funding levels for 6 years. By reauthorizing the SBA over a shorter 3-
year period, as Congress has done traditionally, our
[[Page S12091]]
bill allows Congress to exercise closer oversight than would have been
the case under a 6-year bill. Our bill is responsive to our Nation's
small businesses and entrepreneurs, many of whom have no alternative
credit source and allowing the SBA to make more loans to small
entrepreneurs. These entrepreneurs provide the job creation and
business expansion that can result from the small business loans.
I am pleased the Senate SBA reauthorization bill contains an
amendment I authored to establish the Small Business Intermediary
Lending Pilot Program to address the needs of expanding small business.
The pilot lending program is aimed at businesses that need loans that
are larger than those available under the SBA microloan program but a
variety of reasons--including lack of sufficient or conventional
collateral--are unable to secure the credit they need at the terms they
need through conventional lenders, even with the assistance of the 7(a)
program.
The pilot lending program is designed to work through local non-
profit lending intermediaries. This proposal authorizes the SBA to make
1 percent, 20-year loans on a competitive basis to up to 20 non-profit
lending intermediaries around the country. These loans would be used to
capitalize a revolving loan fund through which the intermediary would
make loans of between $35,000 and $200,000 to small businesses. Unlike
the SBA microloan program there would be no technical assistance grant
provided to the intermediary. All administrative costs or technical
support provided to business borrowers would be covered by the interest
rate spread between the lending intermediary's 1 percent loan from the
SBA and the loans made to the business borrowers.
While the SBA is committed to ensuring that 7(a) lenders make smaller
loans, this pilot is designed to reach a sector of small businesses
that 7(a) lenders cannot and will not reach due to the perceived higher
risk of these businesses. Many of our States, including Michigan, Maine
and Idaho, are fortunate to have a health network of community based,
non-profit intermediary lenders that are experienced and successful in
meeting the needs of these businesses. This pilot program will give
them additional tools to help them create badly needed jobs among small
businesses.
Finally, I am pleased that the reauthorization bill contains the bill
providing disaster relief for small businesses damaged by drought. This
includes a provision I authored which would make eligible small
businesses hurt by low water levels on the Great Lakes. I am also glad
to see it includes the childcare lending pilot program to allow
affordable and low interest SBA 504 loans for non-profit child care
center. It is my hope that this program will spur the establishment and
expansion of child care providers.
Mr. ENZI. Mr. President, I rise today to speak in support of the
Small Business Administration 50th Anniversary Reauthorization Act of
2003. There are millions of good reasons why we need to pass this
important bill today and they are reflected in the millions of small
businesses around the country that benefit from the support the Small
Business Administration provides small businesses in Wyoming and around
the country. Although we do not have time for me to list those millions
of reasons I can sum them up in just three words--jobs, jobs, jobs.
It's an expression we have heard many, many times but it is the
truth--small businesses really are the backbone of our economy. They
provide careers for the established generation of workers who need jobs
to raise their families and they provide jobs to the younger generation
of workers--teens and young adults of my State and many others who are
looking for employment to help them pay the expenses of school and help
them learn the lessons of responsibility, commitment and teamwork.
As a former small business owner myself, I have seen firsthand how a
paycheck impacts lives and teaches invaluable life lessons and career
skills. A job is more than a responsibility--it's a precious gift that
can change your life and help you understand what it means to be a
contributing member of society.
In my home state of Wyoming, 96.5 percent of our businesses are small
businesses and that translates into a lot of jobs and a lot of families
with food on the table and a roof over their heads thanks to the SBA
and the programs it provides the people of our country.
That is why I was so pleased to be a part of the important work on
the Small Business Administration 50th Anniversary Reauthorization Act
of 2003. This is truly a historic occasion as we celebrate the SBA's
successes of the past 50 years and set its course for the years to
come.
We've all heard the expression--give a man a fish and you will have
fed him for today. Teach a man to fish and you will have provided him
with the tools he will need to feed himself for the rest of his life.
The SBA operates on a similar principle. It does not give a business
funding for a day's operation. Instead, it provides the tools, training
and support necessary to ensure that a business begins to operate on
firm, solid footing and has a reasonable chance for success.
Then, when the doors open up and the customers come in, the SBA
continues to serve as a reference and a source of support to ensure
that a small business has a place to turn to for advice, encouragement
and help if things take an unexpected turn for the worse.
Expect the unexpected--that's not just good advice--it's the focus of
the SBA's updated disaster authority in this bill. This section is one
of the changes we were able to make to help ensure that SBA remains
responsive in the bad times--as well as the good. We were able to
expand the definition of a disaster to include drought and below
average water levels in bodies of water that support small businesses.
That change was clearly needed because the impact of a drought or low
water level on agriculture is clear to all of us.
What might not be so clear is how these water problems also affect
tourism and recreational businesses. It wasn't clear before, so these
businesses often fell through the cracks of Federal assistance. With
the passage of this bill, however, that crack will be filled in and
small businesses will no longer suffer from these problems with no help
or relief in sight.
Native Americans will also benefit from this bill and find help for
the terrible challenges poverty and unemployment impose on the Native
American communities in my State and across the Nation. Promoting the
creation and development of small businesses in these areas will bring
much needed assistance to those Native Americans who need a chance to
help themselves. I believe this approach will work because each tribe
will actively support it to ensure the program is a success.
These and many other changes to the SBA will ensure that it remains a
beacon of support and hope for small businesses that are carefully
navigating the rough and rocky shores of competition and the thousands
of details that can slow or destroy a small business at any stage of
its development.
As I have already mentioned, our small businesses are the backbone of
our economy. The Small Business Administration is the lifeblood of our
small businesses. The support and encouragement of each helps make the
other more efficient, more productive and more successful.
Our small businesses and the Small Business Administration have a
unique and important relationship. They need each other to grow and
prosper and best of all--as they do--they help the Nation to do the
same.
Mr. PRYOR. Mr. President, today the Senate will consider a bill that
is very important to small business owners and their employees. I am
referring to S. 1375, the Small Business Administration 50th
Anniversary Reauthorization Act. The purpose of this bill is to
reauthorize the many needed initiatives at the SBA--from long-term
loans and venture capital to help with accessing Government contracts--
that have helped create successful businesses that are now household
names to many Americans. To name just a few, Callaway Golf, Ben &
Jerry's, Winnebago, Apple Computer and FedEx. In Arkansas, last year,
more than 305 businesses got loans through the SBA, and with them
created jobs and contributed to the local tax base.
We on the committee have worked hard to review the services available
to small businesses through the SBA and its lending and counseling
partners. As
[[Page S12092]]
a result, this bill builds upon what works right at the SBA and
improves upon areas that need to be updated. The changes are sensible
and fiscally responsible. We also included an innovative provision to
address workforce issues.
I offer my thanks and appreciation to Senator Snowe and Senator Kerry
for giving me the opportunity to address my concerns regarding some of
the provisions in the SBA reauthorization bill. One of my initial
concerns was that we continued to actively support the SBA's 7(a)
guaranteed business loan and 504 certified business development company
loans programs.
Access to capital is one of the most critical issues facing new and
small businesses alike, particularly for minorities and entrepreneurs
in inner-city and rural areas who lack sufficient collateral or credit
to get loans from banks, even when they have a good idea and repayment
ability. I believe, and am hopeful, that the SBA Reauthorization Act
will go far in satisfying this demand for capital to those who have
traditionally been shut out. Additionally, I have endeavored to ensure
that the SBA 7(a) and 504 programs continue unharmed. I encourage the
SBA to work with the small business community--the trade associations
for 7(a) and 504 lenders and borrowers, the National Association of
Government Guaranteed Lenders and the National Association of
Development Companies, to ensure they are not harmed.
Small businesses employ millions of people and provide the fuel for
our Nation's economic growth. Although most economists aver that the
recession has ended, employment figures continue to lag behind other
economic data at a rate that continues to cause me great concern--21
months of straight job losses means we should be using every tool we
have to create jobs. With the assistance of Senator Snowe, the SBA
Reauthorization Act should help to spur job creation and increase
access to much needed capital for our Nation's small businesses.
I ask my colleagues to support this bill because we need to enact
this legislation before many of SBA's programs expire on September 30.
Ms. LANDRIEU. Mr. President, before the Senate prepares to consider
and pass S. 1375, the Small Business Administration 50th Anniversary
Reauthorization Act of 2003, I would like to bring an important issue
to the Senate's attention that I hope will be addressed in conference
with the House. It relates to the HUBZone program, specifically the
price preferences for food aid contracts. I would like to discuss this
matter with my colleague, the Chair of the Small Business and
Entrepreneurship Committee, so that we have a clear record of our
position on the issue prior to final passage of the SBA Reauthorization
legislation.
Let me begin by first congratulating her for bringing this bill
through Committee and to the Senate floor where it will pass
unanimously. The Committee held informative and useful hearings and
roundtable discussions to learn from small business owners and leaders
about the value of the Small Business Administration's programs. We
also heard from SBA Administrator Hector Barreto, about the Bush
administration's reauthorization proposal for improving the agency's
ability to respond to the many challenges facing small businesses and
the increasing number of start-ups. In the end she put together an
excellent bill that I supported when it passed the committee
unanimously. I expect the Senate to do the same.
Ms. SNOWE. I thank the Senator for her generous comments, and I
appreciate her work on the Committee. She added an excellent amendment
to the bill to ensure that the National Women's Business Council
maintains a bipartisan balance. I thank her for supporting this bill.
Ms. LANDRIEU. The issue I wanted to bring to your attention relates
to HUBZone provisions in the House version of the SBA reauthorization.
HUBZones are distressed urban and rural areas characterized by chronic
high unemployment and/or low household income. Mr. President, there are
152 HUBZone companies creating jobs and empowering communities
throughout my State. Under the program, small businesses that locate in
a HUBZone, and hire workers who live in the HUBZone, are eligible to
receive price preferences in bidding on government contracts. These
price preferences encourage small businesses to locate in our
distressed communities and help offset the additional costs they face
as a result of being out of the regular stream of commerce. Price
preferences also help to even the playing field between HUBZone
eligible and non-HUBZone firms in competing for contracts. I support
the HUBZone program. It is providing an economic boost through job
creation and capital investment to areas of poverty and unemployment
that really need it.
Ms. SNOWE. I am also a strong supporter of the HUBZone program. Today
there are more than 8,300 HUBZone small businesses that helped to
create more than 30,000 jobs in the last 2 years. In our
reauthorization bill, the committee has made some minor changes to
strengthen the program. One of these changes would ensure that
communities affected by military base closures would receive temporary
HUBZone eligibility, preventing a significant economic downturn. The
bill also allows HUBZone companies to receive up to 15 percent
investment from outside organizations, allowing them to raise capital,
expand their business and create even more jobs.
Ms. LANDRIEU. I am pleased that the Senate has decided to leave the
HUBZone program intact with these limited, but sound modifications. An
issue has been brought to my attention involving how the Department of
Agriculture has interpreted legislation regarding the treatment of
HUBZone price preferences for food aid purchases. The current system
provides HUBZone firms with a price preference on the first 40 percent
of a given tender of food aid. A tender is essentially a contract for
aid that spells out how much of a particular commodity--corn, wheat,
vegetable oil--would be provided under the contract. The remaining 60
percent of the contract volume is not subject to the preference, so
HUBZones companies compete with all other firms, large and small, in
full and open competition for this portion of the contract.
The Department of Agriculture has misinterpreted the statute and
unfairly limited the participation of HUBZone firms to only 40 percent
of any food aid contract. This effectively locked them out of 60
percent of every tender contract offered. The Department has since
corrected its interpretation and is allowing the program to perform as
it was intended by Congress when these provisions were added to the
HUBZone program in 2000.
I am glad that the Department of Agriculture has changed its
interpretation. Louisiana has 10 HUBZone firms that are exporters and
may be able to participate in the food aid program and compete now that
the proper interpretation is in effect. Officials with the Port of Lake
Charles in Lake Charles, LA came to me and expressed their concern with
the Department's initial interpretation because they operate in a
HUBZone and want to attract more businesses to the port. This
interpretation limited the amount of contracts HUBZone firms were
eligible to bid on. The correct interpretation allows them to bring new
businesses to the Lake Charles area and help them to reinvigorate an
area that is working to regain its footing in the current economic
climate and provide critical jobs for the families who live there.
I know there are some who feel that under the current interpretation
HUBZone firms may have an unfair advantage. I welcome the opportunity
to work with the chair and the other members of the committee to
investigate this further. Perhaps the committee could hold a hearing to
learn more about this issue.
Ms. SNOWE. I thank the Senator for bringing this to my attention. I
am happy to work with the Senator on this issue. I thank the Senator
from Louisiana for her support of this legislation.
Mr. BAYH. Mr. President, today, the Senate will unanimously pass the
Small Business Reauthorization Act. This is a critically important
piece of legislation for the future of small business in America, and
in turn, for our Nation's economy. Small businesses are the engines of
economic growth, and they play a vital role in expanding our economy.
This is something I believe in so strongly that for 2 weeks in August,
I traveled across the State of
[[Page S12093]]
Indiana to meet with small business owners and to host a series of
small business summits. The purpose of these summits was to link people
looking to start or expand their small businesses with every available
Federal resource that could help them fulfill their dream.
During my visits in Indiana, I saw first hand the differences small
businesses can make in their communities. John Roembke, of Ossian, IN,
used a Small Business Administration loan to start his manufacturing
and design company nearly 30 years ago. He began as the sole employee
for his company, but today he employs more than 60 Hoosiers. Each
Hoosier employed at Roembke Manufacturing represents a family that has
greater job security and new economic opportunities thanks to John's
success and help from the SBA.
Our Nation's unemployment rate now stands at 6.1 percent, and in my
State, there are pockets of even higher unemployment. What these areas
need, and what our economy needs, is more job creation, and it is a
well-known fact that three out of every four new jobs are created by
our growing and innovative small businesses. Usually, the only hurdle
standing between a company and its desire to expand and hire new
workers is capital. Without it, our businesses starve because they
cannot obtain space, equipment, tooling, and employees. With it,
creative businesses can secure all of these assets, expand
productivity, increase sales, add new jobs, and improve the quality of
life in their communities.
The legislation we pass today will build on this kind of success, by
creating jobs, improving access to capital, and strengthening crucial
disaster assistance programs. Through the efforts of Chairman Snowe,
Ranking Member Kerry, and my other fellow members of the Small Business
Committee, the Senate has taken an important step toward reauthorizing
the Small Business Administration and its important small business
assistance programs for the next three years.
Today, I look forward to supporting this bill that reauthorizes the
most effective capital access programs that exist today in our Federal
government: the 504 and 7(a) loan guaranty programs. These two programs
will provide more than $20 billion in both long and short term funding
to America's small businesses each and every year of this
reauthorization. In just the last three years, these SBA loan programs
have created more than 500,000 new jobs nationwide. Over the past three
years in Indiana, the 504 program alone has provided $125 million in
capital to small businesses and created 5,000 new jobs. The employees
who fill the new positions and the entrepreneurs who have expanded
their businesses return millions of dollars in payroll, sales, income,
and real estate taxes to the Federal, State, and local governments in
every county and State each year. These programs also provide specific,
critical support to businesses that are owned and operated by women,
minorities, and veterans, groups that sometimes face greater difficulty
in obtaining capital.
Best of all, the 504 loan program provides all of these opportunities
for economic growth at no cost to the taxpayer. The 504 program is
subsidy-free, financed purely by user fees that borrowers pay to
finance the risk inherent in the program. The cost to the taxpayers is
zero.
Even with these advantages, there are still greater needs for capital
in Indiana, particularly in the manufacturing sector, which employs
580,000 Hoosiers, a higher percentage of industrial workers than any
other State. The manufacturing sector is in crisis. Since July 2000,
manufacturing has lost 2.6 million jobs--the largest decline during the
post-World War II era. Recent job losses in manufacturing jobs
represents nearly 90 percent of total U.S. job losses. Manufacturing
output has shown virtually no growth since December 2001.
Manufacturing is, and will continue to be, critical to our country's
overall economic growth, and for that reason, I want to help our small
manufacturers that are struggling to compete with the low wages and
high technology equipment used by our international competitors. In
order to addresses this need, I offered an amendment during the mark-up
of this bill that was graciously accepted by the Committee Chair. The
provision directly address the needs of America's small manufacturers,
providing them with the additional capital they need to stay
competitive in both the United States and world markets.
The provision would increase the 504 maximum loan guaranty for small
manufacturers to $4 million and alter the job creation capital
requirements for small manufacturers, allowing small manufacturers to
create one new job for each $100,000 in 504 loan guarantees. As a
result of this legislation, companies will be able to obtain new
equipment, become more competitive and, most importantly, hire new
workers. Indiana's Certified Development Companies estimate that the
bill could create between 200 and 400 additional jobs each year.
The change to the 504 loan program will allow our manufacturers to
acquire more state-of-the-art equipment and technology to become more
productive, and lower their operating costs. If small manufacturers are
allowed to invest in state-of-the-art technology, and remain
competitive with foreign competitors, this will put more hardworking
Hoosiers back to work. Further, these jobs will provide higher wages
and benefits than we see available in many communities today, thereby
improving our quality of life.
This legislation will provide the fuel that our manufacturers need to
remain competitive in world market and to create jobs for workers at
home. I commend the Senate for passing this bill and hope that the
Senate and the House will reconcile their differences quickly so that
this critical legislation can go to the President's desk for his
signature.
on-demand air service
Mr. WYDEN. Mr. President, I want to take a moment to highlight a
particular issue that my staff has been talking to the Small Business
Administration, SBA about. This relates to an Oregon company named
SkyTaxi, which has an innovative and ambitious business plan for
providing on-demand air service to small communities. As my colleague
from Maine knows better than most, small and rural communities are
often gravely underserved by commercial airlines. These are places
where transportation links are a make-or-break issue for local economic
opportunity. But, as a recent General Accounting Office report
concluded last January, the trend is not positive. The current turmoil
in the airline industry hits small communities hard, because those are
the first places airlines trim or eliminate service when they are
looking to cut costs. And most efforts to promote air service to small
communities have met with limited long-term success.
Ms. SNOWE. I agree with the Senator that attracting new air service
and retaining current service to small communities is a critical
economic issue. I am also familiar with the GAO report to which he
refers, since Senator Wyden and I were two of the three Senate
requesters of that report, together with our colleague on the Aviation
Subcommittee, Senator Rockefeller.
Mr. WYDEN. The Senator may recall, then, that the GAO report briefly
discusses SkyTaxi as a potential alternative way to provide air service
to small communities. The report observes that SkyTaxi offers a
business model that is still relatively new, but that could help meet
some of the needs of small communities.
Ms. SNOWE. I share the Senator's view that it is critical to explore,
support and promote alternative approaches for meeting the
transportation needs of small and rural communities. This includes
ensuring that Federal agencies take the appropriate action to provide
financial assistance to small business franchisees interested in
helping communities improve transportation services.
Mr. WYDEN. SkyTaxi intends to operate through a franchise system, in
which individual small businesses would purchase small aircraft and
operate local SkyTaxi franchises. But purchasing an aircraft takes a
substantial amount of capital, and many potential franchise owners--
such as laid-off commercial pilots who now wish to start their own
businesses--find that financing for aviation-related businesses is
currently very difficult to obtain. SkyTaxi therefore expects and hopes
that potential franchise owners
[[Page S12094]]
would be able to turn to the SBA and its lending partners for small
business loans, in order to get up and running.
The problem now arises because, in order to satisfy FAA safety
requirements and obtain FAA certification, SkyTaxi needs to retain
certain authority over safety matters, including ensuring the
competence of flight crew and the quality of aircraft maintenance.
It has set up its franchise agreement accordingly. Unfortunately, the
SBA has so far taken the position that, due to the authority vested in
SkyTaxi in the franchise agreement, the SBA would view each of the
individual franchise owners as ``affiliated'' with Sky-Tax and each
other--and thus ineligible to apply for individual SBA guarantee loans.
My staff has been in contact with the SBA about this, and I am
hopeful that this eligibility problem can be solved. For example, it
may be possible to work with FAA to clarify the limits of SkyTaxi's
safety-related authority over franchisees, and to rework the franchise
agreement to preserve SBA loan eligibility. But for that to happen,
it's going to take a commitment from the SBA to work on a cooperative
basis to try to find a solution. If the SBA will roll up its sleeves
and work creatively with my office and with SkyTaxi, then I think the
problem can be solved to everyone's satisfaction. And in the end, the
real beneficiaries could be rural communities.
Ms. SNOWE. As chair of the Small Business Committee, I am concerned
by any interpretation of the Small Business Act that unnecessarily
inhibits access to SBA programs and services by eligible small
businesses. This interpretation not only affects the ability of small
businesses to receive financial assistance under the 7(a) loan program
but also to bid on Federal contracts set aside for small businesses. As
the economy struggles to recover, it is critical that we get back to
business--an investment in small business is an investment in jobs.
As we work with our colleagues on the House Small Business Committee
to reauthorize the SBA's programs and services, we will carefully
consider provisions to address this issue and work with the SBA to find
an agreeable solution.
Mr. WYDEN. I thank the Senator for her assistance with this issue,
and for her consistent and careful attention to small business issues
and rural transportation issues alike.
Mr. FRIST. I ask unanimous consent that the committee-reported
amendments be agreed to, the managers' amendment at the desk be agreed
to, the bill, as amended, be read a third time and passed, the motion
to reconsider be laid upon the table, and any statements relating to
the bill be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The committee amendments were agreed to.
The amendment (No. 1788) was agreed to, as follows:
(Purpose: To make technical corrections to the bill, and for other
purposes)
On page 87, strike line 7 and all that follows through page
91, line 4.
On page 91, strike line 23 and all that follows through
page 92, line 5, and insert the following:
Section 351(3)(A)(ii) of the Small Business Investment Act
of 1958 (15 U.S.C. 689(3)(A)(ii)) is amended--
(1) in subclause (I), by striking ``50 percent or more''
and all that follows and inserting ``the median family income
for such tract does not exceed 80 percent of the greater of
the statewide median family income or metropolitan area
median family income; or''; and
(2) in subclause (II), by striking ``household income''
each place it appears and inserting ``family income''.
On pages 109 through 110, redesignate paragraphs (6)
through (13) as paragraphs (7) through (14), respectively.
On page 109, between lines 2 and 3, insert the following:
``(6) Disadvantaged native american entrepreneur.--The term
`disadvantaged Native American entrepreneur' means a
disadvantaged entrepreneur who is also a member of an Indian
Tribe.''
On page 111, line 21, strike ``and'' and all that follows
through ``(4)'' on line 22, and insert the following:
``(4) to provide training and technical assistance to
disadvantaged Native American entrepreneurs and prospective
entrepreneurs; and
``(5)''
On page 117, strike lines 9 through 14 and insert the
following:
``(i) Authorization of Appropriations.--
``(1) In general.--There are authorized to be appropriated
to the Administrator $15,000,000 for each of the fiscal years
2004 through 2006 to carry out the provisions of this
section, which shall remain available until expended.
``(2) Training for native american entrepreneurs.--In
addition to the amount authorized under subsection (i)(1),
there are authorized to be appropriated to the Administrator
$2,000,000 for each of the fiscal years 2004 through 2006 to
carry out the provisions of subsection (c)(4), which shall
remain available until expended.''
On page 190, strike line 21 and all that follows through
``(iii)'' on page 191, line 1, and insert the following:
``(ii)''.
On page 192, strike line 11 and all that follows through
page 193, line 6, and insert the following:
SEC. 403. SMALL BUSINESS PARTICIPATION IN PRIME CONTRACTING.
(a) Reserved Contracts.--Section 15(j) of the Small
Business Act (15 U.S.C. 644(j)) is amended by adding at the
end the following:
``(4) Any adjustment to the simplified acquisition
threshold (as defined in section 4(11) of the Office of
Federal Procurement Policy Act (41 U.S.C. 403(11))), shall be
immediately matched by an identical adjustment to the small
business reserve for purposes of this subsection.''.
(b) Participation in Multiple Award Contracts.--Section
15(j) of the Small Business Act (15 U.S.C. 644(j)) is
amended--
(1) in paragraph (2), by striking ``(2) In carrying out
paragraph (1)'' and inserting ``(3) In carrying out
paragraphs (1) and (2)'';
(2) in paragraph (3), by striking ``(3) Nothing in
paragraph (1)'' and inserting ``(4) Nothing in this
subsection''; and
(3) by adding after paragraph (1) the following:
``(2)(A) In the case of orders under multiple award
contracts, including Federal Supply Schedule contracts and
multi-agency contracts, that are subject to the small
business reserve, contracting officers shall consider not
less than 2 small business concerns if such small business
concerns can offer the items sought by the contracting
officer on competitive terms, with respect to price, quality,
and delivery schedule, with the goods or services available
in the market.
``(B) If only 1 small business concern can satisfy the
requirement, the contracting officer shall include such small
business concern in their evaluation.''.
(c) Report Requirement.--
(1) In general.--Not less than once every 180 days, the
Comptroller General shall submit a report on the level of
participation in multiple award contracts, including the
Federal Supply Schedule to--
(A) the Small Business Administration;
(B) the Committee on Small Business and Entrepreneurship of
the Senate; and
(C) the Committee on Small Business of the House of
Representatives.
(2) Contents.--Each report submitted under paragraph (1)
shall contain, for the 6-month reporting period--
(A) the total number of multiple award contracts;
(B) the total number of small business concerns that
received multiple award contracts;
(C) the total number of orders;
(D) the total value of orders;
(E) the number of orders received by small business
concerns;
(F) the value of orders received by small business
concerns;
(G) the number of small business concerns that received
orders; and
(H) such other information that the Comptroller General
considers relevant.
On page 193, strike line 14 and all that follows through
page 194, line 7, and insert the following:
(2) in subparagraph (F), by striking the period at the end
and inserting ``; and''; and
``(G) certification that the offeror or bidder will acquire
articles, equipment, supplies, services, or materials, or
obtain the performance of construction work from small
business concerns in the amount and quality used in preparing
the bid or proposal, unless such small business concerns are
no longer in business or can no longer meet the quality,
quantity, or delivery date.''.
(b) Penalties for False Certifications.--Section 16(f) of
the Small Business Act (15 U.S.C. 645(f)) is amended by
striking ``of this Act'' and inserting ``or the reporting
requirements of section 8(d)(11)''.
On page 195, strike lines 4 through 19 and insert the
following:
(1) by redesignating paragraph (11) as paragraph (14); and
(2) by inserting after paragraph (10) the following:
``(11) Certification.--A report submitted by the prime
contractor pursuant to paragraph (6)(E) to determine the
attainment of a subcontract utilization goal under any
subcontracting plan entered into with a Federal agency under
this subsection shall contain the name and signature of the
president or chief executive officer of the contractor,
certifying that the subcontracting data provided in the
report are accurate and complete.
``(12) Centralized database.--The results of an evaluation
under paragraph (10)(C) shall be included in a national
centralized governmentwide database.
``(13) Payments pending reports.--Each Federal agency
having contracting authority shall ensure that the terms of
each contract for goods and services includes a provision
[[Page S12095]]
allowing the contracting officer of an agency to withhold an
appropriate amount of payment with respect to a contract
(depending on the size of the contract) until the date of
receipt of complete, accurate, and timely subcontracting
reports in accordance with paragraph (11).''.
On page 196, lines 17 and 18, strike ``performance, or lack
of performance of the subcontractor.'' and insert
``circumstances surrounding the failure to make the timely
payment described in subparagraph (A).''.
On page 199, line 3, strike ``(b)'' and insert the
following:
(b) HUBZone Status Timeline and Commencement.--
(1) In general.--A base closure area shall be treated as a
HUBZone for a period of 5 years beginning on the date of
final closure. A military base that was closed before the
date of enactment of this Act shall not be considered a base
closure area for purposes of this section.
(2) Effective date.--This section and the amendments made
by this section shall take effect on the date of enactment of
this Act.
(c)
The bill (S. 1375), as amended, was considered read the third time
and passed, as follows:
(The bill will be printed in a future edition of the Record.)
____________________