[Senate Report 107-236]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 545
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-236

======================================================================



 
             NATIVE AMERICAN SMALL BUSINESS DEVELOPMENT ACT

                                _______
                                

                 August 1, 2002.--Ordered to be printed

                                _______
                                

 Mr. Kerry, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2335]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 2335) to establish the Office 
of Native American Affairs within the Small Business 
Administration, to create the Native American Small Business 
Development Program, and for other purposes, having considered 
the same, reports favorably thereon with amendments and 
recommends that the bill, as amended, do pass.
    On July 24, 2002, the Committee on Small Business and 
Entrepreneurship considered S. 2335, the ``Native American 
Small Business Development Act.'' The Committee adopted by 
unanimous voice vote an amendment offered by the Chairman, 
Senator John F. Kerry, and the Ranking Republican, Senator 
Christopher S. Bond. As amended, S. 2335 would statutorily 
create an office housed in the U.S. Small Business 
Administration (SBA) called the Office of Native American 
Affairs and establish two grant assistance programs to provide 
resources to Native Americans, one of which is a pilot program 
designed to explore competing types of assistance to aid Native 
American communities. Having considered S. 2335, as amended, 
the Committee reports favorably thereon without further 
amendment and recommends that the bill do pass.

                            I. INTRODUCTION

    The United States has a unique historical and legal 
relationship with the American Indian tribes, which serves as 
the basis for the Federal government's responsibility and 
obligations. This government-to-government relationship is a 
well-established principle of Federal Indian law that is 
reflected in the U.S. Constitution and expressed in treaties, 
executive agreements and orders, statutes, the course of 
dealings, and hundreds of Federal court decisions. There are 
also moral components to the relationship, which has been 
described as a ``mutuality of obligations'' between the 
parties. The relationship is most easily understood by 
reference to the cession of millions of acres of land by tribes 
to the United States in return for peace, protection of tribal 
sovereignty, and the provision of programs and services by the 
United States.
    There are currently 561 Federally recognized tribes in the 
United States, with some 40 percent of tribes located in the 
state of Alaska. The 2000 Census data indicate there are 2.5 
million American Indians and Alaska Natives (AI/AN) in the 
United States, with over 57 percent living in urban areas, and 
the remainder residing on Indian reservations or in rural 
areas, sometimes hundreds of miles from the nearest urban area. 
In addition, approximately 4.1 million Census respondents 
identified themselves in the AI/AN category or ancestry who 
also claimed other ethnicity or ancestry. Many of these 
individuals would be eligible for Federal services under S. 
2335, the ``Native American Small Business Development Act.''
    Given the near-complete absence of private-sector 
enterprises in reservation communities, nearly one in three 
American Indians and Alaska Natives, or 31.2 percent, live in 
poverty. In the U.S. today, the unemployment rate is 5.9 
percent, whereas in Native communities the unemployment rate 
hovers near 50 percent--nearly twice that of the national 
unemployment rate in the Great Depression of the 1930s. Earning 
capacity figures also lag behind that of other Americans: for 
every $100 earned by the average American family, an American 
Indian family earns $62. Similarly, the average annual per 
capita income for American Indians is $8,284.
    Native Hawaiians face a similar set of economic 
circumstances and their communities would benefit from the 
targeted resources of S. 2335. For example, according to the 
2000 edition of the Native Hawaiian Data Book, published by the 
Office of Hawaiian Affairs of the state of Hawaii, over 19 
percent of Native Hawaiians in Hawaii are below the poverty 
level and over 45 percent of Native Hawaiians in Hawaii receive 
food stamps.
    Since 1910, the Congress has enacted over 160 statutes to 
address the conditions of Native Hawaiians, based upon their 
status as Native Americans. Like their American Indian and 
Alaska Native counterparts, Native Hawaiian communities 
experience high rates of unemployment, the highest rates of 
inadequate and overcrowded housing in the United States, and 
some of the highest rates of mortality from diabetes, 
hypertension and certain forms of cancer. In an effort to 
address the economic conditions that plague Native Hawaiian 
communities, Native Hawaiian small businesses have entered into 
partnerships with Native Hawaiian nonprofit organizations, so 
that business revenues can be used to address the needs of the 
broader Native Hawaiian population.
    Regardless of where Native Americans reside, however, they 
continue to rank at or near the bottom of nearly every social, 
health, and economic indicator, as compared to all other groups 
of American citizens. They continue to suffer the highest rates 
of unemployment and poverty, live in substandard housing, have 
poor health, receive an inadequate education, and contend with 
disintegrating social systems, all of which erode both the 
quality and dignity of life in Native communities and serve as 
indicators that the United States is not doing all it can to 
meet its responsibilities and promises.
    It is the Committee's belief that providing increased 
resources to Native American communities for small business 
creation and growth is essential to assisting Native American 
communities in their efforts to overcome the systemic problems 
that have lead to limited opportunities and high unemployment.
    The Small Business Administration currently has an Office 
of Native American Affairs (ONAA), whose stated mission is to 
ensure that American Indians, Alaska Natives and Native 
Hawaiians seeking to create, develop and expand small 
businesses have full access to the necessary business 
development and expansion tools available through the SBA's 
entrepreneurial development, lending and procurement programs. 
The ONAA has only one project designed to provide assistance to 
Native American communities, the Tribal Business Information 
Centers (TBICs). As of March 2002, the SBA has ceased funding 
for this useful activity, despite bipartisan support in the 
United States Senate. At its peak, the TBIC activity operated 
18 centers in seven states. SBA provided $32,000 to each center 
annually after the initial start-up funding provided by the 
Bureau of Indian Affairs at the Department of Interior.
    Although TBICs used limited SBA resources to provide 
desperately needed, culturally tailored business development 
assistance to Native American communities, their small number 
and inadequate funding level has prevented them from being a 
solution to the small business development needs of many Native 
American communities. Further, TBICs did not operate in Native 
Hawaiian or Native Alaskan communities. The Committee believes 
that TBICs have had the greatest impact when the services they 
provide were combined with a broader range of small business 
services, such as those currently provided by the SBA in non-
Native American communities, so as to reach a wider spectrum of 
small businesses in Native American communities.
    On February 4, 2002, the Bush Administration sent the 
Fiscal Year 2003 budget request to Congress. Within the budget 
submission for the SBA, the President requested $1 million for 
an unspecified grant program, designated ``Native American 
Outreach'' to provide resources ``directly to tribes to assist 
in economic development and job creation.'' Increased resources 
are needed to alleviate the dire conditions in Native America 
and address the basic human needs of American Indians, Alaska 
Natives and Native Hawaiians. While the Committee is in favor 
of providing increased resources to Native American 
communities, it is concerned about the SBA's desire to abandon 
the current TBIC program, which has the support of the Native 
American communities they serve, for an unspecified block grant 
program.
    The Senate Committee believes that the SBA would better 
serve Native American communities through the expansion of the 
existing TBIC activity, as envisioned by S. 2335, the ``Native 
American Small Business Development Act,'' and the expansion of 
other small business development programs in Native American 
communities that are capable of providing culturally tailored 
business development assistance and that authorize increased, 
targeted resources as envisioned by both S. 2335 and H.R. 2538, 
the ``Native American Small Business Development Act.''

                        II. LEGISLATIVE HISTORY

H.R. 2538, the ``Native American Small Business Development Act''

    On July 17, 2001, Congressman Tom Udall of New Mexico 
introduced H.R. 2538, the ``Native American Small Business 
Development Act.'' This legislation authorizes a three-year 
pilot program at $7 million per year, for state Small Business 
Development Centers (SBDCs) to receive grant assistance from 
the SBA, up to a maximum of $300,000, to assist with outreach, 
development, and enhancement of small business startups and 
expansions that are owned by Indian tribe members, Alaska 
Natives, or Native Hawaiians and that are located in Alaska or 
Hawaii, or on Indian lands in the 48 contiguous states.
    On Thursday, July 19, 2001, the Subcommittee on Workforce, 
Empowerment and Government Programs of the Committee on Small 
Business held a hearing to hear testimony with regard to H.R. 
2538 and other legislation. According to the House Report 
accompanying H.R. 2538 (H. Rpt. 107-211), the hearing ``showed 
that some SBDCs were already providing, on a limited basis, the 
services which are the subject of the three bills. The hearing 
evidenced a need for expansion of the services to other 
locations.''
    On August 1, 2001, the House Committee on Small Business 
considered H.R. 2538 and passed the legislation without 
amendment. On December 5, 2001, the House of Representatives 
passed, by voice vote, H.R. 2538, without amendment.
    The Senate Committee believes that providing additional 
resources to SBDCs for culturally tailored business development 
assistance in Native American communities is an important step 
in helping to develop these communities. However, the Senate 
Committee also believes that such a step should coincide with 
an increase in the TBIC activity and the statutory creation of 
a program at the SBA to promote small business development in 
Native American communities.

S. 2335, the ``Native American Small Business Development Act''

    On April 25, 2002, Senator Tim Johnson of South Dakota 
introduced S. 2335, the ``Native American Small Business 
Development Act.'' Senators John F. Kerry, Maria Cantwell, Paul 
D. Wellstone, Thomas A. Daschle, Max Baucus, Daniel K. Inouye, 
Jeff Bingaman, Debbie Stabenow, Hillary Rodham Clinton, Gordon 
Smith and Daniel K. Akaka are cosponsors of the legislation. 
The purpose of S. 2335 was to create, by statute, an office 
housed in the SBA called the Office of Native American Affairs 
(ONAA), create a Native American Development Program and 
establish three assistance programs to provide resources to 
Native Americans, two of which are pilot programs.
    On April 30, 2002, the Committee held a joint hearing with 
the U.S. Senate Committee on Indian Affairs titled ``Small 
Business Development in Native American Communities: Is the 
Federal Government Meeting its Obligations?'' During the 
hearing, the Committees heard testimony regarding SBA's 
proposed block grant program, S. 2335 and general Native 
American development issues surrounding small business growth 
and creation. Congressman Tom Udall, the sponsor of H.R. 2538 
and Senator Tim Johnson testified on the first panel, both in 
support of S. 2335. The second panel consisted of Ms. Kaaren 
Johnson Street, the Associate Deputy Administrator for 
Entrepreneurial Development at the SBA. Ms. Johnson Street 
represented the SBA and provided testimony on the block grant 
proposal, stating that the SBA had no position on the 
legislation before the Committee (S. 2335). The third panel to 
provide testimony consisted of Native American activists, 
program providers and Tribal leaders. All participants on the 
third panel expressed support for S. 2335 and stated it would 
be of substantial benefit to Native American communities.
    During consideration of S. 2335, on July 24, 2002, the 
Committee adopted an amendment proposed by Senators Kerry and 
Bond, which made changes to the Native American Development 
Grant Pilot Program, eliminated the American Indian Tribal 
Assistance Center Grant Program, and clarified provisions of 
the legislation.
    Changes to the Native American Development Grant pilot 
program stemmed from testimony presented to the Committee and 
subsequent discussions with the Association of Small Business 
Development Centers. The elimination of the American Indian 
Tribal Assistance Center grant program was a compromise 
agreement worked out between the Committee managers to address 
unease regarding the $7 million cost of the legislation and the 
concern that multiple programs might result in inadequate 
funding levels. Concerns that the SBA should focus on 
strengthening its existing TBIC activity were also strongly 
expressed. Clarifying changes were made as needed after 
consultation with program beneficiaries, and the Senate and 
House sponsors of the legislation.

    III. ANALYSIS OF S. 2335, THE ``NATIVE AMERICAN SMALL BUSINESS 
                     DEVELOPMENT ACT,'' AS AMENDED

Purpose

    The purpose of the Native American Small Business 
Development Act, as amended, is to create by statute an office 
housed in the U.S. Small Business Administration (SBA) called 
the Office of Native American Affairs (ONAA). The legislation 
also establishes two assistance programs to provide aid to 
Native Americans, one of which is a pilot program.
    The original legislation called for the establishment of a 
third assistance program, the American Indian Tribal Assistance 
Center Grant Pilot Program. The amendment adopted in Committee 
eliminated this proposed pilot program.

Role of the Office of Native American Affairs

    The ONAA, to be headed by an Assistant Administrator, will 
be responsible for assisting Native Americans and Native 
American communities to start, operate, and grow small business 
concerns; develop management and technical skills; seek Federal 
procurement opportunities; increase employment opportunities 
through the start and expansion of small business concerns; and 
increase their access to capital markets.

Responsibilities of the Assistant Administrator

    The Assistant Administrator for the ONAA shall be 
responsible for administering the Native American Development 
Program; recommending budget levels and establishing funding 
levels for the programs under its jurisdiction; and maintaining 
lines of communication between Native American business centers 
(NABCs). The Assistant Administrator (AA) is statutorily 
required to consult with Tribal Colleges and Tribal 
Governments, NABCs, Alaska Native Corporations (ANC), and 
Native Hawaiian Organizations (NHO) when carrying out 
responsibilities under this legislation. Under the Native 
American Small Business Development Act, the AA must have 
knowledge of Native American cultures and experience providing 
culturally tailored small business development assistance to 
Native Americans.
    The requirement that the AA also consult with the NABCs 
established under the legislation was added in the amendment 
adopted by the Committee.
            Native American Small Business Development Program
    The Native American Small Business Development program 
under S. 2335 is designed to be the SBA's primary program for 
providing business development assistance to Native American 
communities. To provide this assistance, the SBA will offer 
financial and resource assistance to establish and keep NABCs 
in operation. Financial assistance under the Native American 
Development program would be available through competitive 
grant awards to Tribal Governments and Tribal Colleges, ANCs 
and NHOs. Resource assistance would also be available to NABCs 
located on or near Tribal lands.
    Financial assistance includes grants (without a matching 
requirement), contracts, or cooperative agreements. ANCs and 
NHOs may only receive grant assistance.
    Resource assistance includes personal computers, CD-ROM 
technology and interactive videos, graphic work stations, 
computer software, distance learning business-related training 
courses, and reference materials.

Use of Funds

    The funds available under the legislation are to be used to 
address the unique conditions faced by reservation-based 
American Indians, as well as Native Hawaiians and Alaska 
Natives, in their efforts to create, develop, and expand small 
business concerns.
    Each NABC that receives financial or resource assistance 
shall establish a five-year project. The five-year projects 
will offer development assistance to provide:
          Financial education assistance, including training 
        and counseling in applying for and securing business 
        credit and investment capital; preparing and presenting 
        financial statements; and managing cash flow and other 
        financial operations of a business concern;
          Management education assistance, including training 
        and counseling in planning, organizing, staffing, 
        directing, and controlling each major activity and 
        function of a small business concern; and
          Marketing education assistance, including training 
        and counseling in identifying and segmenting domestic 
        and international market opportunities; preparing and 
        executing marketing plans; developing pricing 
        strategies; locating contract opportunities; 
        negotiating contracts; and utilizing varying public 
        relations and advertising techniques.

Application Process

    Eligible entities desiring assistance under this program 
must submit five-year project proposals to the SBA, which is 
responsible for determining eligibility criteria within the 
following guidelines:
          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;
          The ability of the applicant to commence a project 
        within a minimum amount of time and the ability of the 
        applicant to provide training and services to a 
        representative number of Native Americans;
          The proposed location for the NABC, with a priority 
        given for geographic dispersion and location near 
        populations targeted by the legislation; and
          Previous assistance from the SBA to provide services 
        in Native American communities.
    It is the Committee's intention that in establishing the 
predetermined selection criteria for the NABC grant application 
process, the SBA should provide the highest priority to current 
and former participants in the TBIC activity. The SBA should 
then look to creating the widest possible geographic dispersion 
of NABCs to ensure Native American communities throughout the 
country have access to NABC services.

Program Monitoring and Evaluation

    Each recipient of assistance under the NABC program shall 
annually provide the SBA with a cost breakdown of all 
expenditures from the previous year.
    The SBA is required to review these financial reports and 
analyze the results of each examination to determine the 
programmatic and financial viability of each NABC. The 
Committee expects this analysis to be completed promptly.
    Grant renewals are available at the completion of a five-
year project. The SBA may deny a renewal if the NABC has failed 
to provide any significant, required information or if the 
information provided by the NABC is inadequate or incomplete, 
preventing an adequate analysis of the performance of the NABC.
    Contract and cooperative agreement renewals are on a yearly 
basis, provided funding is available. A contract or cooperative 
agreement may not be terminated or denied renewal without a 
written statement of explanation from the SBA.

SBA Reporting Requirement

    The SBA, with respect to each NABC receiving financial 
assistance, must report annually to Congress: the number of 
individuals receiving assistance from the NABC; the number of 
startup business concerns formed; the gross receipts of 
assisted concerns; the employment increases or decreases of 
assisted Native American small business concerns; to the 
maximum extent practicable, increases or decreases in profits 
of assisted Native American small business concerns; and the 
most recent financial examination.
    The Committee believes that the SBA should develop 
appropriate standards, conforming to the Government Performance 
and Results Act of 1993, for the required report.

Native American Business Center Reporting Requirement

    Each NABC receiving assistance from the Federal government 
under this program shall annually provide the SBA a report on 
the services provided with such financial assistance, including 
the number of individuals assisted, categorized by ethnicity; 
the number of hours spent providing counseling and training for 
those individuals; the number of startup small business 
concerns formed, maintained, and lost; the gross receipts of 
assisted small business concerns; the number of jobs created, 
maintained, or lost at assisted small business concerns; and 
the number of Native American jobs created, maintained, or lost 
at assisted small business concerns.

Authorization

    The program is authorized at $4 million per year.
    The amendment adopted in Committee transferred $1 million 
of the original $5 million authorization to the Native American 
Development Grant Pilot Program to accommodate changes made by 
the amendment.
            Native American Development Grant Pilot Program
    This pilot program establishes a Native American 
development grant, which is designed to provide culturally 
tailored business development training and other services to 
Native Americans and small businesses owned by Native 
Americans. The program is authorized as a 4-year pilot program. 
Grants awarded under this program are for a period of two to 
four years.

Eligible Participants

    The Native American development grant is open to two types 
of organizations: (1) any Small Business Development Center 
(SBDC); or (2) any private nonprofit organization that (a) is 
permitted by the tribal government to provide technical 
assistance to small business concerns within the jurisdiction 
of the tribe, (b) is an NHO, or (c) is an ANC.
    A provision in the legislation requires that the same 
number of grants be issued to each type of eligible 
organization and that disbursements occur to each type of 
organization in pairs, so that each type of organization can be 
evaluated against the other on a level playing field.
    The amendment adopted by the Committee changed the 
description of an eligible nonprofit by striking ``has tribal 
government members, or their designees, comprising a majority 
of its board of directors,'' and replacing it with the phrase 
``is permitted by the tribal government to provide technical 
assistance to small business concerns within the jurisdiction 
of the tribe.'' The Committee amendment made this change in 
response to hearing testimony raising concerns about the 
volatility in the leadership composition of some Tribal 
Governments, which may make it difficult for some nonprofit 
entities to maintain Tribal Government members or their 
designees on their boards.
    This change is also intended to allow for a broader 
application pool for the Native American development grant. The 
Committee intends ``permitted'' to mean operating with the 
knowledge of the Tribal Government and should not be 
interpreted to mean formal written authority.
    The Committee amendment also set forth the requirement for 
an equal number of grants for eligible types of organizations 
as a response to concerns that the pilot program, as put forth 
in the underlying legislation, did not establish a true test 
between SBDC services and nonprofit services in Native American 
communities.

Application Criteria

    Applicants must employ a full-time executive director or 
program manager to manage the facility; agree to a site visit 
as part of the final selection process and to an annual 
programmatic and financial examination; and remedy, to the 
maximum extent practicable, any problems identified pursuant to 
that site visit or examination. Applicants must also provide:
          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;
          Information relating to proposed assistance that the 
        grant will provide, including the number of individuals 
        to be assisted, the number of hours of counseling, 
        training, and workshops to be provided;
          Information demonstrating the effective experience of 
        the applicant in conducting financial, management, and 
        marketing assistance programs designed to impart or 
        upgrade the business skills of current or prospective 
        Native American business owners; provide training and 
        services to a representative number of Native Americans 
        located on or off Tribal Lands; using resource partners 
        of the SBA and other entities, including universities, 
        Tribal Governments, or Tribal Colleges; and the prudent 
        management of finances and staffing;
          The proposed location where Native Americans will 
        receive the culturally tailored business development 
        training and other services to be provided by the 
        applicant; and
          A multi-year plan, corresponding to the length of the 
        grant, that describes the number of Native Americans 
        and Native American small business concerns to be 
        served by the grant; and the training and services to 
        be provided to a representative number of Native 
        Americans.
    The amendment adopted in Committee added the phrase ``on or 
near Tribal lands'' to the multi-year plan as it pertains to 
proposed services in the contiguous United States. It is the 
Committee's intention that services provided in the contiguous 
United States under this pilot be focused on or near the 
reservation, where poverty rates are at their worst and 
economic opportunities are severely limited.

Application Review and Approval

    The SBA will review each eligible applicant's submission 
and approve or disapprove of the application within 60 days of 
submission.
    The amendment adopted in Committee establishes a 
provisional approval process so that the SBA can meet the 
requirements of the 60-day application review in the event that 
one type of applicant must wait for the approval of the other 
under the pairing requirement.

Reporting Requirements

    Each recipient of a Native American development grant must 
annually report to the SBA on the number of individuals 
assisted, categorized by ethnicity; the number of hours spent 
providing counseling and training for those individuals; the 
number of startup small business concerns formed, maintained, 
and lost; the gross receipts of assisted small business 
concerns; the number of jobs created, maintained, or lost at 
assisted small business concerns; and the number of Native 
American jobs created, maintained, or lost at assisted small 
business concerns.
    Although not specifically stated in the legislation, the 
Committee believes that SBA should submit and evaluation of 
this pilot program to the Committee on Small Business of the 
House and the Committee on Small Business and Entrepreneurship 
of the Senate detailing whether the pilot program was 
successful in providing culturally tailored small business 
assistance to Native Americans and comparing and contrasting 
the results of the activities of each type of eligible grant 
organization under the pilot program. The Committee believes 
that the SBA should develop appropriate standards, conforming 
to the Government Performance and Results Act of 1993, for this 
evaluation.

Grant Level and Authorization

    The grants are capped at $100,000 per year. The pilot 
program is authorized at $2 million per fiscal year.
    The amendment adopted in Committee increased the original 
authorization for this pilot program from $1 million to $2 
million, $1 million for each type of eligible organization. 
This increase was necessary to accommodate changes to the 
Native American development grant pilot made by the amendment. 
The $1 million was transferred from the Native American Small 
Business Development program established in Section 2 of S. 
2335.
            American Indian Tribal Assistance Center Grant Program
    This pilot program, along with its $1 million authorization 
level and references to it within the underlying legislation, 
was eliminated in the amendment adopted in Committee. The 
elimination of this program reduces the overall authorized 
level of S. 2335 to $6 million.

                           IV. COMMITTEE VOTE

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following votes were recorded on July 24, 2002. 
A motion by Senator Kerry to adopt an amendment by Senators 
Kerry and Bond concerning a compromise agreement on the 
legislation passed by unanimous voice vote. A motion by Senator 
Kerry to adopt S. 2335, the ``Native American Small Business 
Development Act,'' as amended, was approved by a 19-0 recorded 
vote, with the following Senators voting in the affirmative: 
Kerry, Bond, Levin, Harkin, Lieberman, Wellstone, Cleland, 
Landrieu, Edwards, Cantwell, Carnahan, Burns, Bennett, Snowe, 
Enzi, Fitzgerald, Crapo, Allen and Ensign. No Senator voted in 
the negative.

                   V. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI(11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who make use of the services provided.

                      VI. CHANGES IN EXISTING LAW

    In the opinion of the Committee, it is necessary to 
dispense with the requirement of rule XXVI(12) of the Standing 
Rules of the Senate in order to expedite the business of the 
Senate.

                           VII. COST ESTIMATE

    In compliance with rule XXVI(11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts indicated by the 
Congressional Budget Office in the following letter.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 30, 2002.
Hon. John F. Kerry,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepare the enclosed cost estimate for S. 2335, the Native 
American Small Business Development Act.
    If you wish further details on the estimate, we will be 
pleased to provide them. The CBO staff contact is Ken Johnson.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 2335--Native American Small Business Development Act

    Summary: S. 2335 would authorize the Small Business 
Administration (SBA) to issue grants for small business 
development centers (SBDCs) and other business training program 
targeted to Native Americans. These programs would be operated 
by the private sector, schools, community groups, or tribal 
governments and would provide management assistance to current 
and prospective small business owners.
    S. 2335 would authorize the appropriation of $4 million a 
year for SBDCs during the 2003-2007 period of $2 million a year 
for other training programs through 2006. CBO estimates that 
implementing the bill would cost $27 million over the 2003-2007 
period, assuming the appropriation of the authorized amounts. 
The bill would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply.
    S. 2335 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would benefit tribal governments receiving grants 
under this bill, and any costs they incur would be voluntary.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 2335 is shown in the following table. 
For this estimate, CBO assumes that the bill will be enacted by 
the end of fiscal year 2002 and that the authorized amounts 
will be appropriated for each year. Estimated outlays are based 
on historical spending patterns for similar SBA programs. The 
costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year in millions of dollars--
                                                                    --------------------------------------------
                                                                       2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level................................................        6        6        6        6        4
Estimated Outlays..................................................        4        6        6        6        5
----------------------------------------------------------------------------------------------------------------

    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: S. 2335 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit tribal governments 
receiving grants under this bill, and any costs they incur 
would be voluntary.
    Previous CBO cost estimate: On August 14, 2001, CBO 
transmitted a cost estimate for H.R. 2538, the Native American 
Small Business Development Act, as ordered reported by the 
House Committee on Small Business on August 1, 2001. H.R. 2538 
authorized the appropriation of $7 million a year during the 
2002-2004 period for SBDCs that assist Native Americans. CBO 
estimated that implementing that bill would cost about $200 
million over the 2002-2006 period, assuming the appropriation 
of the authorized amounts.
    Estimate prepared by: Federal costs: Ken Johnson; Impact on 
state, local, and tribal governments: Greg Waring; Impact on 
the private sector: Cecil McPherson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

VIII. SECTION-BY-SECTION ANALYSIS, S. 2335, THE ``NATIVE AMERICAN SMALL 
                 BUSINESS DEVELOPMENT ACT,'' AS AMENDED

    The bill establishes the Office of Native American Affairs 
within the Small Business Administration, creates the Native 
American Small Business Development Program, and creates a 
pilot program to assist Native American communities.

Section 1. Short title

    The Act is titled the ``Native American Small Business 
Development Act.''

Section 2. Native American Small Business Development Program

    This section amends the Small Business Act by redesignating 
the existing Section 36 as Section 37 and inserting a new 
Section 36 with the Native American Small Business Development 
Program.

Section 3. Pilot program

    This section establishes the Native American Development 
Grant Pilot Program.

                                  
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