[Senate Report 107-251]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 561
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-251

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



 
            SMALL BUSINESS PROCUREMENT OMBUDSMAN ACT OF 2002

                                _______
                                

               September 3, 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. 2753]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 2753), having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill (as amended) do pass.
    On July 24, 2002, the Committee on Small Business and 
Entrepreneurship considered S. 2753, the ``Small Business 
Procurement Ombudsman Act of 2002'' originally introduced as 
the ``Small and Disadvantaged Business Ombudsman Act.'' The 
Committee adopted by unanimous voice vote a substitute 
amendment offered by the Chairman, Senator John F. Kerry, and 
the Ranking Republican, Senator Christopher S. Bond. As 
amended, S. 2753 would create a statutory position housed in 
the U.S. Small Business Administration's Office of Advocacy 
called the Small Business Procurement Ombudsman, make 
improvements to the Office of Small and Disadvantaged Business 
Utilization at each Federal agency, and increase the Federal 
government's governmentwide small business prime contracting 
goal to 30 percent. Having considered S. 2753, as amended, the 
Committee reports favorably thereon without further amendment 
and recommends that the bill do pass.

                            I. INTRODUCTION

    Small businesses play a critical role in providing 
competition and bringing innovation to our Federal procurement 
system. A major reason for the creation of the Small Business 
Administration (SBA) was to ensure an adequate private-sector 
base for the Department of Defense, as it was deemed in our 
national security interests to have a thriving small business 
sector. The Committee believes that a thriving small business 
sector is more important than ever, not just to our national 
security, but to our economic security as well.
    The Federal government, through the Small Business Act and 
other legislation, has in place programs designed to promote 
small business participation in the Federal procurement 
marketplace. The 8(a) Business Development program, the Small 
and Disadvantaged Business (SDB) program, the Historically 
Underutilized Business Zone (HUBZone) program, the woman-owned 
business procurement program, the disabled veteran-owned small 
business program, and the general small business set-aside all 
play a decisive role in providing fair access to the Federal 
marketplace for small businesses. However, these programs must 
be implemented fully and faithfully if small businesses are to 
receive their fair share of the Federal procurement 
marketplace.
    In addition to these programs, and in an effort to ensure 
small businesses are participating in Federal procurement at 
appropriate levels, Congress enacted legislation establishing 
statutory governmentwide goals for contracting dollars to be 
awarded to various types of small business: SDB, 5 percent; 
HUBZone, 3 percent (beginning in FY 2003); women-owned 
business, 5 percent; disabled veteran-owned, 3 percent; and all 
small businesses, 23 percent.
    Table 1 demonstrates the Federal government's small 
business prime contracting goal achievement for the previous 
four fiscal years and highlights when the Federal government 
failed to achieve a statutory small business goal. The table 
also demonstrates that the Federal government, for fiscal years 
1998, 1999, 2000 and 2001 achieved slightly below or slightly 
above the statutory, 23 percent governmentwide small business 
prime contracting goal.

                                TABLE 1


                                                 SMALL BUSINESS
----------------------------------------------------------------------------------------------------------------
              Year                     Billion        Goal  percent    Actual  percent           SB loss
----------------------------------------------------------------------------------------------------------------
1998............................            $181.7             23.00             23.39
1999............................             185.7             23.00             23.10
2000............................             200.9             23.00             22.26  $1.5 billion
2001............................             219.6             23.00             22.81   417 million
----------------------------------------------------------------------------------------------------------------


                                                   WOMEN-OWNED
----------------------------------------------------------------------------------------------------------------
              Year                     Billion        Goal  percent    Actual  percent          WOB loss
----------------------------------------------------------------------------------------------------------------
1998............................            $181.7              5.00              2.21  $5.1 billion
1999............................             185.7              5.00              2.50   4.6 billion
2000............................             200.9              5.00              2.28   5.5 billion
2001............................             219.6              5.00              2.49   5.5 billion
----------------------------------------------------------------------------------------------------------------


                                                   HUBZONE \1\
----------------------------------------------------------------------------------------------------------------
              Year                     Billion        Goal  percent    Actual  percent           HZ loss
----------------------------------------------------------------------------------------------------------------
1998............................            $181.7           \2\ N/R               N/R
1999............................             185.7              1.00               N/A  $1.9 billion
2000............................             200.9              1.50              0.33   2.4 billion
2001............................             219.6              2.00              0.72  2.8 billion
----------------------------------------------------------------------------------------------------------------
\1\ HUBZone = Historically Underutilized Business Zone.
\2\ N/R = not yet required by law.


                                             DISABLED VETERAN-OWNED
----------------------------------------------------------------------------------------------------------------
              Year                     Billion        Goal  percent    Actual  percent           DV loss
----------------------------------------------------------------------------------------------------------------
1998............................            $181.7           \1\ N/R               N/R
1999............................             185.7               N/R               N/R
2000............................             200.9              3.00               N/A  $6.0 billion
2001............................             219.6              3.00              0.25   6.0 billion
----------------------------------------------------------------------------------------------------------------
\1\ N/R = not yet required by law.


                                                      8(a)
----------------------------------------------------------------------------------------------------------------
                                                                                                 Percent change
                  Year                         Billion        Goal  percent    Actual  percent      from 1998
----------------------------------------------------------------------------------------------------------------
1998....................................            $181.7           \1\ N/G              3.57
1999....................................             185.7               N/G              3.40             -4.76
2000....................................             200.9               N/G              2.88            -19.33
2001....................................             219.6               N/G              2.86            -19.89
----------------------------------------------------------------------------------------------------------------
\1\ N/G = no statutory goal.


                                                   ALL SDB \1\
----------------------------------------------------------------------------------------------------------------
              Year                     Billion        Goal  percent    Actual  percent          SDB loss
----------------------------------------------------------------------------------------------------------------
1998............................            $181.7              5.00              6.48
1999............................             185.7              5.00              6.70
2000............................             200.9              5.00              6.49
2001............................             219.6              5.00              7.12
----------------------------------------------------------------------------------------------------------------
\1\ SDB = Small Disadvantaged Business.

    According to the Federal government's own data, as 
presented in Table 1, small business participation in Federal 
procurement has failed to achieve the statutory goal of 23 
percent for the past two years, 8(a) participation has steadily 
declined, the HUBZone and disabled veteran-owned small business 
procurement programs have fallen well short of goal attainment, 
and women-owned small business participation in government 
procurement has failed to achieve any noticeable increase, 
despite passage of a targeted procurement program to assist 
these firms.
    The Committee believes that a major cause of this decline 
has its roots in the new procurement environment created by 
reforms in the mid-1990s (such as passage of the Federal 
Acquisition Streamlining Act and the Federal Acquisition Reform 
Act, and the regulatory changes to procurement programs in 
response to the Adarand Constructors Inc. v. Pena decision), 
and reductions in the acquisition workforce. Additionally, a 
procurement culture that favors expediency and short-term cost 
savings has relegated small business participation in Federal 
procurement to secondary status.
    Until the Federal government, at all levels, realizes the 
importance of doing business with small business, these 
negative trends will continue. Our nation will not have access 
to a wide range of small business suppliers, and small 
businesses across the country will continue to lose billions of 
dollars in contract opportunities year after year.
    While no single piece of legislation alone can ever solve 
the complex problems faced by small businesses in today's 
Federal procurement environment, the Committee believes that 
the creation of an advocate, such as an ombudsman for small 
business procurement, to assist small business owners and 
ensure they are treated fairly in the procurement process will 
be of great benefit.
    For example, small businesses frequently contact the 
Committee to report problems they are having with a prime 
contractor or a contracting agency. Too often, these businesses 
are afraid to come forward and make an official complaint for 
fear of being black-balled and denied future contracting 
opportunities. A small business procurement ombudsman would 
provide one solution for these small businesses who fear 
retaliation, by allowing them to submit confidential 
complaints. A small business procurement ombudsman would also 
work to change the culture at Federal procuring agencies by 
tracking the training of procurement personnel and working to 
ensure that this training not only includes the ``how to'' of 
small business participation, but the ``why'' of small business 
participation--their crucial role in agency success and the 
national economy.
    The Committee also believes that strengthening the role 
played by the Office of Small and Disadvantaged Business 
Utilization at each Federal agency will have a positive impact 
on small business participation in the Federal procurement 
system and serve as a necessary corollary to creating a 
governmentwide advocate for small business procurement.
    The Committee has heard statements that the governmentwide 
small business prime contracting goal should be raised to 
provide small businesses an increased share of the over $200 
billion in goods and services purchased yearly by the Federal 
government. Some advocates have requested a level as high as 40 
percent, given that small businesses make up an overwhelming 
percentage of Federal contractors. However, given the current 
level of small business participation, the Committee has 
supported a goal of 30 percent. By raising the Federal 
governmentwide small business prime contracting goal, 
opportunities for all small businesses should increase and the 
diversified network of small business suppliers needed to meet 
the Federal government's procurement needs should be enhanced.
    The Committee believes S. 2753 will help ensure small 
businesses are treated fairly in the Federal procurement 
process and enhance small business participation in the Federal 
procurement system.

                        II. LEGISLATIVE HISTORY

    S. 2753, the ``Small and Disadvantaged Business Ombudsman 
Act,'' was officially introduced by Senator John F. Kerry on 
July 18, 2002. Senators Christopher S. Bond, Max Cleland, Maria 
Cantwell, Jeff Bingaman, Jean Carnahan and Mary L. Landrieu are 
cosponsors of the legislation. The Committee held a roundtable 
on June 19, 2002 titled, ``Are Government Purchasing Policies 
Hurting Small Business?'' During the roundtable, the bill's 
predecessor, a discussion draft of the Small and Disadvantaged 
Ombudsman bill, was a topic of deliberation. The draft included 
provisions to establish a small business ombudsman to help 
ensure small businesses are treated fairly in the procurement 
process and to report to the Congress on Federal procurement 
activities as they relate to small business. The draft also 
contained an increase in the statutory, governmentwide small 
business prime contracting goal from 23 percent to 30 percent.
    Many small business advocates that participated in the 
Roundtable supported the creation of a small business 
procurement ombudsman and supported the increase in the small 
business prime contracting goal. Suggestions were made to 
include provisions to improve the Office of Small and 
Disadvantaged Business Utilization (OSDBU) at each Federal 
agency and give the ombudsman the authority to rectify small 
business complaints as well. Suggestions were also made to 
change the name of the ombudsman to be more reflective of all 
small business concerns.
    During consideration of S. 2753, the Committee adopted a 
substitute amendment proposed by Senators Kerry and Bond, which 
changed the name of the ombudsman from the Small and 
Disadvantaged Business Ombudsman for Procurement to the Small 
Business Procurement Ombudsman, transferred the position from 
the Small Business Administration (SBA) to the SBA's Office of 
Advocacy, and required the Chief Counsel for Advocacy to 
appoint the ombudsman. The substitute also transferred the 
authority to work on the goal attainment plan required under 
the legislation from the ombudsman to the SBA program managers 
and made a number of technical improvements to the section 
regarding the OSDBU at each Federal agency.
    The amendment also changed the short title of the 
legislation from the Small and Disadvantaged Business Ombudsman 
Act to the Small Business Procurement Ombudsman Act of 2002.
    The substitute amendment was the result of a compromise 
agreement reached between the Chairman and the Committee's 
Ranking Republican. It also reflects issues and suggestions 
raised at the June 19, 2002, Committee roundtable.

 III. ANALYSIS OF S. 2753, THE ``SMALL BUSINESS PROCUREMENT OMBUDSMAN 
                       ACT OF 2002,'' AS AMENDED

Purpose

    S. 2753, the Small Business Procurement Ombudsman Act of 
2002, will establish a Small Business Procurement Ombudsman 
(Procurement Ombudsman) at the U.S. Small Business 
Administration's (SBA) Office of Advocacy and strengthen the 
Office of Small and Disadvantaged Business Utilization (OSDBU) 
at each Federal agency. The legislation will also raise the 
Federal governmentwide procurement goal for small business 
prime contracting by 7 percentage points, over a period of 
three years, culminating with a governmentwide goal of 30 
percent in FY 2006 and thereafter.
    The substitute amendment offered by Senators Kerry and Bond 
changed the short-title of the legislation and the title of the 
ombudsman position. As introduced, the legislation's short-
title was the ``Small and Disadvantaged Business Ombudsman 
Act,'' and the Procurement Ombudsman was known as the Small and 
Disadvantaged Business Ombudsman for Procurement (SDB 
Ombudsman).

Major Federal agencies

    A major Federal agency for purposes of the legislation 
means an agency that has procured over $200 million in goods 
and services in the previous fiscal year.

Establishment of a Small Business Procurement Ombudsman

    The legislation requires that the Chief Counsel for the 
SBA's Office of Advocacy appoint a Procurement Ombudsman, 
looking to existing Federal employees to the extent 
practicable. The Procurement Ombudsman is required to be highly 
qualified, with experience assisting small business concerns 
with Federal procurement, and would receive compensation based 
on the Senior Executive Service pay scale. The Procurement 
Ombudsman will report to the Chief Counsel.
    The Committee strongly believes that the Chief Counsel 
should make every effort to promptly appoint a Procurement 
Ombudsman from existing personnel within the Federal government 
and that the Procurement Ombudsman should have extensive years 
of experience in the Federal procurement process, pre-dating 
the procurement reforms of the 1990s and continuing through the 
acquisition reform period, if at all possible. Additionally, 
the Committee believes that experience assisting small business 
concerns with the Federal procurement process at a major 
Federal agency and knowledge of and experience with the 
legislative process and congressional stakeholders are 
necessary and critical attributes for the Procurement Ombudsman 
to possess.
    During the Committee roundtable on June 19, 2002, 
participants strongly supported the concept of the discussion 
draft legislation to create an ombudsman to deal with small 
business procurement problems. However, no consensus was 
reached as to where the ombudsman should be located.
    The substitute amendment adopted in Committee moved the 
Procurement Ombudsman from the SBA to the Office of Advocacy 
and placed responsibility for appointing the Procurement 
Ombudsman with the Chief Counsel. As introduced, the SBA 
Administrator was responsible for the appointment. This 
transfer represented a compromise reached between the Chairman 
and the Ranking Republican about the use of SBA resources.

Duties of the Small Business Procurement Ombudsman

    The Procurement Ombudsman shall work with each Federal 
agency with procurement authority to ensure small business 
concerns are treated fairly in the procurement process, serve 
as a focal point within the Federal government to track and 
rectify complaints received from small business firms regarding 
their treatment by Federal procuring agencies and non-small 
business prime contractors, and complete an annual report.
    The discussion draft of the legislation did not provide 
authority for the ombudsman to rectify small business problems. 
The ombudsman was merely to collect data and report on trends 
in small business procurement. During the Committee roundtable 
on June 19, 2002, participants expressed strong support for 
providing authority to the ombudsman to rectify complaints. The 
legislation as introduced provided this authority.
    The substitute amendment adopted in Committee added this 
provision after concerns were raised that the Office of 
Advocacy at the SBA might receive pressure to add the 
Procurement Ombudsman's duties to an existing position. It is 
the Committee's intention that the Procurement Ombudsman should 
be a new position and receive sufficient resources to carry out 
the duties under the legislation.
    The substitute amendment also removed the authority of the 
new position to negotiate goal attainment plans with Federal 
agencies. This was in response to concerns raised by the 
Ranking Republican that this was inherently a policy function 
and should rest with the Office of Government Contracting and 
Business Development at the SBA. However, the responsibility 
for evaluating the goal attainment plan remains with the 
Procurement Ombudsman.
    Due to the important nature of the Procurement Ombudsman's 
responsibilities, the legislation bars the Procurement 
Ombudsman from having other significant job duties beyond those 
in the Act.

Annual report

    The Procurement Ombudsman shall annually report to Congress 
on each Federal agency's success or failure in meeting its 
small business goals, including subcontracting data, an overall 
score for each agency, and an evaluation of any required goal 
attainment plans; the treatment of small businesses by all 
Federal agencies; the training of contracting personnel at 
major Federal agencies to ensure knowledge of small business 
procurement programs and their importance to the Federal 
government and the economy; each major Federal agency's 
outreach activities to small business contractors; each Federal 
agency's compliance with the Small Business Act's provision 
establishing an OSDBU at each agency; and any discrimination 
faced by small businesses based on their status as a small 
business concern, qualified HUBZone small business concern, 
small business concern owned and controlled by disabled 
veterans, or the gender or social or economic status of their 
owner.
    Federal agencies are given an opportunity to comment in 
writing on the annual report before its submission.
    The Procurement Ombudsman must keep confidential all 
information that could potentially expose a small business to 
retaliation from the Federal government or a non-small business 
prime contractor, unless a written waiver is obtained. The 
confidentiality clause extends to information received by any 
OSDBU employee that could expose the employee to retaliation 
from a Federal agency.

Administrative resources

    The legislation requires the SBA to provide the Procurement 
Ombudsman with sufficient personnel, office space and dedicated 
financial resources, which shall be specifically identified in 
the annual SBA budget.
    Although this provision should need no explanation, the 
Committee is concerned that the SBA will not provide sufficient 
resources for the Procurement Ombudsman, given the lack of 
resources requested for many key functions in recent budget 
submissions. The Committee strongly urges the SBA to provide 
the needed resources for the Procurement Ombudsman to carry out 
the duties under the legislation and serve as an effective 
advocate on behalf of the small business Federal contracting 
community.

Effect on other agencies

    None of the authority or duties given to the Procurement 
Ombudsman is intended to limit the role of the OSDBU at any 
Federal agency.
    The Committee strongly supports the OSDBU provisions of the 
Small Business Act and views these offices as critical links 
for small businesses in the Federal marketplace. The Committee 
strongly believes that the Procurement Ombudsman and each OSDBU 
should work together to advocate on behalf of small businesses, 
with the Procurement Ombudsman acting as a governmentwide 
advocate and each OSDBU serving as an advocate at its 
respective Federal agency.

Improvements to the Offices of Small and Disadvantaged Business 
        Utilization

    S. 2753 makes several improvements to the director's 
position at each OSDBU. The legislation requires OSDBU 
Directors to receive pay up to GS-15 (major Federal agencies 
set at a minimum GS-15); requires OSDBU Directors to be well-
qualified at assisting small businesses with procurement 
matters; bars senior procurement executives from simultaneously 
serving as OSDBU Directors; requires OSDBU Directors at major 
Federal agencies to attend OSDBU Council meetings to the extent 
practicable; clarifies the underlying legislation by stating 
that the OSDBU Director is responsible to the head or deputy 
head of an agency for all matters; requires OSDBU Directors to 
assist the Procurement Ombudsman; and states that the OSDBU 
Director at a major Federal agency shall have no other 
substantial job duties beyond those stated in the Small 
Business Act.
    The Committee expects the OSDBU Director's position at each 
Federal agency to be filled by career personnel to the extent 
practicable. The Committee believes that the use of career 
personnel will provide continuing expertise and experience, 
which will better serve the small business government 
contracting community.
    The legislation also makes statutory the OSDBU Council, 
requiring it to meet at least once every two months. The 
membership of the Council shall consist of all OSDBU Directors, 
and requires the Procurement Ombudsman and the SBA's Associate 
Deputy Administrator for Government Contracting and Business 
Development to serve as non-voting, ex officio members. The 
Council will be headed by an elected chairperson, who shall 
serve a one-year renewable term, and consider issues such as 
personnel matters, barriers to small business participation in 
the Federal marketplace, agency compliance with provisions of 
the Small Business Act and any other matter within its mission 
scope. The legislation bars the SBA from providing financial 
assistance to the Council.
    The discussion draft of the Small and Disadvantaged 
Business Ombudsman Act did not contain provisions to strengthen 
the OSDBUs. During the Committee Roundtable on June 19, 2002, 
participants urged the Committee to consider strengthening the 
OSDBUs. The legislation as introduced by Senator Kerry 
contained provisions in response to the suggestions discussed 
at the roundtable.
    The Committee believes strongly in the need to strengthen 
the OSDBU Director's role at each Federal agency. Although it 
is the Committee's position that these additions to Section 
15(k) of the Small Business Act were a part of the 
legislation's original intent, Federal agencies have 
consistently thwarted its provisions, especially the 
requirement that OSDBU Directors report to the head or deputy 
head of their agency. The Committee has received information in 
writing from several agencies, and through verbal 
communications, that have led the Committee to conclude that 
the majority of Federal agencies are in violation of Section 
15(k) of the Small Business Act. It is the Committee's hope 
that by clearly stating that the OSDBU Director shall report to 
the head or deputy head of his or her agency, Federal agencies 
will seek to comply with the law rather than explore possible 
loopholes.
    The Committee understands that a successful OSDBU Director 
is one with access to the highest level of his or her agency 
and that a successful OSDBU Director is necessary for a 
successful small business procurement program. The Committee 
strongly urges all Federal agencies to comply with the letter 
and spirit of Section 15(k) of the Small Business Act and allow 
the OSDBU Director to play a key role in acquisition policies. 
The Committee also urges all Federal agencies to have their 
OSDBU Director report to the head of the agency, as opposed to 
the deputy head.
    The Committee feels strongly that OSDBU Directors should 
have no substantial job responsibilities beyond those in the 
Small Business Act; however, budgetary constraints at non-major 
Federal agencies may make that difficult to achieve. As a 
result, the legislation includes a provision to bar an OSDBU 
Director from simultaneously serving as the senior procurement 
executive. The Committee believes that the role of the OSDBU 
Director is incompatible with that of a senior procurement 
executive because the role of the OSDBU Director is one of 
advocacy on behalf of small businesses, while the senior 
procurement executive must serve the entire contracting 
community. Moreover, the OSDBU Director is intended to 
influence contracting decisions by the procurement staff, and 
making that position superior to the OSDBU Director (or merged 
with the OSDBU) is incompatible with that supervisory function.
    The Committee intends ``to the maximum practical extent,'' 
with regard to Council meeting attendance, to mean that OSDBU 
personally should take the fullest possible advantage of 
Council meetings as an opportunity for exchange of ideas, 
training, and professional development.
    The substitute amendment adopted in Committee set the basic 
pay for an OSDBU Director at a major Federal agency at a 
minimum rate of 15 on the General Schedule. However the 
Committee intends for an OSDBU Director at a major Federal 
agency to receive basic pay at a rate equal to that of the 
senior procurement executive at his or her agency.
    The substitute amendment also made minor changes to other 
OSDBU provisions, but kept intact the original intent of the 
introduced version.

Goal attainment plan

    The legislation requires each major Federal agency that 
fails to meet a small business goal to submit a detailed report 
to the SBA as to why the agency failed to achieve a goal and a 
plan for attaining future goals. The Committee directs that the 
goal attainment plan be submitted to the Associate Deputy 
Administrator (ADA) for Government Contracting and Business 
Development, or any successor position, and that the ADA shall 
play a consultative role in establishing the plan.
    The substitute amendment adopted by the Committee 
transferred authority for negotiating this plan from the 
Procurement Ombudsman to the SBA.

Increase in the governmentwide goal

    The legislation increases the Federal government's 
statutory governmentwide procurement goal for small business 
prime contracting by 7 percentage points over a three-year 
period. The new governmentwide goal would be 30 percent. The 
goal increase would be phased in over three years: 26 percent 
in FY 2004, 28 percent in FY 2005, and 30 percent in FY 2006 
and thereafter.
    During the Committee roundtable on June 19, 2002, the 
Committee heard testimony that the Federal government could 
achieve 30 percent small business participation if it properly 
implemented small business programs. One participant even 
suggested a goal of 40 percent small business participation. 
However, concerns were raised that the Federal government does 
not meet the current statutory goal of 23 percent small 
business participation, and that such an increase might serve 
to discourage Federal agencies from striving to meet their 
goal. However, evidence at the roundtable suggested that the 
Federal government, when firmly targeting a goal of 23 percent, 
has usually come very close to achieving this percentage, some 
years slightly more, some less. The Committee believes that 
some agencies may treat the 23 percent goal as a ceiling, 
rather than a minimum level of acceptable small business 
participation. The goal increase reflects the Federal 
government's insistence on targeting a specific number, as 
opposed to striving to surpass that number.

                           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 a substitute 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. 2753, the ``Small and Disadvantaged 
Business Ombudsman 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 use 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 31, 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 
prepared the enclosed cost estimate for S. 2753, the Small 
Business Procurement Ombudsman Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Ken Johnson 
and Matthew Pickford.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 2753--Small Business Procurement Ombudsman Act of 2002

    S. 2753 would create a new Procurement Ombudsman within the 
Small Business Administration (SBA). The Ombudsman would 
address concerns raised by small businesses participating in 
the federal procurement process and annually report to the 
Congress. The bill would make technical changes to the Offices 
of Small and Disadvantaged Business Utilization within each 
federal agency exercising procurement authority. Finally, S. 
2753 would raise the statutory goal for the value of federal 
contracts awarded to minority and women-owned businesses.
    CBO estimates that implementing S. 2753 would cost about $1 
million a year, subject to the availability of appropriated 
funds. The bill would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply.
    S. 2753 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    Based on information from SBA, CBO expects that the office 
of the Procurement Ombudsman that would be established under S. 
2753 would be similar in size to the office of the agency's 
Regulatory Enforcement Ombudsman. Therefore, CBO estimates that 
creating the office of the Procurement Ombudsman would cost 
about $500,000 a year, assuming the appropriation of the 
necessary amounts.
    Additionally, the Offices of Small and Disadvantaged 
Business Utilization within each agency with procurement 
authority could incur additional costs to implement new 
management practices and reporting requirements related to the 
contracting goals for minority and women-owned businesses. CBO 
estimates these requirements would cost less than $500,000 a 
year.
    The CBO staff contacts for this estimate are Ken Johnson 
and Matthew Pickford. This estimate was approved by Peter H. 
Fontaine, Deputy Assistant Director for Budget Analysis.

        VIII. SECTION-BY-SECTION ANALYSIS OF S. 2753, AS AMENDED

Section 1. Short-title

    Titles the Act as the ``Small Business Procurement 
Ombudsman Act of 2002.''

Section 2

    Amends Section 15 of the Small Business Act to include a 
new subsection (q), which establishes the Small Business 
Procurement Ombudsman at the SBA's Office of Advocacy and 
spells out the duties of the position.

Section 3

    Amends Section 15(k) of the Small Business Act to add the 
improvements to the Office of Small and Disadvantaged Business 
Utilization (OSDBU) at each Federal agency contained within the 
legislation, and establishes the OSDBU Council.

Section 4

    (a) Amends Section 15(g) of the Small Business Act by 
adding paragraph (3) establishing the requirement for a goal 
attainment plan.
    (b) Amends Section 15(g)(1) of the Small Business Act by 
raising the statutory governmentwide small business prime 
contracting goal to 26 percent in FY 2004, 28 percent in FY 
2005, and 30 percent in FY 2006 and thereafter.

                                
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