[Senate Report 111-2]
[From the U.S. Government Publishing Office]




111th Congress                                                   Report
 1st Session                     SENATE                           111-2
_______________________________________________________________________

                                     


                         SUMMARY OF LEGISLATIVE

                        AND OVERSIGHT ACTIVITIES

                       DURING THE 110TH CONGRESS

                               __________

                              R E P O R T

                                 of the

                              COMMITTEE ON

                   SMALL BUSINESS & ENTREPRENEURSHIP

                          UNITED STATES SENATE

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13


                 January 9, 2009--Ordered to be printed
            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
                       One Hundred Tenth Congress

                 JOHN F. KERRY, Massachusetts, Chairman
                OLYMPIA J. SNOWE, Maine, Ranking Member
CARL LEVIN, Michigan                 CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     NORM COLEMAN, Minnesota
JOSEPH I. LIEBERMAN, Connecticut     DAVID VITTER, Louisiana
MARY LANDRIEU, Louisiana             ELIZABETH DOLE, North Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
EVAN BAYH, Indiana                   BOB CORKER, Tennessee
MARK PRYOR, Arkansas                 MICHAEL ENZI, Wyoming
BENJAMIN L. CARDIN, Maryland         JOHNNY ISAKSON, Georgia
JON TESTER, Montana
                 Naomi Baum, Democratic Staff Director
                Wallace Hsueh, Republican Staff Director
                            C O N T E N T S

                              ----------                              
                                                                   Page
I. Overview......................................................     1
II. Response to the Credit Crisis................................     2
    A. Hearing on the Impact of the Credit Crunch on Small 
      Business...................................................     3
    B. Legislation...............................................     3
        1. Small Business Economic Stimulus Act of 2008..........     3
        2. Small Business Lending Stimulus Act of 2008...........     4
        3. Small Business Lending Market Stabilization Act of 
          2008...................................................     4
    C. Oversight Letters.........................................     5
        1. Seeking Additional SBA Funding for Small Business Aid.     5
        2. Questioning of FY 2009 Budget's Relevance to Credit 
          Crunch.................................................     5
        3. Seeking SBA Loan Fee Relief...........................     6
        4. Urging President Bush To Help Small Businesses........     6
        5. Urging SBA to Act To Mitigate Credit Crunch...........     6
        6. Urging Treasury To Use TALF for SBA Loans.............     6
III. Reauthorization of Small Business Administration Programs...     7
    A. Small Business Administration Finance Programs............     7
        1. Small Business Lending Reauthorization and 
          Improvements Act of 2007...............................     7
        2. Hearings and Roundtables on the SBA's Loan Programs...     8
        3. The Small Business Venture Capital Act of 2007........     9
        4. The SEED Act of 2007..................................     9
        5. Hearings and Roundtables on the SBA's Venture Capital 
          Programs...............................................    10
    B. Small Business Administration Entrepreneurial Development 
      Programs...................................................    11
        1. The Entrepreneurial Development Act of 2007...........    11
    C. Concerns Regarding the Implementation of the Emerging 200 
      Program....................................................    12
    D. Additional Legislation....................................    12
        1. The Invest in Small Business Act of 2007..............    12
IV. Lender Oversight.............................................    12
    A. Urging the SBA To Increase CDC Oversight..................    13
    B. Business Loan Center (BLX) Fraud..........................    13
    C. Hearing on Lender Oversight and BLX Fraud.................    14
    D. The Small Business Lending Oversight and Performance Act 
      of 2007....................................................    15
    E. Hearing on SBA Accountability, Lender Oversight, and 
      Women's Contracting........................................    15
    F. SBA's Suspension of Compensation for 504 Loan Liquidation 
      Costs......................................................    16
    G. Reinstating Compensation for 504 Loan Liquidation Costs...    16
    H. Urging SBA To Implement Inspector General Reccomendations.    16
    I. SBA's Loan Monitoring System..............................    17
    J. BLX Declaration of Bankruptcy.............................    17
V. Disaster Loan Program.........................................    18
    A. Reforming the Disaster Loan Program.......................    18
    B. The Small Business Disaster Response and Improvements Act 
      of 2007....................................................    18
    C. Additional Legislation....................................    19
    D. Allegations of Improper Disaster Loan Processing Practices    20
    E. Hearing on Oversight of Gulf Coast Disaster Loans.........    20
    F. Field Hearing on Rebuilding the Gulf Coast................    20
    G. Changes to Credit Elsewhere Test for Disaster Loans.......    21
    H. Seeking Additional Funding for the Disaster Loan Program..    21
    I. Disaster Declarations.....................................    22
        1. Eastern Market Fire...................................    22
        2. Western Massachusetts Floods..........................    22
        3. Uxbridge Mill Fire....................................    22
        4. Lawrence Fire.........................................    22
        5. Peabody Fire..........................................    23
        6. Red Tide Outbreak.....................................    23
VI. Women's Small Business Issues................................    23
    A. Enactment of the Women's Business Center Renewal Grants 
      Program....................................................    24
        1. Amendment No. 187 to the Fair Minimum Wage Act........    25
    B. Implementation of the Women's Business Center Renewal 
      Grants Program.............................................    25
    C. Oversight of the Women's Business Center Program..........    26
    D. Improving SBA Grant Disbursement Process for Centers......    26
    E. Women's Procurement Program...............................    27
    F. Delayed Implementation of the Women's Procurement Program.    27
    G. Proposed Rule for Implementing the Women's Procurement 
      Program....................................................    27
    H. Hearing on Proposed Rule for Implementing the Women's 
      Procurement Program........................................    27
    I. Letters Opposing Final Rule on the Women's Procurement 
      Program....................................................    28
    J. Committee Roundtables.....................................    28
        1. Women in Business: Leveling the Playing Field.........    28
        2. Opportunities and Challenges for Women Entrepreneurs 
          on the 20th Anniversary of the Women's Business 
          Ownership Act..........................................    28
    K. Additional Legislation To Aid Women Business Owners.......    29
VII. Minority Entrepreneurship...................................    30
    A. Hearing on Assessing the Effectiveness of SBA's Programs 
      for the Minority Business Community........................    30
    B. Hearing on Business Start-Up Hurdles in Underserved 
      Communities................................................    30
    C. Legislation...............................................    32
        1. The SBA Reauthorization and Improvements Act of 2008..    32
        2. The Minority Entrepreneurship Development Act of 2007.    32
        3. The Native American Small Business Development Act of 
          2007...................................................    32
    D. Shortfalls in Federal Contracting With Minority and 
      Disadvantaged Businesses...................................    32
VIII. Regulatory Compliance and Sarbanes-Oxley...................    33
    A. Securing an Extension of the Deadline for Small Business 
      Compliance.................................................    33
        1. Letters to the SEC and PCAOB..........................    33
        2. Hearing on Sarbanes-Oxley and its Impact on Small 
          Business...............................................    34
    B. Legislation To Provide Regulatory Assistance to Small 
      Businesses.................................................    35
        1. The Small Business Compliance Assistance Enhancement 
          Act of 2007............................................    35
    C. Delaying Implementation of Employee Verification 
      Regulation.................................................    35
IX. Technology, Research, and Development........................    36
    A. Reauthorization of the SBIR and STTR Programs.............    36
        1. The SBIR/STTR Reauthorization Act of 2008.............    36
        2. Additional Legislation................................    37
        3. Temporary Extension of SBIR...........................    38
    B. The Commercialization Pilot Program.......................    38
    C. Committee Roundtables and Meetings on the SBIR and STTR 
      Programs...................................................    38
    D. National Academy of Sciences and General Accountability 
      Office Reports.............................................    39
    E. Restoring Army and Air Force SBIR Funds...................    41
    F. Increasing the Size of Awards.............................    41
    G. Increasing Funding for Technology Transfer................    41
X. Veterans and Reservists.......................................    42
    A. Committee Report: The State of Veteran and Reservist 
      Entrepreneurship...........................................    42
    B. Legislation...............................................    42
        1. The Military Reservist and Veteran Small Business 
          Reauthorization Act of 2007............................    42
        2. The Military Reservist and Veteran Small Business 
          Reauthorization and Opportunity Act of 2007............    43
    C. Funding for the Veteran Assistance Program................    44
    D. Implementation of the Veterans and Reservists 7(a) Pilot 
      Program....................................................    44
    E. Enactment of Military Tax Relief Provisions...............    45
    F. Improvement of the Military Reserve Economic Injury Loan 
      Program....................................................    45
    G. Hearing on Assessing Federal Small Business Assistance 
      Programs for Veterans and Reservists.......................    46
    H. Roundtable on Reducing Unemployment and Increasing 
      Business Opportunities for Veterans........................    46
    I. Contracting With Service-Disabled Veteran-Owned Businesses    46
    J. Improving Data on Veteran Small Businesses................    47
    K. Investigating Tax and Regulatory Barriers for Veterans....    47
    L. Ineligibility of Small Business Resellers.................    47
    M. Efforts to Fund Veterans' Business Development Centers....    48
    N. Investigation of the Veterans Corporation (TVC)...........    49
XI. Energy and the Environment...................................    50
    A. Enactment of the Small Business Energy Efficiency Act of 
      2007.......................................................    50
    B. Clarification of the SBDC Energy Efficiency Initiative....    51
    C. Implementation of the 7(a) Energy Efficiency Loan Pilot 
      Program....................................................    51
    D. General Implementation of the Small Business Energy 
      Efficiency Act.............................................    51
    E. The Impact of High Energy Costs and Efforts To Provide 
      Relief.....................................................    52
        1. Hearing to Examine the Impact of Rising Gas Prices on 
          Small Businesses.......................................    52
        2. The Small Business Emergency Fuel Assistance Act of 
          2007...................................................    52
        3. Field Hearing on the Rising Costs of Energy and 
          Challenges and Opportunities for Small Businesses......    52
        4. Hearing on the Effect of the High Price of Home 
          Heating Oil on Homeowners and Small Businesses.........    53
        5. The Small Business Energy Emergency Relief Act of 2008    53
        6. A Bill to Amend the Energy Policy and Conservation Act    54
    F. Small Business Solutions for Combating Climate Change.....    54
        1. Hearing on the Role of Small Businesses in Curbing 
          Global Warming.........................................    54
        2. Increasing Resources for the Energy Star Small 
          Business Program.......................................    54
        3. SBA Compliance With the Energy Policy Act of 2005.....    55
XII. Procurement.................................................    55
    A. Hearing on Increasing Government Accountability and 
      Ensuring Fairness in Small Business Contracting............    56
    B. Field Hearing on Access to Federal Contracts and How to 
      Level the Playing Field....................................    56
    C. The Small Business Contracting Revitalization Act of 2007.    57
    D. The TSA Acquisition Reform Act of 2007....................    57
    E. Investigating Size Standards With Respect to Contracts 
      With Blackwater USA........................................    58
    F. Improper Small Disadvantaged Business Certification.......    58
    G. Additional Oversight of Federal Contracting Programs......    59
        1. Contracting Improvements Following Hurricane Katrina..    59
        2. Review of Global Supply Stock Program Changes.........    59
        3. Contracting With Minority-Owned Advertising Firms.....    60
XIII. The SBA Budget and Appropriations..........................    60
    A. FY 2008 Budget for the SBA................................    60
    B. FY 2009 Budget for the SBA................................    62
XIV. Additional Oversight........................................    63
    A. Restricting SBA Management's Access to Employee E-Mail....    63
    B. The Small Business Information Security Act of 2008.......    64
    C. Improving SBA's Information Technology Security Controls..    64
    D. GAO Report: Opportunities Exist to Build on Leadership's 
      Efforts to Improve Agency Performance and Employee Morale..    64
XV. Presidential Nominations.....................................    65
    A. Carol Dillon Kissal.......................................    65
    B. Santanu K. Baruah.........................................    65
    C. John Grasty Crews II......................................    65
XVI. Other Committee Initiatives.................................    65
    A. Temporary Extension of SBA Programs.......................    65
    B. Small Business Health Care................................    66
        1. Hearing on Alternatives for Easing the Small Business 
          Health Care Burden.....................................    66
        2. The Small Business Health Care Tax Credit Act.........    66
        3. The Small Business Health Insurance Options Act of 
          2007...................................................    67
        4. The Small Business Children's Education Act of 2007...    67
        5. Federal Tax Incentives for Small Business Health Care.    67
        6. Field Hearing on Affordable Health Care for Small 
          Business...............................................    68
    C. Rural Small Business......................................    68
        1. Legislation...........................................    68
        2. GAO Study on the Needs of Small Businesses in Rural 
          America................................................    70
    D. Broadband Internet Access.................................    70
        1. Hearing on Improving Internet Access To Help Small 
          Businesses Compete in the Global Economy...............    70
        2. The Broadband Data Improvement Act....................    70
    E. Underground Economy.......................................    71
        1. Field Hearing on the Impact of Employers Who Failed To 
          Abide by Lawful Hiring Practices.......................    71
    F. International Trade.......................................    71
        1. The Small Business International Trade Enhancements 
          Act of 2007............................................    71
    G. Additional Measures.......................................    72
        1. Resolutions Honoring Small Businesses.................    72
        2. Comprehensive Committee Report on Successful State 
          Initiatives That Foster Small Business.................    72
XVII. Appendices.................................................    73
    A. Hearings of the 110th Congress............................    73
        1. First Session.........................................    73
        2. Second Session........................................    74
    B. Bills Referred to the Committee...........................    74
        1. First Session.........................................    74
        2. Second Session........................................    77
    C. Public Laws...............................................    78





111th Congress                                                   Report
                                 SENATE
 1st Session                                                      111-2

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



 
   SUMMARY OF LEGISLATIVE AND OVERSIGHT ACTIVITIES DURING THE 110TH 
                                CONGRESS

                                _______
                                

                January 9, 2009.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                              I. Overview

    The 110th Congress marked the end of the second 
administration of President George W. Bush and the acceleration 
of the financial crisis that had been building since before 
December 2007, when the nation officially slipped into a 
recession. The defining event of the 110th Congress was the 
economic crisis caused by subprime lending in the housing 
market and widespread home foreclosures. The crisis gripped the 
nation and threatened the global economy, requiring the Federal 
Reserve, the U.S. Department of Treasury, and Congress to take 
unprecedented actions to stimulate economic growth and prevent 
large sectors of our financial system from collapsing.
    As the nation's lenders tightened their lending standards, 
many small businesses were forced to find alternative financing 
sources. The Small Business Administration's (SBA) loan 
programs, which typically make up 40 percent of all long-term 
capital to small businesses in this country, should have been 
playing a key role in filling the gaps left by a tightening 
credit market, but that did not occur. Instead, the volume of 
SBA loans decreased, falling by more than 50 percent, and many 
SBA lenders left the program or stopped making loans. Since 
small businesses make up more than 99 percent of all employers 
in the country, the lack of credit to this sector, and, 
therefore, the inability of small businesses to create or 
maintain jobs, had a significant impact on our economy. 
Therefore, the Committee on Small Business and Entrepreneurship 
fought for administrative and legislative changes to stabilize 
and stimulate the SBA's loan guaranty programs, as well as to 
expand the SBA's microloan programs to meet growing demand.
    Additionally, the Committee focused on a host of other 
concerns, including: reauthorization of the SBA's loan, venture 
capital, counseling and contracting programs; reauthorization 
of the Small Business Innovation Research and Small Business 
Technology Transfer programs; oversight of SBA's lending 
programs; reform of SBA's disaster loan program; women's small 
business development; minority entrepreneurship; regulatory 
issues; veteran entrepreneurship; energy efficiency and the 
environment; procurement; the decline of SBA's budget under the 
Bush Administration; small business health care; broadband 
internet access; the underground economy; international trade; 
and, small business best practices. Small business owners and 
employees, as well as experts across the United States, 
submitted testimony and information regarding these topics.
    The principal legislative achievements of the Committee in 
the 110th Congress included the enactment of legislation to 
comprehensively reform the SBA's Disaster Loan Program; to 
provide small businesses with the tools to become energy 
efficient; to help veterans and military reservists start and 
grow their businesses; to provide tax breaks for small business 
owners employing reservists; to ensure that aspiring women 
entrepreneurs continue to have access to critical resources; to 
hold federal agencies accountable for meeting small business 
contracting goals; and, to temporarily extend the authorization 
for the SBA's programs.
    This report summarizes the legislative and oversight 
activities of the Committee on critical issues of concern to 
small businesses.

                   II. Response to the Credit Crisis

    During the 110th Congress, the Committee worked to address 
the challenges facing small firms and advanced measures that 
would provide assistance to small businesses squeezed by the 
tightening credit markets. The subprime mortgage crisis 
triggered a credit crunch, making it difficult for small 
businesses to access capital to start, grow, or even maintain 
their small businesses. According to the Federal Reserve's 
survey of banks in January of 2008, 35 percent of lenders had 
tightened their standards for small business loans, and that 
number grew to 75 percent by the October 2008 survey. The 
National Small Business Association's 2008 annual survey also 
found that 55 percent of small businesses surveyed had 
difficulty obtaining a loan due to the credit crunch.
    Traditionally, the SBA's 7(a) loan guaranty program for 
working capital and 504 loan program for financing fixed assets 
have filled the gap left by private lenders. But the increase 
in the amount and number of fees charged by the SBA, coupled 
with the lenders' rising cost of funds and problems in the 
secondary market, caused lenders to reduce or altogether stop 
originating SBA loans. Consequently, SBA loan activity dropped 
substantially during 2008, dramatically reducing access to this 
essential source of capital to small businesses in this 
country. For example, in the SBA's largest loan program, the 
7(a) program, lending dropped by as much as 57 percent compared 
to the previous year. And, in the SBA's second largest loan 
program, the 504 program, lending dropped by 43 percent. The 
Committee made it a top priority to identify the cause for the 
drop in loan numbers and dollars and to determine what steps 
could be taken to help the SBA to provide small businesses with 
needed relief from the credit crisis.

    A. HEARING ON THE IMPACT OF THE CREDIT CRUNCH ON SMALL BUSINESS

    On April 16, 2008, Chairman John F. Kerry held a hearing 
titled ``Impact of the Credit Crunch on Small Business'' to 
gather information on how the tightening credit markets were 
affecting small firms. By the time of the hearing, evidence was 
mounting that the economic crisis caused by the subprime 
mortgage meltdown had spread from Wall Street to Main Street, 
with 7(a) lending down 17 percent and 504 lending down 6 
percent. At the hearing, small business owners and financial 
experts testified about the trouble that entrepreneurs were 
facing in accessing affordable credit. The Committee also heard 
from Federal Reserve Board of Governors member Frederic S. 
Mishkin, who testified that credit standards had tightened for 
small businesses, making it more expensive and harder for 
entrepreneurs to obtain essential financing. SBA Administrator 
Steven C. Preston testified on the steps the SBA and the 
Federal Reserve had taken to support access to credit for small 
businesses, contending, as he did during the FY 2009 budget 
hearing, that the existing programs and the cut in interest 
rates were sufficient to address the credit crunch.
    Unfortunately, those actions were not sufficient. Day after 
day, articles and stories ran nationwide, describing small 
businesses frozen out of short- and long-term credit markets. 
Even firms with excellent payment histories and strong banking 
relationships were turned away by loan officers. Consequently, 
Senator Kerry introduced a number of bills throughout 2008 and 
pursued legislative and administrative solutions to make SBA 
financing more affordable for small firms, to provide banks 
with added incentives to lend to America's small businesses, 
and to help entrepreneurs avoid using high-interest credit 
cards to finance their businesses.

                             B. LEGISLATION

1. Small Business Economic Stimulus Act of 2008

    On January 24, 2008, Chairman Kerry introduced the Small 
Business Stimulus Act of 2008 (S. 2553), which Senators Carl 
Levin and Mary L. Landrieu cosponsored. The bill would have 
provided targeted tax incentives to small businesses to 
encourage new investments, reduced fees on loans for borrowers 
and lenders, and doubled funding for microloans. The bill would 
have increased from $125,000 to $200,000 the amount small 
businesses could write off their taxes for new investments for 
2008 in order to encourage new investments that year. It also 
would have increased the net operating carry back period for 
losses arising in taxable years ending in 2007 and 2008 from 
two years to five years, reduced fees on borrowers and lenders 
to make credit more affordable and to provide an incentive for 
lenders to make small business loans, and provided funding to 
leverage nearly $20 million in additional microloans, which 
proportionally benefit underserved communities, including women 
and minorities, more than traditional loan programs.
    After the legislation was referred to the Committee on 
Finance, the temporary increase in small business expensing for 
2008 portion of the bill was incorporated into the Economic 
Stimulus Act of 2008 (H.R. 5140) and signed into law as part of 
P.L. 110-185 on February 13, 2008. An amended version of the 
net operating loss carry back provision passed the Senate as a 
part of the Foreclosure Prevention Act of 2008 (H.R. 3221) on 
April 10, 2008.

2. Small Business Lending Stimulus Act of 2008

    Not only did the Federal Reserve's January 2008 survey of 
banks show that more than one-third of U.S. banks had tightened 
their lending standards for small business loans, but also the 
SBA's data showed that its lending had declined further and the 
credit crunch had spread to the SBA's 504 loan program. 7(a) 
loans were down 14 percent from the previous year, and 504 
loans were stagnant after increases in previous years. To 
address the growing problem and to provide economic stimulus to 
small businesses affected by the credit crisis, Chairman Kerry 
introduced a bill more targeted to the SBA's loan programs than 
S. 2553. The Small Business Lending Stimulus Act of 2008 (S. 
2612), introduced on February 7, 2008, would have reduced loan 
fees for SBA's two largest loan programs, leveraging more than 
$25 billion in affordable credit to small businesses.
    Specifically, the legislation would have provided $150 
million to cut loan fees on government-backed 7(a) loans to 
small businesses, making available up to $17.5 billion in loans 
for working capital. For loans under $150,000, the bill would 
have cut the loan fee from 2 to 1 percent; between $150,000 and 
$700,000, the fee would have been cut from 3 to 2.5 percent; 
for loans over $700,000, the bill would have cut the fee from 
3.5 percent to 3 percent; and, for loans over $1 million, the 
bill would have eliminated the additional 0.25 percent fee, 
cutting the fee to 3 percent. The legislation also would have 
reduced the cap on the lenders' fee to 0.25 percent from 0.55 
percent, similar to what Congress enacted after the terrorist 
attacks of September 11, 2001 (S. 1499/P.L. 107-117), a step 
that had proved very effective: 7(a) lending nationwide 
increased by more than 23 percent as the Federal Reserve 
reported drops in conventional lending due, in part, to a lack 
of confidence in the economy and more aversion to risk.
    To stimulate 504 lending, S. 2612 would have provided $45 
million to eliminate the first lender fee, making available up 
to $7.5 billion in loans for fixed assets. It also included a 
provision that would have allowed 504 loans to be used for some 
refinancing. Last, the bill would have provided funding to 
leverage nearly $20 million in additional microloans.

3. Small Business Lending Market Stabilization Act of 2008

    Unfortunately, the credit crunch for small businesses 
continued to worsen, moving from a crunch to a crisis to a near 
collapse of our financial system, as Lehman Brothers Holding 
Inc. announced bankruptcy and American International Group 
(AIG), the world's largest insurance company, sought $40 
billion in emergency funding from the Federal Reserve. 
Consequently, the focus of legislation then required that 
solutions target stabilization of the lending markets instead 
of merely a stimulus to alleviate a credit crunch.
    Therefore, on September 25, 2008, Senator Kerry introduced 
the Small Business Lending Market Stabilization Act of 2008 (S. 
3596), cosponsored by Senators Evan Bayh and Charles E. 
Schumer. Unlike previous bills, which partially reduced program 
fees to stimulate lending and reduce costs for borrowers, the 
Stabilization Act was more aggressive and sought to temporarily 
but completely eliminate fees charged to the borrowers and 
lenders who participated in the 7(a) program. Additionally, the 
bill would have suspended the lender and servicing fees and 
increased the maximum loan size for the 504 program. The relief 
package also would have allowed a limited amount of refinancing 
on certain mortgages, adjusted the program's job creation 
requirement for inflation, and improved and standardized the 
owner-occupancy requirement. It also provided funding for 
lender oversight. Together these changes would have made 
borrowing more affordable for small businesses while making the 
programs more cost-effective to lenders.
    Many of these provisions from S. 3596 were included in the 
Economic Recovery Act of 2008 (S. 3689), introduced by Senate 
Majority Leader Harry Reid, to build upon the Emergency 
Economic Stabilization Act of 2008 (P.L. 110-343). 
Specifically, it contained $635 million to help small 
businesses access critical financing. That included $515 
million to temporarily eliminate 7(a) loan fees for up to $15 
billion in loans and $100 million to temporarily eliminate the 
504 loan upfront fee paid by the first lender and the ongoing 
fee paid by the Certified Development Company for up to $7.5 
billion in loans. The small business piece also included $1 
million to leverage an additional $8.5 million in microloans 
and $4 million for counseling. This bill did not become law. 
Similar provisions were included in S. 3604, a supplemental 
appropriations bill for FY 2008, but, in that bill, smaller 
appropriations were provided, and fees for the 504 loan program 
were not covered. Neither bill was passed into law in the 110th 
Congress.

                          C. OVERSIGHT LETTERS

1. Seeking additional SBA funding for small business aid

    On January 29, 2008, Chairman Kerry sent a letter to the 
Appropriations Subcommittee on Financial Services requesting 
funding for the SBA in the pending supplemental appropriations 
bill to stimulate the economy.

2. Questioning of FY 2009 budget's relevance to credit crunch

    On February 13, 2008, Chairman Kerry wrote SBA 
Administrator Preston, outlining the Committee's concerns with 
the President's Budget and asking the SBA to provide its plan 
for helping small businesses that were facing a shrinking 
credit market. In the ``Economic Report of the President'' 
released that week, the Administration acknowledged lending 
standards for large and small businesses had tightened. Yet, in 
the 2009 budget request the President unveiled, the 
Administration proposed implementing higher and more fees on 
lenders and provided no resources to expand loans to small 
businesses. In his letter, the Chairman discussed pending 
legislation that would improve the SBA's loan programs and 
expand credit to small businesses, such as the Small Business 
Lending Reauthorization and Improvements Act of 2007 (S. 1256) 
and the Small Business Lending Stimulus Act of 2008 (S. 2612), 
and he requested that the Administrator be prepared to discuss 
the budget, the bills, and the credit crunch at the Committee's 
hearing on the budget later in February.

3. Seeking SBA loan fee relief

    On April 21, 2008, Chairman Kerry and Ranking Member 
Olympia J. Snowe sent a letter to the Appropriations 
Subcommittee on Financial Services requesting funding in the 
Emergency Supplemental Appropriations bill (H.R. 2642) for a 
temporary reduction in loan fees.

4. Urging President Bush to help small businesses

    On October 20, 2008, Chairman Kerry wrote President Bush 
urging him to help small businesses and support the Small 
Business Lending Market Stabilization Act (S. 3596), as well as 
other legislation that would encourage SBA lending. Senator 
Kerry urged the Administration to work with the Committee to 
develop measures to aid small businesses during the credit 
crunch. The letter came on the heels of data showing that loan 
volume for the SBA's largest lending program had fallen 53 
percent in October 2008, compared to the figures for October 
2007. Senator Kerry expressed frustration that his repeated 
warnings to the Bush Administration that small businesses were 
being seriously affected by the credit crunch had gone 
unheeded; the SBA had not used its authority to take meaningful 
steps to make access to capital easier for struggling small 
businesses.

5. Urging SBA to act to mitigate credit crunch

    On November 3, 2008, Chairman Kerry and Senator Schumer 
wrote a letter to Acting SBA Administrator Sandy K. Baruah 
urging the SBA to take emergency steps to assist small 
businesses facing a credit crunch. Among the steps suggested by 
the Senators was to make bridge loans available through the 
SBA's Economic Injury Disaster Loan (EIDL) program, to allow 
some existing 504 borrowers to either refinance their 
unguaranteed first mortgage or obtain another bank loan that 
SBA would agree to subordinate to the existing 504 second 
mortgage, and to make three key changes to the 7(a) loan 
guarantee program: allow weighted average coupons to sell SBA 
loans on the secondary market, make a regulatory change to 
adopt an alternative interest rate index other than Prime, and 
temporarily adjust the maximum rate cap for 7(a) loans. The 
Senators emphasized that the SBA had the authority and the 
ability to take these steps without further legislative action 
and, therefore, urged the Administration to take immediate 
action. On November 13, 2008, the SBA cooperated and published 
a notice in the Federal Register, stating that it would allow 
weighted average coupons to sell SBA loans on the secondary 
market and that it would adopt an alternative interest rate 
index, the London Interbank Offered Rate.

6. Urging Treasury to use TALF for SBA loans

    On November 20, 2008, Chairman Kerry, Ranking Member Snowe, 
and Senator Schumer sent a letter to Treasury Secretary Henry 
M. Paulson, urging him to use money from the Troubled Asset 
Relief Program (TARP) to purchase pooled SBA loans on the 
secondary market. The objective was to provide immediate relief 
to small businesses shut out of the credit market because of a 
paralyzed financial system. The government-backed 7(a) and 504 
loan programs were frozen. Through TARP, the Department of 
Treasury had the authority to address the liquidity crisis and 
its effects on small firms. Purchasing pooled government loans 
would have jumpstarted SBA lending and freed up liquidity for 
the hundreds of thousands of American small businesses that 
needed loans to stock their shelves, pay their employees, and 
keep their businesses running. The Senators urged the Treasury 
to do so immediately. In December, the Federal Reserve and the 
Department of Treasury responded positively, announcing that 
the new Term Asset-Backed Securities Loan Facility (TALF) would 
include a small business loan component aimed at restoring the 
flow of purchase activity in the secondary-market for SBA-
backed loans.

     III. Reauthorization of Small Business Administration Programs

    Access to capital remained a top priority for American 
small businesses in 2007 and 2008, particularly as the subprime 
mortgage crisis triggered a severe credit crunch. The federal 
government's programs of guaranteed loans and venture capital 
are a critical source of financing in this country, enabling 
millions of small businesses to finance the startup, growth, 
and expansion of their firms, and the Committee worked in the 
110th Congress to reauthorize and improve the SBA's loan and 
venture capital programs. The Committee also sought to bolster 
the SBA's entrepreneurial development programs so that aspiring 
entrepreneurs would have the knowledge and tools to grow their 
businesses and so that businesses struggling in the economic 
downturn could adjust their business plans to survive until 
conditions improve. Roundtables held early in the 110th 
Congress laid the groundwork for reauthorization legislation, 
culminating in the introduction of the SBA Reauthorization and 
Improvements Act of 2008 (S. 2920), comprehensive SBA 
reauthorization legislation that incorporated several bills 
that the Committee introduced and passed unanimously in 2007.

           A. SMALL BUSINESS ADMINISTRATION FINANCE PROGRAMS

1. Small Business Lending Reauthorization and Improvements Act of 2007

    Chairman Kerry was joined by Ranking Member Snowe in 
introducing the Small Business Lending Reauthorization and 
Improvements Act of 2007 (S. 1256) on May 1, 2007. The bill 
would have reauthorized the SBA's microloan programs, the 7(a) 
Loan Guaranty program, and the 504 Loan Guaranty program 
through Fiscal Year 2010. In addition to making significant 
improvements to the SBA's existing lending programs, the bill 
also would have authorized two new pilot programs--Senator 
Levin's Intermediary Lending Pilot program and Senator Kerry's 
Child Care Lending Pilot program.
    During the markup of the bill, on May 16, 2007, the 
Committee unanimously adopted by voice vote a bipartisan 
managers' substitute amendment, offered by Chairman Kerry for 
himself and Ranking Member Snowe, which incorporated modified 
versions of amendments filed by Senators Isakson, Enzi, and 
Christopher S. Bond regarding the reduction of 7(a) loan fees, 
the Child Care Lending Pilot Act, and the Microloan program. 
The bill was subsequently adopted as amended by a roll call 
vote of 19-0. It was later included in the SBA Reauthorization 
and Improvements Act of 2008 (S. 2920), introduced on April 24, 
2008.
    S. 1256 incorporated virtually all of the lending 
provisions that were unanimously adopted by the Committee in 
the 109th Congress as part of the Small Business 
Reauthorization and Improvements Act of 2006 (S. 3778), a 
comprehensive reauthorization bill developed under Senator 
Snowe, then the chair of the Committee. S. 1256 built on the 
Committee's work in the 109th Congress, and it would have made 
significant changes to the SBA's 7(a) Loan Guaranty program, 
the agency's largest small-business loan program. The bill also 
would have instituted a rural outreach lending program designed 
to increase lending in rural areas, modified the 504 Loan 
Guaranty program to provide incentives to increase business 
development in low-income communities, adopted versions of 
proposals by the Administration to make uniform the real estate 
appraisal requirements for 7(a) and 504 loans in order to 
simplify the programs, and established a semi-annual schedule 
for payment of principal and interest on 504 debentures.

2. Hearings and roundtables on the SBA's loan programs

    S. 1256 was the product of a series of hearings, meetings 
and roundtables held in 2006 and 2007 that examined the capital 
needs of small businesses and sought to determine whether the 
SBA's loan programs were serving their purpose and whether 
legislative changes were needed.
    In the 109th Congress, on March 9, 2006, under Senator 
Snowe, then chair of the Committee, the Committee held a 
hearing to examine the SBA's Fiscal Year 2007 budget and the 
SBA's proposed legislative package for reauthorization. The 
Committee questioned the rationale for the SBA's budget cuts 
and proposals for essential programs, such as elimination of 
all three microloan programs and the Administration's proposal 
to impose administrative fees on the small business 
participants through programs authorized in Section 7(a) of the 
Small Business Act, and Section 504 of Title III of the Small 
Business Investment Act regarding Small Business Investment 
Companies (SBIC).
    On April 26, 2006, the Committee held a hearing entitled, 
Reauthorization of SBA Financing and Economic Development 
Programs. The Committee heard from lenders, small business 
stakeholders, and SBA representatives on the benefits of SBA's 
credit programs and evaluated reauthorization proposals to 
improve the broad range of finance programs which play a vital 
role in assisting America's entrepreneurs in obtaining 
operating and equity capital.
    In the 110th Congress, on February 28, 2007, under the 
Chairmanship of Senator Kerry, the Committee held a hearing to 
review the SBA's Fiscal Year 2008 budget. Stephen Preston, the 
new SBA Administrator, testified. He presented the 
Administration's budget request of $464 million for the Agency. 
Of concern to many on the Committee was the proposal to move 
the SBA's Microloan program to zero subsidy and to eliminate 
the technical assistance grants for counseling the borrowers. 
The budget did propose fee reductions for SBIC debenture deals 
and 504 and 7(a) loans, but there was concern that the fee 
reduction for 7(a) loans would only benefit the lenders and not 
the borrowers. Also of concern was a recycled proposal to 
impose a new fee on 7(a) loans sold in the secondary market.
    On May 2, 2007, the Committee held a roundtable entitled 
SBA Reauthorization: Small Business Loan Programs. The purpose 
of the roundtable was to give members an opportunity to get 
feedback from the SBA, lending experts, and small business 
advocates on the provisions in S. 1256 and any necessary 
changes or enhancements. Of particular concern was the SBA's 
proposal to make the Microloan program zero-subsidy by raising 
the interest rate on lenders, to eliminate the Microloan 
technical assistance program, and to require the SBA's other 
counseling partners--Small Business Development Centers, 
Women's Business Centers, and SCORE--to serve microloan 
borrowers.
    On May 22, 2007, the Committee held a hearing entitled 
Minority Entrepreneurship: Assessing the Effectiveness of SBA's 
Programs for the Minority Business Community. As part of 
reauthorization, the Committee tried to address complaints from 
minority business owners, and organizations representing 
minorities, that SBA's programs do not effectively meet the 
needs of these entrepreneurs, and that there is a need to use 
SBA's economic development tools to help close the wealth gap 
between whites and minorities. Among other topics, the 
Committee discussed the need to increase the share of loans to 
minorities, which has remained largely stagnant since 2001.

3. The Small Business Venture Capital Act of 2007

    Chairman Kerry was joined by Ranking Member Snowe in 
introducing the Small Business Venture Capital Act of 2007 (S. 
1662) on June 19, 2007. There were four objectives of S. 1662: 
(1) to simplify the SBIC Debenture program so that it was more 
attractive and beneficial to investors; (2) to tweak the SBIC 
Participating Securities program so that the last operating 
funds would have the flexibility to maximize follow-on 
investments as the program was phased out; (3) to encourage 
investment in firms owned by minorities and women; and (4) to 
use the changes to restore the reputation of and confidence in 
the SBIC program. The bill would have reauthorized through 2010 
the Small Business Investment Company Debenture and 
Participating Securities programs.
    During the markup of S. 1662 on June 26, 2007, the 
Committee unanimously adopted by voice vote a bipartisan 
managers' substitute amendment offered by Chairman Kerry for 
himself and Ranking Member Snowe. The substitute amendment 
incorporated the SEED Act (S. 1663) and also made 
clarifications and changes to the bills, as originally 
introduced, based on feedback from participants of the small 
business venture capital roundtable held on June 21, 2007. S. 
1662 was subsequently adopted as amended by a roll call vote of 
19-0. The legislation was later included in S. 2920.

4. The SEED Act of 2007

    The Securing Equity for the Economic Development of Low 
Income Areas Act of 2007 (S. 1663)--or SEED Act, as introduced 
by Chairman Kerry and Ranking Member Snowe on June 19, 2007, 
and subsequently incorporated into the Small Business Venture 
Capital Act, S. 1662, would have modified the NMVC program's 
targeted investment area (the definition of low-income 
community) to mirror the New Markets Tax Credit program, 
eliminated the matching requirement for the operational 
assistance grants to mirror the U.S. Department of 
Agriculture's community development venture capital program for 
rural areas, and clarified that conditionally approved NMVC 
companies had a full two years to raise the required private 
capital. The bill would have reauthorized through 2010 the New 
Markets Venture Capital (NMVC) program, and was similar to a 
bill in the House (H.R. 1719), that was introduced earlier in 
the year by Congresswoman Gwen Moore.

5. Hearings and roundtables on the SBA's venture capital programs

    SBA's venture capital programs and the provisions in S. 
1662 and S. 1663 were deliberated in a series of hearings and 
roundtables in the 109th and 110th Congresses.
    In the 109th Congress, under then Chair Snowe, on March 9, 
2006, during the hearing to examine the SBA's Fiscal Year 2007 
budget and the SBA's proposed legislative package for 
reauthorization, the Committee questioned the rationale for the 
Administration's proposal to impose administrative fees on the 
small business participants of the 7(a) Loan Guaranty program, 
the 504 Loan Guaranty program, and the Small Business 
Investment Company program. These proposals were controversial 
and were not adopted by the Committee.
    In the 110th Congress, under Chairman Kerry, on February 
28, 2007, the Committee held a hearing to review the SBA's 
Fiscal Year 2008 budget. In addition to concerns about frozen 
program levels for the credit programs, including SBICs, some 
members were opposed to zero funding for the NMVC program for 
the seventh consecutive year, particularly considering that the 
Administration at the same time proposed a new, separate New 
Markets program, described as the ``New Markets Tax Credit 
Pilot Loan program.'' Senators Kerry and Snowe were successful 
in passing an amendment to the FY2008 Budget Resolution (S. 
Con. Res 21) that provided funding for the New Markets Venture 
Capital program. There was concern about the lack of a proposal 
or funding for an initiative to reform the Participating 
Securities program. Members were glad to see that the 
Administration did not recycle the previous year's proposal to 
impose an administrative fee on the SBICs, and they were 
cautious about the budget's proposed fee reductions for SBIC 
debenture deals because there was concern about how the Agency 
would implement the reduction while keeping the program at zero 
subsidy.
    On April 26, 2006, the Committee held a hearing on the 
``Reauthorization of SBA Financing and Economic Development 
Programs.'' The Committee heard from lenders, small business 
stakeholders, and SBA representatives on the benefits of SBA's 
loan and venture capital programs and evaluated legislative 
proposals that were incorporated in S. 3778, the ``Small 
Business Reauthorization and Improvements Act of 2006.''
    On June 21, 2007, to complement the reauthorization hearing 
held on April 26, 2006, the Committee held a roundtable, ``SBA 
Reauthorization: Small Business Venture Capital.'' The purpose 
was to discuss the state of venture capital for small 
businesses, the venture capital needs of small businesses, the 
strengths and weaknesses of the SBIC and NMVC programs, and the 
provisions in S. 1662 and S. 1663. The participants included 
small businesses that had received venture capital through the 
SBIC or NMVC programs, managers who run SBIC or NMVC funds, 
experts in the field of developmental venture capital and 
equity for small businesses, and representatives from the Small 
Business Administration, the National Black Chamber of 
Commerce, and the U.S. Hispanic Chamber of Commerce.
    Finally, on May 22, 2007, the Committee held a hearing 
entitled ``Minority Entrepreneurship: Assessing the 
Effectiveness of SBA's Programs for the Minority Business 
Community.'' As part of reauthorization, the Committee tried to 
address complaints from minority business owners and 
organizations representing minorities that SBA's programs do 
not effectively meet the needs of these entrepreneurs and that 
the SBA needs to use its economic development tools to help 
close the wealth gap between whites and minorities. The 
Committee discussed the need to increase the share of loans to 
minorities, which has remained largely stagnant since 2001, to 
increase the SBIC investments in firms owned by minorities, and 
to increase the licensing of SBIC funds to minorities because, 
according to the SBA's data, they have been declining since 
1998.

 B. SMALL BUSINESS ADMINISTRATION ENTREPRENEURIAL DEVELOPMENT PROGRAMS

1. The Entrepreneurial Development Act of 2007

    Chairman Kerry was joined by Ranking Member Snowe in 
introducing the Entrepreneurial Development Act of 2007 (S. 
1671) on June 20, 2007. The bill would have reauthorized and 
updated the SBA's entrepreneurial development programs through 
Fiscal Year 2010. During markup of the bill, on June 26, 2007, 
the Committee unanimously adopted by voice vote a bipartisan 
managers' substitute amendment, offered by Chairman Kerry for 
himself and Ranking Member Snowe. The bill was subsequently 
adopted as amended by a roll call vote of 19-0 and was later 
incorporated into S. 2920.
    S. 1671 was based on the Small Business Reauthorization and 
Improvements Act of 2006 (S. 3778), which incorporated 
virtually all of the entrepreneurial development provisions 
that were adopted by the Committee in the 109th Congress. S. 
1671 built on the Committee's work in the prior Congress, 
making a few changes to the provisions, including updating the 
language to reflect passage of Senate Amendment 187, which 
created a permanent three-year Renewal Grant Program for 
Women's Business Centers. S. 1671 also called for a National 
Small Business Summit. Aside from technical changes, other 
changes included extending Small Business Development Center 
privacy requirements to SCORE clients and increasing from 9 to 
10 the members of the National Small Business Development 
Center Advisory Board. S. 1671 would have expanded Small 
Business Development Centers, Women's Business Centers, and 
SCORE, created the Minority Entrepreneurship Program to guide 
minority students in highly skilled fields towards 
entrepreneurship as a career option, and established new 
programs to support Native Americans in starting and growing 
their own small businesses. It would also have created pilot 
programs to help small businesses deal with health care costs 
and regulatory burdens.

  C. CONCERNS REGARDING THE IMPLEMENTATION OF THE EMERGING 200 PROGRAM

    On March 31, 2008, Chairman Kerry sent a letter to SBA 
Administrator Preston discussing various concerns with the 
implementation of the Emerging 200 initiative proposed as a 
part of the President's FY 2009 budget for the SBA. The letter 
was prompted by the SBA's moving forward with the proposal 
prior to the start of FY 2009, with the agency announcing on 
March 27th its plans to implement the initiative, designed to 
target and train inner city businesses in 11 cities across the 
country. While Senator Kerry was supportive of the goals of the 
program, his primary criticism was that it was being pushed in 
lieu of a similar initiative, the New Markets Venture Capital 
program, which the Chairman helped to enact in 1999 and that 
had gone unfunded over the course of the Bush Administration. 
Senator Kerry's other concerns included that the $400,000 in 
funding for the program would have come from existing funds for 
7(j) for FY 2008 that should have gone to mentor firms owned by 
minorities or under-represented groups, that SBA's plan to 
secure one organization or company to provide training for all 
11 cities would not be the best way to support small 
businesses, and that Emerging 200 would have negative 
consequences for the SBA's existing resource partners, such as 
SBDCs, Women's Business Centers, and SCORE. SBA responded on 
May 19, 2008. In the letter, Associate Administrator Anoop 
Prakash sought to clarify the purpose of the Emerging 200 
program, how it would be run, and how it differed from existing 
programs.

                       D. ADDITIONAL LEGISLATION

1. The Invest in Small Business Act of 2007

    In addition to the loan and venture capital bills that were 
introduced to increase financing opportunities for small 
businesses, Chairman Kerry and Ranking Member Snowe introduced 
the Invest in Small Business Act of 2007 (S. 1214) on April 25, 
2007. This legislation would have amended the Internal Revenue 
Code of 1986 to modify the partial exclusion for gain from 
certain small business stocks. This legislation would have 
encouraged private investment in small businesses by increasing 
the existing exclusion from 50 percent to 75 percent and making 
additional improvements to the provision. The modifications to 
the provision would have provided an appropriate tax incentive 
to encourage innovation and entrepreneurship.

                          IV. Lender Oversight

    Throughout the 110th Congress, Chairman Kerry and Ranking 
Member Snowe continually called on the SBA to strengthen its 
lender oversight function--even before the rippling effects of 
the collapse in the subprime mortgage market began to take 
their toll on small business lenders. And when the OIG issued a 
report detailing the SBA's failures in detecting a $76 million 
fraud scheme involving SBA-backed loans, the Committee 
redoubled its efforts to force much-needed reforms to the SBA's 
oversight system.

              A. URGING THE SBA TO INCREASE CDC OVERSIGHT

    On April 17, 2007, Chairman Kerry sent a letter 
acknowledging the success and growth of the SBA's 504 Loan 
program for fixed assets and Certified Development Companies 
(CDCs) and emphasizing the need for oversight of the programs 
to be carried out in a comprehensive, thorough manner--
especially in light of the SBA's transition to centralized loan 
processing in 2004, going from 69 district offices to one 
center in Herndon, Virginia, and the subsequent reduction of 
liquidation staff. That centralization initiative became the 
subject of controversy as SBA was criticized for poorly 
carrying out the centralization through drastic and hasty 
budget reductions. The Chairman asked SBA Administrator Preston 
to submit to the Committee information on CDC auditing, 
including an explanation of the agency's objectives with CDC 
auditing, the number of CDC audits completed in the last five 
years by the SBA Office of Lender Oversight, and the CDC audit 
schedule for the remainder of FY 2007.

                  B. BUSINESS LOAN CENTER (BLX) FRAUD

    An SBA Inspector General report released on July 11, 2007, 
sharply criticized the SBA's lax lender oversight program in 
the wake of a $76 million fraud scheme carried out by one of 
the agency's largest 7(a) lenders, Business Loan Center (BLX or 
Business Loan Express). According to the Inspector General's 
report (IG Report No. 07-28), 19 individuals, including a 
former executive vice president of BLX, were charged with fraud 
for allegedly making more than $76 million in fraudulent loans 
to unqualified borrowers at a BLX branch office located in 
Troy, Michigan.
    After the SBA Inspector General conducted an audit of the 
agency's oversight of BLX from 2001 to 2006, the SBA asserted 
that the Inspector General could not fully disclose parts of 
the report due to Freedom of Information Act (FOIA) and other 
exemptions covering trade secrets, the deliberative process 
privilege, and bank examination documents. On October 24, 2007, 
Chairman Kerry sent a letter to Administrator Preston calling 
on the Administration to provide a detailed explanation as to 
why it chose to withhold from public scrutiny large portions of 
the Inspector General's report on BLX. The SBA responded on 
November 6, 2007, and included a chart that outlined the 
exemptions SBA was claiming for the redactions in varying 
degrees of detail. However, neither the chart nor the letter 
explained why each specific redaction fit the exemption claimed 
and why that justified withholding that particular information 
from the public. The Committee remained concerned that the 
SBA's actions in redacting key information and recommendations 
in the BLX report could undermine the future authority and 
efficacy of the SBA's Office of Inspector General (OIG). To 
resolve this situation, the Committee engaged in staff 
discussions with OIG and the SBA's Office of General Counsel 
(OGC) with the intention of coming to an agreement with the OGC 
on additional portions of the report that could be released. 
OGC was not responsive, so a joint statement was entered into 
the record by Chairman Kerry and Ranking Member Snowe.

              C. HEARING ON LENDER OVERSIGHT AND BLX FRAUD

    The Committee continued its investigation into the 
effectiveness of the SBA's lender oversight program by holding 
a hearing on November 13, 2007. The hearing focused on the 
Inspector General's report and the SBA's failed oversight 
efforts. Bob Tannenhauser, Chairman of Business Loan Center, 
testified, along with Administrator Preston, SBA Inspector 
General Eric Thorson, and members of two trade associations: 
Tony Wilkinson, president of the National Association of 
Government Guaranteed Lenders, and Jim Baird, president of the 
Bay Area Development Company and Chairman of the Legislative 
Affairs Committee of the National Association of Development 
Companies. The goal of the hearing was not only to understand 
what happened with the BLX case, but to use the case as well as 
the recommendations of SBA and the trade associations to move 
the agency toward effective oversight of its loan guaranty 
programs. Committee members questioned Bob Tannenhauser on 
BLX's role in the loan scheme, noting that the defaults and 
possibly the currency rates of timely payments should have been 
red flags for BLX, had the company been monitoring those 
indicators. Committee members followed up by questioning him on 
whether BLX monitors the performance of its loans by branch, 
whether SBA loans were the bulk of the Michigan office's loans, 
when BLX noticed that many of the defaulted loans were to one 
industry (gas stations), and how much money was at stake.
    The Committee also questioned Administrator Preston on the 
SBA's oversight of BLX and its lender oversight efforts more 
generally. Among the issues discussed was the SBA's 
implementation of a comprehensive off-site monitoring program 
through Dun and Bradstreet that was supposed to forecast 
whether a loan was at risk of default. According to the lender 
and CDC associations that testified at the hearing, the new 
program collected data already available from the lenders and 
the SBA's loan servicing contractor, arrived at currency and 
default rates that differed greatly from the lenders' actual 
performance, and was not transparent. Further, according to the 
lenders, once the system predicted that loans would go bad, SBA 
would not tell the lenders which loans could be in trouble so 
they could proactively try to prevent a borrower from falling 
behind on payments or defaulting. The Committee urged SBA to 
take action to reduce defaults and not just take corrective 
action after the fact.
    The trade associations also commented on the negative 
impact of the staffing shortages at the SBA's centralized loan 
processing centers in Herndon and in Sacramento. Chairman Kerry 
emphasized this point, stating that ``simple logic says you 
that you can't go from a budget of almost $1 billion to $600 
million, while nearly doubling your loan portfolio from about 
51,000 loans in 2002 to almost 100,000 loans in 2006, and still 
claim to have the labor-intensive personal oversight necessary 
to know what those loans [and lenders] are doing.'' Finally, 
SBA Inspector General Thorson testified that IG audits and 
investigations had identified significant weaknesses in the 
SBA's oversight of its lenders, and that, since 2000, they had 
indentified lender oversight, guaranty purchase reviews, and 
loan agent fraud as major challenges facing the agency. Thorson 
also commented that SBA had been slow to develop its lender 
oversight program and that only in recent years had the agency 
made progress in addressing longstanding weaknesses.

  D. THE SMALL BUSINESS LENDING OVERSIGHT AND PERFORMANCE ACT OF 2007

    In order to address the deficiencies in the SBA's lender 
oversight activities, Chairman Kerry joined Ranking Member 
Snowe in introducing the Small Business Lending Oversight and 
Performance Act of 2007 (S. 2288), on November 1, 2007. The 
legislation was based in part on recommendations made by the 
Government Accountability Office in a July 2007 report, ``Small 
Business Administration: Additional Measures Needed to Assess 
7(a) Loan Program's Performance'' (GAO-07-769), and would have 
(i) required a report on borrowers' economic performance beyond 
the currently utilized SBA estimate of job creation, (ii) 
increased the transparency of lenders' portfolio quality, (iii) 
created a 7(a) and 504 portfolio default rate that could be 
compared directly to commercial lenders' default rates, and 
(iv) required the SBA to follow cost containment and cost 
control practices to hold down lender oversight fees. The 
legislation was supported by the National Association of 
Guaranteed Government Lenders and the National Association of 
Development Companies and was included in S. 2920, the 
Committee's comprehensive SBA Reauthorization and Improvements 
Act of 2008.

    E. HEARING ON SBA ACCOUNTABILITY, LENDER OVERSIGHT, AND WOMEN'S 
                              CONTRACTING

    On December 5, 2007, Chairman Kerry and Ranking Member 
Snowe sent a letter to Administrator Preston announcing a 
hearing to be held in January to follow up on the SBA's lender 
oversight efforts, among other topics. The hearing, titled 
``Holding the Small Business Administration Accountable: 
Women's Contracting and Lender Oversight,'' was held on January 
30, 2008. In addition to following up on the BLX controversy, 
the issues discussed at this hearing with the Administrator 
included the insufficient staffing level of the Sacramento 504 
loan processing center and the inability of the center to re-
implement the Abridged Submission Method for maintaining loan 
quality because of staffing shortages. Also discussed was the 
centralization of the liquidation and purchase functions of the 
7(a) loans to Herndon, the process for assessing whether a 
lender would be approved or renewed for national delegated 
lending authority, the need to separate the Office of Lender 
Oversight (which became the Office of Credit Risk Management or 
OCRM) from the Office of Capital Access (OCA) in order to 
resolve the conflict of interest inherent in that arrangement, 
and, finally, the staffing, training, and turnover issues at 
the 7(a) loan processing center in Herndon. Committee members 
pressed Administrator Preston on the negative impact newly-
imposed lender oversight fees were having on lender 
participation and loan volume. By the time of this January 2008 
hearing, the trend of fewer SBA loans being made that would 
continue throughout 2008 was already noticeable, and the 
Committee continued to question the Administration on the lack 
of action it was taking to facilitate the flow of capital to 
small businesses.

   F. SBA'S SUSPENSION OF COMPENSATION FOR 504 LOAN LIQUIDATION COSTS

    The Committee's lender oversight efforts continued on April 
3, 2008, when Chairman Kerry sent a letter to Administrator 
Preston pressing the SBA to delay publication of a 
controversial notice regarding the liquidation of 504 loans 
(See, 73 FR 18600). The notice was to reduce compensation rates 
for costs incurred by authorized Certified Development 
Companies that liquidate defaulted 504 loans and then, 90 days 
after publication, suspend all compensation for any 504 loan 
debenture not yet purchased. The letter expressed the 
Chairman's concern that suspending reimbursements would 
exacerbate SBA's liquidation problems, a problem created in 
part by SBA. The agency had not requested funding for CDCs for 
this purpose in its FY 2008 and FY 2009 budget requests and was 
looking to stretch dollars to avoid asking Congress for 
additional money.

       G. REINSTATING COMPENSATION FOR 504 LOAN LIQUIDATION COSTS

    Despite the Committee's efforts, the SBA moved forward with 
the Federal Register notice, leading Senator Kerry to follow up 
with another letter to Administrator Preston on April 7, 2008, 
calling on the Administration to protect taxpayer investments 
in government-backed small business loans by reinstating the 
program that reimburses CDCs for the costs they incur when they 
recoup losses from defaulted 504 loans. With almost 1,000 loans 
worth an estimated $404 million in default at the time the SBA 
issued the notice to eliminate the reimbursement program, as 
well as an inadequate number of SBA staff to liquidate the 
loans, the Chairman was concerned that the elimination of this 
program could result in greater losses at the taxpayers' 
expense. SBA Associate Administrator for Capital Access, Eric 
Zarnikow, responded on May 15, 2008. He had met with Committee 
staff on April 14th to discuss many of the issues that the 
letter brought up, but this response included information on 
the number and dollar amount of 504 loans that were to be 
charged off (200 cases for $85 million), as well as an estimate 
of funding that SBA would need to continue the reimbursements 
to Authorized Community Development Company Liquidators ($1.5 
million over the next six years for cases closed between May 
2007 and July 2008). The SBA was not able to provide a useful 
estimate for the annual costs of continuing to compensate ACLs 
beyond July 2008, and the Administration remained uncooperative 
in funding the program. And, despite Chairman Kerry's efforts, 
the SBA refused to reinstate the reimbursement program.

      H. URGING SBA TO IMPLEMENT INSPECTOR GENERAL RECOMMENDATIONS

    On May 12, 2008, Chairman Kerry and Ranking Member Snowe 
sent a letter to Administrator Preston, calling on the SBA to 
restore the integrity of its lender oversight program by 
eliminating the inherent conflicts of interest created by the 
agency's proposed lender oversight regulations. Under those 
regulations, SBA placed OCRM--the SBA office charged with 
lender oversight--within OCA, the SBA office responsible for 
promoting the agency's loan programs. The Senators argued that 
placement of OCRM within OCA created a conflict of interest 
between OCA's goal of encouraging lender participation and 
OCRM's responsibility to take proper lender oversight 
enforcement actions.
    This letter was in response to another Inspector General 
Report, titled ``Oversight of SBA Supervised Lenders'' (OIG 
Report No. 08-12), which criticized the SBA for failing to take 
proper enforcement measures against high-risk lenders, titled 
``Oversight of SBA Supervised Lenders'' (OIG Report No. 08-12). 
The report found that the SBA had ``major weaknesses'' in four 
crucial oversight activities: untimely reviews of loan 
purchases, insufficient examinations of lenders' loan 
portfolios, inconsistent and inadequate implementation of 
corrective action plans, and poor remediation of bad loans. In 
their letter, Kerry and Snowe also criticized the SBA for 
moving forward with another proposed rule (See, 72 FR 61752) 
that they believed was insufficient to improve lender 
oversight. Among other things, the proposed rule would have 
provided very little enforcement guidance to SBA regulators and 
the lenders they were supposed to oversee, making the SBA's 
lender oversight even less effective. Associate SBA 
Administrator Zarnikow responded on June 3, 2008, to highlight 
the SBA's efforts to improve lender oversight, to dispute the 
OIG report and to say that Kerry and Snowe's comments would be 
placed in the proposed rule comments in the rulemaking record.

                    I. SBA'S LOAN MONITORING SYSTEM

    On June 5, 2008, Chairman Kerry and Ranking Member Snowe 
sent a letter to Gene L. Dodaro, Acting Comptroller General of 
the United States, to express their continued concern with the 
effectiveness of the SBA's lender oversight activities. In June 
2004, the GAO had reported that the SBA's loan and lender 
monitoring system, originally implemented in 2002 and used 
internally to assess the risk of 7(a) lenders and 504 CDCs, 
reflected some best practices, but also that the SBA had not 
developed an effective strategy for its use (GAO-04-610). 
However, since oversight difficulties in SBA lending had 
persisted, the Senators requested that the GAO conduct an 
investigation to validate the improvements, efficiencies, cost 
savings, and enhanced oversight outcomes the loan and lender 
monitoring system had created for the SBA's 7(a) and 504 loan 
programs. The GAO expected to issue its findings in July 2009.

                    J. BLX DECLARATION OF BANKRUPTCY

    On October 22, 2008, Chairman Kerry sent a letter to Acting 
SBA Administrator Baruah to follow up on the case of Business 
Loan Express, which filed for Chapter 11 bankruptcy earlier in 
2008. Kerry requested information on how many SBA loans BLX had 
outstanding, how many of those loans were in default or 
liquidation, and how much money remained in the BLX escrow to 
protect taxpayers from defaulted BLX loans. The Chairman also 
requested a copy of the settlement agreement executed by BLX 
and the SBA in connection with the BLX fraud case, which was 
discussed at the November 13, 2007, Committee hearing. As of 
December 2008, the SBA had not provided the information.

                        V. Disaster Loan Program

    The Committee has oversight of the SBA's Disaster Loan 
Program, which is the federal government's primary tool to 
assist in economic recovery after a disaster by providing loans 
to small businesses and homeowners affected by a disaster. The 
program also serves to mitigate the economic injury to 
businesses, such as those owned by reservists called to active 
duty who must abruptly leave their businesses for extended 
periods. Disaster declarations are made for areas suffering 
from incidents including flooding, hurricanes, drought, fires, 
earthquakes, tornadoes, winter storms, or terrorist attacks.

                 A. REFORMING THE DISASTER LOAN PROGRAM

    After Hurricanes Katrina, Rita, and Wilma displaced 
hundreds of thousands of Gulf Coast residents in 2005, the SBA 
failed in its mission to approve and distribute loans 
efficiently and effectively to disaster victims. The Committee 
began reviewing the shortcomings of the response to Hurricane 
Katrina and Rita in the 109th Congress and continued to do so 
into the 110th Congress, which lead to major reform of the 
SBA's disaster loan program.

  B. THE SMALL BUSINESS DISASTER RESPONSE AND IMPROVEMENTS ACT OF 2007

    On January 4, 2007, Chairman Kerry introduced the Small 
Business Disaster Response and Loan Improvements Act of 2007 
(S. 163), which overhauled the manner in which SBA would 
respond to all disasters, especially future disasters on the 
scale of Hurricanes Katrina and Rita and the terrorist attacks 
on September 11, 2001. The bill included provisions to 
establish a Private Disaster Loan (PDL) program to allow banks 
to make loans directly to disaster victims, to require the SBA 
to draft rules to create a new ``expedited disaster assistance 
business loan program,'' to provide small businesses with 
access to capital in the wake of a disaster, to create a new 
presidential declaration of catastrophic national disaster to 
allow businesses across the country to access low-interest 
loans in the event of a large scale disaster, and to authorize 
the SBA to make low-interest loans to fuel-dependent small 
businesses during extraordinary fuel price increases. This 
bipartisan bill was cosponsored by Senators Snowe, Landrieu, 
David Vitter, Johnny Isakson, and Bill Nelson, and was 
unanimously reported out of the Committee on March 29, 2007. On 
August 3, 2007, the bill passed the Senate by unanimous 
consent.
    Senator Kerry offered a version of S. 163 as an amendment 
(S.A. 3604) to the Farm, Nutrition, and Bioenergy Act of 2007 
(H.R. 2419), which passed the Senate on December 14, 2007. The 
amendment was cosponsored by Senators Snowe, Landrieu, and 
Vitter. Provisions based on S. 163 and the amendment to H.R. 
2419 were included in the Conference Report to H.R. 2419. The 
Senate agreed to the Conference Report on May 15th, and, on May 
22nd, the Senate overrode the President's veto, and the bill 
became law (P.L. 110-234). Due to a clerical error which 
excluded one title from P.L. 110-234, the Farm Bill was 
reintroduced and passed as H.R. 6124, becoming P.L. 110-246 on 
June 18, 2008.

                       C. ADDITIONAL LEGISLATION

    A number of other disaster-related bills were introduced in 
the 110th Congress. On February 8, 2007, Senator Landrieu 
introduced the Gulf Coast Back to Business Act of 2007 (S. 
537), which was cosponsored by Chairman Kerry, Senator Joseph 
I. Lieberman, and Senator Trent Lott. The bill would have 
authorized $100 million in grants for businesses affected by 
the 2005 Gulf Coast hurricanes ($75 million of which was 
allotted for Louisiana and $25 million of which was designated 
for Mississippi). The bill deferred disaster loan payment for 
up to one year for affected businesses and homeowners in the 
regions and allowed the SBA to immediately disburse $35,000 (up 
from $10,000) on an approved loan without requiring additional 
collateral. Additionally, S. 537 would have allowed small firms 
in the disaster zone to compete for lucrative federal contracts 
within the HUBZone program for two to three years.
    On February 14, 2007, Senators Kerry, Snowe, Lieberman, 
Landrieu, and Vitter introduced the Small Business Disaster 
Loan Reporting Act of 2007 (S. 598). The legislation would have 
amended the 2006 hurricane season disaster response plan and 
directed the SBA to report monthly to the Committee on the 
operation of the SBA Disaster Loan program and report daily 
during presidentially declared disasters. The bill also would 
have directed the SBA Administrator to provide reports on 
federal contracts awarded as a result of a major disaster and 
would have asked the SBA to report on how the SBA could improve 
the Disaster Loan application process. Many of these reporting 
requirements ultimately became law as part of the Farm, 
Nutrition, and Bioenergy Act of 2007 (P.L. 110-246).
    Senator Landrieu introduced the Small Business Disaster 
Recovery Assistance Improvement Act of 2007 (S. 715) on 
February 28, 2007, along with Senators Kerry, Snowe, and 
Vitter. This bipartisan bill would have created a short-term, 
low-interest loan program at the SBA to help businesses 
impacted by major disasters. Provisions similar to S. 715 were 
included in the Farm, Nutrition, and Bioenergy Act of 2007 
(P.L. 110-246). The low-interest loans established in S. 715 
would have allowed impacted small firms to make payroll and 
begin necessary repairs to stay open until they received a 
standard SBA Disaster Loan or insurance payment. The Expedited 
Disaster Assistance Loans could not exceed 180 days after the 
disaster, had no prepayment penalty, and could be refinanced as 
part of any subsequent SBA Disaster Loans.
    The Committee's work in the 110th Congress to reform the 
disaster loan program built on legislation developed in the 
previous Congress: (1) The Small Business, Homeowners, and 
Renters Disaster Relief Act of 2005 (S. 1724), introduced by 
Senator Snowe, then Chair, cosponsored by Senators Vitter and 
Jim Talent. (2) The Small Business Hurricane Relief and 
Reconstruction Act of 2005 (S. 1807), introduced by Chair Snowe 
and cosponsored by Senator Kerry and Senators Landrieu, Vitter, 
Mark L. Pryor, John Cornyn, Evan Bayh, Edward M. Kennedy, Thad 
Cochran, and Talent. (3) The Gulf Coast Open for Business Act 
of 2006 (S. 2482), introduced by Senator Landrieu and 
cosponsored by Senator Kerry and Senator Bayh. (4) The Small 
Business Partners in Reconstruction Act of 2006 (S. 2608), 
introduced by Chair Snowe and cosponsored by Senator Vitter. 
(5) The Small Business Disaster Loan Reauthorization and 
Improvements Act of 2006 (S. 3487), introduced by Senator 
Kerry, then Ranking Member, and cosponsored by Senators Pryor, 
Landrieu, Bayh, Bill Nelson, and Daniel K. Akaka. (6) The Small 
Business Disaster Recovery Assistance Improvements Act of 2006 
(S. 3664), introduced by Senator Landrieu and cosponsored by 
Senator Kerry and Senators Bayh and Pryor. (7) The Gulf Coast 
Back to Business and Homes Act of 2006 (S. 4072), introduced by 
Senator Landrieu and cosponsored by Senator Kerry. And (8), The 
Small Business Disaster Response and Loan Improvements Act of 
2006 (S. 4097), introduced by Chair Snowe and cosponsored by 
Senators Kerry, Landrieu, Norm Coleman and Vitter.

     D. ALLEGATIONS OF IMPROPER DISASTER LOAN PROCESSING PRACTICES

    On February 26, 2007, Chairman Kerry sent a letter to SBA 
Administrator Preston expressing concern over allegations of 
improper loan processing practices in the Fort Worth, Texas, 
processing center. These complaints asserted that the SBA made 
a habit of rewarding employees who met volume-related quotas 
for the number of applications processed or disbursed. These 
practices purportedly resulted in applications being processed 
hastily and a system in which less attention was paid to 
quality customer service or legal requirements. Senator Kerry 
questioned whether or not the SBA was aware of these 
allegations and asked that Administrator Preston disclose the 
dates and circumstances under which he was made aware of the 
charges. On February 27th, Administrator Preston responded and 
indicated that it was an instance of mismanagement he was aware 
of and that he was seriously looking into the allegations.

          E. HEARING ON OVERSIGHT OF GULF COAST DISASTER LOANS

    On July 25, 2007, Chairman Kerry convened a hearing titled 
``Oversight: Gulf Coast Disaster Loans and the Future of the 
Disaster Assistance Program.'' Senator Kerry called this 
hearing in order to examine the SBA's Disaster Loan program one 
month before the two-year anniversary of Hurricane Katrina. The 
Committee heard from former SBA loan officers and the Inspector 
General of the SBA about charges that staff improperly 
cancelled already approved loans, forced loan withdrawals, or 
disbursed loans without the homeowner's or business owner's 
consent in order to reduce the number of pending loan 
applications and ratio of loans declined in order to improve 
the agency's and administration's reputation for severe 
mismanagement of disaster loan assistance for the hurricane 
victims. Hearing witnesses included SBA Administrator Preston; 
SBA Inspector General Eric Thorson; William Shear, Director of 
the Financial Markets and Community Investment at U.S. 
Government Accountability Office; and Gale Martin, a former SBA 
loan officer.

             F. FIELD HEARING ON REBUILDING THE GULF COAST

    On February 20, 2008, Senator Landrieu chaired a field 
hearing with Senator Vitter titled ``Rebuilding the Gulf Coast: 
Small Business Recovery in South Louisiana.'' Held in Lake 
Charles, Louisiana, the hearing's purpose was to measure the 
success of federal, state, and local small business recovery 
efforts following Hurricanes Katrina and Rita. In the wake of 
Katrina and Rita, 18,000 small businesses were totally 
destroyed and 81,000 businesses were economically affected. The 
Senators heard testimony from small business owners, SBA 
officials, local government leaders, and others involved in the 
recovery process to determine what worked and what was lacking 
in government assistance following the storms, what steps were 
still needed for recovery, and how the federal government might 
perform better following a future disaster.

         G. CHANGES TO CREDIT ELSEWHERE TEST FOR DISASTER LOANS

    Beginning on May 25, 2008, Iowa and parts of the Midwest 
experienced flooding, tornadoes and severe storms that 
disrupted small businesses and led to a disaster declaration 
for Iowa. After Hurricane Katrina, all but 2 percent of 
applicants received low-interest loans capped at 4 percent to 
help them rebuild their homes and businesses. However, reports 
following these Midwest floods showed that the SBA was 
determining that disaster victims had access to credit 
elsewhere at a rate fifteen times greater than during Katrina. 
These victims were thus being offered loans with rates capped 
at 8 percent and shorter repayment periods. Chairman Kerry, 
Ranking Member Snowe, and Senators Tom Harkin and Chuck 
Grassley sent a letter to the SBA on September 23, 2008, urging 
the Administration to review its new standards for credit 
elsewhere to ensure that the requirements enabled current and 
future disaster victims to obtain assistance. The Senators 
pressed the SBA to review the standards in Iowa, and submitted 
a series of questions to the agency on the credit elsewhere 
requirements.
    On October 2, 2008, Chairman Kerry and Senator Harkin sent 
a letter to Jim Nussle, Director of the Office of Management 
and Budget (OMB), and SBA Acting Administrator Baruah, to 
request documentation on the decision to change the ``credit 
elsewhere'' test for disaster assistance. They emphasized that 
the credit elsewhere test must be a fair standard and that OMB 
must not try to balance the budget on the backs of disaster 
victims seeking loans. This letter came in response to an 
anonymous letter sent to Senator Harkin's office with a copy of 
an internal SBA e-mail that suggested that OMB was the driving 
force behind the change to the credit elsewhere standard. 
Acting SBA Administrator Baruah responded on October 14, 2008, 
saying that the loans to businesses in Iowa that were charged a 
higher rate would be reviewed to determine if the credit 
elsewhere test was properly applied and if a financial hardship 
waiver should have been granted.

      H. SEEKING ADDITIONAL FUNDING FOR THE DISASTER LOAN PROGRAM

    On January 22, 2007, Chairman Kerry and Ranking Member 
Snowe sent a letter to Chairman Richard Durbin and Ranking 
Member Sam Brownback on the Appropriations Subcommittee on 
Financial Services, expressing concerns about the FY 2007 
funding level for SBA's Disaster Loan program. Senators Kerry 
and Snowe urged the appropriators to authorize the transfer of 
funds from FY 2006 emergency supplemental appropriations or to 
appropriate additional funding in the Continuing Resolution for 
the Disaster Loan Program.
    On March 2, 2007, Senator Kerry, along with Ranking Member 
Snowe and Senators Landrieu and Vitter, wrote a letter to the 
Appropriations Committee Chairman Byrd and Ranking Member 
Cochran requesting that small business provisions be included 
in the FY 2008 Emergency Supplemental Appropriations Bill. In 
this letter, the Senators requested an additional $75 million 
for the SBA's Economic Injury Disaster Loans (EIDL) program, as 
well as the inclusion of language designating the Gulf Coast 
disaster areas as HUBZones for three years. Ultimately, on May 
25, 2007, the Senators' efforts succeeded and $25 million in 
additional recovery assistance for small businesses and 
homeowners affected by Hurricanes Katrina and Rita were enacted 
as a part of the U.S. Troop Readiness, Veterans' Care, Katrina 
Recovery, and Iraq Accountability Appropriations Act of 2007 
(H.R. 2206/P.L. 110-28).

                        I. DISASTER DECLARATIONS

1. Eastern Market fire

    In the wake of the fire that devastated many Eastern Market 
small businesses, Senator Kerry wrote a letter to Washington, 
D.C. Mayor Adrian M. Fenty on April 30, 2007, pledging his 
support for rebuilding the historic landmark. Additionally, 
Senator Kerry offered information on SBA disaster assistance 
for the small firms affected by the fire and urged the Mayor's 
office to reach out to Committee staff for detailed information 
on the various forms of federal assistance available to those 
small establishments.

2. Western Massachusetts floods

    Chairman Kerry and his colleagues also sent several letters 
to SBA requesting disaster declarations following flooding and 
fires that damaged or destroyed small businesses and homes in 
Massachusetts. On May 3, 2007, Chairman Kerry and Senator 
Edward M. Kennedy sent a letter to request the SBA 
Administrator formally declare a disaster area for severe 
flooding in Essex, Plymouth, Barnstable, Dukes, Franklin, 
Hampden, Hampshire, and Berkshire Counties in Massachusetts. 
Given the Federal Emergency Management Agency (FEMA) 
estimations of damage totaling over $10 million, Senators Kerry 
and Kennedy urged the agency to issue a swift declaration so 
that small businesses in the affected counties could have 
access to the credit needed to rebuild the region's 
infrastructure and their livelihoods. The declaration was 
issued on May 7, 2007.

3. Uxbridge Mill fire

    On July 23, 2007, Chairman Kerry joined Senator Kennedy and 
Congressman Richard E. Neal of Massachusetts in urging the SBA 
to move quickly in issuing a disaster declaration for those 
affected by a July 21st eight-alarm fire that ravaged an 
Uxbridge Mill complex housing 65 Massachusetts businesses. An 
Administrative disaster declaration was made on July 23rd and 
was printed in the Federal Register on July 27th.

4. Lawrence fire

    On January 24, 2008, Chairman Kerry, Senator Kennedy, and 
Representative Niki Tsongas sent a letter to the SBA urging the 
Bush administration to provide timely disaster loan assistance 
to the victims of a fire in Lawrence, Massachusetts. At least 
150 people were left homeless after the blaze on January 21st, 
which leveled most of a city block. The lawmakers were 
successful in getting the federal government to declare the 
area as a disaster; however, delays in disbursing loans to 
victims of the fire led the lawmakers to write another letter 
to the Administrator pressing for movement in getting the 
resources to those in need. On February 27, 2008, Chairman 
Kerry and Representative Tsongas sent another letter to SBA 
expressing concern about the SBA's rejection of the loan 
applications of six victims of the January fire.

5. Peabody fire

    On June 4, 2008, Chairman Kerry, Senator Kennedy, and 
Representative John F. Tierney sent a letter to the SBA 
encouraging the agency to provide disaster loans to the victims 
of a large Peabody, Massachusetts fire. The affected areas 
received a disaster declaration on June 6th. The SBA moved 
quickly to make the loans available and to urge affected 
homeowners and small businesses to apply for assistance, 
leading Senator Kerry to praise the agency for its efforts.

6. Red tide outbreak

    Also on June 4th, Chairman Kerry sent a letter to SBA 
Administrator Preston and to the Department of Agriculture 
requesting disaster assistance to help small businesses 
adversely impacted by the red tide outbreak which closed the 
operations of many Northeast fishermen, affecting them and the 
businesses they supplied with shellfish. In May, the 
Massachusetts Division of Marine Fisheries closed Cape Cod Bay 
to shell fishing in Sandwich and Bourne in response to the red 
tide bloom. As a result of these closures, the coast of 
Massachusetts from New Hampshire border to the Cape Cod Canal 
was off-limits to shell fishing. In 2005, Chairman Kerry had 
worked to provide assistance for Massachusetts shellfish 
farmers who were suffering through the worst outbreak of red 
tide in more than three decades; unfortunately, at that time, 
there was significant confusion between the Department of 
Agriculture and the Small Business Administration as to which 
federal agency ultimately is responsible for providing 
assistance to these fishermen. In these letters, the Chairman 
urged the agencies to better coordinate their efforts.

                   VI. Women's Small Business Issues

    2008 marked the twentieth anniversary of the passage of the 
Women's Business Ownership Act of 1988 (P.L. 100-533), the 
first comprehensive small business legislation aimed to help 
women entrepreneurs succeed. This bill was the culmination of a 
movement that began with the women's rights movement in the 
1960s and early 1970s and that continued with such changes as 
passage of the Equal Credit Opportunity Act of 1974, which 
outlawed credit discrimination based on gender. In 1979, 
President Carter created the Small Business Administration's 
Office of Women's Business Ownership in response to a 
interagency report titled ``The Bottom Line: Unequal Enterprise 
in America,'' which detailed the barriers to women's success in 
entrepreneurship. The Women's Business Ownership Act played an 
important role in the growth of women-owned businesses that 
occurred between its passage and the 110th Congress.
    According to the Center for Women's Business Research, 
between 1977 and 2002, the number of women-owned businesses 
grew by 824 percent. According to the numbers that the Center 
officially released at a September 2008 Committee roundtable, 
in 2008, 7.2 million firms were owned 51 percent or more by 
women. These firms employed 7.3 million workers and created 
$1.1 trillion in revenue. When including firms owned 50 percent 
or more by women, the numbers rose to 10.1 million firms, 
employing 13 million workers and generating $1.9 million in 
revenue.
    However, despite their recent successes, women-owned small 
businesses still continued to lag behind their male 
counterparts in important areas. Women-owned firms had lower 
revenue and fewer employees than their male counterparts. 
eighty percent of women-owned firms had revenues under $50,000, 
and, although 6 percent of men-owned businesses had revenues of 
$1 million or more, only 3 percent of all women-owned firms 
did. With regard to employment, only 16 percent of all firms 
with employees were owned by women. Even in federal 
procurement, women-owned firms received less than 3.5 percent 
of all federal contracts. Understanding what caused these 
differences and taking steps to address them would aid not just 
women-owned firms but also the economic strength of the United 
States economy, particularly important during the tough 
economic times of the 110th Congress. As reported in the Global 
Entrepreneurship Monitor 2007 Report on Women and 
Entrepreneurship, ``ignoring the proven potential of women's 
entrepreneurial activity means that countries put themselves at 
a disadvantage and thwart their opportunity to increase 
economic growth.''
    In reviewing the previous 20 years, many of the issues that 
were hindering women entrepreneurs from achieving their full 
economic potential in 1988 were still barriers in 2008. Access 
to capital, access to markets, particularly federal 
procurement, and other issues continued to be issues women 
business owners brought to the Committee's attention. During 
the 110th Congress, the Committee took steps to address these 
issues by securing final passage of a Women's Business Center 
Renewal Grants Program that Chairman Kerry and Ranking Member 
Snowe had been seeking for several years. The Committee also 
held several hearings and roundtables on issues facing women 
small business owners and entrepreneurs and pressed the 
Administration to implement the long-overdue Women's 
Procurement Program in an appropriate and effective manner.

   A. ENACTMENT OF THE WOMEN'S BUSINESS CENTER RENEWAL GRANTS PROGRAM

    The Women's Business Center (WBC) program was created in 
1988 through the Women's Business Ownership Act of 1988 to 
address concerns that women continued to face discrimination in 
starting and running small businesses. The program provided 
grants to non-profit centers which provided counseling and 
assistance to socially and economically disadvantaged women 
wishing to start or grow a small business. In FY 2007, there 
were 99 WBCs receiving funds from SBA and 17 ``graduated'' 
centers which no longer received SBA funding.
    The initial legislation provided that non-profits could 
apply for only one 5-year grant, which they had to match with 
non-federal funds. This initial five-year grant was often 
referred to as ``regular funding.'' After those five years of 
funding, centers were expected to become self-sufficient. 
However, centers struggled to become independent, in large part 
because they served a low-income population and could not 
charge more than nominal fees for their services.
    In 1999, in response to concerns about the future of 
established WBCs, Senators Kerry and Snowe introduced the 
Women's Business Center Sustainability Act of 1999, which 
created the Sustainability Pilot Program. This program allowed 
centers which had already received the initial five-year grant 
to apply for a second five years of funding. The Sustainability 
Pilot Program expired in 2004; however, it was continued each 
year through language in the Commerce, Justice, and Science 
appropriations bill. In addition to the ongoing uncertainty 
about the future of the Sustainability Pilot Program, in 2005, 
WBCs began graduating from the second five years of funding and 
again struggled to fill the gap left by the lack of federal 
matching funding.

1. Amendment No. 187 to the Fair Minimum Wage Act

    On February 2, 2007, Chairman Kerry was joined by Ranking 
Member Snowe and Senator John E. Sununu in introducing an 
amendment (S.A. 187) to the Fair Minimum Wage Act (H.R. 2) to 
replace the Sustainability Pilot Program with a permanent 
three-year Renewal Grant Program. The amendment was adopted in 
the Senate by unanimous consent but the underlying bill did not 
become law. However, at the urging of Senators Kerry and Snowe 
in a May 18, 2007, letter to Congressional appropriators and 
leadership, the provision was ultimately attached to the U.S. 
Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
Accountability Appropriations Act of 2007 (H.R. 2206), and 
signed into law as part of P.L. 110-28 on May 25, 2007. The 
result of the legislation was that all WBCs, including those 
that had already graduated from SBA funding, could apply on a 
continuous basis to receive matching funds from the SBA.

B. IMPLEMENTATION OF THE WOMEN'S BUSINESS CENTER RENEWAL GRANTS PROGRAM

    There was disagreement between Congress and the SBA about 
when and how the new Women's Business Center Renewal Grants 
Program should be implemented. According to the Senate 
Legislative Counsel and the Congressional Research Service, the 
SBA had the authority to administer the new Renewal Grant 
Program immediately upon the legislation being signed into law. 
However, the SBA argued that they could not administer the new 
program until the old Sustainability Pilot Program was 
repealed. The Sustainability Pilot Program was supposed to be 
repealed October 1, 2007; however, because of a series of 
temporary extensions of SBA program authorizations, it had not 
been repealed.
    On August 17, 2007, Chairman Kerry and Ranking Member Snowe 
wrote to the SBA urging them to implement the Renewal Grant 
Program as soon as possible. The Senators followed up in a 
September 18, 2007, letter, telling SBA that it would need to 
provide clear answers on the implementation of the Renewal 
Grant Program at the September 20, 2007, Committee hearing 
titled, ``Expanding Opportunities for Women Entrepreneurs: The 
Future of Women's Small Business Programs.'' At the hearing, 
SBA Associate Administrator for Entrepreneurial Development, 
Anoop Prakash, committed to implementing the program within 120 
days. On December 5, 2007, Kerry and Snowe again sent a letter 
to SBA announcing a hearing to be held in January to hold the 
Administration accountable for implementing this and other 
programs. The hearing was titled ``Holding the SBA Accountable: 
Women's Contracting and Lender Oversight,'' and held on January 
30, 2008. The SBA had made significant progress in implementing 
the grant program. Program grant announcements were posted 
January, 24, 2007, and notices of awards to established WBCs 
began to be issued in March 2008.

          C. OVERSIGHT OF THE WOMEN'S BUSINESS CENTER PROGRAM

    In the 110th Congress, the Committee continued to receive 
complaints from WBCs about SBA's administration of the WBC 
program. Both the Government Accountability Office (GAO) and 
the SBA Inspector General office investigated the WBC program 
in 2007. The GAO examined: (1) the impact of funding 
uncertainties on the WBC program (the Renewal Grant legislation 
addressed this problem); (2) the oversight and administration 
of the WBC program; and (3) whether WBC services duplicated 
those provided by SCORE or Small Business Development Centers. 
The GAO report, entitled ``Small Business Administration: 
Preliminary Views on Issues Related to the Women's Business 
Center Program'' (GAO-07-1244T), was released on September 20, 
2007.

        D. IMPROVING SBA GRANT DISBURSEMENT PROCESS FOR CENTERS

    At the request of Chairman Kerry in a May 9, 2007, letter, 
the SBA Inspector General investigated the problems WBCs had in 
receiving grant money from the SBA. WBCs applied for a five-
year grant, but they received the money on a quarterly basis 
throughout the five years. From WBC reports to the Committee, 
this process had been tremendously difficult. Centers 
complained about unclear directions from SBA, changing 
requirements which were not communicated ahead of time, and, as 
a result, very late payments. At the Committee's September 20, 
2007, hearing, the Inspector General discussed the findings of 
the investigation, corroborating the stories from the WBCs and 
revealing that some payments had been more than 300 days late. 
Anoop Prakash, SBA's Associate Administrator for 
Entrepreneurial Development promised to improve the payment 
system. Senators Kerry and Snowe followed up on this and other 
SBA promises at a January 30, 2008 hearing. The hearing 
determined that SBA had made significant progress in improving 
the reimbursement process for WBCs; however, more still needed 
to be done, and both Senators pushed for continuing 
improvement. The SBA Inspector General Report, entitled ``Audit 
of Grant Disbursement of Women's Business Centers'' (IG Report 
No. 08-05), was formally released on November 20, 2007.

                     E. WOMEN'S PROCUREMENT PROGRAM

    Between 1997 and 2002, the growth rate in the number of 
women-owned small businesses was almost twice that of all 
firms; however, the share of federal contracting dollars going 
to women-owned small businesses had not increased accordingly. 
Despite accounting for 30 percent of all small businesses, they 
received less than 3.5 percent of federal contracts, well short 
of the 5 percent goal for federal contracting with women-owned 
small businesses.
    To remedy this shortfall in contracting with women-owned 
small businesses, Congress enacted the Women's Procurement 
Program on December 21, 2000. The legislation provided 
contracting officers with the ability to restrict competition 
for federal contracts to women-owned small business concerns 
under certain conditions. Many hailed this law as a new 
beginning for women in federal contracting.

      F. DELAYED IMPLEMENTATION OF THE WOMEN'S PROCUREMENT PROGRAM

    The Bush Administration delayed implementation of the law 
that created the Women's Procurement Program for more than 
eight years. In the 110th Congress, in letters sent on May 3, 
2007, and October 17, 2007, Chairman Kerry and Ranking Member 
Snowe pushed the SBA to promptly issue a broad women's 
procurement rule that would benefit the greatest number of 
women business owners.

   G. PROPOSED RULE FOR IMPLEMENTING THE WOMEN'S PROCUREMENT PROGRAM

    On December 27, 2007, the SBA released a proposed rule for 
implementing the Women's Procurement Program. In the proposed 
rule, the SBA decided to use the narrowest methodology from the 
RAND study to implement the program. This approach--using four 
digit industry classification codes based on dollar amount of 
contract awards--deemed the four following industries out of 
140 industries as underrepresented: National Security and 
International Affairs; Coating, Engraving, Heat Treating, and 
Allied Activities; Household and Institutional Furniture and 
Kitchen Cabinet Manufacturing; and Other Motor Vehicle dealers.
    These were the only industries for which the SBA was 
willing to say that women-owned firms were under-represented or 
substantially under-represented in government-wide federal 
procurement. A number of women small business groups expressed 
their outrage at the rule that was proposed by the Bush 
Administration, and, throughout 2008, Chairman Kerry and 
Ranking Member Snowe were harsh critics of the proposed rule.

 H. HEARING ON PROPOSED RULE FOR IMPLEMENTING THE WOMEN'S PROCUREMENT 
                                PROGRAM

    At the Committee's January 30, 2008, hearing, Senators 
Kerry, Snowe, and Levin pressed SBA Administrator Preston to 
rewrite the proposed rule on the Women's Procurement Program, 
criticizing the Administration for failing to increase 
opportunities for women entrepreneurs and calling for the 
implementation of the Women's Procurement Program in a way that 
would help women-owned small businesses create jobs and grow 
our economy.

   I. LETTERS OPPOSING FINAL RULE ON THE WOMEN'S PROCUREMENT PROGRAM

    Chairman Kerry was joined by Senators Levin, Lieberman, 
Maria Cantwell, Benjamin L. Cardin, and Jon Tester in sending a 
follow-up letter to Administrator Preston on February 1, 2008, 
expressing deep concerns about the proposed rule on the Women's 
Procurement Program. On February 22, 2008, Chairman Kerry and 
Ranking Member Snowe sent an additional letter to Administrator 
Preston, requesting that the comment period for the proposed 
rule be extended for 30 days. On March 31, 2008, another letter 
was submitted to the SBA Administrator which clarified and 
amplified the Senators' objections. Senators Kerry and Snowe 
followed up on June 12, 2008, requesting that the SBA refrain 
from issuing a final rule unless their concerns were addressed. 
On September 22, 2008, a letter was sent from all women 
Senators, including Committee members Senators Snowe, Landrieu, 
Cantwell, and Elizabeth Dole, to SBA urging that the proposed 
rule be changed or withdrawn.
    On October 1, 2008, the SBA published the final rule to 
implement the Women's Procurement Program in the Federal 
Register that did not take into account the objections of the 
Chairman and the Ranking Member and still fell short of 
establishing an effective program that would truly benefit 
women small business owners. Chairman Kerry and Ranking Member 
Snowe again criticized the proposed rule and, in a letter sent 
to SBA Acting Administrator Baruah on October 30, 2008, 
requested an extension of the comment period on the final rule 
until January 30, 2009. Nonetheless, part of the rule took 
effect on October 31, 2008.

                        J. COMMITTEE ROUNDTABLES

1. Women in business: leveling the playing field

    In addition to the two hearings described earlier in the 
report, held on September 20, 2007 and January 30, 2008, the 
Committee held two roundtables in the 110th Congress in order 
to hear first-hand accounts of the obstacles that women faced 
in starting their own businesses and to seek ideas for 
solutions to help them in overcoming them. The first 
roundtable, titled ``Women in Business: Leveling the Playing 
Field,'' was held in Framingham, Massachusetts, on March 19, 
2008. Participants included women small business owners, 
representatives of Women's Business Centers, including the 
Center for Women and Enterprise, local banks, and the District 
Director of the SBA.

2. Opportunities and challenges for women entrepreneurs on the 20th 
        anniversary of the Women's Business Ownership Act

    The second roundtable, titled ``Opportunities and 
Challenges for Women Entrepreneurs on the 20th Anniversary of 
the Women's Business Ownership Act,'' and held on September 9, 
2008, in Washington, DC, commemorated the twenty year 
anniversary of the Women's Business Ownership Act of 1988. The 
roundtable focused on access to markets, access to capital, and 
access to networks and decision-makers. Participants in the 
second roundtable included the Executive Director of the 
National Women's Business Council, the CEO of the U.S. Women's 
Chamber of Commerce, members of the group Women Impacting 
Public Policy, and several women small business owners.

         K. ADDITIONAL LEGISLATION TO AID WOMEN BUSINESS OWNERS

    In addition to passing legislation to create the Women's 
Business Center Renewal Grants Program, both the Small Business 
Venture Capital Act (S. 1662), introduced on June 19, 2007, and 
the Entrepreneurial Development Act (S. 1671), introduced June 
20, 2007, included provisions designed to address many of the 
issues discussed in the roundtables and hearings. The Small 
Business Venture Capital Act would have created incentives for 
more financing to go to women-owned firms under the SBA's 
program for Small Business Investment Companies--or SBICs. 
SBICs are privately-owned companies that are licensed by the 
SBA to provide debt and equity capital to small businesses. 
They can obtain loans from the SBA to supplement their own 
capital, and the proceeds of those loans are used by the SBICs 
for investments in qualified small businesses. S. 1662 would 
also have created an incentive for SBICs to invest in women-
owned small businesses by giving them more leverage if they 
invested in these firms.
    The Entrepreneurial Development Act would have reauthorized 
the Women's Business Center program and the National Women's 
Business Council. The bill would have provided authority for 
the SBA's Office of Women's Business Ownership to develop and 
make available new programs and services for established women-
owned businesses, addressing issues in the areas of women in 
manufacturing, technology, professional services, retail and 
product sales, travel and tourism, international trade and 
federal government procurement. The bill also would have 
directed the SBA to conduct training for District Office Women 
Business Ownership Representatives (existing personnel who were 
responsible for marketing and outreach activities) and District 
Office Technical Representatives (existing personnel who were 
responsible for grant programmatic and financial oversight 
duties) as well as provided resources for the District Offices 
to carry out their responsibilities.
    It would also have revived the Interagency Committee on 
Women's Business Enterprise and established, as a subcommittee 
to the Interagency Committee, a policy advisory group 
consisting of representatives from the SBA, the Department of 
Commerce, the Department of Labor, the Department of Defense, 
and the Department of the Treasury and two members of the 
National Women's Business Council. The Committee believed that 
the policy advisory group would return the Interagency 
Committee to a mix of public/private members to provide the 
support and direction so badly needed to revive the intent of 
the Interagency Committee. The Interagency Committee, which 
consisted of representatives of various federal agencies, was 
required to submit an annual report to the President and 
Congress, through the SBA, but there was no recent record of 
annual reports being prepared or forwarded to the President and 
Congress. In addition, the President had not appointed a 
Chairperson to carry out the mission of the Interagency 
Committee, and therefore, the Interagency Committee was 
inactive.
    Both bills passed Committee unanimously in 2007 and were 
included in the SBA Reauthorization and Improvements Act of 
2008 (S. 2920).

                     VII. Minority Entrepreneurship

    There is a large amount of data indicating that small 
businesses are the dominant economic growth engine driving the 
United States in the global economy. However, the fact that a 
significantly increasing number of small businesses are being 
started by minorities and women is less known--and has only 
been documented in a serious manner over the last ten years. 
Between 1997 and 2006, minority business enterprises accounted 
for over 50 percent of the two million new businesses started 
in the United States. These businesses crossed the entire 
industrial base from financial services and health care to 
construction and transportation. Ensuring adequate access to 
the federal market for these firms through the 8(a) and Small 
Disadvantaged Business (SDB) programs is essential to their 
future growth and success. Furthermore, the share of lending to 
minority firms has remained largely stagnant or made 
statistically insignificant increases. Also, there has been a 
steady decline in equity and equity-like investments to 
minorities through the SBIC program. In the 110th Congress, the 
Committee sought solutions to increase lending to minorities, 
thereby growing their ownership of small businesses and 
planting the seeds for wealth creation, and to create new 
entrepreneurs in underserved communities through education and 
outreach.

  A. HEARING ON ASSESSING THE EFFECTIVENESS OF SBA'S PROGRAMS FOR THE 
                      MINORITY BUSINESS COMMUNITY

    On May 22, 2007, Chairman Kerry convened a hearing titled, 
``Minority Entrepreneurship: Assessing the Effectiveness of 
SBA's Programs for the Minority Business Community.'' The 
purpose of this hearing was to examine the state of minority 
entrepreneurship programs nationwide and to highlight any 
barriers that minority business owners faced in starting, 
maintaining, and growing their firms. The hearing also examined 
widespread reports of barriers faced by minority entrepreneurs 
in the federal contracting arena.
    The first panel in this hearing consisted of the 
administrative witness Calvin Jenkins, SBA Deputy Associate 
Administrator for Government Contracting and Business 
Development. The second panel of witnesses included testimony 
from Jon Wainwright, Vice President of Economic Research 
Associates, Inc.; Anthony Robinson, President of the Minority 
Business Enterprise Legal Defense and Educational Fund; Bill 
Miera, Chief Executive Officer of Fiore Industries, Inc.; and 
Fernando Galaviz, Chairman of the Small Business Association 
for Technology.

   B. HEARING ON BUSINESS START-UP HURDLES IN UNDERSERVED COMMUNITIES

    The Committee held another hearing on September 11, 2008, 
titled, ``Business Start-up Hurdles in Underserved Communities: 
Access to Venture Capital and Entrepreneurship Training'' to 
address the lack of access to credit and venture capital for 
underserved communities. Businesses in economically depressed 
inner-city and rural areas, along with minority- and women-
owned enterprises, were not receiving vital technical 
assistance to help their firms thrive. The hearing provided 
further evidence of the need for important provisions within 
the SBA Reauthorization and Improvement Act of 2008 (S. 2920).
    Witnesses at the hearing included Marian Sabety, President 
and Chief Executive Officer, Wyndstorm Corporation; Don 
O'Bannon, Vice President of Business Diversity and Development, 
Dallas-Fort Worth International Airport; Margaret Henningsen, 
Vice President and Founder, Legacy Bank; Robert Rapoza, 
President, Rapoza Associates; Jon Wainwright, Vice President, 
NERA Economic Consulting; Thomas Boston, President and Chief 
Executive Officer, EuQuant, Inc.; Rodney Strong, Chief 
Executive Officer, Griffin & Strong, PC; and Donald Wilson, 
President and Chief Executive Officer, Association of Small 
Business Development Centers.
    At the September 2008 hearing, Chairman Kerry addressed a 
number of important statistics about the SBIC program in 
particular. SBA's public reports denoted that black-, other 
minority-, and women-owned firms received less SBIC financing, 
as compared to other firms per transaction, and as a group 
these firms received less than 5 percent of all SBIC dollars. 
Black-owned firms received less than 0.6 percent of SBIC 
venture capital funding in 2003. Clearly, these statistics 
showed that more needed to be done to get venture capital into 
the hands of women and minority entrepreneurs.
    It was also clear that women and minorities were not in 
positions of authority at venture capital firms. According to a 
Wall Street Journal survey, venture capital firms were 
overwhelmingly white and male. The survey found that of all 
employees at venture capital firms, 88 percent were white, 75 
percent were male, and 66 percent were white males. When the 
results were narrowed to exclude non-investment professional 
titles, the percentage of white people stayed at 88 percent, 
but the percentage of males increased to 86 percent and the 
percentage of white males increased to 77 percent.
    Furthermore, women typically lack the necessary personal 
connections to decision makers that men have. From 1995 to 
2000, males in venture capital increased by 64 percent, but 
there was only a 47 percent increase in females. From 1995 to 
2000, only about 25 percent of venture capital firms had women 
in management tracks. In 2000, only 9 percent of management-
track venture capitalists were women. From 1995 to 2000, 64 
percent of women left the venture capital industry (compared 
with 33 percent of men).
    The lack of diversity in venture capital firms had real 
consequences for women- and minority-owned firms. According to 
a study by the Kauffman Foundation titled, ``Gatekeepers of 
Venture Growth: The Role and Participation of Women in the 
Venture Capital Industry,'' the inability to gain access to 
investor networks helped explain why women received less than 5 
percent of venture capital investments made in the United 
States over the past 40 years. The lack of access also denied 
women access to the guidance and relationships that venture 
capitalists often provide to firms in their portfolios. This 
kind of soft support can often mean the difference between 
success and failure to many firms.

                             C. LEGISLATION

1. The SBA Reauthorization and Improvements Act of 2008

    In response to evidence provided in the hearing on venture 
capital, provisions in S. 2920 would have encouraged venture 
capital investments in small businesses owned by underserved 
members of the community by expanding the Small Business 
Investment Companies program and New Markets Venture Capital 
program, by creating a program in colleges and universities to 
encourage students to become entrepreneurs and give them the 
tools to do so successfully, and by creating an office at the 
SBA dedicated to tracking and increasing access for underserved 
business to all of the SBA's programs, from lending and venture 
capital to contracting. The concerns stemmed from a dramatic 
decline in financing and licenses to minority- and women-owned 
firms in the SBA's largest venture capital program and stagnant 
to marginal increases in lending to such businesses.

2. Minority Entrepreneurship Development Act of 2007

    Many of the provisions to promote entrepreneurship in 
underserved communities in S. 2920 were originally introduced 
by Chairman Kerry as part of the Minority Entrepreneurship 
Development Act of 2007 (S. 98) on January 4, 2007. That 
legislation was cosponsored by Senators Cardin, Landrieu, and 
Clinton. Many provisions were also included in the 
Entrepreneurial Development Act of 2007 (S. 1671), which 
unanimously passed the Committee on June 26, 2007.

3. Native American Small Business Development Act of 2007

    Also included in S. 2920 were provisions based on the 
Native American Small Business Development Act of 2007 (S. 
2176), introduced by Senator Tim Johnson on October 17, 2007. 
The bill had eight original cosponsors: Senators Kerry, Jon 
Tester, Daniel K. Akaka, Barbara Boxer, Byron L. Dorgan, Daniel 
K. Inouye, Gordon H. Smith, and Debbie Stabenow. The purpose of 
the legislation was to promote the development of Native 
American small business concerns by establishing the Office of 
Native American Affairs within the SBA, creating a Native 
American Small Business Development program, and enacting two 
pilot programs: the Native American Development Grant Pilot 
Program and the American Indian Tribal Assistance Center Grant 
Pilot Program. Currently, Native Americans own less than 1 
percent of all small businesses in the United States.

 D. SHORTFALLS IN FEDERAL CONTRACTING WITH MINORITY AND DISADVANTAGED 
                               BUSINESSES

    On August 13, 2007, Senator Kerry was joined by Senators 
Reid and Schumer, and Congresswoman Carolyn Kilpatrick in 
sending letters to the Departments of Defense and Treasury 
expressing concern for their poor record of awarding contracts 
to minority and disadvantaged businesses and requesting the 
agencies outline specific steps they were taking to increase 
contracts with minority advertising firms. Their action came in 
response to a report by the Government Accountability Office 
(GAO) released the same day that found that federal agencies 
continued to fall short of the standards set by an executive 
order issued in 2000 calling on the government to 
``aggressively'' reach out to minority and underserved firms 
(GAO-06-361, ``Federal Advertising: Established Programs Were 
Largely Used to Address Executive Order Directive to Ensure 
Small and Minority-Owned Business Participation'').
    The Defense Department awarded minority advertising firms 
only 1.8 percent of contract dollars and paid them on average 
nearly 84 percent less per contract than majority firms. The 
Treasury Department awarded minority advertising firms only 1.9 
percent of contract dollars and paid them on average nearly 47 
percent less per contract than majority firms. The Treasury 
Department responded in a letter dated September 7, 2007, 
outlining steps they had already taken and describing the 
contents of an Acquisition Bulletin dated September 4, 2007, 
issued by the Department's Senior Procurement Executive 
reminding acquisition personnel of the importance of compliance 
with the Executive Order.
    More information on the Committee's efforts to ensure 
fairness in federal contracting can be found in the section of 
this report on Procurement.

             VIII. Regulatory Compliance and Sarbanes-Oxley

    Providing resources and guidance on complying with 
government regulations is particularly important to small 
businesses. Understanding and following the countless number of 
federal regulations can be tricky for small firms, especially 
small companies with few employees. This was particularly the 
case in the 110th Congress, as small businesses continued to 
struggle to comply with the provisions of the Public Company 
Accounting Reform and Investor Protection Act of 2002, or 
Sarbanes-Oxley. Indeed, a GAO Report issued on April 13, 2006, 
entitled ``Consideration of Key Principles Needed in Addressing 
Implementation for Smaller Public Companies'' (GAO-06-361) 
found that small public businesses spent considerably more on 
implementing Sarbanes-Oxley requirements. In fact, firms with 
less than $75 million in market capitalization were spending 
877 percent more than their larger counterparts on compliance 
with the Sarbanes-Oxley law. The Committee took steps to ensure 
that small businesses had the time and resources to comply with 
the regulations.

 A. SECURING AN EXTENSION OF THE DEADLINE FOR SMALL BUSINESS COMPLIANCE

1. Letters to the SEC and PCAOB

    On February 23, 2007, Senators Kerry and Snowe sent a 
letter to Chairman Christopher Cox of the Securities and 
Exchange Commission (SEC) and Chairman Mark Olson of the Public 
Company Accounting Oversight Board (PCAOB), calling on them to 
extend the deadline for small business implementation of 
Sarbanes-Oxley Section 404 requirements in an effort to ease 
the burden of compliance. Section 404 of the Sarbanes-Oxley law 
called for the establishment of internal control frameworks for 
firms and directed them to file internal control reports. 
Senators Kerry and Snowe also urged the SEC and the PCAOB to 
carefully consider comments from small public companies as each 
agency finalized their rulemaking on the issue. On March 7th 
the PCAOB responded, indicating that they planned to coordinate 
with the SEC to make transition to Section 404 compliance for 
non-accelerated filers as smooth as possible, and agreed with 
Senators Kerry and Snowe's views on regulatory policy and the 
need for improvement in that realm. Additionally, on April 5th, 
the Committee received a response from the SEC.
    On May 8, 2007, Chairman Kerry and Ranking Member Snowe 
sent a letter to the SEC and PCAOB to follow up on the April 
18th hearing. This letter restated the need for the SEC and 
PCAOB to provide additional time and assistance for small 
public companies to comply with the upcoming final rules. 
Specifically, Senators Kerry and Snowe urged each entity to 
give small non-accelerated filers up to one additional year to 
comply with forthcoming changes to Section 404 of the Sarbanes-
Oxley law. Additionally, the Senators requested that the SEC 
publish a small business compliance assistance guide and urged 
the agency to consider raising the threshold for securities 
registration, as well as reporting on the law's impact on small 
firms and methods for reducing costs. Senators Kerry and Snowe 
also requested that the PCAOB monitor auditors to ensure that 
small public companies do not face red tape beyond the law's 
requirement.
    On June 6, 2007, Chairman Kerry and Ranking Member Snowe 
sent a letter to the SEC outlining specific steps the SEC 
should take to provide more time and assistance to small public 
companies to comply with Sarbanes-Oxley internal control 
regulations. In this letter, they again requested that the SEC 
provide a reasonable extension for small public companies to 
comply with the newly issued regulations and a full assessment 
of the cost of the new rules under the Regulatory Flexibility 
Act before they became effective later that year. They also 
reiterated their request that the SEC provide a small business 
compliance guide to be published by the SEC that would assist 
small companies in implementing the new internal controls 
requirements and a regular report by the SEC's Advisory 
Committee on Smaller Public Companies on the impact of Section 
404, as well as how the financial burden of compliance with the 
Sarbanes-Oxley Act may be reduced. The Committee received a 
response on June 29th which stated that small firms would not 
have to provide a section 202 auditor report until 2009.
    On December 12, 2007, Senator Kerry issued a statement 
praising the SEC for finally agreeing to an additional one year 
extension for small businesses to comply with Sarbanes-Oxley 
internal control requirements. And on June 20, 2008, the SEC 
agreed to provide small businesses with an additional one year 
extension to comply with the Sarbanes-Oxley Section 404(b) 
auditor attestation requirements.

2. Hearing on Sarbanes-Oxley and its impact on small business

    On April 18, 2007, Chairman Kerry convened a hearing 
titled, ``Sarbanes-Oxley and Small Business: Addressing 
Proposed Regulatory Changes and their Impact on Capital 
Markets.'' This hearing examined the difficulty many small 
businesses faced in complying with onerous Sarbanes-Oxley 
regulations. Senator Kerry called on the Securities and 
Exchange Commission to give small companies additional time to 
comply with upcoming changes to Sarbanes-Oxley. The first panel 
of Administration witnesses included SEC Chairman Christopher 
Cox and Public Company Accounting Oversight Board Chairman Mark 
Olson, who testified regarding recently proposed guidance for 
accounting management and standards for auditors in complying 
with Section 404 of the Sarbanes-Oxley law. The second panel of 
witnesses included Thomas Venables, representing the American 
Bankers Association; Richard Wasielewski, Vice President and 
CFO of Nortech Systems, Inc.; and Joseph Piche, Founder and CEO 
of Eikos, Inc. All three of the second panel witnesses attested 
to the complexity and high costs of compliance with Sarbanes-
Oxley and the need for more time to comply with new rules and 
regulations.

  B. LEGISLATION TO PROVIDE REGULATORY ASSISTANCE TO SMALL BUSINESSES

1. The Small Business Compliance Assistance Enhancement Act of 2007

    The Committee also took steps to provide legislative 
assistance to help small businesses comply with regulations. On 
January 10, 2007, Ranking Member Snowe, Chairman Kerry, and 
Senators Landrieu and Michael B. Enzi introduced the Small 
Business Compliance Assistance Enhancement Act of 2007 (S. 
246). This bill would have amended the Small Business 
Regulatory Enforcement Fairness Act of 1996 to require that the 
agency prepare a small business compliance guide to assist 
small firms in complying with the federal rule.
    On January 23, 2007, Senate Amendment No. 128, introduced 
by Chairman Kerry along with Ranking Member Snowe and Senators 
Landrieu and Enzi, to direct the SBA Administrator to establish 
a pilot program to provide regulatory compliance assistance to 
small business concerns was successfully attached to the Fair 
Minimum Wage Act of 2007 (H.R. 2), but it was not included in 
the final version of the bill.

     C. DELAYING IMPLEMENTATION OF EMPLOYEE VERIFICATION REGULATION

    Additionally, on September 12, 2007, Chairman Kerry sent a 
letter to Secretary Michael Chertoff of the Department of 
Homeland Security and Commissioner Michael J. Astrue of the 
Social Security Administration calling on Administration 
officials to delay implementation of a new employee 
verification regulation (71 Fed. Reg. 34281) pending the 
completion of a full and complete economic impact analysis of 
the regulation's potential impact on small entities, as was 
required by the Regulatory Flexibility Act. The regulation, 
initially proposed in June of 2006, could have forced 
businesses to fire employees who had discrepancies with their 
Social Security numbers. Specifically, employers that received 
notice from the Social Security Administration in the form of a 
``No-Match'' letter that an employee's name and Social Security 
number did not match would have had to take steps to resolve 
the discrepancy within a 90 day period or else terminate the 
employee. Senator Kerry pointed out in this letter that there 
were many reasons why a ``No-Match'' notice could be triggered, 
not the least of which was the faulty database utilized by the 
Social Security Administration, and that this regulation would 
have been over burdensome to small businesses and potentially 
lead to discrimination in the hiring process toward Latinos and 
other immigrants. Neither agency responded to the Committee's 
inquiry. On August 15, 2007, a final rule was issued; however, 
an injunction was quickly filed to prevent its implementation. 
A revised proposed rule was issued on March 26, 2008, but was 
never finalized.

               IX. Technology, Research, and Development

    The Committee continued to believe that programs are needed 
in order to stimulate America's innovation economy, to remedy 
the continued underrepresentation of small businesses in 
federal research and development, and to use small businesses 
to help government agencies meet national needs. Small 
businesses continue to receive only about 4 percent of federal 
research and development dollars despite the fact that small 
businesses employ about one-third of America's scientists and 
engineers, produce more patents than large businesses and 
universities, and are powerful vehicles for the dissemination 
of scientific and technical knowledge. Moreover, in the 
competitive global economy, innovation can be a driving force 
to keep the United States at the forefront, creating good jobs 
and meeting national needs in the process.

            A. REAUTHORIZATION OF THE SBIR AND STTR PROGRAMS

    The Small Business Innovation Research (SBIR) and the Small 
Business Technology Transfer (STTR) programs are two of the 
very few federal programs that utilize this largest sector of 
the scientific and technological community, and they are 
essential to fulfilling the priority research needs of the 
country. Furthermore, these programs utilize the innovative 
capabilities of small businesses to create jobs, to stimulate 
local economies, and to commercialize ideas originally 
developed in our federal science agencies and universities. The 
SBIR and STTR programs also serve as powerful mechanisms to 
involve a diverse group of individuals, geographically and 
demographically, in federal research and development, thereby 
increasing competition, diversifying the government's supply 
base, and reducing costs. For these reasons, the Committee took 
steps in the 110th Congress to reauthorize, strengthen, and 
improve the SBIR and STTR programs and to ensure that federal 
agencies were fulfilling what was required of them in 
implementing the programs. SBIR reauthorization was a priority 
for the Committee because the program had been set to sunset on 
September 30, 2008.

1. The SBIR/STTR Reauthorization Act of 2008

    Chairman Kerry was joined by Ranking Member Snowe in 
introducing the SBIR/STTR Reauthorization Act of 2008 (S. 3362) 
on July 29, 2008. S. 3362 would have reauthorized the SBIR and 
STTR programs for 14 years each, through 2022 and 2023, 
respectively. The legislation would have gradually increased, 
over ten years, the allocation for the SBIR program at most 
participating agencies from 2.5 percent to 3.5 percent of the 
agencies' extramural research and development budgets, and, for 
the STTR program, it would have gradually increased, over six 
years, the allocation at all participating agencies from 0.3 
percent to 0.6 percent of this same budget. It would have 
increased the award size guidelines for the SBIR and STTR 
programs from $100,000 to $150,000 for Phase I and from 
$750,000 to $1 million for Phase II. Also, in order to protect 
against abuses in issuing ``jumbo'' awards, the bill would have 
restricted agencies from making awards that are more than 50 
percent larger than the guidelines.
    To increase geographic participation in the SBIR and STTR 
programs, particularly in rural states, S. 3362 would have 
enhanced and reauthorized through 2014 the Federal and State 
Technology Partnership (FAST) program and the Rural Outreach 
Program (ROP). To help move SBIR and STTR technologies across 
the ``valley of death'' (a phrase used to describe the funding 
gap between Phases II and III or commercialization), the 
legislation would have extended and improved the 
Commercialization Pilot Program at the Department of Defense 
(DoD) and given other agencies the authority to establish 
commercialization pilot programs, authorizing all such pilots 
through 2014.
    The bill included a compromise on the issue of the 
participation of companies majority owned and controlled by 
multiple venture capital companies in the SBIR program, 
allowing the National Institutes of Health (NIH) to apply to 
award up to 18 percent of its SBIR dollars to companies 
majority owned and controlled by multiple venture capital 
companies and the other SBIR qualifying agencies to apply to 
award up to 8 percent of their SBIR dollars to this class of 
firms. The affiliation rule itself and the 500 employee 
standard would have remained unchanged in the bill. Last, the 
legislation sought to improve oversight by giving more autonomy 
and resources to the SBA's Office of Technology, by building in 
regular assessments by the National Academy of Sciences, and by 
streamlining data collection and reporting requirements to help 
Congress better assess the programs' effectiveness to guide 
future policy changes and to address record-keeping problems 
identified by GAO and NAS in their reports on the programs.
    On July 30, 2008, S. 3362 was passed by the Committee by a 
roll call vote of 19-0. Ultimately, despite the Committee's 
efforts to come to a compromise that would allow the bill to 
pass, comprehensive SBIR reauthorization legislation did not 
pass in the 110th Congress.

2. Additional legislation

    In addition to comprehensive reauthorization legislation 
and an extension of the SBIR programs, there were other 
legislative efforts to continue the programs. On September 25, 
2007, Chairman Kerry filed an amendment (S.A. 3041) to the 
National Defense Authorization Act for FY 2008 (H.R. 1585), 
which would have extended the SBIR program through 2010, thus 
ensuring that the thousands of firms that participate in the 
program each year would not face the same delays and shut-downs 
of eight years ago, when there was a great deal of uncertainty 
surrounding the reauthorization of the SBIR program. The 
amendment was adopted by unanimous consent and passed the 
Senate; however, it was not included in the final version of 
the legislation. Chairman Kerry was joined by Ranking Member 
Snowe in re-offering the same amendment (as S.A. 5617) to the 
National Defense Authorization Act for FY 2009 (S. 3001) on 
September 16, 2008, but it was not included, nor were any 
amendments, because there was no managers' package; one Senator 
blocked all amendments to the bill.

3. Temporary extension of SBIR

    The SBIR program was extended through March 20, 2009, by S. 
3029, an Act to provide for an additional temporary extension 
of programs under the Small Business Act and the Small Business 
Investment Act of 1958, introduced by Chairman Kerry on May 15, 
2008. It was signed into law as P.L. 110-235 on May 23, 2008. 
The extension, which covered all of the SBA's programs, gave 
Congress additional time to complete the comprehensive SBIR 
reauthorization process, while preventing the agencies from 
slowing down or shutting down their SBIR programs, as happened 
around the time of the 2000 reauthorization, hurting many small 
businesses and delaying research.

                 B. THE COMMERCIALIZATION PILOT PROGRAM

    Senators Kerry and Snowe also collaborated in the 110th 
Congress to extend and improve the Commercialization Pilot 
Program for the SBIR Program at the Department of Defense. The 
Commercialization Pilot Program was established by then Chair 
Snowe, with support from Senator Kerry, in 2005 in order to 
help small firms bridge the so-called ``valley of death'' by 
providing assistance in transitioning their products developed 
through the SBIR program to commercialization. On September 24, 
2007, they submitted an amendment (S.A. 3023) to H.R. 1585 to 
extend the Commercialization Pilot Program through 2012 and to 
authorize the use of additional incentives that encourage the 
transition of SBIR technologies into fielded systems and 
programs of record. The amendment was adopted by unanimous 
consent and passed the Senate; however, it was not included in 
the final version of the legislation. The Senators again 
attempted to pass this amendment (as S.A. 5616) to S. 3001 on 
September 16, 2008, but it was not adopted, for the same 
reasons discussed above.

  C. COMMITTEE ROUNDTABLES AND MEETINGS ON THE SBIR AND STTR PROGRAMS

    On August 1, 2007, the Committee held a roundtable titled 
``Reauthorization of the Small Business Innovation Research 
Program: National Academies' Findings and Recommendations,'' to 
follow-up on a hearing on SBIR in the 109th Congress and to 
bring the discussion on reauthorization up-to-date by inviting 
the National Academy of Sciences (NAS) to present the results 
of its overall in-depth study and assessment of the SBIR 
program. In addition to NAS, a variety of stakeholders 
participated in the roundtable, including SBIR program managers 
at federal agencies, staff of the Office of Technology at the 
SBA, small business owners, trade association representatives, 
and providers of technical assistance to SBIR award recipients. 
The discussion was wide-ranging and gave participants the 
opportunity to provide feedback on the findings and 
recommendations of the NAS report, providing the Committee with 
further insight into a number of issues relevant to 
reauthorization.
    On October 18, 2007, the Committee held another roundtable, 
``Reauthorization of the Small Business Innovation Research 
Program: How to Address the Valley of Death, the Role of 
Venture Capital, and Data Rights,'' in order to expand upon 
previous discussions of these three critical issues. 
Participants again included program managers at federal 
agencies and staff of the SBA Office of Technology, as well as 
small business owners in a variety of industries. The 
roundtable focused on initiatives in effect at SBIR agencies to 
help small businesses move their innovative technologies across 
the ``valley of death'' from the laboratory to the marketplace, 
the debate over the involvement of companies majority owned and 
controlled by multiple venture capital firms in the SBIR 
program, and the problems inherent in how SBIR data rights are 
treated by federal agencies and prime contractors.
    Further, in preparation for drafting comprehensive SBIR 
reauthorization legislation, the majority staff of the 
Committee held more than 20 meetings with SBIR-participating 
agencies and with departments within the Department of Defense.

   D. NATIONAL ACADEMY OF SCIENCES AND GENERAL ACCOUNTABILITY OFFICE 
                                REPORTS

    The National Academy of Sciences and the Government 
Accountability Office issued several reports on the SBIR 
program since the 2000 reauthorization of SBIR that guided the 
work of the Committee in drafting reauthorization legislation.
    NAS Studies: In order to better measure the progress of the 
SBIR program toward its objectives, when the SBIR program was 
reauthorized for eight years in 2000 (P.L. 106-554), Congress 
requested a comprehensive external evaluation by NAS of SBIR at 
federal agencies with an SBIR budget greater than $50 million. 
The goals of the studies were to determine how SBIR had 
stimulated innovation and used small firms to meet the research 
needs of the nation and to provide overall recommendations for 
the program. The result of the five-year, $5 million review by 
the NAS was a series of reports, issued beginning in 2007.
    The National Academies' comprehensive assessment of SBIR, 
``An Assessment of the Small Business Innovation Research 
Program,'' was published in July 2007. The core finding of the 
NAS study was that the SBIR program was ``sound in concept and 
effective in practice.'' The NAS report found that the SBIR 
program was effectively linking universities to public and 
private markets, increasing private sector commercialization of 
innovations, creating new companies, and providing widely 
distributed support for innovation activity. Agency or topic-
specific studies published by NAS in accordance with the 
mandate to evaluate the program originating in P.L. 106-554 
include:
           An Assessment of the SBIR Program at the 
        Department of Energy (June 2008)
           An Assessment of the SBIR Program at the 
        Department of Defense (November 2007)
           An Assessment of the SBIR Program at the 
        National Institutes of Health (November 2007)
           An Assessment of the SBIR Program at the 
        National Science Foundation (July 2007)
           An Assessment of the Small Business 
        Innovation Research Program (July 2007)
           SBIR and Phase III Challenge of 
        Commercialization (February 2007)
           SBIR: Program Diversity and Assessment 
        Challenges (September 2004)
           Capitalizing on Science, Technology, and 
        Innovation: An Assessment of the Small Business 
        Innovation Research Program--Project Methodology 
        (September 2004).
    Additional NAS studies to be released include:
           An Assessment of the SBIR Program at the 
        National Aeronautics and Space Administration (In 
        Review)
           Revisiting the Department of Defense SBIR 
        Fast Track Initiative (In Draft)
           Venture Funding and the NIH SBIR Program (In 
        Draft).
    GAO Study: Additionally, GAO conducted a review of the SBIR 
program at the request of Senators Kerry and Kennedy, later 
joined by Senators Snowe and Enzi and Congressman Manzullo, 
that studied the impact of a 2002 SBA Office of Hearings and 
Appeals decision that clarified the definition of a small 
business for the purposes of the SBIR program. The purpose of 
the review was to look at the agencies with the largest SBIR 
budgets to examine the extent to which firms with venture 
capital participated before and after the clarification, 
including those firms majority owned and controlled by multiple 
venture capital companies. The goal of the study was to 
determine what role venture capital and firms majority owned 
and controlled by multiple venture capital companies should 
play in the SBIR program, as well as the impact that the 
participation of these firms had on the program and the 
country's innovation.
    The report, titled ``Small Business Innovation Research: 
Information on Awards Made by NIH and DoD in Fiscal Years 2001 
through 2004'' (GAO-06-565) was released in April of 2006. It 
found that, over the period of the study, the number of awards 
and dollars to firms with venture capital went up at both the 
National Institutes of Health and the Department of Defense and 
the percentage of SBIR dollars to firms with venture capital 
went up at the National Institutes of Health and held steady at 
the Department of Defense. Due to a lack of publically 
available data on the ownership structure of firms with venture 
capital, it was not possible for GAO to determine which firms 
were majority owned and controlled by venture capital 
companies; however, it was generally acknowledged that the 
numbers from FY 2001 and FY 2002 included awards to firms with 
venture capital, both majority owned and not, and that the 
numbers from FY 2003 and FY 2004 did not include majority owned 
firms. The report also found that, on balance, firms with 
venture capital received larger awards, oftentimes well in 
excess of the established award levels of $100,000 for Phase I 
and $750,000 for Phase II, and that awards were concentrated in 
a limited number of states. While this report was issued in the 
109th Congress, these findings helped to frame the Committee's 
deliberations on the matter of allowing businesses owned and 
controlled by multiple venture capital companies to be eligible 
to receive awards in Phases I and II of the SBIR program.

               E. RESTORING ARMY AND AIR FORCE SBIR FUNDS

    On May 18, 2007, Chairman Kerry and Senator Kennedy sent a 
letter urging the Appropriations Subcommittee on Defense to 
consider expeditiously reprogramming $260 million in Army and 
Air Force SBIR funds upon passage of supplemental 
appropriations legislation. Prior to the bill's passage, SBIR 
funds were reprogrammed to fill the gap pending passage of the 
FY 2007 Supplemental for the Iraq Security Forces Fund. 
Senators Kennedy and Kerry cited how, in previous years, 
similar situations often resulted in detrimental lags in 
program funding--putting many small SBIR firms in dire straits.
    After the supplemental appropriations bill was signed into 
law, the Senators called on Department of Defense Secretary 
Robert Gates to swiftly reprogram the money on June 11, 2007. 
In the letter, Senators Kerry and Kennedy requested that the 
Secretary provide a copy of the reprogramming request as soon 
as it was available, as well as any documentation demonstrating 
action by the Department of Defense to return SBIR activities 
to normal. The Secretary of the Air Force and the Acting 
Secretary of the Army were copied on this letter, and the money 
was, in fact, reprogrammed.

                    F. INCREASING THE SIZE OF AWARDS

    On September 16, 2008, Chairman Kerry sent a letter to 
Acting SBA Administrator Baruah in support of a proposed 
amendment to the SBIR Policy Directive that would have 
increased the threshold award size for the SBIR program from 
$100,000 to $150,000 for Phase I awards and from $750,000 to $1 
million for Phase II awards. Senator Kerry also emphasized the 
importance of increasing the SBIR allocation of federal 
research and development dollars and of taking steps to 
restrict jumbo awards that well exceed the threshold amounts to 
ensure that the proposed increases to the award thresholds did 
not have the result of seriously impacting the number of awards 
that could be made and, therefore, the number of new 
technologies developed through the SBIR program. Senator Kerry 
urged the SBA to support additional amendments to the Policy 
Directive to that effect. However, the SBA's proposed increases 
to the threshold amounts were in line with the levels passed by 
the Committee in the SBIR/STTR Reauthorization Act of 2008 (S. 
3362), so the Chairman agreed that the increases made sense. As 
of the end of the 110th Congress, the proposed amendment has 
not been finalized.

             G. INCREASING FUNDING FOR TECHNOLOGY TRANSFER

    To increase the amount of money going to SBIR transition at 
the Department of Defense, on October 29, 2007, Senator Kerry 
and Senator Harkin sent a letter requesting that the conferees 
of the FY 2008 Defense Appropriations bill agree to language in 
the House Appropriations Committee report providing $100 
million more than requested for the SBIR program at the 
Department. The purpose was to increase the use of small, high-
tech businesses to help the military develop the best 
technologies, diversify the supply base, and reduce costs. The 
additional funding was to be used to support the transition of 
SBIR technologies at the Department of Defense: $25 million 
allocated to the Army's Future Combat System; $50 million for 
the Navy's surface ship and submarine development activities; 
and $25 million for the Joint Strike Fighter program. In the 
conference report, $85 million of the $100 million was 
retained. The legislation was signed into law by the President 
on November 13, 2007 (H.R. 3222/P.L. 110-155). In April 2008, 
Senator Kerry was joined by Senators Harkin, Lieberman, and 
Cantwell in requesting this funding in the FY 2009 Defense 
Appropriations bill.

                       X. Veterans and Reservists

    According to the Department of Veterans Affairs, there were 
an estimated 23.4 million veterans, in addition to over 1 
million reservists in America in 2008. As the conflicts in Iraq 
and Afghanistan continued, the number of veterans--including 
service disabled veterans--increased, and reservists continued 
to carry more of the burden than ever before. Starting, growing 
or maintaining a small business is a challenging endeavor, and 
veterans often faced unique challenges and barriers due to 
their service to our country. Unemployment was higher among 
recently discharged veterans, and many reservists lost income 
or experienced economic harm to their business as a result of 
deployment. Financial assistance through loans or grants and 
access to entrepreneurial development programs are key 
solutions to addressing those challenges and leveling the 
playing field for veterans and reservists. In the 110th 
Congress, the Committee made it a priority to address the 
challenges facing veterans and reservist entrepreneurs and to 
ensure that federal agencies were committed to helping 
America's veterans and reservists succeed in business and the 
private sector during and after their service to our country.

        A. COMMITTEE REPORT: THE STATE OF VETERAN AND RESERVIST 
                            ENTREPRENEURSHIP

    On March 28, 2007, Chairman Kerry issued a report, entitled 
``The State of Veteran and Reservist Entrepreneurship,'' which 
outlined the obstacles facing veteran and reservist 
entrepreneurs and included specific recommendations for 
supporting veterans and reservists in small business. The 
report found that many recently discharged veterans were 
experiencing higher rates of unemployment and that a smaller 
percentage of small business loans were going to veterans. The 
report also found that many reservists were experiencing high 
rates of income loss during deployment, and included 
recommendations for increased oversight of federal contracting 
and new steps to increase contracting opportunities for service 
disabled veterans.

                             B. LEGISLATION

1. The Military Reservist and Veteran Small Business Reauthorization 
        Act of 2007

    On March 28, 2007, in conjunction with the release of the 
aforementioned report, Chairman Kerry introduced the Military 
Reservist and Veteran Small Business Reauthorization Act of 
2007 (S. 1005). The bill would have created a new, non-
collateralized loan of up to $100,000 for businesses affected 
by the deployment of a key employee. S. 1005 also would have 
fixed a program designed to provide reservist-dependent 
businesses access to low-interest loans through the SBA's 
disaster loan program by expanding the application period for 
these loans and creating a method of pre-consideration so that 
businesses could apply for and access the capital they needed 
prior to incurring financial hardship. For small reservist-
dependent firms that were unable to take on additional debt, 
the bill would have provided grants of up to $25,000, 
contingent upon the business providing a viable business plan. 
Finally, the bill would have authorized increased resources for 
the SBA's Office of Veterans Business Development. Senator 
Chuck Hagel was the lead cosponsor on the bill, and Senators 
Cardin, Tester, and Mark L. Pryor also signed on in support.

2. The Military Reservist and Veteran Small Business Reauthorization 
        and Opportunity Act of 2007

    On July 12, 2007, Chairman Kerry and Ranking Member Snowe 
introduced the Military Reservist and Veteran Small Business 
Reauthorization and Opportunity Act of 2007 (S. 1784). The bill 
was based on the provisions of S. 1005 and the Veterans Small 
Business Opportunity Act of 2007 (S. 904), which Senator Snowe 
introduced on March 15, 2007. S. 1784 was cosponsored by 
Senators Hagel, Landrieu, Lieberman, Cantwell, and Tester. On 
October 1, 2007, an amendment modeled on S. 1784 passed the 
Senate as part of the 2008 Defense Authorization Act, but it 
was not included in the final version of the bill.
    The text of S. 1784 passed the Senate on December 19, 2007, 
as a substitute amendment to the Military Reservist and Veteran 
Small Business Reauthorization and Opportunity Act of 2008 
(H.R. 4253). The House amended the bill with Senate-House 
compromise language, and this version passed the House on 
January 16, 2008. On January 31, 2008, the bill passed in the 
Senate by unanimous consent, and, on February 14, 2008, the 
bill was signed into law (P.L. 110-186).
    The bill expanded business opportunities for veterans and 
helped reservists keep their businesses afloat during 
deployment. Specifically, the bill increased the authorization 
of appropriations for the SBA's Office of Veteran Business 
Development and created an Interagency Taskforce on Veteran 
Small Business to focus on increasing veterans' small business 
success, procurement and franchising opportunities, and access 
to capital. S. 1784 also made permanent the Advisory Committee 
on Veterans Business Affairs and allowed the SBA Administrator 
to offer loans up to $50,000 without requiring collateral from 
a loan applicant. The bill improved the Military Reservist 
Economic Injury Disaster Loan program by providing a longer 
application deadline, creating a pre-application loan approval 
process, expanding outreach and technical assistance, and 
raising the maximum loan amount. It also created a loan 
participation program in which veterans can receive 7(a) loans 
while paying just 50 percent of the fees and a grant program to 
improve Small Business Development Centers' outreach to the 
veteran community. It also required Veteran Business Outreach 
Centers to increase their participation in the Transition 
Assistance Program, and the Office of Veterans Business 
Development to create and disseminate information aimed at 
informing women veterans about the resources available to them. 
Finally, the bill required a GAO report on the needs of 
service-disabled veterans and how to improve relations between 
employers and reservist employees.

             C. FUNDING FOR THE VETERAN ASSISTANCE PROGRAM

    Upon enactment of the Military Reservist and Veteran Small 
Business Reauthorization and Opportunity Act of 2008 (P.L. 110-
186), the Committee urged the Administration to implement its 
provisions in a timely manner. On March 4, 2008, Chairman Kerry 
sent a letter to SBA Administrator Preston to clarify 
Congressional intent with regard to funding for the Veteran 
Assistance program involving Small Business Development Centers 
included in P.L. 110-186. Specifically, the letter noted that 
funding for the initiative was to come from an account separate 
from the core SBDC funding, contained in the Consolidated 
Appropriations Act of 2008, adding that the new program was 
designed to enhance the existing SBDC program, not to replace 
it. The letter also urged the Administration to implement the 
program as soon as possible.

  D. IMPLEMENTATION OF THE VETERANS AND RESERVISTS 7(A) PILOT PROGRAM

    On March 11, 2008, Chairman Kerry and Ranking Member Snowe 
sent a letter to SBA Administrator Preston to follow up on the 
implementation of the 7(a) pilot program to increase access to 
capital for veteran and reservist small business owners and 
entrepreneurs enacted as part of P.L. 110-186. Congress had 
designed the program so that it would not need appropriations; 
however, the Administration had taken the position that the 
pilot did require funding. In the letter, the Senators asked 
the SBA to describe how the program could be funded without a 
separate appropriation and to state when it intended to fund 
and implement the program. The Administrator responded on April 
10, 2008, saying that, because separate risk categories exist 
for each pilot program and because the pilot program would have 
had positive subsidy rates for 2008 and 2009, the SBA could not 
make these loans without an appropriation to cover the subsidy 
cost.
    Additionally, in response to the Administration's position 
that the 7(a) pilot program included in P.L. 110-186 could not 
be implemented without a separate appropriation, Chairman Kerry 
and Ranking Member Snowe sought funding for the program in 
supplemental appropriations bills. On April 21, 2008, the 
Senators sent a letter to the leadership of the Senate 
Appropriations Committee and the Appropriations Subcommittee on 
Financial Services requesting that $25 million to implement the 
program be included in an emergency supplemental appropriations 
bill, but the funding was not included in the bill. However, on 
July 28, 2008, funding to implement provisions of P.L. 110-186 
were included in a draft of an emergency supplemental 
appropriations bill, and on September 25, 2008, funding to 
implement the veterans loan provisions in P.L. 110-186 was 
included in the Economic Recovery Act of 2008 (S. 3604). That 
legislation did not receive consideration by the full Senate in 
the 110th Congress.

             E. ENACTMENT OF MILITARY TAX RELIEF PROVISIONS

    On January 31, 2007, Chairman Kerry introduced the Active 
Duty Military Tax Relief Act of 2007 (S. 455), which was 
cosponsored by Senators Smith, Cantwell, and Blanche L. 
Lincoln. This legislation would have provided small employers 
with a tax credit for paying a salary differential to reservist 
employees called up to active duty. In addition, the 
legislation would have amended the Internal Revenue Code to 
treat differential wage payments accounts; increased the 
standard tax deduction for members of the uniformed services on 
active duty for more than 30 days; and made permanent the 
taxpayer election to treat combat pay as earned income for 
purposes of computing the earned income tax credit. Provisions 
based on this bill were passed as a part of the Defenders of 
Freedom Tax Relief Act of 2007 (H.R. 3997), which passed the 
Senate on December 12, 2007. They were also included in H.R. 
6081, the Heroes Earnings Assistance and Relief Tax Act of 
2008, which passed the Senate on May 22, 2008, and was signed 
into law on June 17, 2008 (P.L. 110-245).
    Small businesses with less than 100 employees employed 
about 18 percent of all reservists who held civilian jobs. 
While most large businesses had the resources to provide 
supplemental income to reservist employees called up and to 
replace them with a temporary employee, it was not that easy 
for small businesses to do the same. A majority of returning 
veterans were reserve and National Guard members, 35 percent of 
which were either self-employed or owned or were employed by a 
small business. This legislation was designed to help 
reservists who owned their own business hire temporary 
replacement employees while they were called up and help small 
businesses with the impact of having an essential employee 
called up for active duty. In addition to helping small 
businesses, the legislation included additional tax provisions 
to help ease the financial burden of military families.

  F. IMPROVEMENT OF THE MILITARY RESERVE ECONOMIC INJURY LOAN PROGRAM

    On March 27, 2007, Chairman Kerry successfully included an 
amendment (S.A. 687) to improve programs for small business 
concerns that employed reservists to the U.S. Troop Readiness, 
Veterans' Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act of 2007 (H.R. 1591). The amendment's 
provisions would have strengthened the Military Reserve 
Economic Injury Loan program by directing the SBA to create a 
preapproval process for reservist dependent businesses so that 
businesses could begin drawing down funds immediately upon the 
reservist being called to duty. The amendment would have 
extended the window of time for a reservist dependent business 
to apply for a loan from 90 days following the date of 
discharge to 1 full year. In addition, this amendment called 
for SBA to establish a coordinated, proactive marketing plan to 
be conducted by the SBA, the Veterans' Administration, and the 
Department of Defense to efficiently distribute information 
about the program to reservists and their families.
    Finally, the amendment directed the SBA to report back to 
the Small Business Committees of the Senate and the House of 
Representatives on the status of this program, as well as 
additional steps that may be taken to improve the program for 
reservist-dependent small businesses. The amendment was adopted 
by a voice vote on March 28th; however, the bill was ultimately 
vetoed and an override attempt failed.

G. HEARING ON ASSESSING FEDERAL SMALL BUSINESS ASSISTANCE PROGRAMS FOR 
                        VETERANS AND RESERVISTS

    On January 31, 2007, Chairman Kerry convened a hearing 
titled ``Assessing Federal Small Business Assistance Programs 
for Veterans and Reservists.'' As his first hearing of the 
110th Congress, Senator Kerry continued his advocacy for the 
veteran and reservist communities by holding this hearing to 
urge federal agencies to improve and strengthen their 
assistance programs for men and women who wear the uniform. 
Senator Kerry demanded that the SBA toughen its standards to 
ensure that federal agencies meet their mandated contracting 
goals for service-disabled veterans. The first panel consisted 
of Administrative witnesses, including Linda Bithell Oliver, 
Acting Director of the Office of Small Business Programs at the 
Department of Defense; Scott Denniston, Director of the Center 
for Veterans Enterprise at the Department of Veterans Affairs; 
and William Elmore, Associate Administrator of the Office of 
Veteran Business Development at the SBA. The second panel of 
witnesses consisted of testimony from Louis Celli, President of 
the Northeast Veterans Business Resource Center, Inc.; Capt. 
Ann Yahner, USN (Ret.), President and General Manager of 
Penobscot Bay Media, LLC; Bob Hesser, President and CEO of HI 
Tech Services; and Ted Daywalt, President and CEO of VetJobs.

    H. ROUNDTABLE ON REDUCING UNEMPLOYMENT AND INCREASING BUSINESS 
                       OPPORTUNITIES FOR VETERANS

    The Committee also held a roundtable discussion on May 14, 
2008, titled ``Reducing Unemployment and Increasing Business 
Opportunities for Veterans.'' Senator Kerry chaired the 
roundtable to focus on ways to bring more veterans into the 
workforce and help veteran entrepreneurs succeed. A Department 
of Veterans Affairs report, entitled ``Employment Histories'' 
and released on September 28, 2007, found that the percentage 
of veterans not in the labor force jumped to 23 percent in 
2005, a sharp increase from 10 percent in 2000. A survey of 
veterans released by military.com in November 2007 found that 
81 percent of returning military veterans did not feel fully 
prepared to enter the work force, and 76 percent of these 
veterans said they were unable to translate their military 
skills to work in the civilian world. Several veterans and 
Administration officials spoke out strongly about the value of 
the services provided by Veterans' Business Centers.

     I. CONTRACTING WITH SERVICE-DISABLED VETERAN-OWNED BUSINESSES

    On May 15, 2007, Chairman Kerry sent a letter to the 
Department of Defense urging the agency to fulfill its 
obligation to contract with service-disabled veteran-owned 
businesses (SDVOBs). Despite a 3 percent federally mandated 
goal, the Defense Department had failed to meet that level 
every year since the goal was established. Senator Kerry called 
on Secretary Robert Gates to meet or exceed the 3 percent goal 
in the coming year--especially given that the agency accounted 
for nearly 70 percent of all federal procurement spending--and 
emphasized the important role these SDVOBs play in the economy. 
Additionally, Senator Kerry requested that answers to official 
questions from the January 31, 2007, veteran and reservist 
hearing be expeditiously sent to the Committee given their 
delinquency. The Committee received a response on June 7, 2007, 
acknowledging missing contracting goals and highlighting 
efforts being made, including a contract with a service-
disabled veteran-owned small business to perform an analysis of 
the SDVOSB supplier base and its role in Department of Defense 
procurement.

             J. IMPROVING DATA ON VETERAN SMALL BUSINESSES

    On November 9, 2007, Chairman Kerry and Senator Akaka sent 
a letter to the Department of Commerce expressing a desire to 
gather more information on veteran small businesses as a part 
of the Survey of Business Owners to match surveys already 
conducted on minority and women business owners. In the letter, 
the Senators expressed their disappointment at the limited 
information available about veteran and reservist small 
business owners and asked the Department of Commerce to explain 
the obstacles in collecting data on these small businesses, 
what the department was doing to overcome them, and whether 
more extensive data would be collected in the future. The 
Committee received a response on December 20th from the 
Secretary of Commerce, in which he discussed new data that 
would be collected for the 2007 survey and indicated an 
interest in going further in the 2012 survey.

       K. INVESTIGATING TAX AND REGULATORY BARRIERS FOR VETERANS

    On January 30, 2008, Chairman Kerry, Ranking Member Snowe, 
and Senator Tom Coburn, together with House Committee Chair 
Nydia Velazquez and Ranking Member Steve Chabot, sent a letter 
to the SBA, requesting the SBA Office of Advocacy investigate 
the various federal tax and regulatory barriers that hinder 
veterans in their efforts to become entrepreneurs and sustain 
their businesses. The letter also asked for recommendations on 
how best to eliminate those barriers to better assist current 
or future veteran small business owners. They asked that the 
study be completed within 18 months and contracted out by 
September of 2008. The Committee received a response on 
February 7, 2008.

              L. INELIGIBILITY OF SMALL BUSINESS RESELLERS

    On April 29, 2008, Chairman Kerry and Ranking Member Snowe 
sent a letter to the Department of Veterans Affairs expressing 
concern that small business resellers would be deemed 
ineligible for federal contracts. The letter, addressed to 
James B. Peake, Secretary of the Department of Veterans Affairs 
(VA), expressed their concern with aspects of a October 15, 
2007, report published by the VA's Office of Inspector General 
(OIG) titled, ``Final Report: Special Review of the Federal 
Supply Schedule Medical Equipment and Supply Contracts Awarded 
to Resellers.'' The policy positions stated in the OIG report 
would have excluded small business resellers from participating 
in the government procurement process at the VA. The Senators 
were also concerned by the OIG's attempt to set procurement 
policy for programs over which they had no jurisdiction. The 
Senators stated that policy decisions concerning what type of 
companies were eligible to supply goods and services to the 
government fell within the jurisdiction of Congress and the 
General Services Administration.
    The Senators requested information from the VA concerning 
whether the agency was contemplating implementing the changes 
to the Multiple Award Schedule policy proposed by the OIG 
report, what impact the OIG's recommendations would have on 
contracts with small businesses if implemented, and what the 
VA's opinion on whether the VA or the GSA retained the 
statutory authority to prescribe methods of procurement policy 
for the supply of personal property and non-personal services. 
Secretary Peake responded on June 26, 2008, and discussed the 
creation of a working group to review the OIG's recommendations 
that consisted of contracting, acquisition policy, General 
Counsel, OIG, and Office of Small and Disadvantaged Business 
Utilization staff.

       M. EFFORTS TO FUND VETERANS' BUSINESS DEVELOPMENT CENTERS

    During the 110th Congress, the Committee continued to 
monitor the operations and activities of the National Veterans 
Business Development Corporation, commonly referred to as The 
Veterans Corporation or TVC. The corporation was created in 
1999 through the Veterans Entrepreneurship and Small Business 
Development Act (P.L. 106-50), and was charged with 
establishing and maintaining a network of Veterans' Business 
Development Centers (Centers). However, over the past two 
years, the Committee criticized TVC's leaders for, among other 
things, failing to adequately support the Centers.
    On September 21, 2007, Chairman Kerry and Ranking Member 
Snowe sent a letter to Mr. Walter Blackwell, the President and 
Chief Executive Officer of TVC, requesting information on how 
it planned to support the network of Centers. In the letter, 
the Senators expressed their concerns regarding the 
implications that the new Veteran Entrepreneurship Support 
grant initiative could have for established Centers that were 
currently receiving funding and requested information on how 
TVC would maintain those existing Centers considering the 
changes to its grant program.
    Chairman Kerry and Ranking Member Snowe followed up on 
December 21, 2007, by sending another letter to TVC seeking 
assurance that it would continue to use its budget allowance to 
fund veteran business centers.
    On February 11, 2008, Senators Kerry, Snowe, Barbara A. 
Mikulski, and Richard C. Shelby sent a letter to TVC, 
expressing concern that it had not yet made a decision 
concerning its FY 2008 grant program. The Senators were 
concerned that the delayed decision was leading to Centers 
reducing services, laying off staff, and being on the verge of 
closing. Even though TVC had received funding in the Continuing 
Resolution and $1.4 million from the FY 2008 appropriation from 
Congress, the Centers had been without funding for four months. 
The Senators requested that TVC inform them, in writing, when 
it would make a decision on the grants and when the funds would 
be distributed. In February of 2008, TVC granted two of the 
three Centers $67,500 each--about half what they had been given 
in the previous fiscal year. The other Center in Boston was not 
given any funding.
    On March 11, 2008, Senators Kerry and Snowe sent a letter 
to appropriators requesting funding in the Emergency 
Supplemental for the SBA to be distributed to the three 
Centers. The letter was sent to Appropriations Committee 
Chairman Robert Byrd and Ranking Member Thad Cochran, and 
Appropriations Subcommittee on Commerce, Science, Justice & 
Related Agencies Chairman Mikulski and Ranking Member Shelby. 
Senators Kerry and Snowe requested that $600,000 be included in 
the Emergency Supplemental to be distributed by the SBA to the 
three Centers that traditionally received funding from TVC.
    On March 14, 2008, Senators Kerry and Snowe sent a letter 
to Senate Committee on Appropriations Subcommittee on Financial 
Services Chairman Durbin and Ranking Member Brownback informing 
them of the request they made in their letter dated March 11, 
2008, to the CJS Appropriations Subcommittee. While funding for 
TVC was through the CJS Appropriations Subcommittee, since the 
Senators had requested the money be appropriated to the SBA, 
they sent a letter to the Subcommittee with responsibility for 
appropriations for the SBA. Also on March 14, 2008, Chairman 
Kerry and Ranking Member Snowe officially launched a Committee 
investigation into TVC's financial activities and operations.
    On May 14, 2008, Senators Kerry and Snowe sent a letter to 
appropriators in support of an amendment offered by Senator 
Bond amendment to provide funding to TVC's Centers. The 
Senators emphasized the critical nature of the Centers' work, 
particularly as wars in Iraq and Afghanistan produced veterans 
in high numbers. On May 15, 2008, the Appropriations Committee 
passed Bond's amendment to the Emergency Supplemental 
Appropriations bill to provide an additional $600,000 in 
funding for the Centers in St. Louis, Mo., Boston, Mass., and 
Flint, Mich. The bill passed the Senate with the funding 
included, but it was stripped by the House and not included in 
the final version of the bill.

           N. INVESTIGATION OF THE VETERANS CORPORATION (TVC)

    In March of 2008, Chairman Kerry and Ranking Member Snowe 
launched a Committee investigation into the Veterans 
Corporation's (TVC) financial activities and operations. During 
the course of the investigation, the Committee subpoenaed 
banking and credit card statements from TVC's financial 
institutions, reviewed thousands of pages of documents and 
records furnished by TVC, and conducted numerous interviews 
with TVC insiders, including each current member of TVC's board 
of directors, TVC's acting president, John Madigan, its former 
director of finance, and its highest paid independent 
contractor. TVC's former president, Walter Blackwell, declined 
Committee staff's repeated requests for an interview.
    On December 11, 2008, Chairman Kerry and Ranking Member 
Snowe issued a report on the TVC investigation, which included 
the Committee staff's detailed findings and recommendations. 
The report showed that TVC's leaders had grossly mismanaged 
taxpayer dollars--including lavish spending on costly dinners 
and luxury hotels, first-class travel, and compensation for its 
top two executives that amounted to nearly a quarter of the 
charity's federal funds. In addition, the report described how 
TVC had failed to achieve its statutory mission of expanding 
technical assistance for veteran entrepreneurs despite 
receiving over $17 million in federal funds over the previous 
eight years. As a result of those findings, the report 
recommended that TVC receive no further federal funds, and if--
in the absence of federal funding--TVC could not adequately 
support the Centers, that the SBA's Office of Veteran Business 
Development receive additional funds to take over 
responsibility for these important veteran entrepreneur 
resources.

                     XI. Energy and the Environment

    There are an estimated 25 million small businesses in this 
country, and they account for more than half of all the 
commercial energy used in North America. In the last couple of 
years, small businesses have suffered crippling financial 
hardships because of energy price spikes and unreliability. 
Small businesses could have saved billions if the federal 
government used its resources to educate small businesses about 
energy saving practices and helped to facilitate the purchases 
of energy-efficient equipment. In the 110th Congress, the 
Committee focused on the interplay between small businesses, 
innovation, job creation, and the nation's environmental, and 
energy goals. Through hearings and legislation, the Committee 
took steps to improve the ability of small businesses to become 
energy efficient themselves and to encourage small businesses 
to drive innovation to make our country more energy efficient.

    A. ENACTMENT OF THE SMALL BUSINESS ENERGY EFFICIENCY ACT OF 2007

    On June 19, 2007, Chairman Kerry and Ranking Member Snowe 
introduced the Small Business Energy Efficiency Act of 2007 (S. 
1657), in an effort to help small businesses and entrepreneurs 
increase their energy efficiency and reduce their dependency on 
fossil fuels. Language from the bill was also introduced the 
same day as an amendment (S.A. 1706) to the Energy Independence 
and Security Act of 2007 (H.R. 6). On June 21, 2007, the 
amendment was adopted by unanimous consent and the underlying 
bill, H.R. 6, passed the Senate by a 65-27 margin. On December 
19, 2007, the legislation, including the Kerry-Snowe 
provisions, was signed into law as P.L. 110-140.
    The provisions signed into law established an Energy 
Clearinghouse program that works with the Environmental 
Protection Agency's (EPA) Energy Star program to help educate 
small businesses on energy efficiency; created a small business 
energy efficiency pilot grant program to offer grants to Small 
Businesses Development Centers to conduct energy audits of 
small businesses and help them reduce their energy consumption; 
encouraged innovation in the field of energy efficiency by 
requiring federal agencies to give priority to SBIR/STTR 
program solicitations by small businesses that participate in 
or conduct energy efficiency or renewable energy system 
research and development; allowed loans to be made through the 
SBA's Express Loan program for the purpose of purchasing a 
renewable energy system or financing of energy efficiency 
projects; established a renewable fuel Capital Investment 
Company program designed to promote the research, development, 
production, and marketing of renewable energy resources; and 
initiated a small business telecommuting pilot program to 
provide information regarding telecommuting options to small 
business owners and their employees.

   B. CLARIFICATION OF THE SMALL BUSINESS DEVELOPMENT CENTER ENERGY 
                         EFFICIENCY INITIATIVE

    On March 4, 2008, Chairman Kerry sent a letter to SBA 
Administrator Steven Preston to clarify Congressional intent 
with regard to funding for the energy efficiency initiative 
involving Small Business Development Centers. Specifically, the 
letter noted that funding for the initiative was to come from 
an account separate from the core SBDC funding, contained in 
the Consolidated Appropriations Act of 2008, adding that the 
new program was designed to enhance the existing SBDC program, 
not to replace it. The letter also urged the Administration to 
implement the energy efficiency program as soon as possible.

     C. IMPLEMENTATION OF 7(A) ENERGY EFFICIENCY LOAN PILOT PROGRAM

    On March 11, 2008, Chairman Kerry and Ranking Member Snowe 
sent a letter to SBA Administrator Preston to follow up on the 
implementation of a 7(a) pilot program to increase access to 
capital for small businesses looking to invest in energy 
efficient technologies. Congress designed the program so that 
it would not need appropriations; however, the Administration 
had taken the position that the pilot did require funding. In 
the letter, the Senators asked the SBA to describe how the 
programs could be funded without a separate appropriation and 
to state when it intended to fund and implement the program. 
The Administrator responded on April 10, 2008, saying that, 
because separate risk categories exist for each pilot program 
and because the pilot programs would have positive subsidy 
rates for 2008 and 2009, the SBA could not make these loans 
without an appropriation to cover the subsidy cost.
    Additionally, in response to the Administration's position 
that the 7(a) pilot program included in P.L. 110-140 could not 
be implemented without a separate appropriation, Chairman Kerry 
and Ranking Member Snowe sought funding for the program in 
supplemental appropriations bills. On April 21, 2008, the 
Senators sent a letter to the leadership of the Senate 
Appropriations Committee and the Appropriations Subcommittee on 
Financial Services requesting that $25 million to implement the 
program be included in an emergency supplemental appropriations 
bill, but the funding was not included in the bill. However, 
$14 million to implement the program was included in the 
Economic Recovery Act of 2008 (S. 3604), introduced in 
September. Ultimately, that legislation did not pass.

 D. GENERAL IMPLEMENTATION OF THE SMALL BUSINESS ENERGY EFFICIENCY ACT

    On July 31, 2008, Chairman Kerry and Ranking Member Snowe 
sent an additional letter to SBA, this time to Acting 
Administrator Jovita Carranza, to request information on steps 
the SBA was taking to implement the provisions of P.L. 110-140. 
In the letter, the Senators discussed small business owners' 
concerns with rising energy costs. Senators Kerry and Snowe 
stressed the importance of creating a Small Business Energy 
Efficiency Pilot Grant Program, encouraging the selection of 
topics relating to energy efficiency in the SBIR program, 
establishing a renewable fuel capital investment company 
program, and allowing SBA Express Loans for renewable energy 
and energy efficiency. New SBA Acting Administrator Baruah 
responded on September 2, 2008, and described the SBA's ongoing 
actions to implement the provisions of the law.

    E. THE IMPACT OF HIGH ENERGY COSTS AND EFFORTS TO PROVIDE RELIEF

    The Committee held several hearings in the 110th Congress 
on the impact of rising energy costs on small businesses, and 
Chairman Kerry and Ranking Member Snowe introduced several 
pieces of legislation designed to help small businesses to deal 
with the challenges caused by the rise in costs.

1. Hearing to examine the impact of rising gas prices on small 
        businesses

    On June 14, 2007, the Committee held a hearing to examine 
the impact of rising gas prices on small businesses. The small 
business owners testifying on the witness panel outlined the 
harmful effect of high gas prices, both in terms of fuel costs 
for delivery and the financial burden it placed on employees 
and customers. Frederick W. Smith, President and CEO of Federal 
Express, also advocated for strong bipartisan energy security 
legislation that would improve corporate average fuel 
efficiency (CAFE) standards. Additionally, the Committee heard 
testimony from Sal Lupoli, an entrepreneur from Lawrence, 
Massachusetts, who testified about the hardships his pizza 
delivery business faced during times of record-high gas prices.

2. The Small Business Emergency Fuel Assistance Act of 2007

    Following the hearing on June 14, 2007, Chairman Kerry 
introduced legislation, cosponsored by Senator Cantwell, to 
institute a fuel emergency program for small companies that 
were struggling to survive due to escalating gas prices. The 
bill (S. 1631) would have created a grant program within the 
Department of Commerce's Economic Development Agency and 
authorized the Secretary of Commerce to issue grants to states 
to provide assistance for small firms with a demonstrated need 
and plan toward becoming more energy efficient. Chairman Kerry 
also filed this bill as an amendment to the Energy Independence 
and Security Act of 2007 (H.R. 6), but it was not included in 
the final version of that legislation.

3. Field hearing on the rising costs of energy and challenges and 
        opportunities for small businesses

    On May 28, 2008, Senator Kerry chaired a field hearing in 
Pittsfield, Massachusetts, titled, ``The Rising Costs of 
Energy: Challenges and Opportunities for Small Businesses,'' to 
examine the impact of rising energy and fuel costs on small 
businesses and to look at new and existing programs to help 
small businesses address the energy crisis and create green 
jobs. Witnesses included North Adams Mayor John Barrett; Mike 
Supranowicz, President of the Berkshire Chamber of Commerce; 
Undersecretary of Energy Ann Berwick from the Massachusetts 
Executive Office of Energy and Environmental Affairs; and 
several small business owners. Massachusetts Attorney General 
Martha Coakley and Mayor of Pittsfield, James M. Ruberto, were 
also in attendance. At the time of the field hearing, the price 
of a barrel of crude oil had soared to over $135.

4. Hearing on the effect of the high price of home heating oil on 
        homeowners and small businesses

    On June 15, 2008, the Committee held a hearing to examine 
the effect of the high price of home heating oil on homeowners 
and small businesses, look at the role of the federal 
government's heating oil reserves, and look at innovative 
programs and renewable alternatives to help consumers. It was 
estimated that heating oil costs rose 116 percent from 2005 to 
2008, and, at the time of the hearing, heating prices in New 
England were as high as $4.65 per gallon, or $2 per gallon 
higher than the previous year. Nationally 7.7 million 
households, including over 6.2 million in the Northeast, rely 
on heating oil to heat their homes. The hearing investigated 
the causes of the rise of home heating oil costs and included 
testimony from consumers and small business distributors on the 
impact that these prices were having on them. Also discussed 
were what programs and assistance were available for these 
individuals, what promising technologies might be on the 
horizon to ease the burden of home heating oil prices, and what 
could be done in the short and long term to help people cope 
with rapidly rising prices. Witnesses included David F. 
Johnson, Deputy Assistant Secretary for Petroleum Reserves, and 
Michael Ferrante, president of the Massachusetts Oilheat 
Council.

5. The Small Business Energy Emergency Relief Act of 2008

    On June 27, 2008, Chairman Kerry was joined by Ranking 
Member Snowe and ten additional original cosponsors in 
introducing the Small Business Energy Emergency Relief Act of 
2008 (S. 3223). The bill would have provided assistance through 
affordable, low-interest SBA disaster loans to small businesses 
that had suffered economic harm and were unable to pay their 
bills due to significant price increases in heating oil, 
propane, kerosene, and natural gas. Forms of this legislation 
had been introduced several times in the past. In 2001, a 
similar bill passed the Committee and the full Senate as a 
free-standing bill, S. 295, with 34 cosponsors. In 2005, 
legislation passed the full Senate twice as an amendment to the 
Energy Policy Act of 2005 (H.R. 6) and as part of a larger 
Hurricane Katrina relief amendment to the Senate's 2006 CJS 
Appropriations Act (H.R. 2862). The disaster relief amendment 
was dropped in conference. The legislation was also introduced 
in 2006, passing the Committee as part of Senator Snowe's 
comprehensive SBA reauthorization bill (S. 3778), after being 
introduced as a stand-alone bill (S. 269) with 22 cosponsors. 
Finally, in 2007, the legislation passed the Committee as part 
of the Small Business Disaster Response and Loan Improvements 
Act of 2007 (S. 163).

6. A bill to amend the Energy Policy and Conservation Act

    On June 19, 2008, Chairman Kerry joined Ranking Member 
Snowe and Senator Christopher J. Dodd in introducing S. 3170 to 
amend the Energy Policy and Conservation Act by adding a 
mandatory release of the Northeast Home Heating Oil Reserve, 
thus lowering prices, if the price of home heating oil exceeded 
$4 per gallon. The President currently has the power to 
authorize a release of the reserve if there is a major 
disruption in the supply of home heating oil, in which the 
price differential between crude oil and heating oil increases 
to more than 60 percent over its five-year rolling average 
during the winter months and the price differential continues 
to increase during the most recent week for which price 
information is available. However, this trigger set an 
unrealistic bar to reach with crude oil prices at record highs 
and would have precluded releasing the reserve to help small 
businesses and consumers cope with record prices in the summer 
of 2008. To remedy that unintended consequence, the legislation 
would have provided assistance to homeowners in situations when 
the price of heating and crude oil were both high and would 
have used the Northeast Home Heating Oil Reserve as a tool to 
help ease the pressure of rising fuel costs.

        F. SMALL BUSINESS SOLUTIONS FOR COMBATING CLIMATE CHANGE

1. Hearing on the role of small businesses in curbing global warming

    On March 8, 2007, the Committee held a hearing to examine 
the role small businesses could play in curbing global warming, 
as well as to examine the progress the Administration had made 
toward implementing the small business requirements included in 
the Energy Policy Act of 2005. Given that small firms represent 
50 percent of the nation's economy, the hearing also 
highlighted their role in developing new clean energy 
technologies of the future and ways they could make a 
difference with their day-to-day business practices. In the 
hearing, the Committee examined state and federal efforts to 
educate and encourage climate-friendly practices and 
technologies in the private sector. In a March 3, 2007, letter, 
Senators Kerry and Snowe had invited the heads of the SBA and 
the EPA to testify at this hearing, but they declined to do so.
    The first panel of Administration witnesses consisted of 
testimony from Senator Boxer, Chair of the Committee on the 
Environment and Public Works; Dan Horowitz, Assistant 
Administrator for Policy and Planning at SBA; and Bill Wehrum, 
acting Assistant Administrator for Air and Radiation at EPA. 
The second panel of witnesses included Byron Kennard, Executive 
Director of the Center for Small Business and the Environment; 
Jim Barber, President and CEO of Metabolix; Chris Lynch, 
Director of the Environmental Management Assistance Program and 
Pennsylvania SBDCs; David Goldstein, Co-Director of the 
National Resources Defense Council's Energy Program; and Scott 
Hauge, Vice President of NSBA and Founder of Small Business 
California.

2. Increasing resources for the Energy Star Small Business Program

    To follow up on the March 2007 hearing on global warming, 
on April 3, 2007, Chairman Kerry and Ranking Member Snowe sent 
a letter to EPA Administrator Stephen Johnson. In the letter, 
the Senators criticized the EPA's meager budget of just $1 
million and a staff of two for the Energy Star Small Business 
program, and requested that it be increased to allow more small 
firms to play a role in combating climate change. Senators 
Kerry and Snowe urged the agency to consider their request for 
additional funding for the program, and also requested that the 
EPA provide the Committee with: (1) a five-year history of both 
the EPA's overall Energy Star program budget as well as the 
Energy Star Small Business program; (2) a five-year history of 
staffing allocations for the Energy Star Small Business program 
along with a detailed description of services rendered by the 
program; and (3) detailed estimates of overall energy use by 
small businesses nationwide and projections of potential 
savings attained through energy efficiency practices and 
improvements by small firms.
    January 2, 2008, Chairman Kerry and Ranking Member Snowe 
were joined by Senators Lieberman, Landrieu, Cantwell, Tester, 
and Norm Coleman in sending an additional letter to the EPA 
urging the agency to invest more resources in the Energy Star 
for Small Business program to help small businesses become more 
energy efficient. In the letter, the bipartisan group of 
senators urged the Administration to fund the EPA's Energy Star 
for Small Business program at a minimum of $2 million annually, 
so small businesses could access the information they needed to 
improve their energy efficiency. On February 28, Senator Jeff 
Bingaman, Chairman of the Senate Energy and Natural Resources 
Committee, sent a letter to EPA Administrator Johnson agreeing 
that the Energy Star funding for small businesses should be 
doubled from its current level of $1 million.

3. SBA compliance with the Energy Policy Act of 2005

    Similar in form to the letter Senators Kerry and Snowe sent 
to the EPA on April 3, 2007, in response to the climate change 
hearing, the Senators sent a letter on April 24, 2007, to SBA 
Administrator Preston to follow up on testimony offered by Mr. 
Horowitz, Assistant Administrator for the Office of Policy at 
the SBA. In this letter, Senators Kerry and Snowe requested 
more detailed information on the SBA's mandated 
responsibilities as set forth in the Energy Policy Act of 2005, 
specifically as they pertained to: (1) resources required to 
implement the program (or lack thereof); (2) staff dedicated to 
implementing and administering the Small Business Energy 
Clearinghouse; and (3) a concrete timeline detailing a schedule 
for completion of all SBA requirements under the Energy Policy 
Act.

                            XII. Procurement

    The Small Business Administration was officially 
established in 1953--largely as a response to the pressures of 
World War II and the Great Depression--to foster a strong and 
varied supplier base and to help struggling small businesses 
obtain a ``fair portion''' of government contracts, as well as 
compete against a growing number of big businesses across the 
nation. In the 110th Congress, the Committee continued to seek 
to improve opportunities for small businesses in the federal 
procurement arena by holding hearings, conducting vigorous 
oversight of existing contracting programs, and introducing 
legislation designed to improve access to contracts for small 
businesses.

    A. HEARING ON INCREASING GOVERNMENT ACCOUNTABILITY AND ENSURING 
                 FAIRNESS IN SMALL BUSINESS CONTRACTING

    On July 18, 2007, Chairman Kerry held a hearing on 
``Increasing Government Accountability and Ensuring Fairness in 
Small Business Contracting.'' The purpose of the hearing was to 
examine the challenges and solutions for small businesses in 
the federal contracting arena. The hearing focused on barriers 
to success for small business, such as the maze of complicated 
regulations, contract bundling, size standards with loopholes 
for big businesses, a lack of protections for sub-contractors, 
and a General Services Administration schedule that is 
difficult to navigate. Senator Kerry pressed the Bush 
Administration to implement the Women's Procurement Program, 
which became law in 2000, and to make a real effort to contract 
with service disabled veterans. Senator Kerry also questioned 
why the SBA had only requested nine Procurement Center 
Representatives (PCRs) that year to oversee more than $400 
billion in federal contracts while he and Ranking Member Snowe 
had pushed for 100 additional PCRs.
    The hearing witnesses included Paul Hsu, Associate 
Administrator of the SBA's Office of Government Contracting and 
Business Development; Anthony Martoccia, Director of the Office 
of Small Business Programs at the Department of Defense; Todd 
McCracken, President of the National Small Business 
Administration; Patricia Rice, Director of Maine Procurement at 
the Maine Procurement Technical Assistance Center; Magdalah 
Silva, Chief Executive Officer of DMS International, Inc.; and 
Ronald Newlan, President and Chairman of the HUBZone 
Contractors National Council.

 B. FIELD HEARING ON ACCESS TO FEDERAL CONTRACTS AND HOW TO LEVEL THE 
                             PLAYING FIELD

    On October 29, 2007, Senator Cardin chaired a field hearing 
in Bowie, Maryland titled ``Access to Federal Contracts: How to 
Level the Playing Field.'' The hearing highlighted the 
persistent problems that minority and women owned businesses 
confronted in their efforts to contract with the federal 
government. For the previous six years the federal government 
had consistently failed to meet its small business contracting 
goals. According to the SBA, in 2006 the federal government 
failed to meet any of its small business contracting goals. The 
SBA report also showed that its goals for women and minorities 
fell below the 5 percent objective. Another recurring theme of 
those testifying at the hearing was that many of the contracts 
that were intended for small businesses ended up going to large 
corporations. In 2005, at least six of the top 30 small 
business vendors doing business with the federal government 
were actually large corporations. At the hearing, Senator 
Cardin discussed the legislative efforts of the Committee with 
regard to federal contracting, including the bill that would be 
introduced the following week (S. 2300). Within S. 2300 is one 
provision that would require annual size certifications that 
would help eliminate large businesses getting small business 
set aside contracts.
    Witnesses at the field hearing included Calvin Jenkins, 
Deputy Associate Administrator of the SBA's Office of 
Government Contracting and Business Development; Anthony 
Martoccia, Director of Small Business Programs at the 
Department of Defense; Michael Rigas, Deputy Associate 
Administrator of the Office of Small Business Utilization at 
the General Servcies Administration; Wayne Frazier, President 
of the Washington Minority Contractors Association, Inc.; 
Hubert ``Petey'' Green, President of Prince George's County 
Black Chamber of Commerce; Ricardo Martinez, President of the 
Maryland Hispanic Chamber of Commerce; Melvin Forbes, President 
of Wilkerson Sports Enterprise; Timothy Adams, President of 
Systems Application and Technology, Inc.; and Carmen Ortiz 
Larsen, CEO of Aquas, Inc.

      C. THE SMALL BUSINESS CONTRACTING REVITALIZATION ACT OF 2007

    On November 1, 2007, on the heels of the Maryland field 
hearing on October 27, 2007, Chairman Kerry, Ranking Member 
Snowe, and Senator Cardin introduced the Small Business 
Contracting Revitalization Act of 2007 (S. 2300). S. 2300 would 
have made changes to improve the oversight of unbundling 
contracts for small firms, increased enforcement of protections 
for subcontractors, and expanded opportunities for minority, 
women and service-disabled entrepreneurs. Specifically, the 
bill would have addressed challenges faced by small businesses 
by reducing contract bundling, improving oversight of bundling 
regulation compliance by the SBA, preventing misrepresentations 
in subcontracting by prime contractors by increasing oversight 
and establishing enforcement mechanisms, and helping service-
disabled veteran-owned small businesses gain government 
contract and subcontract opportunities by expanding the 
authority for sole-source awards. The legislation also would 
have directed the SBA to implement the Women's Procurement 
Program--enacted into law in 2000--within 90 days, extended the 
8(a) contracting program through 2012 and improved it by 
allowing the small disadvantaged business certifications issued 
by other agencies to be accepted by the SBA. Finally, S. 2300 
would have adjusted for inflation the personal income and net 
worth requirements for 8(a) program participants, prohibited 
qualified retirement plans from being used by the SBA to 
determine an individual's net worth, and strengthened the 
government's ability to enforce the size and status standards 
for small business certification. S. 2300 was marked up in 
Committee on November 7th, and passed out of Committee by a 
vote of 19 to 0.

               D. THE TSA ACQUISITION REFORM ACT OF 2007

    On August 1, 2007, Chairman Kerry and Ranking Member Snowe 
introduced the TSA Acquisition Reform Act of 2007 (S. 1922), a 
bill to apply basic contracting laws to the Transportation 
Security Administration (TSA). This legislation increased 
contracting transparency at the TSA by repealing its exemption 
from federal contracting laws and requiring the agency to meet 
the 23 percent small business contracting goal. The bill 
mandated that TSA be in compliance within 180 days. On July 
26th, Senators Kerry and Snowe successfully attached similar 
language to the Homeland Security Appropriations Bill in the 
Senate (S.A. 2468). Both the bill and the amendment were 
endorsed by Citizens against Government Waste and the 
Professional Services Council, the principal trade association 
representing federal contractors. On December 26, 2007, 
provisions modeled on S. 1922 were signed into law as a part of 
the Consolidated Appropriations Act for 2008 (H.R. 2764/P.L. 
110-161).

    E. INVESTIGATING SIZE STANDARDS WITH RESPECT TO CONTRACTS WITH 
                             BLACKWATER USA

    On October 23, 2007, Chairman Kerry sent a letter to the 
SBA requesting that Administrator Preston explain the SBA's 
potential role in payroll tax evasion by Blackwater USA, the 
embattled private security firm providing protection for State 
Department officials in Iraq and Afghanistan. Senator Kerry 
requested any documentation the SBA may have provided to 
Blackwater. In defending their tax filings in a press release, 
Blackwater pointed to an ``official finding'' by the SBA that 
allowed Blackwater's workers to be counted as independent 
contractors rather than employees. Administrator Preston 
responded on October 24th and provided the Committee with 
information on the SBA's size determination of Presidential 
Airways, an affiliate of Blackwater. The Administrator's 
response included a November 2, 2006 size determination for 
Presidential Airways, which, according to SBA, was only 
relevant in considering a business for small business programs, 
not for tax purposes.
    Following the letter to SBA, Senator Kerry sent a letter to 
Erik Prince, Chairman of the Prince Group, founder of 
Blackwater USA, on October 26, 2007, asking him to clarify why 
Blackwater relied on an SBA size determination to classify its 
workers for tax purposes. Senator Kerry requested documents 
related to the SBA size determination and Blackwater's 
classification of workers as employees for tax purposes, an 
explanation of the chain of command of Blackwater workers who 
were deployed in Iraq and Afghanistan, and the status of any 
IRS audit of Blackwater and related companies. Mr. Prince did 
not respond to the Chairman's inquiry.
    Also on October 26, 2007, Senator Kerry sent a letter to 
Finance Chairman Max Baucus and Ranking Member Grassley 
concerning Blackwater tax filings and requested that the 
Finance Committee conduct an investigation of Blackwater to 
determine if it was evading taxes due to an erroneous 
misclassification of workers.
    On November 11, 2007, Chairman Kerry sent a letter to SBA 
expressing continued concerns with the size determination made 
by the SBA with regards to the Blackwater affiliate. Senator 
Kerry pressed SBA Administrator Preston for more information 
about how size determinations were made before awarding 
Blackwater USA federal contracts. Administrator Preston 
responded to the earlier inquiry about Blackwater, but Senator 
Kerry wrote that additional details were still needed on how 
the determination was made. The SBA did not respond to this 
letter.

         F. IMPROPER SMALL DISADVANTAGED BUSINESS CERTIFICATION

    On April 10, 2008, Senator Kerry sent letters to Secretary 
Robert Gates at the Department of Defense, Secretary 
Condoleezza Rice at the Department of State, and SBA 
Administrator Preston urging an investigation into how a small 
business under fire for delivering faulty munitions to Afghan 
security forces might have fraudulently obtained as many as 50 
contracts with the Defense and State Departments by claiming to 
be a Small Disadvantaged Business (SDB). The letters called on 
the agencies to explain how AEY Inc. was erroneously labeled as 
a Small Disadvantaged Business and if that mistaken designation 
helped the company secure $298 million in federal contracts in 
2007. Senator Kerry called for greater oversight of the 
contracting process to protect national security and ensure 
federal agencies did not undermine efforts to level the playing 
field for small businesses.
    On May 8, 2008, Deputy Under Secretary of Defense James 
Finley responded and detailed the procedures that the Defense 
Department used to verify the small business and socioeconomic 
status of businesses, as well as the contracts that AEY had 
received. Assistant Secretary of State for Legislative Affairs 
Jeffery Berger responded in April with all purchase orders with 
AEY. SBA Associate Administrator for Government Contracting and 
Business Development responded on May 30th, discussing its 
oversight activities to ensure the integrity of the SDB 
program. The SBA letter stated that it did not have any 
documentation relevant to AEY as it had not applied for 
participation in the 8(a) program. On August 4, Bernard S. 
Champoux, Chief of Legislative Liaison for the Army, responded 
with relevant documents. The Committee remains concerned about 
the issues raised by the AEY contracting case.

        G. ADDITIONAL OVERSIGHT OF FEDERAL CONTRACTING PROGRAMS

1. Contracting improvements following Hurricane Katrina

    On March 1, 2007, Senator Kerry sent a letter to the 
Departments of Defense and Homeland Security, the General 
Services Administration, and the Army Corps of Engineers, 
urging the implementation of the recommendations the GAO made 
in its report regarding Hurricane Katrina subcontracting data 
for small businesses (GAO-07-205, ``Hurricane Katrina: Agency 
Contracting Data Should be More Complete Regarding 
Subcontracting Opportunities for Small Businesses). The 
Committee received a response from the Army Corps of Engineers 
on March 29th stating that the Director of Contracting would 
re-emphasize small business contracting practices and 
highlighting an Inspector General investigation ordered in 
January 2007 at the Small Business Program Office. The response 
from the General Services Agency on May 22nd included two 
``acquisition alerts'' forwarded to its entire acquisition 
workforce.

2. Review of Global Supply Stock Program Changes

    On July 6, 2007, Chairman Kerry, Ranking Member Snowe, 
Senator Isakson, and House Chairwoman Velazquez and Ranking 
Member Chabot sent a letter to the General Services Agency 
(GSA) asking that they refrain from eliminating office supplies 
from the Global Supply Stock Program on small businesses until 
Congress had time to study the impact that such a change would 
have on small businesses. The Committee received a response on 
September 6th that discussed efforts being made at GSA to 
contract with small businesses and reiterated that its plans 
were in early stages and that studies would take place before 
changes were implemented. On December 20, 2007, Chairman Kerry 
and Ranking Member Snowe again called on the GSA to postpone 
implementing the policy. The GSA was preparing to drop office 
supplies from its Global Supply Stock Program. Nearly 80 
percent of government office supply purchases through this 
program were directed to small businesses. Senators Kerry and 
Snowe also asked the Government Accountability Office (GAO) to 
review the consequences, given that the Stock Program's office 
products created a vital and readily accessible resource to all 
government agencies for their various supply needs in times of 
emergency.

3. Contracting with minority-owned advertising firms

    On August 13, 2007, Senators Kerry, Schumer, and Reid, 
along with Congresswoman Kilpatrick, wrote a letter to the 
Departments of Defense and Treasury requesting information on 
contracting policies with minority-owned advertising firms, 
and, on April 29, 2008, Senator Kerry sent a letter to the 
Department of Veterans Affairs expressing concern that small 
businesses would be deemed ineligible for federal contracts. 
Both of these letters are discussed elsewhere in the report, in 
the Minority Entrepreneurship and Veterans sections, 
respectively.

                XIII. The SBA Budget and Appropriations


                     A. FY 2008 BUDGET FOR THE SBA

    The President requested $464 million in new budget 
authority for the SBA's FY 2008 budget in his budget request 
submitted to Congress in 2007. The request excluded funding for 
disaster loans, which were proposed to be funded by carryover 
from the emergency appropriations provided in FY 2006. While 
the budget request was a modest decrease compared to the $468 
million provided in FY 2007, its impact had the potential to be 
great because it exacerbated years of cuts. In aggregate, the 
SBA's budget had been cut by more than 30 percent, excluding 
disaster loan funding, since the President took office in 2001. 
As a result of the President's cuts, SBA loans and venture 
capital became more expensive, shifting more than $100 million 
in fees to the small business community; businesses were 
getting less counseling, and they were losing out on 
opportunities to do business with the federal government, a 
very serious problem since the Federal government spent about 
$370 billion on contracting for services and goods each year. 
The President's FY 2008 budget request would have only made 
these problems worse.
    Among the most disturbing proposed cuts to the SBA in FY 
2008, the President for the fourth year in a row proposed to 
eliminate all funding for the Microloan program and for 
Microloan Technical Assistance. This was very hard to justify 
given that the Administration was willing to spend so much on 
micro-credit in other countries. In 2005, the Administration 
provided approximately $211 million for the development of 
foreign microenterprise programs through the Agency for 
International Development. In FY 2006, according to Ambassador 
Zalmay Khalilzad, the U.S. Ambassador to Iraq at the time, the 
Administration provided more than $54 million for microloans in 
Iraq. And for FY 2007, the Administration requested 
supplemental funding for Iraq that included at least $160 
million for micro-credit programs.
    Prior to the release of the President's FY 2008 budget, 
Chairman Kerry and Ranking Member Snowe sent a letter to OMB 
Director Rob Portman on January 21, 2007, urging the 
Administration to sufficiently fund the SBA in the President's 
FY 2008 budget proposal. Touting the importance of the agency 
and its small business loan and assistance programs, the 
Senators called on the Administration to reverse course and end 
years of slashed funding for the SBA, given how the agency had 
been stretched to the breaking point in each of the President's 
proposed budgets since 2001. On February 27, 2007, the 
Committee received a response from Director Portman, endorsing 
the President's budget proposals for the SBA.
    The following day, February 28, 2007, the Committee held a 
hearing on the President's FY 2008 budget request for the SBA. 
The hearing served as the opportunity for Chairman Kerry, 
Ranking Member Snowe, and other Committee members to question 
SBA Administrator Preston on the President's FY 2008 budget 
proposal. Senator Kerry vocalized his disappointment with the 
inadequate funding levels for core SBA programs.
    In a March 1, 2007, letter to Chairman Kent Conrad and 
Ranking Member Judd Gregg of the Budget Committee, Chairman 
Kerry detailed his views and estimates on the President's FY 
2008 budget request for the SBA and urged the Budget Committee 
to consider increasing its funding recommendation for a minimum 
of an additional $187.8 million for the SBA, bringing the total 
to $651.8 million. This still would have been a fraction of the 
$2.9 trillion the President had proposed for the entire federal 
budget, and $34 million less than what was provided in 2001 to 
the agency, excluding disaster loan funding.
    The FY 2008 budget process was complicated by the SBA's 
failure to submit its FY 2008 legislative package in February 
immediately after the President's budget proposal was issued, 
nor prior to the Committee's FY 2008 budget hearing and in 
advance of the Budget Committee's markup of the FY 2008 Budget 
Resolution. On March 23, 2007, Chairman Kerry wrote to SBA 
Administrator Preston inquiring about its status, and, on March 
30, 2007, the Committee finally received the SBA's official 
legislative package.
    On March 22, 2007, Chairman Kerry was joined by Senator 
Snowe in introducing an amendment (S.A. 616) to the 
Congressional Budget Resolution (S. Con. Res. 21), which 
successfully secured a recommendation for $97 million in 
additional SBA funding above that of the President's FY 2008 
request for the SBA. The amendment restored the Microloan and 
Microloan Technical Assistance programs to the levels they were 
in 2001--$3.2 million to leverage $30 million in loans and $20 
million in technical assistance. The amendment also restored 
the proposed cuts to the Women's Business Centers, the Small 
Business Development Centers, the Office of Veterans Business 
Development, and programs for the development of minority 
businesses and Native Americans. It recommended restoring $10 
million in funding for the New Markets programs.
    Ultimately, the Consolidated Appropriations Act for FY 2008 
(H.R. 2764/P.L. 110-161), signed into law at the end of 
December 2007, included a funding increase of approximately $40 
million over FY 2007 for the SBA's core programs, including 
Small Business Development Centers, Women's Business Centers 
and the Microloan program. It was the first increase in SBA 
funding in seven years. Specifically, it increased funding for 
Small Business Development Centers by 9 percent over the FY 
2007 level, Women's Business Centers by 4 percent, Microloan 
Technical Assistance Grants by 15 percent, Microloans by 53 
percent, a program for investment in Microentrepreneurs by 50 
percent, 7(j) technical assistance by 53 percent, the HUBZone 
program by 5 percent, and the Surety Bond program by 6 percent. 
Drug-free Workplace Grants, SCORE, the Women's Business 
Council, and Veterans Business Development Assistance saw 
decreases in funding.

                     B. FY 2009 BUDGET FOR THE SBA

    Chairman Kerry and Ranking Member Snowe sought to secure 
additional increases for the SBA in the FY 2009 budget process. 
On January 8, 2008, Senators Kerry and Snowe sent a letter to 
OMB Director James Nussle, urging the Administration to build 
upon the FY 2008 budget by recommending funding of the SBA's 
programs at a level that would provide much-needed resources to 
Small Business Development Centers, Women's Business Centers, 
the Microloan Program, the HUBZone program, Procurement Center 
Representatives, the 7(j) Technical Assistance Program, 
Veterans Business Development, and SCORE, among others. The 
President's budget for FY 2009, released on February 4th, did 
just the opposite, further cutting funding for these important 
small business programs. The FY 2009 President's Budget Request 
proposed $657 million for the SBA, including $174,369,000 in 
new funding for disaster loans and their administration. 
However, in an apples-to-apples comparison of the President's 
request, which means excluding new disaster funding and 
earmarks, it represented a 3.4 percent reduction from the FY 
2008 enacted level and a 28.2 percent reduction from the FY 
2001 enacted level.
    On February 27, Senator Kerry chaired a hearing to question 
SBA Administrator Preston on President Bush's budget proposal 
for the SBA for FY 2009. At the hearing, Kerry was joined by 
Ranking Member Snowe and Senator Cardin in highlighting the 
ways in which the Administration's budget fell short in aiding 
America's small businesses by failing to invest in lending, 
contracting and counseling programs. Despite signs that small 
businesses were facing increasingly difficult market 
conditions, the Bush budget proposal for the SBA raised fees on 
loans, provided no funding for microloans, did not invest in 
more contracting oversight, and cut funding for key business 
assistance programs like Women's Business Centers, and Small 
Business Development Centers. The budget also recommended no 
new funding for Procurement Center Representatives (PCRs), who 
monitor contract bundling and break out contracts for small 
firms. At that time, there were about 57 PCRs--although only 
around 30 had full-time PCR duties. This fell far short of the 
100 PCRs Congress had been calling for to oversee nearly $400 
billion in federal contracts.
    Prior to the hearing, on February 22, 2008, Chairman Kerry 
had sent a letter to Senators Conrad and Gregg, the Chairman 
and Ranking Member of the Committee on the Budget, to express 
his views and estimates on the President's FY 2009 budget 
request for the SBA and to make recommendations for the FY 2009 
Budget Resolution. The letter addressed a number of 
deficiencies in the President's budget and sought increased 
funding for a wide range of SBA programs, including Microloan 
programs, 7(a) loans, 504 loans, Women's Business Centers, the 
Office of Veterans' Business Development, Small Business 
Development Centers, SCORE, and the Office of Technology, among 
others. It also expressed concern with the President's proposal 
to eliminate line-item budget authority for 7(j), HUBZones, 
Native American Outreach, and Office of International Trade 
programs. Specifically, Senator Kerry requested that the Budget 
Committee provide an additional $242 million for the SBA's core 
programs, bringing the total to $357 million. Ultimately, the 
Budget Resolution (S. Con. Res. 170) recommended more than $100 
in additional funding over the President's request for key 
small business programs at the SBA and the conference report 
was approved by the Senate on June 4, 2008, and the House on 
June 5, 2008.
    On April 3, 2008, Senators Kerry and Snowe sent a letter to 
Senate Appropriations Committee Chairman Byrd and Ranking 
Member Cochran and Appropriations Subcommittee on Financial 
Services Chairman Durbin and Ranking Member Brownback 
requesting funding for small business programs for FY 2009. 
Like the letter to the Budget Committee, this letter addressed 
a number of deficiencies in the President's budget and sought 
increased funding for a wide range of SBA programs, like 
Microloan programs, 7(a) loans, 504 loans, Women's Business 
Centers, the Office of Veterans' Business Development, Small 
Business Development Centers, SCORE, and the Office of 
Technology, among others. It also expressed concern with the 
President's proposal to eliminate line-item budget authority 
for 7(j), HUBZones, Native American Outreach, and Office of 
International Trade programs. This came in the wake of Senate 
passage of the Budget Resolution, which set forth a blueprint 
for an SBA budget of $100 million more than President Bush's 
request.
    The Financial Services and General Government 
Appropriations bill for FY 2009 (S. 3260), passed the 
Appropriations Committee on July 11, 2008, and included $107 
million in funding above the President's request for the SBA. 
The legislation did not receive consideration by the full 
Senate in the 110th Congress.

                       XIV. Additional Oversight


       A. RESTRICTING SBA MANAGEMENT'S ACCESS TO EMPLOYEE E-MAIL

    On January 11, 2008, Chairman Kerry sent a letter to SBA 
Administrator Preston urging the Administration to protect 
whistleblowers at the SBA by instituting a new policy that 
would prevent SBA managers from gaining unrestricted access to 
their employees' e-mails. According to an Inspector General 
report (OIG Report No. 08-02), SBA managers accessed the e-
mails of an SBA employee after the employee served as a 
confidential source to a Congressional committee. By law, 
agency employees had a right to provide information to 
Congressional committees without interference. In particular, 
the letter requested that the SBA revise its e-mail access 
authorization guidelines, currently set forth in SBA Standard 
Operating Procedure 90 49. On January 24, 2008, Frank Borchert 
III, General Counsel at the SBA, responded and provided the 
Committee with a copy of SBA Procedural Notice 9000-1720, 
effective December 21, 2007, which outlined steps to be taken 
to strike a balance between employee rights and the legitimate 
business needs of the agency.

         B. THE SMALL BUSINESS INFORMATION SECURITY ACT OF 2008

    On June 9, 2008, Chairman Kerry joined Ranking Member Snowe 
in introducing the Small Business Information Security Act of 
2008 (S. 3102), to help protect America's 27 million small 
businesses from computer hackers and other information 
security. The legislation would have created the Small Business 
Information Security Task Force within the SBA to help small 
firms understand and effectively respond to the information 
security challenges they face. Specifically, the Small Business 
Information Security Task Force would have: identified 
information security concerns and the services that address 
those concerns; made recommendations to the SBA regarding how 
it could better assist small businesses to both understand 
cyber-security issues and identify resources to help meet those 
complex challenges; and promoted current programs and services 
that would help small businesses protect their customers' 
valuable information. Representatives Michael Michaud and 
Donald Manzullo introduced companion legislation in the House 
of Representatives (H.R. 6206).

      C. IMPROVING SBA'S INFORMATION TECHNOLOGY SECURITY CONTROLS

    On February 12, 2008, Chairman Kerry sent a letter to 
Christine Liu, the Chief Information Officer at the SBA, urging 
the SBA to implement the recommendations of KPMG and the 
Inspector General to improve the agency's information 
technology security controls. An independent KPMG audit report 
demonstrated deficiencies in IT controls at the SBA. As Senator 
Kerry noted, in an era when identity theft and other high-tech 
crimes are commonplace, sound information security is critical 
to ensuring the accuracy and reliability of SBA data. In 
particular, Kerry urged the SBA to bolster network monitoring 
to detect unauthorized access, perform periodic vulnerability 
tests to identify susceptible threats, and develop and 
implement end-user computing procedures to monitor user-level 
access control.

D. GAO REPORT: OPPORTUNITIES EXIST TO BUILD ON LEADERSHIP'S EFFORTS TO 
             IMPROVE AGENCY PERFORMANCE AND EMPLOYEE MORALE

    A GAO Report issued in September 2008 titled 
``Opportunities Exist to Build on Leadership's Efforts to 
Improve Agency Performance and Employee Morale'' (GAO-08-995) 
served to highlight the challenges that a reduced budget posed 
for the agency and the transformation SBA had undergone over 
the previous six years to improve its operations. The report 
found several areas of improvement, including enhanced 
communication, performance management, and employee 
involvement. However, the report also detailed the inadequate 
support that the SBA received over the years of the Bush 
Administration and the effect that years of underfunding had on 
the SBA's lender oversight efforts, among other things. While 
GAO credited the SBA for efforts to improve training, 
transparency and communication, the report noted that employees 
had less time and resources for business development activities 
because they had to take on more duties as staff sizes 
decreased. This contributed to low morale and led to SBA 
placing last in both the 2005 and 2007 ``Best Places to Work'' 
list of federal agencies, compiled by the Partnership for 
Public Service and American University's Institute for the 
Study of Public Policy Implementation with data collected from 
the Office of Personnel Management's Federal Human Capital 
Survey.

                      XV. Presidential Nominations

    During the 110th Congress, the Committee received three 
executive nominations from the President.

                         A. CAROL DILLON KISSAL

    On February 25, 2008, President Bush nominated Carol Dillon 
Kissal to serve as Inspector General of the SBA. At the time, 
the position was still occupied by Eric M. Thorson, who was the 
nominee for Inspector General of the Department of the 
Treasury. Mr. Thorson was not confirmed by the Senate for that 
position until August 1, 2008, and was sworn into that office 
on August 12, 2008. On July 24, 2008, prior to the time the 
position was actually vacant at SBA, President Bush withdrew 
Ms. Kissal's nomination, and she accepted a position as the 
Washington Metropolitan Area Transit Agency's Chief Financial 
Officer.

                          B. SANTANU K. BARUAH

    On June 26, 2008, President Bush nominated Santanu K. 
Baruah, who was Assistant Secretary of the Economic Development 
Administration at the Department of Commerce, to serve as 
Administrator of the SBA. Steven Preston, who had been 
Administrator since July 2006, was sworn in as the Secretary of 
the Department of Housing and Urban Development on June 5, 
2008. Jovita Carranza, Deputy Administrator, was made Acting 
Administrator of the SBA following Preston's departure. Prior 
to a hearing being held on Mr. Baruah, President Bush used the 
Vacancies Act to install him as Administrator. Given that the 
authorizing statute for the SBA provided for succession in the 
event of a vacancy, it is not entirely clear that President 
Bush's appointment was properly made. However, given how little 
time was left before a new Administration would be in place, 
the Committee did not protest the appointment.

                        C. JOHN GRASTY CREWS II

    On September 26, 2008, President Bush nominated John Grasty 
Crews II to serve as Inspector General of the SBA. The 
Committee did not hold a hearing on Mr. Crews' nomination.

                    XVI. Other Committee Initiatives


                 A. TEMPORARY EXTENSION OF SBA PROGRAMS

    Extensions of authorizations for programs under the Small 
Business Act and the Small Business Investment Act have 
occurred regularly over the several years prior to the 110th 
Congress. In this Congress, Chairman Kerry and Ranking Member 
Snowe secured three additional extensions to ensure the 
continued operation of the SBA's programs, while attempting to 
pass comprehensive reauthorization legislation. On February 2, 
2007, H.R. 434 was signed into law as P.L. 110-4, extending the 
authorization for SBA programs through July 31, 2007. On August 
8, 2007, H.R. 3206 was signed into law as P.L. 110-57, 
extending the authorization through December 15, 2007. On 
December 14, 2007, H.R. 4252 was signed into law as P.L. 110-
136, extending the authorization through May 23, 2008. Finally, 
on May 23, 2008, S. 3029 was signed into law as P.L. 110-235, 
extending the ending authorization date through March 20, 2009. 
The Committee plans to continue to take action in the 111th 
Congress to ensure that the authorizations for the SBA's 
programs do not expire.

                     B. SMALL BUSINESS HEALTH CARE

1. Hearing on alternatives for easing the small business health care 
        burden

    On February 13, 2007, the Committee held a hearing to 
address small business health care. The ability to provide 
quality, affordable health insurance options for their 
employees, their families, and themselves was one of the 
biggest issues facing small business owners. In this hearing, 
Chairman Kerry led a debate about the best methods of reform to 
enable entrepreneurs to offer meaningful health care. Kerry 
advocated for universal health care coverage, as well as other 
policies that would help small businesses immediately while 
moving the nation toward comprehensive reform--including 
federal reinsurance for high cost cases, responsibly expanding 
coverage pools, and a 50-percent refundable tax credit for 
small firms that provide coverage to their low- and moderate-
income employees. The Chairman pushed for the Senate to 
consider comprehensive solutions to address the health care 
crisis and stressed the importance of going beyond Association 
Health Plans (AHPs) as the sole-solution to helping small firms 
cope with skyrocketing health care costs. Mary Beth Senkewicz, 
formerly with the National Association of Insurance 
Commissioners, testified that in order to ensure affordable, 
adequate coverage there needed to be larger and more efficient 
pooling for small firms in order to spread the risk and level 
the playing field. She also advocated for federal subsidies--
including tax credits--to assist with purchasing health 
insurance.

2. The Small Business Health Care Tax Credit Act

    To address this issue, Chairman Kerry introduced the Small 
Business Health Care Tax Credit Act (S. 99) on January 4, 2007. 
The legislation would have provided a refundable tax credit for 
small employers to help with the cost of health care premiums 
for employees making less than $50,000 a year. This amount 
would have been indexed for inflation. In order to be eligible 
for the credit, employers would have had to meet the following 
requirements: (1) have average gross receipts of less than $5 
million for the three last years; (2) pay at least 50 percent 
of the premiums of a qualified health plan; (3) employ more 
than one but less than 50 employees; and (4) offer health 
insurance to all qualified employees. The credit would have 
been equal to the applicable percentage of qualified health 
employee insurance expenses paid by the employer. The 
applicable percentage of the credit was based on the number of 
employees. Employers with less than 10 employees would have 
been eligible for a 50 percent credit. Employers with more than 
nine, but less than 25 employees, would have been eligible for 
a 25 percent credit. Employers with more than 24 employees, but 
less than 50, would have been eligible for a 20 percent credit. 
The maximum health expenses allowable for the credit per 
employee would have been $4,000 for self-only coverage, and 
$10,000 for family coverage. No other deduction or credit would 
have been allowed for health expenses that are taken into 
account in computing the credit. The self-employed would not 
have been eligible for the credit.

3. The Small Business Health Insurance Options Act of 2007

    Additionally, Chairman Kerry joined Ranking Member Snowe in 
introducing the Small Business Health Insurance Options Act of 
2007 (S. 1690) on June 25, 2007. This bill would have 
established a grant program for Small Business Development 
Centers to provide regional information for small businesses 
about health insurance options available to them. The measure 
was based on research conducted by the non-partisan Healthcare 
Leadership Council, which found that, after a brief education 
and counseling session on health insurance options in their 
geographic area, small businesses were up to 33 percent more 
likely to offer health insurance to their employees. The 
provisions were included in the Entrepreneurial Development Act 
of 2007 (S. 1671), which passed Committee on June 26, 2007, and 
were included in the SBA Reauthorization and Improvements Act 
of 2008 (S. 2920).

4. The Small Business Children's Education Act of 2007

    Further, on June 27, 2007, Chairman Kerry was joined by 
Ranking Member Snowe in introducing the Small Business 
Children's Education Act of 2007 (S. 1714). The legislation 
would have created an intergovernmental task force headed by 
the Administrator of the SBA, along with the Secretary of 
Health and Human Services, the Secretary of Labor, and the 
Secretary of the Treasury, to launch a campaign to enroll 
eligible children in the State Children's Health Insurance 
program (SCHIP) and provide information about eligibility 
criteria. All SBA business partners, Chambers of Commerce, 
health advocacy groups, and small firms themselves could have 
participated in the campaign. The legislation came in response 
to an Urban Institute report that showed that two million 
children out of a total nine million uninsured were eligible 
for enrollment in the SCHIP program. Many of those children 
were dependents of small business employees and self-employed 
workers. Provisions based on the legislation were included as 
an amendment (S.A. 2529) to the Children's Health Insurance 
Program Reauthorization Act of 2007 (H.R. 976), on August 2, 
2007, and passed the Senate on September 27, 2007; however, 
that bill was ultimately vetoed and an override attempt failed.

5. Federal tax incentives for small business health care

    On October 24, 2007, Chairman Kerry and Ranking Member 
Snowe sent a letter to Finance Committee Chairman Baucus and 
Ranking Member Grassley, in advance of an October 25, 2007, 
Finance Committee hearing on small business health care 
solutions. In the letter, Senators Kerry and Snowe outlined the 
principles that they believed should guide small business 
health care legislation. Offering federal tax incentives to 
small businesses that provided meaningful health care and 
choices to employees figured prominently in their 
recommendations.

6. Field hearing on affordable health care for small businesses

    On January 10, 2008, Senator Coleman chaired a field 
hearing in St. Paul, Minnesota, titled ``Affordable Health 
Care: A Big Problem for Small Businesses.'' The purpose of the 
hearing was to outline the challenges facing small businesses 
trying to provide health insurance to their employees and to 
discuss possible solutions. The hearing witnesses included Cal 
Ludeman, commissioner of the Minnesota Department of Human 
Services; Mark A. Carlson, president of Minnesota Mailing 
Solutions; Sanjay Kuba, president of GCI Systems; Jason Flohrs, 
director of Government Affairs at Twinwest Chamber of Commerce; 
William L. Oemichen, president and CEO of the Minnesota 
Association of Cooperatives and Wisconsin Federation of 
Cooperatives; and Patrick McLaughlin, director of marketing at 
Employers Association, Inc.

                        C. RURAL SMALL BUSINESS

1. Legislation

    The Committee took several steps in the 110th Congress to 
address the needs of small businesses in rural areas. The Small 
Business Lending Reauthorization and Improvements Act of 2007 
(S. 1256), introduced on May 1, 2007, included various titles 
to improve the ability of the SBA's programs to help rural 
small businesses. Specifically, to address ongoing complaints 
to the Committee regarding the Administration's elimination of 
the 7(a) Low-Doc program, and its harmful impact on lending in 
rural areas, the bill would have established the Rural Lending 
Outreach program, a new 7(a) loan program designed to increase 
lending in rural areas. The maximum loan would have been 
$250,000 and the program would have provided incentives for 
lenders to participate, with an 85 percent guarantee and a 
requirement of the SBA to process loans within 36 hours. It 
would have streamlined 7(a) lending by requiring a short 
application and minimum documentation, and made the eligibility 
requirements on the borrower more flexible. The provision 
replaced a study that was adopted by the Committee in the 109th 
Congress to assess whether the elimination of the Low-Doc 
program was reducing access to capital in rural areas. The 
Committee concluded that there was a need for an initiative to 
expand lending in rural areas.
    Also, to simplify use of the 504 program and to encourage 
CDCs to make loans to businesses in rural areas, S. 1256 would 
have amended the definition of ``rural'' in the Small Business 
Investment Act of 1958 to match the definition used by the U.S. 
Department of Agriculture. Specifically, an area other than a 
city or town with a population greater than 50,000 inhabitants, 
or the urbanized area contiguous and adjacent to such a city or 
town, would have qualified. This would have benefited small 
businesses because development in a rural area qualifies as one 
of the public policy goals of the 504 program, allowing such 
businesses to qualify for larger loans of $2 million, instead 
of $1.5 million. S. 1256 was unanimously approved by the 
Committee at a May 16, 2007, markup, and it was included in the 
SBA Reauthorization and Improvements Act of 2008 (S. 2920).
    The Small Business Venture Capital Act of 2007 (S. 1662), 
introduced on June 19, 2007, also included provisions to assist 
small business owners and entrepreneurs in rural areas. In 
particular, the SBA's New Markets Venture Capital (NMVC) 
program, which would have been reauthorized in S. 1662, 
addressed the market gap in venture capital for companies 
located in low- and moderate-income rural and urban areas, as 
well as the need for smaller deals that neither traditional 
venture funds nor the Small Business Investment Company (SBIC) 
program would make. By law, NMVC funds are obligated to make 80 
percent of their investments in such areas, but, in FY 2006, 
they surpassed that target by making 92 percent of their 
investments in those areas. In order to further expand access 
to community development venture capital across the country, S. 
1662 would have added a geographic requirement to the criteria 
for selecting NMVC applicants. Building on the current 
provision to seek ``nationwide distribution,'' it would have 
directed the SBA, to the extent practicable, to license NMVC 
companies in one of each of the SBA's 10 regions.
    The bill also included a provision to eliminate the 
requirement for NMVC companies to raise matching funds from the 
private sector to access operational assistance grant money 
from the SBA. Specifically, NMVC companies are required to 
raise an amount equal to 30 percent of the private capital they 
have already raised for the NMVC fund, which amounts to a 
minimum of $1.5 million. This has proved virtually impossible, 
wasting small business owners' precious time and dollars flying 
around the country fundraising. Consequently, when Congress 
adopted a bill by Senator Harkin that established an NMVC 
program for rural areas at the Department of Agriculture, it 
eliminated that requirement. S. 1662 would have brought the 
programs in line with each other, allowing rural small 
businesses to access capital more easily. This bill was 
unanimously approved by the Committee on June 26, 2007, and was 
also incorporated into S. 2920.
    Last, the SBIR/STTR Reauthorization Act of 2008 (S. 3362), 
introduced on July 29, 2008, and unanimously approved by the 
Committee on July 30, 2008, included a section to improve 
outreach in rural areas. The bill would have reauthorized the 
Federal and State Technology (FAST) partnership program and the 
Rural Outreach Program (ROP) through 2014, and would have 
increased the authorization for the ROP from $2 million to $5 
million. This bill also would have reduced the match 
requirement for FAST recipients in rural areas to 50 cents for 
each federal dollar and reduced the match requirement to 35 
cents for a FAST recipient in a rural area which was also 
located in one of the 18 states receiving the fewest SBIR Phase 
I awards. As part of the 2000 Reauthorization of the SBIR 
program, Congress created the FAST Program. FAST was created to 
strengthen the technological competitiveness of small business 
concerns in all 50 states by providing competitive matching 
grants to states to help support the SBIR and STTR programs. 
These grants are traditionally used to raise awareness of SBIR 
and STTR, assist technology transfers by universities to small 
businesses, provide technical assistance to firms participating 
in the SBIR program, and encourage commercialization of 
technology developed through SBIR funding. The FAST program has 
proven vital to rural states, which have traditionally been in 
the lower tier of states in terms of SBIR/STTR awards and total 
dollars. For this reason, technical assistance provided under 
FAST grants is extremely important to rural small businesses 
and universities. In general, the more SBIR applications that 
are submitted by small businesses in a state, the more SBIR 
awards were made in that state.

2. GAO study on the needs of small businesses in rural America

    In addition to the Committee's legislative efforts to 
support small businesses in rural areas, on October 30, 2007, 
Chairman Kerry sent a letter asking to be a co-requester of a 
GAO study to investigate the coordination between the U.S. 
Department of Agriculture and the SBA in addressing the needs 
of small businesses in rural America. The study was requested 
by Chairman Heath Shuler, Ranking Member Jeff Fortenberry, and 
Representative Vern Buchanan of the House Committee on Small 
Business Subcommittee on Rural and Urban Entrepreneurship In 
his letter, Senator Kerry noted that determining the best way 
to support economic development in rural areas as they adjusted 
to the changing global economy was vital for preserving these 
communities and strengthening the nation's economy. The report, 
entitled ``Rural Economic Development: Collaboration Between 
SBA and USDA Could Be Improved'' (GAO-08-1123), was released on 
September 18, 2008.

                      D. BROADBAND INTERNET ACCESS

1. Hearing on improving Internet access to help small businesses 
        compete in the global economy

    In the 110th Congress, at a hearing held on September 26, 
2007 titled, ``Improving Internet Access to Help Small Business 
Compete in a Global Economy,'' the Committee called attention 
to the problems that a lack of broadband internet access can 
cause for small businesses and pushed for a federal commitment 
to make broadband more widely available to small businesses and 
all Americans. Citing the need for America to compete in a 
global economy, Chairman Kerry called for the Bush 
Administration to make universal broadband access a reality by 
changing regulations and encouraging competition between 
service providers. Senator Kerry also pushed for the Federal 
Communications Commission and the SBA to collect more accurate 
information to measure the availability of broadband services 
for small businesses.

2. The Broadband Data Improvement Act

    Senators Kerry and Snowe sponsored or cosponsored several 
pieces of legislation in the 110th Congress that would 
facilitate the spread of broadband, including the Broadband 
Data Improvement Act (S. 1492), which became law (P.L. 110-385) 
on October 10, 2008, and included a provision that required the 
SBA's Office of Advocacy to conduct a study on the impact of 
broadband speed and price on small businesses. The Financial 
Services and General Government Appropriations Act for Fiscal 
Year 2009 (S. 3260) also included language providing for a 
similar study, but that bill did not become law.

                         E. UNDERGROUND ECONOMY

1. Field hearing on the impact of employers who failed to abide by 
        lawful hiring practices

    On April 28, 2008, Chairman Kerry held a field hearing in 
Chelsea, Massachusetts, to examine the impact of employers who 
failed to abide by lawful hiring practices when hiring 
employees. When employees were misclassified as ``contract 
employees,'' companies were able to avoid paying certain 
employment taxes, and workers lost out on important benefits 
and protections. Testimony focused on the effects of employers 
not abiding by the law and looked at ways to level the playing 
field for businesses and workers who play by the rules. 
Congressman John Tierney also participated in the hearing. 
Witnesses included George Noel, Director of the Massachusetts 
Department of Labor, and representatives from labor groups and 
small businesses. On May 15, 2008, Chairman Kerry sent a letter 
to President Bush asking him to form a federal task force to 
examine the underground economy and how it affected our 
nation's businesses. Senator Kerry requested that the 
interagency task force be created, consisting of 
representatives from the Department of Labor, the Department of 
Justice, and the Department of the Treasury, to further examine 
what federal action might need to be taken to put an end to the 
cash economy. The task force would have considered what changes 
to current enforcement methods may be necessary to more 
effectively deter this behavior, as well as policy proposals 
for addressing current law governing the classification and 
documentation of employees.

                         F. INTERNATIONAL TRADE

1. The Small Business International Trade Enhancements Act of 2007

    Chairman Kerry and Ranking Member Snowe joined Senator 
Landrieu in introducing the Small Business International Trade 
Enhancements Act of 2007 (S. 738) on March 1, 2007. S. 738 
would have set benchmarks for the Office of International Trade 
and sought to improve coordination between the office, other 
SBA resources, and other federal agencies. To ensure that the 
Office of International Trade had sufficient resources to carry 
out its mission and was an effective champion for small 
business exporters, the bill would have created an Associate 
Administrator for International Trade to oversee the office. 
The bill also would have required the SBA to designate at least 
one individual as a Trade Financial Specialist to oversee 
International Loan Programs and assist other SBA employees with 
trade finance issues.
    To make International Trade Loans more effective, this bill 
would have increased the maximum loan guarantee amount to $2.75 
million and specified that the loan cap was $3.67 million, as 
well as set out that working capital was an eligible use for 
loan proceeds. The bill also would have made International 
Trade Loans consistent with regular SBA 7(a) loans in terms of 
allowing the same collateral and refinancing terms as with 
regular 7(a) loans. This bill also sought to stop the 
downsizing of International Finance Specialists. To ensure that 
all smaller exporters nationwide would continue to have access 
to export financing, this bill would have established a floor 
of 18 International Finance Specialists. The bill also would 
have required the SBA to first fill existing vacancies--many 
left vacant for more than three years--before assigning 
specialists to new centers.
    Provisions based on this legislation were included in the 
Small Business Lending Reauthorization and Improvements Act of 
2007 (S. 1256) and the Entrepreneurial Development Act (S. 
1671), which passed Committee unanimously and were later 
included in S. 2920.

                         G. ADDITIONAL MEASURES

1. Resolutions honoring small businesses

    The Committee recognized the contributions of small 
businesses by introducing and passing resolutions honoring them 
in 2007 and 2008 to coincide with National Small Business Week. 
Senate Resolution 174, sponsored by Chairman Kerry, Ranking 
Member Snowe, and seven other members of the Committee, passed 
the Senate by unanimous consent on April 26, 2007. Senate 
Resolution 524, again sponsored by Senators Kerry and Snowe, 
along with 14 other Committee members, passed unanimously on 
April 28, 2008. Both resolutions honored the entrepreneurial 
spirit of the owners of small business concerns in the United 
States during National Small Business Week; honored the efforts 
and achievements of the owners and employees of small business 
concerns, whose hard work, commitment to excellence, and 
willingness to take a risk, made them a crucial part of the 
Nation's economy; recognized that small business concerns were 
essential to restoring the Nation's economic health; recognized 
the vital role of the programs of the SBA and the work of its 
employees and its resource partners in providing assistance to 
entrepreneurs and the owners of small business concerns; and 
strongly urged the President to take steps to ensure that small 
businesses received the attention they deserved and that the 
Administrator of the SBA be given a role in the President's 
cabinet.

2. Comprehensive committee report on successful State initiatives that 
        foster small business

    On October 29, 2008, Chairman Kerry and Ranking Member 
Snowe released a report detailing successful practices for 
assisting small businesses currently being implemented 
throughout the United States. The comprehensive reference 
guide, titled ``What Works for Small Businesses,'' contained 
hundreds of innovative methods to enhance entrepreneurship and 
improve the economy. Senators Kerry and Snowe reached out to 
every state in the country in search of programs, policies, and 
initiatives that had proven successful in encouraging and 
supporting small business development. The comprehensive 
reference guide consisted of hundreds of responses from 
economic development agencies and policymakers in 38 states 
detailing effective practices that may work for entrepreneurs 
in other states. While Senators Kerry and Snowe did not 
specifically endorse any of these ideas, state and local 
authorities on economic development suggested them as examples 
of what works for small firms today.

                            XVII. Appendices


      A. HEARINGS, ROUNDTABLES, AND MARKUPS OF THE 110TH CONGRESS

1. First session

     January 31, 2007: Hearing titled ``Assessing 
Federal Small Business Assistance Programs for Veterans and 
Reservists,'' Senator Kerry chaired.
     February 13, 2007: Hearing titled ``Alternatives 
for Easing the Small Business Health Care Burden,'' Senator 
Kerry chaired.
     February 28, 2007: Hearing titled ``The 
President's Fiscal Year 2008 Budget Request for the Small 
Business Administration,'' Senator Kerry chaired.
     March 8, 2007: Hearing titled ``Small Business 
Solutions for Combating Climate Change,'' Senator Kerry 
chaired.
     March 29, 2007: Markup of S. 163 ``Small Business 
Disaster Response and Loan Improvements Act of 2007,'' Senator 
Kerry chaired.
     April 18, 2007: Hearing titled ``Sarbanes-Oxley 
and Small Business: Addressing Proposed Regulatory Changes and 
their Impact on Capital Markets,'' Senator Kerry chaired.
     May 2, 2007: Roundtable titled ``SBA 
Reauthorization: Small Business Loan Programs,'' Senator Kerry 
chaired.
     May 16, 2007: Markup of S. 1256 ``Small Business 
Lending Reauthorization and Improvements Act of 2007,'' Senator 
Kerry chaired.
     May 22, 2007: Hearing titled ``Minority 
Entrepreneurship: Assessing the Effectiveness of SBA's Programs 
for the Minority Business Community,'' Senator Kerry chaired.
     June 14, 2007: Hearing titled ``The Impact of 
Rising Gas Prices on America's Small Businesses,'' Senator 
Kerry chaired.
     June 21, 2007: Roundtable titled ``SBA 
Reauthorization: Small Business Venture Capital Programs,'' 
Senator Kerry chaired.
     June 26, 2007: Markup of S. 1671 ``Entrepreneurial 
Development Act of 2007,'' S. 1662 ``Small Business Venture 
Capital Act of 2007,'' and other pending business, Senator 
Kerry chaired.
     July 18, 2007: Hearing titled ``Increasing 
Government Accountability and Ensuring Fairness in Small 
Business Contracting,'' Senator Kerry chaired.
     July 25, 2007: Hearing titled ``Oversight: Gulf 
Coast Disaster Loans and the Future of the Disaster Assistance 
Program,'' Senator Kerry chaired.
     August 1, 2007: Roundtable titled 
``Reauthorization of the Small Business Innovation Research 
Program: National Academies' Findings and Recommendations,'' 
Senator Kerry chaired.
     September 20, 2007: Hearing titled ``Expanding 
Opportunities for Women Entrepreneurs: The Future of Women's 
Small Business Programs,'' Senator Kerry chaired.
     September 26, 2007: Hearing titled ``Improving 
Internet Access to Help Small Business Compete in a Global 
Economy,'' Senator Kerry chaired.
     October 18, 2007: Roundtable titled 
``Reauthorization of the Small Business Innovation Research 
Program: How to Address the Valley of Death, the Role of 
Venture Capital, and Data Rights,'' Senator Kerry chaired.
     October 29, 2007: Field Hearing titled ``Access to 
Federal Contracts: How to Level the Playing Field,'' Senator 
Cardin chaired.
     November 7, 2007: Markup of S. 2300 ``Small 
Business Contracting Revitalization Act of 2007,'' Senator 
Kerry chaired.
     November 13, 2007: Hearing titled ``SBA Lender 
Oversight: Preventing Loan Fraud and Improving Regulation of 
Lenders,'' Senator Kerry chaired.

2. Second session

     January 10, 2008: Field Hearing titled ``Health 
Care: A Big Problem for Small Business,'' Senator Coleman 
chaired.
     January 30, 2008: Hearing titled ``Holding the 
Small Business Administration Accountable: Women's Contracting 
and Lender Oversight,'' Senator Kerry chaired.
     February 20, 2008: Field Hearing titled 
``Rebuilding the Gulf Coast: Small Business Recovery in South 
Louisiana,'' Senator Landrieu chaired.
     February 27, 2008: Heating titled: ``The 
President's FY2009 Budget Request for the Small Business 
Administration,'' Senator Kerry chaired.
     March 19, 2008: Field Roundtable titled ``Women in 
Business: Leveling the Playing Field,'' Senator Kerry chaired.
     April 16, 2008: Hearing titled ``The Impact of the 
Credit Crunch on Small Business,'' Senator Kerry chaired.
     April 28, 2008: Field Hearing titled ``The Effects 
of the Underground Economy on Small Businesses and Workers,'' 
Senator Kerry chaired.
     May 14, 2008: Roundtable titled ``Reducing 
Unemployment and Increasing Business Opportunities for 
Veterans,'' Senator Kerry chaired.
     May 28, 2008: Field Hearing titled ``The Rising 
Costs of Energy: Challenges and Opportunities for Small 
Businesses,'' Senator Kerry chaired.
     June 25, 2008: Hearing titled ``Examining 
Solutions to Cope with the Rise in Home Heating Oil Prices,'' 
Senator Kerry chaired.
     July 30, 2008: Markup of S. 3362 ``SBIR/STTR 
Reauthorization Act of 2008,'' Senator Kerry chaired.
     September 9, 2008: Roundtable titled 
``Opportunities and Challenges for Women Entrepreneurs on the 
20th Anniversary of the Women's Business Ownership Act,'' 
Senator Kerry chaired.
     September 11, 2008: Hearing titled ``Business 
Start-up Hurdles in Underserved Communities: Access to Venture 
Capital and Entrepreneurship Training,'' Senator Kerry chaired.

                   B. BILLS REFERRED TO THE COMMITTEE

1. First session

     S. 98 (Mr. Kerry) January 4, 2007. A bill to 
foster the development of minority-owned small businesses.
     S. 163 (Mr. Kerry) January 4, 2007. A bill to 
improve the disaster loan program of the Small Business 
Administration, and for other purposes.
     S. 246 (Ms. Snowe) January 10, 2007. A bill to 
enhance compliance assistance for small business.
     S. 537 (Ms. Landrieu) February 8, 2007. A bill to 
address ongoing small business and homeowner needs in the Gulf 
Coast States impacted by Hurricane Katrina and Hurricane Rita.
     S. 598 (Mr. Kerry) February 14, 2007. A bill to 
require reporting regarding the disaster loan program of the 
Small Business Administration, and for other purposes.
     S. 599 (Ms. Snowe) February 14, 2007. A bill to 
improve the disaster loan program of the Small Business 
Administration, and for other purposes.
     S. 690 (Ms. Landrieu) February 27, 2007. A bill to 
amend the Small Business Act to authorize the Administrator of 
the Small Business Administration to waive the prohibition on 
duplication of certain disaster relief assistance.
     S. 715 (Ms. Landrieu) February 28, 2007. A bill to 
amend the Small Business Act to provide expedited disaster 
assistance, and for other purposes.
     S. 738 (Ms. Landrieu) March 1, 2007. A bill to 
amend the Small Business Act to improve the Office of 
International Trade, and for other purposes.
     S. 745 (Ms. Landrieu) March 1, 2007. A bill to 
provide for increased export assistance staff in areas in which 
the President declared a major disaster as a result of 
Hurricane Katrina of 2005 and Hurricane Rita of 2005.
     S. 904 (Ms. Snowe) March 15, 2007. A bill to 
provide additional relief for small business owners ordered to 
active duty as members of reserve components of the Armed 
Forces, and for other purposes.
     S. 981 (Ms. Landrieu) March 23, 2007. A bill to 
authorize the Administrator of the Small Business 
Administration to waive the prohibition on duplication of 
certain disaster relief assistance.
     S. 985 (Mr. Levin) March 26, 2007. A bill to 
establish a pilot program to provide low interest loans to 
nonprofit, community-based lending intermediaries, to provide 
midsize loans to small business concerns, and for other 
purposes.
     S. 1005 (Mr. Kerry) March 28, 2007. A bill to 
amend the Small Business Act to improve programs for veterans, 
and for other purposes.
     S. 1071 (Ms. Landrieu) March 29, 2007. A bill to 
authorize the Administrator of the Small Business 
Administration to waive the prohibition on duplication of 
certain disaster relief assistance.
     S. 1256 (Mr. Kerry) May 1, 2007. A bill to amend 
the Small Business Act to reauthorize loan programs under that 
Act, and for other purposes.
     S. 1656 (Ms. Snowe) June 19, 2007. A bill to 
authorize loans for renewable energy systems and energy 
efficiency projects under the Express Loan Program of the Small 
Business Administration.
     S. 1657 (Mr. Kerry) June 19, 2007. A bill to 
establish a small business energy efficiency program, and for 
other purposes.
     S. 1662 (Mr. Kerry) June 19, 2007. A bill to amend 
the Small Business Investment Act of 1958 to reauthorize the 
venture capital program, and for other purposes.
     S. 1663 (Mr. Kerry) June 19, 2007. A bill to amend 
the Small Business Investment Act of 1958 to reauthorize the 
New Markets Venture Capital Program, and for other purposes.
     S. 1671 (Mr. Kerry) June 20, 2007. A bill to 
reauthorize and improve the entrepreneurial development 
programs of the Small Business Administration, and for other 
purposes.
     S. 1690 (Ms. Snowe) June 25, 2007. A bill to 
establish a 4-year pilot program to provide information and 
educational materials to small business concerns regarding 
health insurance options, including coverage options within the 
small group market.
     S. 1714 (Mr. Kerry) June 27, 2007. A bill to 
establish a multiagency nationwide campaign to educate small 
business concerns about health insurance options available to 
children.
     S. 1784 (Mr. Kerry) July 12, 2007. A bill to amend 
the Small Business Act to improve programs for veterans, and 
for other purposes.
     S. 1932 (Mr. Bayh) August 1, 2007. A bill to amend 
the Small Business Act to increase SBIR and STTR program 
expenditures.
     S. 1690 (Ms. Snowe) August 2, 2007. A bill to 
amend the Small Business Investment Act of 1958 to improve 
surety bond guarantees, and for other purposes.
     S. 2176 (Mr. Johnson) October 17, 2007. A bill to 
promote the development of Native American small business 
concerns, and for other purposes.
     S. 2288 (Ms. Snowe) November 1, 2007. A bill to 
establish portfolio quality standards, improve lender oversight 
by the Small Business Administration, create economic outcome 
and performance measurements, strengthen the loan programs 
under section 7(a) of the Small Business Act and title V of the 
Small Business Investment Act of 1958, and for other purposes.
     S. 2300 (Mr. Kerry) November 1, 2007. A bill to 
improve the Small Business Act, and for other purposes.
     H.R. 434 (Mr. Chabot) January 12, 2007. An act to 
provide for an additional temporary extension of programs under 
the Small Business Act and the Small Business Investment Act of 
1958 through July 31, 2007, and for other purposes.
     H.R. 1468 (Mr. Jefferson) March 12, 2007. To 
ensure that, for each small business participating in the 8(a) 
business development program that was affected by Hurricane 
Katrina of 2005, the period in which it can participate is 
extended by 18 months.
     H.R. 1873 (Mr. Braley) April 17, 2007. To 
reauthorize the programs and activities of the Small Business 
Administration relating to procurement, and for other purposes.
     H.R. 2284 (Mr. Udall) May 10, 2007. To amend the 
Small Business Act to expand and improve the assistance 
provided by Small Business Development Centers to Indian tribe 
members, Alaska Natives, and Native Hawaiians.
     H.R. 2397 (Ms. Fallin) May 21, 2007. To 
reauthorize the women's entrepreneurial development programs of 
the Small Business Administration, and for other purposes.
     H.R. 2992 (Mr. Hall) July 11, 2007. To amend the 
Small Business Act to improve trade programs, and for other 
purposes.
     H.R. 3020 (Mr. Chabot) July 12, 2007. To amend the 
Small Business Act to improve the Microloan program, and for 
other purposes.
     H.R. 3567 (Mr. Altmire) September 18, 2007. To 
amend the Small Business Investment Act of 1958 to expand 
opportunities for investments in small businesses, and for 
other purposes.
     H.R. 3866 (Ms. Velazquez) October 17, 2007. To 
reauthorize certain programs under the Small Business Act for 
each of fiscal years 2008 and 2009.
     H.R. 3867 (Ms. Velazquez) October 17, 2007. To 
update and expand the procurement programs of the Small 
Business Administration, and for other purposes.

2. Second session

     S. 2553 (Mr. Kerry) January 24, 2008. A bill to 
modify certain fees applicable under the Small Business Act for 
2008, to make an emergency appropriation for certain small 
business programs, and to amend the Internal Revenue Code of 
1986 to provide increased expensing for 2008, to provide a 
five-year carryback for certain net operating losses, and for 
other purposes.
     S. 2608 (Ms. Snowe) February 7, 2008. A bill to 
make improvements to the Small Business Act.
     S. 2612 (Mr. Kerry) February 7, 2008. A bill to 
provide economic stimulus for small business concerns.
     S. 2902 (Ms. Snowe) April 23, 2008. A bill to 
ensure the independent operation of the Office of Advocacy of 
the Small Business Administration, ensure complete analysis of 
potential impacts on small entities of rules, and for other 
purposes.
     S. 3026 (Mr. Kerry) May 15, 2008. A bill to 
provide for an additional temporary extension of programs under 
the Small Business Act and the Small Business Investment Act of 
1958, and for other purposes.
     S. 3102 (Ms. Snowe) June 9, 2008. A bill to 
establish the Small Business Information Security Task Force, 
and for other purposes.
     S. 3223 (Mr. Kerry) June 27, 2008. A bill to 
establish a small business energy emergency disaster loan 
program.
     S. 3262 (Mrs. Hutchison) July 14, 2008. A bill to 
reauthorize the women's entrepreneurial development programs of 
the Small Business Administration, and for other purposes.
     S. 3285 (Ms. Landrieu) July 17, 2008. A bill to 
ensure that, for each small business participating in the 8(a) 
business development program that was affected by Hurricane 
Katrina of 2005 or Hurricane Rita of 2005, the period in which 
it can participate is extended by 24 months.
     S. 3342 (Ms. Landrieu) July 26, 2008. A bill to 
improve access to technology by and increase entrepreneurship 
among small businesses located in rural communities, and for 
other purposes.
     S. 3362 (Mr. Kerry) July 29, 2008. A bill to 
reauthorize and improve the SBIR and STTR programs, and for 
other purposes.
     S. 3451 (Mr. Feingold) September 8, 2008. A bill 
to amend the Small Business Act to extend the Small Business 
Innovation Research and Small Business Technology Transfer 
programs, to increase the allocation of Federal agency grants 
for those programs, to add water, energy, transportation, and 
domestic security related research to the list of topics 
deserving special consideration, and for other purposes.
     S. 3596 (Mr. Kerry) September 25, 2008. A bill to 
stabilize the small business lending market, and for other 
purposes.
     S. 3699 (Ms. Snowe) November 19, 2008. A bill to 
direct the Administrator of the Small Business Administration 
to reform and improve the HUBZone program for small business 
concerns, and for other purposes.
     H.R. 5819 (Ms. Velazquez) April 16, 2008. To amend 
the Small Business Act to improve the Small Business Innovation 
Research (SBIR) program and the Small Business Technology 
Transfer (STTR) program, and for other purposes.

                             C. PUBLIC LAWS

    Public Law: 110-4 (H.R. 434) Additional Temporary Extension 
of Programs under the Small Business Act and the Small Business 
Investment Act of 1958. Signed into law: February 15, 2007.
    Public Law: 110-28 (H.R. 2206/Related Bill S.A. 187) 
Women's Business Center Renewal Grants Program. Signed into 
law: May 25, 2007.
    Public Law: 110-136 (H.R. 4252) Additional temporary 
extension of programs under the Small Business Act and the 
Small Business Investment Act of 1958 through May 23, 2008, and 
for other purposes. Signed into law: December 14, 2007.
    Public Law 110-140 (H.R. 6/Related Bill S. 1657) Small 
Business Energy Efficiency Act of 2007. Signed into law: 
December 19, 2007.
    Public Law 110-161 (H.R. 2764/Related Bill S. 1922) The TSA 
Acquisition Reform Act of 2007. Signed into law: December 26, 
2007.
    Public Law 110-186 (H.R. 4253/Related Bill S. 1784) 
Military Reservist and Veteran Small Business Reauthorization 
and Opportunity Act of 2008. Signed into law: February 14, 
2008.
    Public Law 110-234 (H.R. 2419/Related Bill S. 163) Small 
Business Disaster Response and Loan Improvements Act of 2007. 
Signed into law: May 22, 2008.
    Public Law 110-235 (S. 3029) Additional temporary extension 
of programs under the Small Business Act and the Small Business 
Investment Act of 1958, and for other purposes. Signed into 
law: May 23, 2008.
    Public Law 110-245 (H.R. 6081/Related Bill S. 455) Active 
Duty Military Tax Relief Act of 2007. Signed into law: June 17, 
2008.

                                  
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