89–006

107TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 107–212

VOCATIONAL AND TECHNICAL ENTREPRENEURSHIP

DEVELOPMENT ACT OF 2001

SEPTEMBER 21, 2001.—Committed to the Committee of the Whole House on the

State of the Union and ordered to be printed

Mr. MANZULLO, from the Committee on Small Business,

submitted the following

REPORT

together with

ADDITIONAL VIEWS

[To accompany H.R. 2666]

[Including cost estimate of the Congressional Budget Office]

The Committee on Small Business, to whom was referred the bill

(H.R. 2666) to amend the Small Business Act to direct the Administrator of the Small Business Administration to establish a vocational and technical entrepreneurship development program, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

PURPOSE

The purpose of the Act is to provide entrepreneurial assistance

to persons with vocational and technical skills to help them own

and operate their own businesses rather than being employees of

companies in which they have no direct ownership interest. A further purpose of the Act is to stimulate economic activity, to create

new job opportunities, and to help tradesmen and women realize

the full potential of a free enterprise system.

Specifically, H.R. 2666 aims to utilize the existing network of

small business development centers who will then provide technical

assistance to secondary schools, or to post secondary vocational or

technical schools, for the development and implementation of curricula that can help students enrolled in these institutions to obtain entrepreneurial skills.
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Small businesses are the cornerstone of the U.S. economy, accounting for more than 50 percent of this Nation’s private gross domestic product. The small business community represents 99.7 percent of all employers. In 1996, small businesses produced approximately 75 percent of the 2.5 million new jobs and for the one-year

period from 1995–1996, small businesses created over 78 percent of

the net new jobs. As the statistics establish, the small business sector of the economy is a proven job-creator. It is anticipated that implementation of the Act will add to and reinforce the central role

of small businesses in the economic fabric of this Nation.

NEED FOR LEGISLATION

Many persons within the United States have technical and vocational skills, but do not have business experience or training to

help them succeed in the small business community. Presently,

small businesses employ mechanics, technicians, carpenters,

plumbers, machinists, and draftsmen. However, the Act is needed

to provide the essential training and business counseling necessary

for these skilled workers to start their own businesses, to survive

in the business world, and to grow.

In providing these needed services, the Act relies upon the

present infrastructure of the Small Business Development Centers

(‘‘SBDCs’’ or ‘‘centers’’), which has proven by past performance to

deliver services that greatly enhance the chances of a small business surviving as compared with those who do not receive such assistance.

The centers provide a focal point for studies, research, and counseling concerning the managing, financing, and operation of small

business enterprises, including information retrieval, coordination

of federal and state government services, and referral to experts.

Therefore, the Committee believes that the Small Business Development Center Program can serve a greater number of potential

entrepreneurs, by working with institutions, both at the secondary

and post secondary level, that provide vocational and technical education.

Historically, the centers have focused on counseling entrepreneurs or small business owners that are in a position to either

start their own business or take it to the next level. However, a

limited number of centers have begun sharing their knowledge to

provide vocational students, or ‘‘future entrepreneurs,’’ the proper

business tools while learning their trade skills. Thus, these ‘‘future

entrepreneurs’’ can begin their own business venture after graduating with their new skills instead of working for someone else,

perhaps at a large firm.

The Committee believes that the centers can provide an effective

mechanism for dispensing information and advice on developing

and implementing entrepreneurial curricula. Therefore, the Committee believes that a targeted pilot program to determine how assistance with entrepreneurial curricula by selected small business

development centers will operate is a preferred strategy to generally requiring such assistance be provided by all centers throughout the entire system.
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OVERVIEW OF THE ACT

The Act establishes a three-year pilot project providing Small

Business Administration (‘‘SBA’’) grants to SBDCs for technical assistance to secondary schools and post-secondary vocational and

technical schools, to develop and implement curricula to promote

vocational and technical entrepreneurship.

The purpose of the Act is to assist the development and implementation of curricula that will encourage skilled persons to start

their own businesses and to provide needed entrepreneurial training to support the success of such businesses. The Act provides the

necessary entrepreneurial support to expand the career opportunities for persons receiving vocational training and, thus use their

newly gained skills to become the owners of their own business.

In the grant application, an applicant must outline its goals and

objectives for the assistance to be provided and the educational curricula to be implemented with grant funds. Grants are to be awarded to State small business development centers to carry out the

pilot program on a statewide basis. It is the desire of the Committee that State small business development centers pay particular focus to helping underserved subcenters in the area of vocational and technical entrepreneurship training. Those SBDCs receiving grants under the pilot program must report to SBA within

18 months from receiving the grant monies, detailing how all the

grant funds were used. In addition, not later than March 31, 2004,

SBA must conduct an evaluation of the program and report to Congress the results of each such evaluation.

The Act designates the Association of Small Business Development Centers as a clearinghouse for the collection of information

and expertise regarding vocational and technical entrepreneurship

programs. The minimum amount of a grant under the pilot program is $200,000 and the annual authorization for the 3-year pilot

program is $7 million.

COMMITTEE ACTION

HEARING ON H.R. 2666

On Thursday, July 19, 2001, the Subcommittee on Workforce,

Empowerment and Government Programs of the Committee on

Small Business held a hearing, commencing at 10:00 a.m., to hear

testimony with regard to H.R. 203, H.R. 2538, and H.R. 2666. The

Subcommittees received the testimony of eight witnesses. Panel 1

included: Congressman John E. Sweeney of New York, Congressman Robert A. Brady of Pennsylvania, and Congressman Tom

Udall of New Mexico. Panel 2 included: Mr. Thomas G. Grumbles,

CIH, Vice President, American Industrial Hygiene Association; Mr.

Donald T. Wilson, President and CEO, Association of Small Business Development Centers; Mr. Rudolph Cartier, Jr., Small Business Ombudsman, State of New Hampshire; Mr. Christian Conroy,

Associate State Director, Pennsylvania Small Business Development Centers; and, Mr. Leonard Lopez, Sun Valley Express, Navajo Reservation, Shiprock, New Mexico.

The hearing showed that some SBDCs were already providing,

on a limited basis, the services which are the subject of the three
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bills. The hearing evidenced a need for expansion of the services to

other locations.

CONSIDERATION OF H.R. 2666

At 10:05 a.m. on August 1, 2001, the Committee on Small Business met to consider and report four bills, that included H.R. 2666.

The bill H.R. 2666 was introduced. Chairman Manzullo asked

unanimous consent that H.R. 2666 be considered as read and open

for amendment at any point. No amendments were offered. Chairman Manzullo then moved to pass H.R. 2666 and to report it to the

House. At 10:38 a.m., a quorum being present, the Committee

passed the bill, H.R. 2666, and ordered it reported.

SECTION-BY-SECTION ANALYSIS

Section 1. Short title

The section establishes the short title as the ‘‘Vocational and

Technical Entrepreneurship Development Act of 2001.’’

Section 2. Vocational and Technical Entrepreneurship Development

Program

This section amends the Small Business Act by adding a new

section at the end entitled: ‘‘Vocational and Technical Entrepreneurship Development Program.’’

Subsection (a) defines the terms: ‘‘Administrator,’’ ‘‘program,’’ and

‘‘small business development center.’’

Subsection (b) requires the Administrator to establish a program

by which the Administrator makes grants to SBDCs to enable such

centers to provide technical assistance to secondary schools, or to

postsecondary vocational or technical schools, for the development

and implementation of curricula designed to promote vocational

and technical entrepreneurship. The Committee expects that

SBDCs will work in cooperation with secondary schools and post

secondary vocational and technical schools to develop and implement curricula designed to promote entrepreneurial skills.

Subsection (c) establishes the minimum grant that the Administrator can make with respect to the pilot program as not less than

$200,000.

Subsection (d) requires the Administrator to design a grant application that must be completed by any SBDC seeking a grant.

The application shall include information regarding the applicant’s

goals and objectives for the educational programs to be funded. The

Committee expects that the Administrator will consider the quality

of the proposed programs in determining which centers are selected

to participate in the pilot program in order to provide a baseline

by which the Administrator and the Committee can evaluate the

success of the program.

Subsection (e) requires the Administrator, as a condition of each

grant under the program, that the grantee shall transmit to the

Administrator, within 18 months after receipt of grant funds, a report describing how the grant funds were used. The Committee encourages these reports to include whether each center met its goals

and how the center met its objectives.

Subsection (f) permits the Administrator to enter into a cooperative agreement or contract with a small business development cen-
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ter receiving a grant under this section to provide additional assistance that furthers the purposes of the program.

Subsection (g) requires the Administrator to transmit a report to

Congress, no later than March 31, 2004, that evaluates the program.

Subsection (h) requires the Administrator to select an association

established under section 21(a)(3)(A) of the Small Business Act to

act as a clearinghouse of information and expertise regarding vocational and technical entrepreneurship education programs. In each

fiscal year, 2002, 2003, and 2004, the Administrator shall provide

additional assistance to the association selected to serve as the

clearinghouse. The Committee expects that the Association of

Small Business Development Centers will act as the repository and

clearinghouse.

Subsection (i) authorizes $7,000,000 be appropriated for each of

the fiscal years 2002, 2003, and 2004. The funds are to remain

available until expended.

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, August 15, 2001.

Hon. DONALD MANZULLO, Chairman, Committee on Small Business,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2666, the Vocational and

Technical Entrepreneurship Development Act of 2001.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Ken Johnson.

Sincerely,

DAN L. CRIPPEN, Director.

Enclosure.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 2666—Vocational and Technical Entrepreneurship Development Act of 2001

Summary: H.R. 2666 would require the Small Business Administration (SBA) to issue grants to small business development centers

(SBDCs) so that they can help schools design curricula for teaching

vocational and technical entrepreneurship. SBDCs are jointly funded by the private sector, schools, and federal, state, and local governments to provide management assistance to current and prospective small business owners.

H.R. 2666 would authorize the appropriation of $7 million a year

during the 2002–2004 period to fund the new program. CBO estimates that implementing the bill would cost $20 million over the

2002–2006 period, assuming the appropriation of the authorized

amounts. The bill would not affect direct spending or receipts;

therefore, pay-as-you-go procedures would not apply.

H.R. 2666 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA).

The bill would benefit state and local governments by providing

grants to promote vocational and technical entrepreneurship. Any
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costs to entities receiving grants under this program would be incurred voluntarily.

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2666 is shown in the following table. The costs

of this legislation fall within budget function 370 (commerce and

housing credit). For this estimate, CBO assumes that the authorized amounts will be appropriated for each year and that outlays

will follow historical spending patterns for similar SBA programs.

By fiscal year, in millions of dollars—

2002 2003 2004 2005 2006

Changes in spending subject to appropriation:

Authorization level ................................................................................ 7 7 7 0 0

Estimated outlays ................................................................................ 5 6 7 2 (1)

1. Less than $500,000.

Pay-as-you-go considerations: None.

Intergovernmental and private-sector impact: H.R. 2666 contains

no intergovernmental or private-sector mandates as defined in

UMRA. The bill would benefit state and local governments by providing grants to promote vocational and technical entrepreneurship. Any costs to entities receiving grants under this program

would be incurred voluntarily.

Estimate prepared by: Federal Cost: Ken Johnson. Impact on

State, Local, and Tribal Governments: Susan Sieg Tompkins. Impact on the Private Sector: Patrice Gordon.

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

COMMITTEE ESTIMATE OF COSTS

Pursuant to the Congressional Budget Act of 1974, the Committee estimates that the amendments to the Small Business Act

contained in H.R. 2666 will increase appropriations by no more

than $7 million annually over the next three fiscal years, i.e., 2002

through 2004. Furthermore, pursuant to clause 3(d)(2)(A) of rule

XIII of the Rules of the House of Representatives, the Committee

estimates that implementation of H.R. 2666 will not significantly

increase the administrative costs. This concurs with the estimate

of the Congressional Budget Office.

OVERSIGHT FINDINGS

In accordance with clause 4(c)(2) of rule X of the Rules of the

House of Representatives, the Committee states that no oversight

findings or recommendations have been made by the Committee on

Government Reform with respect to the subject matter contained

in H.R. 2666.

In accordance with clause 2(b)(1) of rule X of the Rules of the

House of Representatives, the oversight findings and recommendations of the Committee on Small Business with respect to the subject matter contained in H.R. 2666 are contained in the descriptive

portions of this report.
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STATEMENT OF CONSTITUTIONAL AUTHORITY

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House

of Representatives, the Committee finds the authority for this legislation in Article I, Section 8, Clause 18 of the Constitution of the

United States.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic,

existing law in which no change is proposed is shown in roman):

SMALL BUSINESS ACT

* * * * * * *

SEC. 36. VOCATIONAL AND TECHNICAL ENTREPRENEURSHIP DEVELOPMENT PROGRAM.

(a) DEFINITIONS.—In this section, the following definitions apply:

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the

Administrator of the Small Business Administration.

(2) PROGRAM.—The term ‘‘program’’ means the program established under subsection (b).

(3) SMALL BUSINESS DEVELOPMENT CENTER.—The term

‘‘small business development center’’ means a small business development center described in section 21.

(b) ESTABLISHMENT.—In accordance with this section, the Administrator shall establish a program under which the Administrator

shall make grants to small business development centers to enable

such centers to provide technical assistance to secondary schools, or

to postsecondary vocational or technical schools, for the development

and implementation of curricula designed to promote vocational

and technical entrepreneurship.

(c) MINIMUM GRANT.—The Administrator may make no grant

under the program for an amount less than $200,000.

(d) APPLICATION.—Each small business development center seeking a grant under the program shall submit to the Administrator

an application in such form as the Administrator may require. The

application shall include information regarding the applicant’s

goals and objectives for the educational programs to be assisted.

(e) REPORT TO ADMINISTRATOR.—The Administrator shall make a

condition of each grant under the program that not later than 18

months after the receipt of the grant the recipient shall transmit to

the Administrator a report describing how the grant funds were

used.

(f) COOPERATIVE AGREEMENTS AND CONTRACTS.—The Administrator may enter into a cooperative agreement or contract with a

small business development center receiving a grant under this section to provide additional assistance that furthers the purposes of

this section.

(g) EVALUATION OF PROGRAM.—Not later than March 31, 2004,

the Administrator shall transmit to Congress a report containing an

evaluation of the program.

(h) CLEARINGHOUSE.—
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(1) SELECTION.—Before making grants under the program,

the Administrator shall select an association established pursuant to section 21(a)(3)(A) to act as a clearinghouse of information and expertise regarding vocational and technical entrepreneurship education programs.

(2) ADDITIONAL ASSISTANCE AUTHORIZED.—In each fiscal year

in which grants are made under the program, the Administrator shall provide additional assistance to the association selected under paragraph (1) to carry out the functions described

in such paragraph.

(i) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to

be appropriated to carry out this section $7,000,000 for each of fiscal years 2002, 2003, and 2004. Such sums shall remain available

until expended.

SEC. ø36¿ 37. All laws and parts of laws inconsistent with this

Act are hereby repealed to the extent of such inconsistency.
(9)

ADDITIONAL VIEWS

Democrats understand that to start a new, successful business,

one must have sound management and organizational skills. The

necessity of increasing productivity, the difficulties in recruiting

qualified workers from a shrinking labor force, and the importance

of devising ways to meet workers’ benefits, will challenge small

business owners. The future of the economy depends on the continued emergence of successful small businesses.

Small business owners continue to demonstrate their extraordinary capacity to mobilize resources and generate new jobs. There

are more than 20 million small businesses in the U.S., and each

year, nearly a quarter of a million new ones are started. However,

the majority of entrepreneurs start without receiving some form of

formal business training. Many are drawn into starting their own

business by the possibility of being their own boss, but to be a successful entrepreneur, one must be prepared.

In addition, many of today’s workers participating in career

training or vocational education, fail to obtain the necessary entrepreneurial skills that can assist them to grow and develop their

own business venture successfully. This legislation will give them

the tools they need to balance their trade-skill with sound business

practices.

The pilot program established by H.R. 2666 utilizes the existing

network of the Small Business Administration’s Small Business

Development Center (SBDC) Program. SBDCs awarded grants will

utilize their statewide network of service centers to partner with

secondary schools, or postsecondary vocational or technical schools,

in developing a cohesive curriculum on starting and operating a

successful business venture.

The teacher of the secondary schools, or postsecondary vocational

or technical schools, will use the curriculum developed through the

partnership, to provide their students with entrepreneurial skills.

In addition, the teacher can modify the training to provide assistance relevant to the particular industry sector for which the students are learning the skills.

By providing entrepreneurial knowledge at the same time workers are learning a trade-skill (e.g., mechanic, machinist or HVAC

repair), career opportunities are expanded. Students not only become more employable, they can become a small business owner

(e.g., auto repair service, machining and tooling business, or HVAC

repair service). In addition, they become the employer, thus expanding the local job market, and revitalizing and developing the

economic growth of the community.

H.R. 2666 will also enhance the productivity and strength of the

overall SBDC Program. By expanding the number of potential entrepreneurs, the number of potential SBDC clients will also increase. It also enhances the effectiveness of current SBDC assist-
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ance by offering entrepreneurial knowledge during the learning

phase and before the initial entrepreneurial phase. After graduating from their career or vocational training, students will have

the basic tools and understanding enabling future SBDC assistance

to be more efficient and productive, thus increasing the rate of successful start-ups.

However, we feel the report language needs to emphasize that

SBDCs will only work in partnership with secondary schools, or

postsecondary vocational or technical schools, in developing and implementing the curricula and will not replace the teacher. SBDC

resources should not be used to staff educational institutions. It is

also important to emphasize that the curriculum will be implemented into the educational plan of secondary schools, or postsecondary vocational or technical schools, and not postsecondary educational institutions whose school curriculum already offers their

own entrepreneurial or business classes.

In addition, SBDCs that are the most qualified, and with the

most experience, should be given priority in awarding grants and

the opportunity to expand on their current efforts. This will ensure

the quality and success of the overall pilot project, especially if

there are experienced programs that can ensure and produce positive results. If these results are realized, these successes may then

be used as examples for the expansion of the program to other

areas, where such programs have not been implemented.

One of the purposes for establishing this program as a pilot, and

not as a permanent program, is to build upon the current practices,

experience and innovation of SBDCs to expand the scope of their

services. If proven successful, the pilot could then be made permanent and also expanded, as stated earlier, to other areas in further

need. To do otherwise, stifles or discourages innovation and discriminates against those SBDCs that have taken that first step. If

SBDCs develop new, innovative ways to assist entrepreneurs, they

should be encouraged to expand and develop that assistance further.

Lastly, we believe that fees must not be charged in conjunction

with this pilot project. Although the SBDCs are permitted to

charge fees under limited circumstances, one-on-one counseling is

provided free of charge. Current and past Administrations have attempted to implement a fee-for-service structure for SBDC services

that are, and have been, historically free. However, implementing

such a structure would not only be detrimental to the pilot program, but to the overall SBDC program. Democrats have consistently opposed such a move and will continue to oppose future attempts.

If the SBDC program is to serve a greater number of potential

entrepreneurs, the centers must transfer their knowledge and expertise to those educational systems having the capacity to reach

and to educate a much larger segment of those potential entrepreneurs. The centers are authorized to provide assistance of many

types, but they do not have an organized program for providing the

assistance established under H.R. 2666. We believe that under the

pilot program, the centers can provide an effective mechanism for

dispensing information and advice on developing entrepreneurial
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curricula. Therefore, we support this pilot program and the entrepreneurial assistance it will provide.

NYDIA M. VELA ́ ZQUEZ.

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