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[House Report 107-212]
[From the U.S. Government Publishing Office]

107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-212

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   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

                              R E P O R T

                             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.
    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.

                          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 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 center 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 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.

                 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.--
          (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. [36] 37. All laws and parts of laws inconsistent with 
this Act are hereby repealed to the extent of such 
inconsistency.

                            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 assistance 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 curricula. Therefore, we 
support this pilot program and the entrepreneurial assistance 
it will provide.

                                                Nydia M. Velazquez.

                                  
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