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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3458 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3458

To improve the program under section 8(a) of the Small Business Act and 
               to establish a surety bond pilot program.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              June 7, 2010

  Ms. Landrieu (for herself and Mr. Cardin) introduced the following 
   bill; which was read twice and referred to the Committee on Small 
                     Business and Entrepreneurship

_______________________________________________________________________

                                 A BILL

 
To improve the program under section 8(a) of the Small Business Act and 
               to establish a surety bond pilot program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Section 8(a) Improvements Act of 
2010''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Despite the significant progress businesses owned by 
        socially and economically disadvantaged individuals have made 
        as a result of the business development program under section 
        8(a) of the Small Business Act (15 U.S.C. 637(a)), such 
        businesses remain subject to discrimination that creates 
        substantial barriers to success in the marketplace. The 
        business development program under section 8(a) of the Small 
        Business Act reflects the commitment of the Nation to 
        eradicating discriminatory barriers to the formation and 
        development of viable businesses by socially and economically 
        disadvantaged individuals.
            (2) Recent evidence presented in Congressional hearings, 
        roundtables, and academic studies demonstrates, among other 
        things, the following:
                    (A) Significant disparities still exist between the 
                number, size, and income of businesses owned by 
                socially and economically disadvantaged individuals and 
                other businesses. These disparities remain even after 
                controlling for factors such as industry, geography, 
                education, age, and labor market status.
                    (B) Discrimination still limits the ability of 
                socially and economically disadvantaged individuals to 
                access capital. Socially and economically disadvantaged 
                individuals are more often denied loans than 
                individuals who are not minorities, and often pay 
                higher rates of interest on small business loans.
                    (C) Socially and economically disadvantaged 
                individuals who own businesses often experience--
                            (i) discrimination from prime contractors 
                        and exclusion from critical business networks; 
                        and
                            (ii) discrimination by bonding companies 
                        and suppliers that impedes the ability of the 
                        businesses to compete equally for Government 
                        contracts.

SEC. 3. DEFINITIONS.

    In this Act, the terms ``Administration'' and ``Administrator'' 
means the Small Business Administration and the Administrator thereof, 
respectively.

SEC. 4. PROGRAMS FOR SOCIALLY AND ECONOMICALLY DISADVANTAGED SMALL 
              BUSINESS CONCERNS.

    (a) Net Worth Threshold.--
            (1) In general.--Section 8(a)(6)(A) of the Small Business 
        Act (15 U.S.C. 637(a)(6)(A)) is amended--
                    (A) by inserting ``(i)'' after ``(6)(A)'';
                    (B) by striking ``In determining the degree of 
                diminished credit'' and inserting the following:
    ``(ii)(I) In determining the degree of diminished credit'';
                    (C) by striking ``In determining the economic 
                disadvantage'' and inserting the following:
    ``(iii) In determining the economic disadvantage''; and
                    (D) by inserting after clause (ii)(I), as so 
                designated by this section, the following:
    ``(II)(aa) Not later than 1 year after the date of enactment of the 
Section 8(a) Improvements Act of 2010, the Administrator shall--
            ``(AA) assign each North American Industry Classification 
        System industry code to a category described in item (cc); and
            ``(BB) for each category described in item (cc), establish 
        a maximum net worth for the socially disadvantaged individuals 
        who own or control small business concerns in the category that 
        participate in the program under this subsection.
    ``(bb) The maximum net worth for a category described in item (cc) 
shall be not less than the modified net worth limitations established 
by the Administrator under section 4(a)(2) of the Section 8(a) 
Improvements Act of 2010.
    ``(cc) The categories described in this item are--
            ``(AA) manufacturing;
            ``(BB) construction;
            ``(CC) professional services; and
            ``(DD) general services.
    ``(III) The Administrator shall establish procedures that--
            ``(aa) account for inflationary adjustments to, and include 
        a reasonable assumption of, the average income and net worth of 
        the owners of business concerns that are dominant in the field 
        of operation of the business concern; and
            ``(bb) require an annual inflationary adjustment to the 
        average income and maximum net worth requirements under this 
        clause.
    ``(IV) In determining the assets and net worth of a socially 
disadvantaged individual under this subparagraph, the Administrator 
shall not consider any assets of the individual that are held in a 
qualified retirement plan, as that term is defined in section 4974(c) 
of the Internal Revenue Code of 1986.''.
            (2) Temporary inflationary adjustment.--
                    (A) In general.--Not later than 30 days after the 
                date of enactment of this Act, the Administrator shall 
                modify the net worth limitations established by the 
                Administrator for purposes of the program under section 
                8(a) of the Small Business Act (15 U.S.C. 637(a)) by 
                adjusting the amount of the net worth limitations for 
                inflation during the period beginning on the date on 
                which the Administrator established the net worth 
                limitations and the date of enactment of this Act.
                    (B) Termination.--The Administrator shall apply the 
                net worth limitations established under subparagraph 
                (A) until the effective date of the net worth 
                limitations established by the Administrator under 
                clause (ii)(II) of section 8(a)(6)(A) of the Small 
                Business Act (15 U.S.C. 637(a)(6)(A)), as added by this 
                subsection.
    (b) Transition Period.--Section 7(j)(15) of the Small Business Act 
(15 U.S.C. 636(j)(15)) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively;
            (2) by striking ``Subject to'' and inserting ``(A) Except 
        as provided in subparagraph (B), and subject to''; and
            (3) by adding at the end the following:
    ``(B)(i) A small business concern may receive developmental 
assistance under the Program and contracts under section 8(a) during 
the 3-year period beginning on the date on which the small business 
concern graduates--
            ``(I) because the small business concern has participated 
        in the Program for the total period authorized under 
        subparagraph (A); or
            ``(II) under section 8(a)(6)(C)(ii), because the socially 
        disadvantaged individuals who own or control the small business 
        concern have a net worth that is more than the maximum net 
        worth established by the Administrator.
    ``(ii) After the end of the 3-year period described in clause (i), 
a small business concern described in clause (i)--
            ``(I) may not receive developmental assistance under the 
        Program or contracts under section 8(a); and
            ``(II) may continue to perform and receive payment under a 
        contract received by the small business concern under section 
        8(a) before the end of the period, under the terms of the 
        contract.''.
    (c) GAO Study.--Section 8(a) of the Small Business Act (15 U.S.C. 
637(a)) is amended by adding at the end the following:
    ``(22) Review of Effectiveness.--
            ``(A) GAO study.--Not later than 5 years after the date of 
        enactment of this paragraph, and every 5 years thereafter, the 
        Comptroller General of the United States shall--
                    ``(i) conduct an evaluation of the effectiveness of 
                the program under this subsection, including an 
                examination of--
                            ``(I) the number and size of contracts 
                        applied for, as compared to the number received 
                        by, small business concerns after successfully 
                        completing the program;
                            ``(II) the percentage of small business 
                        concerns that continue to operate during the 3-
                        year period beginning on the date on which the 
                        small business concerns successfully complete 
                        the program;
                            ``(III) whether the business of small 
                        business concerns increases during the 3-year 
                        period beginning on the date on which the small 
                        business concerns successfully complete the 
                        program; and
                            ``(IV) the number of training sessions 
                        offered under the program; and
                    ``(ii) submit to the Committee on Small Business 
                and Entrepreneurship of the Senate and the Committee on 
                Small Business of the House of Representatives a report 
                regarding each evaluation under clause (i).
            ``(B) SBA report.--Not later than 1 year after the date of 
        enactment of this paragraph, and every year thereafter, the 
        Administrator shall submit to the Committee on Small Business 
        and Entrepreneurship of the Senate and the Committee on Small 
        Business of the House of Representatives a report evaluating 
        the program under this section, including an assessment of--
                    ``(i) the regulations promulgated to carry out the 
                program;
                    ``(ii) online training under the program; and
                    ``(iii) whether the structure of the program is 
                conducive to business development.''.

SEC. 5. SURETY BOND PILOT PROGRAM.

    (a) Definitions.--In this section--
            (1) the terms ``bid bond'', ``payment bond'', ``performance 
        bond'', and ``surety'' have the meanings given those terms in 
        section 410 of the Small Business Investment Act of 1958 (15 
        U.S.C. 694a);
            (2) the term ``Board'' means the pilot program advisory 
        board established under subsection (d)(1);
            (3) the term ``eligible small business concern'' means a 
        socially and economically disadvantaged small business concern 
        that is participating in the program under section 8(a) of the 
        Small Business Act (15 U.S.C. 637(a));
            (4) the term ``Fund'' means the Small Business Surety Bond 
        Pilot Program Fund established under subsection (e)(1);
            (5) the term ``graduated'' has the meaning given that term 
        in section 7(j)(10)(H) of the Small Business Act (15 U.S.C. 
        636(j)(10)(H));
            (6) the term ``pilot program'' means the surety bond pilot 
        program established under subsection (b)(1); and
            (7) the term ``socially and economically disadvantaged 
        small business concern'' has the meaning given that term in 
        section 8(a) of the Small Business Act (15 U.S.C. 637(a)).
    (b) Program.--
            (1) In general.--The Administrator shall establish a surety 
        bond pilot program under which the Administrator may guarantee 
        any surety against loss resulting from a breach of the terms of 
        a bid bond, payment bond, performance bond, or bonds ancillary 
        thereto, by an eligible small business concern.
            (2) Guarantee percentage.--A guarantee under the pilot 
        program shall obligate the Administration to pay to a surety 90 
        percent of the loss incurred and paid by the surety.
            (3) Application.--An eligible small business concern 
        desiring a guarantee under the pilot program shall submit an 
        application at such time, in such manner, and accompanied by 
        such information as the Administrator may require.
            (4) Review.--A surety desiring a guarantee under the pilot 
        program against loss resulting from a breach of the terms of a 
        bid bond, payment bond, performance bond, or bonds ancillary 
        thereto by an eligible small business concern shall--
                    (A) submit to the Administrator a report evaluating 
                whether the eligible small business concern meets such 
                criteria as the Administrator may establish relating to 
                whether a bond should be issued to the eligible small 
                business concern; and
                    (B) if the Administrator does not guarantee the 
                surety against loss, submit an update of the report 
                described in subparagraph (A) every 6 months.
    (c) Technical Assistance and Educational Training.--
            (1) In general.--The Administrator shall provide technical 
        assistance and educational training to an eligible small 
        business concern participating in the pilot program or desiring 
        to participate in the pilot program for a period of not less 
        than 3 years, to promote the growth of the eligible small 
        business concern and assist the eligible small business concern 
        in promoting job development.
            (2) Topics.--
                    (A) Technical assistance.--The technical assistance 
                under paragraph (1) shall include assistance relating 
                to--
                            (i) scheduling of employees;
                            (ii) cash flow analysis;
                            (iii) change orders;
                            (iv) requisition preparation;
                            (v) submitting proposals;
                            (vi) dispute resolution; and
                            (vii) contract management.
                    (B) Educational training.--The educational training 
                under paragraph (1) shall include training regarding--
                            (i) accounting;
                            (ii) legal issues;
                            (iii) infrastructure;
                            (iv) human resources;
                            (v) estimating costs;
                            (vi) scheduling; and
                            (vii) any other area the Administrator 
                        determines is a key area for which training is 
                        needed for eligible small business concerns.
    (d) Panel.--
            (1) Establishment.--The Administrator shall establish a 
        pilot program advisory board to evaluate and make 
        recommendations regarding the pilot program.
            (2) Membership.--The Board shall be composed of 5 members--
                    (A) who shall be appointed by the Administrator;
                    (B) not less than 2 of whom shall have graduated 
                from the program under section 8(a) of the Small 
                Business Act (15 U.S.C. 637(a)); and
                    (C) not more than 1 of whom may be an officer or 
                employee of the Administration.
            (3) Duties.--The Board shall--
                    (A) evaluate and make recommendations to the 
                Administrator regarding the effectiveness of the pilot 
                program;
                    (B) make recommendations to the Administrator 
                regarding performance measures to evaluate eligible 
                small business concerns applying for a guarantee under 
                the pilot program; and
                    (C) not later than 90 days after the date on which 
                all members of the Board are appointed, and every year 
                thereafter until the authority to carry out the pilot 
                program terminates under subsection (f), submit to the 
                Committee on Small Business and Entrepreneurship of the 
                Senate and the Committee on Small Business of the House 
                of Representatives a report regarding the activities of 
                the Board.
    (e) Fund.--
            (1) Establishment of fund.--There is established in the 
        Treasury of the United States a revolving fund to be known as 
        the ``Small Business Surety Bond Pilot Program Fund'', to be 
        administered by the Administrator.
            (2) Availability.--Amounts in the Fund shall be available 
        without fiscal year limitation or further appropriation by 
        Congress.
            (3) Authorization of appropriations.--There is authorized 
        to be appropriated to the Fund $20,000,000.
            (4) Rescission.--Effective on the day after the date on 
        which the term of all guarantees made under the pilot program 
        have ended, all amounts in the Fund are rescinded.
    (f) Termination.--The Administrator may not guarantee a surety 
against loss under the pilot program on or after the date that is 7 
years after the date the date on which the Administrator makes the 
first guarantee under the pilot program.
                                 <all>
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