II 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Section 8(a) Improve5 ments Act of 2010’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Despite the significant progress businesses 

9 owned by socially and economically disadvantaged 

10 individuals have made as a result of the business deVerDate Mar 15 2010 23:14 Jun 07, 2010 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3458.IS S3458

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1 velopment program under section 8(a) of the Small 

2 Business Act (15 U.S.C. 637(a)), such businesses 

3 remain subject to discrimination that creates sub4 stantial barriers to success in the marketplace. The 

5 business development program under section 8(a) of 

6 the Small Business Act reflects the commitment of 

7 the Nation to eradicating discriminatory barriers to 

8 the formation and development of viable businesses 

9 by socially and economically disadvantaged individ10 uals. 

11 (2) Recent evidence presented in Congressional 

12 hearings, roundtables, and academic studies dem13 onstrates, among other things, the following: 

14 (A) Significant disparities still exist be15 tween the number, size, and income of busi16 nesses owned by socially and economically dis17 advantaged individuals and other businesses. 

18 These disparities remain even after controlling 

19 for factors such as industry, geography, edu20 cation, age, and labor market status. 

21 (B) Discrimination still limits the ability of 

22 socially and economically disadvantaged individ23 uals to access capital. Socially and economically 

24 disadvantaged individuals are more often denied 

25 loans than individuals who are not minorities, 


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1 and often pay higher rates of interest on small 

2 business loans. 

3 (C) Socially and economically disadvan4 taged individuals who own businesses often ex5 perience— 

6 (i) discrimination from prime contrac7 tors and exclusion from critical business 

8 networks; and 

9 (ii) discrimination by bonding compa10 nies and suppliers that impedes the ability 

11 of the businesses to compete equally for 

12 Government contracts. 

13 SEC. 3. DEFINITIONS. 

14 In this Act, the terms ‘‘Administration’’ and ‘‘Admin15 istrator’’ means the Small Business Administration and 

16 the Administrator thereof, respectively. 

17 SEC. 4. PROGRAMS FOR SOCIALLY AND ECONOMICALLY 

18 DISADVANTAGED SMALL BUSINESS CON19 CERNS. 

20 (a) NET WORTH THRESHOLD.— 

21 (1) IN GENERAL.—Section 8(a)(6)(A) of the 

22 Small Business Act (15 U.S.C. 637(a)(6)(A)) is 

23 amended— 

24 (A) by inserting ‘‘(i)’’ after ‘‘(6)(A)’’; 


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1 (B) by striking ‘‘In determining the degree 

2 of diminished credit’’ and inserting the fol3 lowing: 

4 ‘‘(ii)(I) In determining the degree of diminished cred5 it’’; 

6 (C) by striking ‘‘In determining the eco7 nomic disadvantage’’ and inserting the fol8 lowing: 

9 ‘‘(iii) In determining the economic disadvantage’’; 

10 and 

11 (D) by inserting after clause (ii)(I), as so 

12 designated by this section, the following: 

13 ‘‘(II)(aa) Not later than 1 year after the date of en14 actment of the Section 8(a) Improvements Act of 2010, 

15 the Administrator shall— 

16 ‘‘(AA) assign each North American Industry 

17 Classification System industry code to a category de18 scribed in item (cc); and 

19 ‘‘(BB) for each category described in item (cc), 

20 establish a maximum net worth for the socially dis21 advantaged individuals who own or control small 

22 business concerns in the category that participate in 

23 the program under this subsection. 

24 ‘‘(bb) The maximum net worth for a category de25 scribed in item (cc) shall be not less than the modified 


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1 net worth limitations established by the Administrator 

2 under section 4(a)(2) of the Section 8(a) Improvements 

3 Act of 2010. 

4 ‘‘(cc) The categories described in this item are— 

5 ‘‘(AA) manufacturing; 

6 ‘‘(BB) construction; 

7 ‘‘(CC) professional services; and 

8 ‘‘(DD) general services. 

9 ‘‘(III) The Administrator shall establish procedures 

10 that— 

11 ‘‘(aa) account for inflationary adjustments to, 

12 and include a reasonable assumption of, the average 

13 income and net worth of the owners of business con14 cerns that are dominant in the field of operation of 

15 the business concern; and 

16 ‘‘(bb) require an annual inflationary adjustment 

17 to the average income and maximum net worth re18 quirements under this clause. 

19 ‘‘(IV) In determining the assets and net worth of a 

20 socially disadvantaged individual under this subparagraph, 

21 the Administrator shall not consider any assets of the indi22 vidual that are held in a qualified retirement plan, as that 

23 term is defined in section 4974(c) of the Internal Revenue 

24 Code of 1986.’’. 


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1 (2) TEMPORARY INFLATIONARY ADJUST2 MENT.— 

3 (A) IN GENERAL.—Not later than 30 days 

4 after the date of enactment of this Act, the Ad5 ministrator shall modify the net worth limita6 tions established by the Administrator for pur7 poses of the program under section 8(a) of the 

8 Small Business Act (15 U.S.C. 637(a)) by ad9 justing the amount of the net worth limitations 

10 for inflation during the period beginning on the 

11 date on which the Administrator established the 

12 net worth limitations and the date of enactment 

13 of this Act. 

14 (B) TERMINATION.—The Administrator 

15 shall apply the net worth limitations established 

16 under subparagraph (A) until the effective date 

17 of the net worth limitations established by the 

18 Administrator under clause (ii)(II) of section 

19 8(a)(6)(A) of the Small Business Act (15 

20 U.S.C. 637(a)(6)(A)), as added by this sub21 section. 

22 (b) TRANSITION PERIOD.—Section 7(j)(15) of the 

23 Small Business Act (15 U.S.C. 636(j)(15)) is amended— 

24 (1) by redesignating subparagraphs (A) and 

25 (B) as clauses (i) and (ii), respectively; 


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1 (2) by striking ‘‘Subject to’’ and inserting ‘‘(A) 

2 Except as provided in subparagraph (B), and sub3 ject to’’; and 

4 (3) by adding at the end the following: 

5 ‘‘(B)(i) A small business concern may receive develop6 mental assistance under the Program and contracts under 

7 section 8(a) during the 3-year period beginning on the 

8 date on which the small business concern graduates— 

9 ‘‘(I) because the small business concern has 

10 participated in the Program for the total period au11 thorized under subparagraph (A); or 

12 ‘‘(II) under section 8(a)(6)(C)(ii), because the 

13 socially disadvantaged individuals who own or con14 trol the small business concern have a net worth 

15 that is more than the maximum net worth estab16 lished by the Administrator. 

17 ‘‘(ii) After the end of the 3-year period described in 

18 clause (i), a small business concern described in clause 

19 (i)— 

20 ‘‘(I) may not receive developmental assistance 

21 under the Program or contracts under section 8(a); 

22 and 

23 ‘‘(II) may continue to perform and receive pay24 ment under a contract received by the small business 


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1 concern under section 8(a) before the end of the pe2 riod, under the terms of the contract.’’. 

3 (c) GAO STUDY.—Section 8(a) of the Small Business 

4 Act (15 U.S.C. 637(a)) is amended by adding at the end 

5 the following: 

6 ‘‘(22) REVIEW OF EFFECTIVENESS.— 

7 ‘‘(A) GAO STUDY.—Not later than 5 years 

8 after the date of enactment of this paragraph, and 

9 every 5 years thereafter, the Comptroller General of 

10 the United States shall— 

11 ‘‘(i) conduct an evaluation of the effective12 ness of the program under this subsection, in13 cluding an examination of— 

14 ‘‘(I) the number and size of contracts 

15 applied for, as compared to the number re16 ceived by, small business concerns after 

17 successfully completing the program; 

18 ‘‘(II) the percentage of small business 

19 concerns that continue to operate during 

20 the 3-year period beginning on the date on 

21 which the small business concerns success22 fully complete the program; 

23 ‘‘(III) whether the business of small 

24 business concerns increases during the 3- 

25 year period beginning on the date on which 


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1 the small business concerns successfully 

2 complete the program; and 

3 ‘‘(IV) the number of training sessions 

4 offered under the program; and 

5 ‘‘(ii) submit to the Committee on Small 

6 Business and Entrepreneurship of the Senate 

7 and the Committee on Small Business of the 

8 House of Representatives a report regarding 

9 each evaluation under clause (i). 

10 ‘‘(B) SBA REPORT.—Not later than 1 year 

11 after the date of enactment of this paragraph, and 

12 every year thereafter, the Administrator shall submit 

13 to the Committee on Small Business and Entrepre14 neurship of the Senate and the Committee on Small 

15 Business of the House of Representatives a report 

16 evaluating the program under this section, including 

17 an assessment of— 

18 ‘‘(i) the regulations promulgated to carry 

19 out the program; 

20 ‘‘(ii) online training under the program; 

21 and 

22 ‘‘(iii) whether the structure of the program 

23 is conducive to business development.’’. 

24 SEC. 5. SURETY BOND PILOT PROGRAM. 

25 (a) DEFINITIONS.—In this section— 


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1 (1) the terms ‘‘bid bond’’, ‘‘payment bond’’, 

2 ‘‘performance bond’’, and ‘‘surety’’ have the mean3 ings given those terms in section 410 of the Small 

4 Business Investment Act of 1958 (15 U.S.C. 694a); 

5 (2) the term ‘‘Board’’ means the pilot program 

6 advisory board established under subsection (d)(1); 

7 (3) the term ‘‘eligible small business concern’’ 

8 means a socially and economically disadvantaged 

9 small business concern that is participating in the 

10 program under section 8(a) of the Small Business 

11 Act (15 U.S.C. 637(a)); 

12 (4) the term ‘‘Fund’’ means the Small Business 

13 Surety Bond Pilot Program Fund established under 

14 subsection (e)(1); 

15 (5) the term ‘‘graduated’’ has the meaning 

16 given that term in section 7(j)(10)(H) of the Small 

17 Business Act (15 U.S.C. 636(j)(10)(H)); 

18 (6) the term ‘‘pilot program’’ means the surety 

19 bond pilot program established under subsection 

20 (b)(1); and 

21 (7) the term ‘‘socially and economically dis22 advantaged small business concern’’ has the mean23 ing given that term in section 8(a) of the Small 

24 Business Act (15 U.S.C. 637(a)). 

25 (b) PROGRAM.— 


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1 (1) IN GENERAL.—The Administrator shall es2 tablish a surety bond pilot program under which the 

3 Administrator may guarantee any surety against 

4 loss resulting from a breach of the terms of a bid 

5 bond, payment bond, performance bond, or bonds 

6 ancillary thereto, by an eligible small business con7 cern. 

8 (2) GUARANTEE PERCENTAGE.—A guarantee 

9 under the pilot program shall obligate the Adminis10 tration to pay to a surety 90 percent of the loss in11 curred and paid by the surety. 

12 (3) APPLICATION.—An eligible small business 

13 concern desiring a guarantee under the pilot pro14 gram shall submit an application at such time, in 

15 such manner, and accompanied by such information 

16 as the Administrator may require. 

17 (4) REVIEW.—A surety desiring a guarantee 

18 under the pilot program against loss resulting from 

19 a breach of the terms of a bid bond, payment bond, 

20 performance bond, or bonds ancillary thereto by an 

21 eligible small business concern shall— 

22 (A) submit to the Administrator a report 

23 evaluating whether the eligible small business 

24 concern meets such criteria as the Adminis25 trator may establish relating to whether a bond 


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1 should be issued to the eligible small business 

2 concern; and 

3 (B) if the Administrator does not guar4 antee the surety against loss, submit an update 

5 of the report described in subparagraph (A) 

6 every 6 months. 

7 (c) TECHNICAL ASSISTANCE AND EDUCATIONAL

8 TRAINING.— 

9 (1) IN GENERAL.—The Administrator shall pro10 vide technical assistance and educational training to 

11 an eligible small business concern participating in 

12 the pilot program or desiring to participate in the 

13 pilot program for a period of not less than 3 years, 

14 to promote the growth of the eligible small business 

15 concern and assist the eligible small business con16 cern in promoting job development. 

17 (2) TOPICS.— 

18 (A) TECHNICAL ASSISTANCE.—The tech19 nical assistance under paragraph (1) shall in20 clude assistance relating to— 

21 (i) scheduling of employees; 

22 (ii) cash flow analysis; 

23 (iii) change orders; 

24 (iv) requisition preparation; 

25 (v) submitting proposals; 


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1 (vi) dispute resolution; and 

2 (vii) contract management. 

3 (B) EDUCATIONAL TRAINING.—The edu4 cational training under paragraph (1) shall in5 clude training regarding— 

6 (i) accounting; 

7 (ii) legal issues; 

8 (iii) infrastructure; 

9 (iv) human resources; 

10 (v) estimating costs; 

11 (vi) scheduling; and 

12 (vii) any other area the Administrator 

13 determines is a key area for which training 

14 is needed for eligible small business con15 cerns. 

16 (d) PANEL.— 

17 (1) ESTABLISHMENT.—The Administrator shall 

18 establish a pilot program advisory board to evaluate 

19 and make recommendations regarding the pilot pro20 gram. 

21 (2) MEMBERSHIP.—The Board shall be com22 posed of 5 members— 

23 (A) who shall be appointed by the Admin24 istrator; 


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1 (B) not less than 2 of whom shall have 

2 graduated from the program under section 8(a) 

3 of the Small Business Act (15 U.S.C. 637(a)); 

4 and 

5 (C) not more than 1 of whom may be an 

6 officer or employee of the Administration. 

7 (3) DUTIES.—The Board shall— 

8 (A) evaluate and make recommendations to 

9 the Administrator regarding the effectiveness of 

10 the pilot program; 

11 (B) make recommendations to the Admin12 istrator regarding performance measures to 

13 evaluate eligible small business concerns apply14 ing for a guarantee under the pilot program; 

15 and 

16 (C) not later than 90 days after the date 

17 on which all members of the Board are ap18 pointed, and every year thereafter until the au19 thority to carry out the pilot program termi20 nates under subsection (f), submit to the Com21 mittee on Small Business and Entrepreneurship 

22 of the Senate and the Committee on Small 

23 Business of the House of Representatives a re24 port regarding the activities of the Board. 

25 (e) FUND.— 


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1 (1) ESTABLISHMENT OF FUND.—There is es2 tablished in the Treasury of the United States a re3 volving fund to be known as the ‘‘Small Business 

4 Surety Bond Pilot Program Fund’’, to be adminis5 tered by the Administrator. 

6 (2) AVAILABILITY.—Amounts in the Fund shall 

7 be available without fiscal year limitation or further 

8 appropriation by Congress. 

9 (3) AUTHORIZATION OF APPROPRIATIONS.— 

10 There is authorized to be appropriated to the Fund 

11 $20,000,000. 

12 (4) RESCISSION.—Effective on the day after the 

13 date on which the term of all guarantees made 

14 under the pilot program have ended, all amounts in 

15 the Fund are rescinded. 

16 (f) TERMINATION.—The Administrator may not 

17 guarantee a surety against loss under the pilot program 

18 on or after the date that is 7 years after the date the 

19 date on which the Administrator makes the first guarantee 

20 under the pilot program. 

Æ 


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