I

103D CONGRESS

1ST SESSION H. R. 278

To establish a Minority Business Development Administration in the Department of Commerce, to clarify the relationship between such Administration and the Small Business Administration, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. MFUME introduced the following bill; which was referred jointly to the

Committees on Banking, Finance and Urban Affairs and Small Business

A BILL

To establish a Minority Business Development Administration in the Department of Commerce, to clarify the relationship between such Administration and the Small

Business Administration, and for other purposes.

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 ‘‘Minority Business De5 velopment Act of 1993’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds that—
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1 (1) the opportunity for full participation in our

2 free enterprise system by socially and economically

3 disadvantaged individuals is essential if we are to

4 obtain social and economic equality for such individ5 uals and improve the functioning of our national

6 economy;

7 (2) that many such individuals are socially dis8 advantaged because of their identification as mem9 bers of certain groups that have suffered the effects

10 of discriminatory practices or similar invidious cir11 cumstances over which they have no control;

12 (3) such groups include, but are not limited to,

13 Black Americans, Hispanic Americans, Native

14 Americans, Asian Pacific Americans, Asian Indian

15 Americans, and other minorities;

16 (4) it is in the national interest to expeditiously

17 ameliorate the conditions of socially and economi18 cally disadvantaged groups;

19 (5) such conditions can be improved by provid20 ing the maximum practicable opportunity for the de21 velopment of business concerns owned by members

22 of socially and economically disadvantaged groups;

23 (6) such opportunity cannot be fully realized

24 unless the Federal Government secures the partici25 pation and cooperation of the private sector in a
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1 joint effort to promote the development of business

2 owned by disadvantaged individuals; and

3 (7) such effort will result in a more equitable

4 share of productive resources being devoted to busi5 ness owned by the disadvantaged and will promote

6 a balanced economy and increased competition.

7 (b) PURPOSE.—It is, therefore, the purpose of this

8 Act to—

9 (1) establish an Administration within the De10 partment of Commerce which will promote and ad11 minister programs in the private and public sectors

12 to assist the development of business owned by the

13 disadvantaged; and

14 (2) achieve such development through the con15 duct of programs which will result in increased ac16 cess to skilled labor, capital, management, and tech17 nology by such business.

18 SEC. 3. DEFINITIONS.

19 As used in this Act the following terms have the fol20 lowing meanings:

21 (1) The term ‘‘Secretary’’ means the Secretary

22 of Commerce.

23 (2) The terms ‘‘State’’, ‘‘States’’, and ‘‘United

24 States’’ include the several States, the District of

25 Columbia, the Commonwealth of Puerto Rico, the
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1 territories of the Virgin Islands, Guam, and Amer2 ican Samoa, the Commonwealth of the Northern

3 Marianas, and the Trust Territory of the Pacific Is4 lands.

5 (3) The terms ‘‘socially and economically dis6 advantaged business concerns’’ and ‘‘disadvantaged

7 business’’ means any for-profit business enterprise

8 which is at least 51 percent owned by one or more

9 socially and economically disadvantaged individuals;

10 or, in the case of any publicly owned business, at

11 least 51 percent of the stock of which is owned by

12 one or more socially and economically disadvantaged

13 individuals; and whose management and daily busi14 ness operations are controlled by one or more of

15 such individuals.

16 (4) The term ‘‘socially disadvantaged individ17 uals’’ means those who have been subjected to racial

18 or ethnic prejudice or cultural bias because of their

19 identity as a member of a group without regard to

20 their individual qualities.

21 (5)(A) The term ‘‘economically disadvantaged

22 individuals’’ means those socially disadvantaged indi23 viduals whose ability to compete in the free enter24 prise system has been impaired due to diminished

25 capital and credit opportunities as compared to oth-
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1 ers in the same business area who are not socially

2 disadvantaged.

3 (B) The Assistant Secretary shall presume that

4 socially and economically disadvantaged individuals

5 include Black Americans, Hispanic Americans, Na6 tive Americans, Asian Pacific Americans, Asian In7 dian Americans, individuals found to be disadvan8 taged by the Small Business Administration pursu9 ant to section 8(a) of the Small Business Act, other

10 individuals so designated by the Minority Business

11 Development Agency under section 1400.1 of title

12 15 of the Code of Federal Regulations (as in effect

13 on October 1, 1986), and other individuals belonging

14 to other minority groups which the Small Business

15 Administration may, from time to time, determine to

16 be socially and economically disadvantaged groups

17 pursuant to Public Law 95–507.

18 (6) The term ‘‘Administration’’ means the Mi19 nority Business Development Administration estab20 lished by this Act.

21 (7) The term ‘‘Assistant Secretary’’ means the

22 Assistant Secretary of the Minority Business Devel23 opment Administration.

24 (8) The term ‘‘agency’’ means any executive

25 agency as defined in section 105 of title 5, United
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1 States Code, and the military departments as de2 fined by section 102 of title 5, United States Code.

3 (9) The term ‘‘public sector’’ means any State,

4 State agency, political subdivision of a State, or

5 agency of such a political subdivision.

6 (10) The term ‘‘private sector’’ means any en7 tity which is not in the public sector excluding the

8 Federal Government, its agencies and instrumental9 ities.

10 SEC. 4. MINORITY BUSINESS DEVELOPMENT ADMINISTRA11 TION.

12 (a) ESTABLISHMENT.—The Minority Business Devel13 opment Agency in the Department of Commerce is hereby

14 redesignated and established as the ‘‘Minority Business

15 Development Administration’’. The Administration shall

16 be headed by an Assistant Secretary of Commerce ap17 pointed by the President, by and with the advice and con18 sent of the Senate. The Assistant Secretary shall be com19 pensated at the rate now or hereafter provided for level

20 IV of the Executive Schedule and shall have responsibility

21 for the administration of this Act. This position shall be

22 in addition to the other positions of Assistant Secretary

23 which are authorized by law.

24 (b) REPORT TO CONGRESS.—Within 120 days after

25 the effective date of this subsection, the Secretary shall
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1 inform appropriate committees of both the Senate and

2 House of Representatives of—

3 (1) the organizational structure established

4 within the Administration;

5 (2) the organizational position of the Adminis6 tration within the Department of Commerce; and

7 (3) a description of how the Administration

8 shall function in relation to the operations of other

9 agencies within the Department.

10 TITLE I—MARKET

11 DEVELOPMENT

12 SEC. 101. PRIVATE SECTOR DEVELOPMENT.

13 (a) DUTIES OF THE ADMINISTRATION.—It shall be

14 the duty of the Administration and it is hereby empow15 ered, whenever it determines such action is necessary or

16 appropriate—

17 (1) to assist disadvantaged business concerns

18 penetrate domestic and foreign markets by making

19 available to such concerns, either directly or in co20 operation with private sector organizations, manage21 ment, and technological assistance, a skilled labor

22 pool and financial and marketing services; and

23 (2) to encourage disadvantaged firms to estab24 lish joint ventures and projects either among them25 selves or in cooperation with public or private sector
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1 organizations for the purpose of increasing the share

2 of any market activity now being performed by dis3 advantaged business.

4 (b) JOINT PROGRAMS PERMITTED.—For purposes of

5 subsection (a)(2):

6 (1) The Assistant Secretary may, after con7 sultation with the Attorney General and the Chair8 man of the Federal Trade Commission, and with the

9 prior written approval of the Attorney General, ap10 prove any agreement between such disadvantaged

11 firms or public or private sector organizations pro12 viding for a joint program for market development

13 if the Assistant Secretary finds that the joint pro14 gram proposed will maintain and strengthen the free

15 enterprise system and the economy of the Nation.

16 The Assistant Secretary or the Attorney General

17 may at any time withdraw approval of the agree18 ment and the joint program for market development

19 covered thereby, if either finds that the agreement

20 or the joint program carried on under it is no longer

21 in the best interests of the competitive free enter22 prise system and the economy of the Nation. A copy

23 of the statement of any such finding and approval

24 intended to be within the coverage of this paragraph,

25 and a copy of any modification or withdrawal of ap-
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1 proval, shall be published in the Federal Register.

2 The authority conferred by this on the Assistant

3 Secretary shall not be delegated.

4 (2) No act or omission to act, pursuant to and

5 within the scope of any joint program for market de6 velopment under an agreement approved by the As7 sistant Secretary under this subsection, shall be con8 strued to be within the prohibitions of the antitrust

9 laws or the Federal Trade Commission Act. Upon

10 publication in the Federal Register of the notice of

11 withdrawal of his approval of the agreement granted

12 under this paragraph, either by the Assistant Sec13 retary or by the Attorney General, the provisions of

14 this paragraph shall not apply to any subsequent act

15 or omission to act.

16 (c) REQUIREMENT OF PARTICIPATION OF SMALL

17 BUSINESS CONCERN IN JOINT PROGRAM.—At least 1

18 party to each agreement for a joint program for market

19 development approved under (b) shall be a small business

20 concern, as defined pursuant to section 3 of the Small

21 Business Act (15 U.S.C. 632). If there are more than 2

22 parties to such an agreement, a majority of the parties

23 shall be small business concerns.

24 (d) FINANCIAL ASSISTANCE.—In order to carry out

25 the purposes of this section, the Administration is hereby
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1 authorized to provide financial assistance in the form of

2 contracts, grants, or cooperative agreements to and with

3 public and private sector organizations, including any as4 sociation, business firm, trade association, or business or5 ganization. No assistance may be provided under the au6 thority of this subsection if such assistance is primarily

7 intended to facilitate the use by disadvantaged business

8 of federally administered programs (not otherwise estab9 lished by this Act) unless the Assistant Secretary obtains

10 the prior concurrence and written approval of the Associ11 ate Administrator for Minority Small Business and

12 Capital Ownership Development of the Small Business

13 Administration.

14 SEC. 102. PUBLIC SECTOR DEVELOPMENT.

15 (a) DUTIES OF THE ADMINISTRATION.—It shall be

16 the duty of the Administration and it is hereby empow17 ered, whenever it determines such action is necessary or

18 appropriate—

19 (1) to consult and cooperate with State and

20 local governments for the purpose of leveraging local

21 resources to promote the position of disadvantaged

22 business in the local economy, including, but not be

23 limited to, assisting such governments to establish—

24 (A) procurement programs and goals for

25 the utilization of disadvantaged business,
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1 (B) management and technological assist2 ance programs,

3 (C) financial and marketing assistance pro4 grams,

5 (D) mobilization activities designed to at6 tract skilled labor for use by disadvantaged

7 firms, and

8 (E) an informational program designed to

9 inform local disadvantaged business of the

10 availability of programs conducted under the

11 authority of this section; and

12 (2) to convene meetings with leaders and offi13 cials of State and local governments for the purpose

14 of recommending and promoting local administrative

15 and legislative initiatives needed to advance the posi16 tion of disadvantaged business in the local economy.

17 (b) FINANCIAL ASSISTANCE.—In order to carry out

18 the purposes of subsection (a) the Administration is here19 by authorized to provide financial assistance to State and

20 local governments in the form of contracts, grants, or co21 operative agreements.

22 (c) PUBLICATIONS IN THE FEDERAL REGISTER.—(1)

23 At least 120 days before the beginning of each fiscal year,

24 the Administration shall publish for public comment in the

25 Federal Register the actual or anticipated amount of fi-
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1 nancial assistance that will or may be available in the im2 mediately succeeding fiscal year for grants, contracts and

3 cooperative agreements planned to be awarded pursuant

4 to this section. Such publication shall also identify the pro5 posed allocation of funds between the several States (and

6 cities within such States) and the exact methodology used

7 by the Administration to make such proposed allocations.

8 (2) At least 60 days prior to the beginning of each

9 fiscal year, the Administration shall publish in the Federal

10 Register its response to comments received pursuant to

11 paragraph (1) and any change in the allocation methodol12 ogy which may be adopted as a result thereof including

13 its effect on the allocation of funds on the several States

14 (and cities within such States) for the immediately suc15 ceeding fiscal year.

16 TITLE II—CAPITAL FORMATION

17 SEC. 201. ACCESS TO EQUITY CAPITAL.

18 (a) PILOT AND DEMONSTRATION PROJECTS.—The

19 Administration is hereby authorized to defray all or part

20 of the costs of pilot or demonstration projects conducted

21 by public or private organizations which are designed to

22 assist disadvantaged business in obtaining access to equity

23 capital.

24 (b) SEC CONSULTATION AND COOPERATION.—The

25 Securities and Exchange Commission shall consult and co-
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1 operate with the Administration in an effort to promote

2 access by disadvantaged business to securities markets

3 and otherwise achieve the purposes of this title.

4 SEC. 202. MBDA STUDY ON CAPITAL FORMATION ALTER5 NATIVES.

6 (a) IN GENERAL.—The Administrator shall conduct

7 a study on alternatives for providing capital formation as8 sistance to qualified disadvantaged business concerns, in9 cluding—

10 (1) the implementation of a revolving fund the

11 proceeds of which would be used to provide financial

12 assistance to qualified disadvantaged business con13 cerns through the purchase of equity investment in

14 such concerns; and

15 (2) the implementation of a surety bond refer16 ral assistance program, specifically the implementa17 tion of an individual surety bond referral program.

18 (b) REPORT.—The Administrator shall submit a re19 port to the Committees on Small Business of the House

20 of Representatives and of the Senate within 6 months

21 after the date of the enactment of this Act that contains

22 the Administrator’s findings of the study conducted under

23 subsection (a). Such report shall specifically address the

24 feasibility of the alternatives described in paragraphs (1)

25 and (2) of such subsection and any other alternative ex-
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1 plored by the Administration concerning the provision of

2 capital formation assistance to qualified disadvantaged

3 business concerns.

4 TITLE III—MANAGEMENT

5 EDUCATIONAL DEVELOPMENT

6 SEC. 301. DUTIES OF THE ADMINISTRATION.

7 It shall be the duty of the Administration and it is

8 hereby empowered, whenever it determines such action is

9 necessary or appropriate to—

10 (1) promote and assist the education and train11 ing of disadvantaged individuals in subjects directly

12 related to business administration and management;

13 (2) join with and encourage accredited colleges

14 and universities, leaders in business and industry, or

15 other public or private entities, particularly for prof16 it entities owned and operated by socially and eco17 nomically disadvantaged individuals, to develop pro18 grams to offer scholarships and fellowships, appren19 ticeships, internships, and to sponsor seminars and

20 conferences, and similar activities related to business

21 for the benefit of disadvantaged individuals;

22 (3) stimulate and accelerate curriculum design

23 and improvement in support of disadvantaged busi24 ness development; and
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1 (4) encourage and assist private institutions

2 and organizations and State and local government

3 agencies to undertake similar activities.

4 TITLE IV—RESEARCH AND

5 INFORMATION

6 SEC. 401. DUTIES OF THE ADMINISTRATION.

7 (a) REPORT ON REQUIRED PRODUCTIVE RE8 SOURCES.—Not later than 1 year after the effective date

9 of this subsection, the Administration shall submit to the

10 Congress a report detailing the types and amounts of pro11 ductive resources (both public and private) needed to ad12 vance and represent disadvantaged business at all phases

13 and levels of the economic system in numbers representa14 tive of the relative population of disadvantaged individuals

15 in the United States. The report shall provide separate

16 recommendations for achieving such representation

17 through a phased approach involving short-term and long18 term goals and objectives.

19 (b) POWERS AND DUTIES.—(1) In order to achieve

20 the purposes of this Act, the Administration shall—

21 (A) collect and analyze data, including, but not

22 limited to, the causes for success or failure of busi23 nesses owned by the disadvantaged,
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1 (B) perform evaluations of private and public

2 sector programs designed to assist the development

3 of disadvantaged business; and

4 (C) conduct research, studies, and surveys of

5 economic conditions generally and how such condi6 tions particularly affect the development of dis7 advantaged business.

8 (2) The Administration is hereby authorized to pro9 vide financial assistance by contract, grant, or cooperative

10 agreement to public and private organizations to assist the

11 Administration in carrying out the provisions of paragraph

12 (1).

13 (3) The Administration is hereby authorized to—

14 (A) develop and maintain, on a current basis, a

15 data bank on disadvantaged business, except that—

16 (i) such activity shall be conducted in co17 operation and consultation with the Associate

18 Administrator for Minority Small Business and

19 Capital Ownership Development of the Small

20 Business Administration, and

21 (ii) such data bank does not duplicate the

22 information stored or capable of being stored by

23 the procurement automated source system

24 (PASS) maintained by the Small Business Ad25 ministration; and
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1 (B) establish and maintain an information

2 clearinghouse for the collection and dissemination of

3 demographic, economic, financial, managerial, and

4 technical data pertinent to disadvantaged business

5 and, to this end, to take such steps as the Adminis6 tration may deem necessary and desirable to search

7 for, collect, classify, coordinate, integrate, record,

8 and catalog such information.

9 TITLE V—ADMINISTRATIVE AND

10 OTHER POWERS OF THE AD11 MINISTRATION; MISCELLANE12 OUS PROVISIONS

13 SEC. 501. ADMINISTRATIVE POWERS.

14 In performing the duties under this Act, the Adminis15 tration is authorized to—

16 (1) adopt and use a seal for the Minority Busi17 ness Development Administration which shall be ju18 dicially noticed;

19 (2) hold hearings, sit and act, and take testi20 mony as the Administration may deem advisable;

21 (3) acquire in any lawful manner any property

22 as the Administration may deem necessary or appro23 priate to conduct the activities authorized in this

24 Act;
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1 (4) make advance payments under grants, con2 tracts, and cooperative agreements;

3 (5) donate without cost (except for costs of care

4 and handling) for use in any Federal, State, or local

5 government or in any recipient nonprofit organiza6 tion for purposes of the development of disadvan7 taged business any real or tangible personal property

8 acquired by the Administration under this Act. The

9 Administration may impose reasonable terms, condi10 tions, reservations, and restrictions upon the use of

11 any property donated under this section;

12 (6) enter into agreements with other Federal

13 agencies;

14 (7) employ experts and consultants or organiza15 tions thereof as authorized by section 3109 of title

16 5, United States Code, to compensate individuals so

17 employed at rates not in excess of the per diem rate

18 authorized for GS–18 of the General Schedule, in19 cluding traveltime, and allow them travel expenses

20 (including per diem in lieu of subsistence) while

21 away from their homes or regular places of business,

22 as authorized by section 5703 of title 5, United

23 States Code, for persons in the Government service

24 employed intermittently, while so employed;
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1 contracts for such employment may be renewed

2 annually;

3 (8) sue and be sued in any court of record of

4 a State having general jurisdiction or in any United

5 States district court, and jurisdiction is conferred

6 upon such district court to determine such con7 troversies without regard to the amount in con8 troversy; but no attachment, garnishment, or other

9 similar process, mesne or final, shall be issued

10 against the Administration or its property; nothing

11 in this Act shall be construed to except the activities

12 under this Act from application of sections 507(b),

13 517, and 2679 of title 28, United States Code; and

14 (9) prescribe such rules, regulations, and proce15 dures as the Administration may deem appropriate

16 to carry out this Act.

17 SEC. 502. AUDITS.

18 (a) RECORDKEEPING REQUIREMENT.—Each recipi19 ent of assistance under this Act shall keep such records

20 as the Administration shall prescribe, including records

21 which fully disclose the amount and the disposition by the

22 recipient of the proceeds of such assistance, the total cost

23 of the undertaking for which such assistance is given or

24 used, the amount and nature of that portion of the cost
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1 of the undertaking supplied by other sources, and such

2 other records as will facilitate an effective audit.

3 (b) ACCESS BY GOVERNMENT OFFICIALS.—The As4 sistant Secretary, the Inspector General of the Depart5 ment of Commerce, and the Comptroller General of the

6 United States, or any of their duly authorized representa7 tives, shall have access for the purpose of audit, investiga8 tion, and examination to any books, documents, papers,

9 records, and other materials of the recipient which are

10 pertinent to the assistance received under this Act.

11 (c) REVIEW BY COMPTROLLER GENERAL.—Not later

12 than 18 months after the date of the enactment of this

13 Act, the Comptroller General of the United States shall

14 conduct a thorough review of the programs authorized by

15 this Act and shall transmit to the Congress a detailed re16 port of the Comptroller’s findings, including therein an

17 evaluation of the effectiveness of the programs authorized

18 to achieve the purpose of this Act, a description of any

19 failure to comply with the requirements of this Act, and

20 recommendations for corrective legislative or administra21 tive action.

22 SEC. 503. ANNUAL REPORT.

23 The Assistant Secretary shall, not later than 120

24 days after the close of each fiscal year, submit to the

25 President a full report of the Administration’s activities
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1 hereunder during the previous fiscal year. Further, the As2 sistant Secretary shall, from time to time, submit to the

3 President recommendations for legislation or other actions

4 as the Assistant Secretary deems desirable to promote the

5 purposes of this Act. Each Federal agency shall consult

6 with the Assistant Secretary on a timely basis so that the

7 Assistant Secretary may consider them for the Assistant

8 Secretary’s report and recommendations to the President.

9 SEC. 504. SEPARABILITY.

10 If any provision of this Act or the application thereof

11 to any persons or circumstances shall be adjudged by any

12 court of competent jurisdiction to be invalid, such judg13 ment shall not affect, impair, or invalidate the remainder

14 of this Act or its application to other persons and cir15 cumstances, but shall be confined in its operation to the

16 provision of this Act or the application thereof to the per17 sons and circumstances directly involved in the con18 troversy in which such judgment shall have been rendered.

19 SEC. 505. AUTHORITY OF ASSOCIATE ADMINISTRATOR FOR

20 MINORITY SMALL BUSINESS AND CAPITAL

21 OWNERSHIP DEVELOPMENT.

22 (a) IN GENERAL.—Section 7(j)(11) of the Small

23 Business Act (15 U.S.C. 636(j)(11)) is amended to read

24 as follows:
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1 ‘‘(11) The Associate Administrator for Minority

2 Small Business and Capital Ownership Development

3 shall be responsible for coordinating and formulating

4 policies relating to assistance provided by Federal

5 agencies (excluding the Minority Business Develop6 ment Administration) to small business concerns de7 scribed in section 7(i) and small business concerns

8 owned and controlled by the socially and economi9 cally disadvantaged as defined pursuant to section

10 8(d).’’.

11 (b) CONSTRUCTION OF PROVISIONS.—Nothing in this

12 Act is intended to duplicate or limit any programs or

13 projects administered by the Small Business Administra14 tion.

15 (c) COOPERATION BY FEDERAL AGENCIES.—Each

16 Federal agency shall cooperate and consult with the Ad17 ministrator and the Small Business Administration to fa18 cilitate the accomplishment of the purposes of this Act and

19 the Small Business Act.

20 SEC. 506. AUTHORIZATION FOR APPROPRIATIONS.

21 There are hereby authorized to be appropriated such

22 sums as may be necessary and appropriate to carry out

23 the provisions and purposes of this Act other than those

24 for which appropriations may from time to time be specifi25 cally authorized.
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1 SEC. 507. TERMINATION OF AUTHORITY UNDER EXECUTIVE

2 ORDER NUMBERED 11625.

3 Beginning on the date of the enactment of this Act,

4 the powers and duties of the Administration shall be deter5 mined without regard to Executive Order Numbered

6 11625.

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