THIRTEENTH CONGRESS OF THE REP 
First Regular Session 
rsllc -f- I 
OF THE PHLLIPINE 
y’h 
Ijy 3.l , I ’ J  
- 
Introduced by Senator Magsaysay, Jr. 
EXPLANATO 
‘Yihow your strengths as a business 
and develop them to the fuLLest: 
this has always been our guidingprinciple. ’’ 
--- Washington Sycip 
This is story of the Philippines’ most successful business enterprise. 
Jolibee started in 1975 as a small ice cream parlor beside Coronet 
Theater in Cubao, Quezon City with pooled resources of Php 350,000.00. It 
was founded by Tony Tan Caktiong and the business is managed in the old- 
fashioned traditional Chinese immigrants of the early generations --- 
hardworking, fiugal, honest and determined. 
Today, Jolibee is the foremost exemplar of business might, inspiring 
small- and medium-scale enterprises in terms of rugged entrepreneurship, 
honest operations and outstanding corporate culture. 
Jolibee has annual 
revenues of Php 27 billion and employs 26,000 people in its almost 1,000 
outlets all over the world in the Philippines, United States, China and other 
countries. 
Jolibee may have started small and limited in terms of capitalization 
and operations, but it is the same smallness and limitations that serve as its 
strength to hurdle the market competition. 
This legislation seeks to 
complement the efforts of small enterprises in the Philippines to make them 
better partners in national development. 
It should be stated that the 
Philippine business profile is laden and lorded by almost ninety nine percent 
(99 %) SMEs. 
Some of them world-class in their respective economic 
endeavours. 
,. _.
In this policy measure are enshrined some of the bedrock beliefs 
written as guiding statements that may assist successful management. 
Likewise, 
ensconced are processes that may well define turning abstract 
values into an environment that fosters initiative while encouraging people 
and workforce ensuring the success of small businesses. 


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The bill is guided by the twin essence that fiee competition and going 
global are the precepts that define the Philippine economic system. In this 
changing and challenging environment, the government needs to adopt a 
strategic and wholistic plan to maintain and develop the advances they have 
achieved in particular those that cater to small and medium enterprises. 
Early recognition of the bill is earnestly sought. 


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Introduced by Senator 
@Y9 
AN ACT 
ORDAINING A CODE FOR SNIALL BUSINESS ENTERPRISES IN THE 
PHILIPPINES 
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. This Act may be cited as the “Small Business Ac of ZOO&”. 
ECTION 2. (a) The essence of the Philippine economic system as enunciated 
in the 1987 Philippine Constitution is free competition. Only through full and free 
competition can free markets, free entry into business, and opportunities for the 
expression and growth of personal initiative and individual judgment be assured. The 
preservation and expansion of such competition is basic not only to the economic well- 
being but to the security of this nation. Such security and well-being cannot be realized 
unless the actual and potential capacity of small business is encouraged and developed. 
It is the declared policy of the State that the government should aid, counsel, 
assist, and protect, insofar as is possible, the interests of small-business concerns in order 
to preserve free competitive enterprise, to ensure that a fair proportion of the total 
purchases and contracts or subcontracts for property and services for the government 
(including but not limited to contracts or subcontracts for maintenance, repair, and 
construction) be placed with small business enterprises, to insure that a fair proportion of 
the total sales of government property be made to such enterprises, and to maintain and 
strengthen the overall economy of the Nation. 
(b) 
(1) 
It is hereby declared the policy of the State that the 
government should aid and assist small business, as defined under this Act, to increase 
their ability to compete in international markets by ---- 
(A) enhancing their ability to expo@; 
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) facilitating technology transfers; 
(C) enhancing their ability to compete effectively and efficiently against 
imports; 
(D) increasing the access of small businesses to long-term capital for the 
purchase of new plant and equipment used in the production of goods and services 
involved in international trade; 
(E) 
disseminating information concerning governmental and private 
programs and initiatives to enhance the ability of small business to compete in 
international markets; and 
(F) 
ensuring that the interests of small businesses are adequately 
represented in bilateral and multilateral trade negotiations. 
(2) The Congress recognizes that the Department of Trade and 
Industry is the principal agency for trade development and export promotion. 
(c) It is the declared policy of the Congress that the Government, through the 
Small Business Administration created in this Act that should aid and assist small 
business concerns which are engaged in the production of food and fiber, agribusiness 
and fisheries, and raising of livestock, aquaculture, and all other farming and agricultural 
related industries; and the financial assistance programs authorized by this Act are also 
to be used to assist such concerns. 
(d) 
(1) The assistance programs authorized by sections 7 (I) and 7 ('j) of this 
Act are to be utilized to assist in the establishment, preservation, and strengthening of 
small business concerns and improve the managerial skills employed in such enterprises, 
with special attention to small business concerns (1) located in urban or rural areas with 
high proportions of unemployed or low-income individuals; or (2) owned by low-income 
individuals; and to mobilize for these objectives private as well as public managerial 
skills and resources. 
(2) (A) With respect to the programs authorized by section 7 (j) 
of this Act, the Congress finds -- 
(i) that the broadening of small business ownership among 
groups that presently own and control little productive capital is essential to provide for 
the well-being of this Nation by promoting their increased participation in the free 
enterprise system of the country; 
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(ii) that such development of business ownership among 
groups that presently own and control little productive capital will be greatly facilitated 
through the creation of a small business ownership development program, which shall 
provide services, including, but not limited to, financial, management, and technical 
assistance. 
(iii) that the power to let contracts pursuant to section 8 (a) 
of this Act can be an effective procurement assistance tool for development of business 
ownership among groups that own and control little productive capital; and 
(vi) that the procurement authority under section 8 (a) of 
the Small Business Act shall be used only as a tool for developing business ownership 
among groups that own and control little productive capital. 
(El) It is therefore the purpose of the programs authorized by section 7 0) 
of this Act to -- 
(I) foster business ownership and development by individuals in 
groups that own and control little productive capital; and 
(ii) 
promote the competitive viability of such firms in the 
marketplace by creating a small business and capital ownership development program to 
provide such available financial, technicaf, and management assistance as may be 
necessary. 
(e) Further, it is the declared policy of the Congress that the Government should 
aid and assist victims of floods and other catastrophes, and small-business concerns 
which are displaced as a result of federally aided construction programs. 
(0 (1) With respect to the Administration’s business development programs the 
Act accords the following recognition -- 
(A) that the opportunity for full participation in our free enterprise system 
by socially and economically disadvantaged persons is essential if we are to obtain social 
and economic equality for such persons and improve the functioning of our national 
economy; 
(B) that many such persons are socially disadvantaged because of their 
identification as members of certain groups that have suffered the effects of 
discriminatory practices or similar invidious circumstances over which they have no 
control; 
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(C) 
that it is in the national interest to expeditiously ameliorate the 
conditions of socially and economically disadvantaged groups; 
(D) that such conditions can be improved by providing the maximum 
practicable opportunity for the development of small business concerns owned by 
members of socially and economically disadvantaged groups; 
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(E) that such procurements also benefit the government and the State by 
encouraging the expansion of suppliers for such procurements, thereby encouraging 
competition among such suppliers and promoting economy in such procurements. 
(2) It is, therefore, the purpose of section 8 (a) to -- 
(A) promote the business development of small business concerns 
owned and controlled by socially and economically disadvantaged individuals so that 
such concerns can compete on an equal basis in the economy; 
(B) promote the competitive viability of such concerns in the 
marketplace by providing such available contract, financial, technical, and management 
assistance as may be necessary; and 
(C) clarifl and expand the program for the procurement by the 
Philippines of articles, equipment, supplies, services, materials, and construction work 
from small business concerns owned by socially and economically 
disadvantaged 
individuals. 
(g) In administering the disaster loan program authorized by section 7 of this Act, 
to the maximum extent possible, the administration shall provide assistance and 
counseling to disaster victims in filing applications, providing information relevant to 
loan processing, and in loan closing and prompt disbursement of loan proceeds and shall 
give disaster program a high priority in allocating fbnds for administrative expenses. 
(h) (1) With respect to the programs and activities authorized by this Act, is is 
hereby declared that -- 
(A) women owned business has become a major contributor to the 
economy by providing goods and services, revenues, and jobs; 
(B) over the past two decades there have been substantial gains in 
the social and economic status of women as they have sought economic equality and 
independence; 
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(C) despite such progress, women, as a group, are subjected to 
discrimination in entrepreneurial endeavors due to their gender; 
(D) 
such discrimination takes many overt and subtle forms 
adversely impacting the ability to raise or secure capital, to acquire managerial talents, 
and to capture market opportunities; 
(E) 
it is in the national interest to expeditiously remove 
discriminatory barriers to the creation and development of small business concerns 
owned and controlled by women; 
(F) the removal of such barriers is essential to provide a fair 
opportunity for full participation in the fi-ee enterprise system by women and to further 
increase the economic vitality of the Nation; 
(G) increased numbers of small business concerns owned and 
controlled by women will directly benefit the economy by expanding the potential 
number of suppliers of goods and services to the Government; and 
(H) programs and activities designed to assist small business 
concerns owned and controlled by women must be implemented in such a way as to 
remove such discriminatory barriers while not adversely affecting the rights of socially 
and economically disadvantaged individuals. 
(2) It is, therefore, the purpose of those programs and activities conducted 
under the authority of this Act that assist women entrepreneurs to -- 
(A) vigorously promote the legitimate interests of small business 
concerns owned and controlled by women; 
(l3) 
remove, insofar as possible, the discriminatory barriers that 
are encountered by women in accessing capital and other factors of production; and 
(C) 
require that the Government engage in a systematic and 
sustained effort to identifjr, define and analyze those discriminatory barriers facing 
women and that such effort directly involve the participation of women business owners 
in public/private sector partnership. 
P 
of the funds made available 
pursuant to this Act may be used to provide any direct benefit or assistance to any 
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individual in the country if the Administrator or the official to which the hnds are made 
available receives notification that the individual is not lawfully within the Philippines. 
- In complying with the statement 
of congressional policy expressed in subsection (a), relating to fostering the participation 
of small business concerns in the contracting opportunities of the Government, each 
agency, to the maximum extent practicable, shall - 
(1) comply with congressional intent to foster the participation of small 
business concerns as prime contractors, subcontractors, and suppliers; 
(2) structure its contracting requirements to facilitate competition by and 
among small business concerns, taking all reasonable steps to eliminate obstacles to their 
participation; and 
(3) avoid unnecessary and unjustified bundling of contract requirements 
that precludes small business participation in procurements as prime contractors. 
Sec. 3 (a) (1) For the purposes of this Act, a small-business concern, including but not 
limited to enterprises that are engage in the business of production of food and fiber, 
ranching and raising of livestock, aquaculture, and all other farming and agricultural 
related industries, shall be deemed to be one which is independently owned and operated 
and which is not dominant in its field of operation : Provided, That notwithstanding any 
other provision of law, an agricultural enterprise shall be deemed to be a small business 
concern if it (including its affiliates) has annual receipts not in excess of Php 500,000.00. 
(2) ESTABLISHMENT OF S 
S . -- 
(A) 
GE 
L. -- In addition to the criteria specified in 
paragraph (1) , the Administrator may specify detailed definitions or standards by which 
a business concern may be determined to be small business concern for the purpose of 
this Act or any other Act. 
(B) ADDITIONAL G 
. -- The standards described in 
paragraph (1) may utilize number of employees, dollar volume of business, net worth, 
net income, a combination thereof, or other appropriate factors. 
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(C) 
QUWEM 
. -- Unless specifically authorized by 
statute, no Federal department or agency may prescribed a size standard for categorizing 
a business concern as a small business concern, unless such proposed size standard -- 
(I) is proposed after an opportunity for public notice and 
comment; 
(ii) provides for determining -- 
(I) 
the size of a manufacturing 
concern’s as 
measured by the manufacturing concern’s average employment based upon employment 
during each of the manufacturing concern’s pay periods for the preceding 12 months; 
(11) 
the size of a business concern providing 
services on the basis of the annual average gross receipts of the business concern over a 
period of not less than 3 years; 
(111) the size of other business concerns on the basis 
of data over a period of not less than 3 years; or 
(IV) other appropriate factors; and 
(iii) is approved by the Administrator 
(3) When establishing or approving any size standard pursuant to 
paragraph (2) , the Administrator shall ensure that the size standard varies fi-om industry 
to industry to the extent necessary to reflect the differing characteristics of the various 
industries and consider other factors deemed to be relevant by the Administrator. 
(b) for purposes of this Act, any reference to an agency or department of the 
Philippines, and the term “agency” shall have the meaning given the term “agency” by 
the appropriate provision of the Administrative Code of the Philippines. 
(c) (1) For purposes of this Act, a qualified employee trust shall be eligible for 
any loan guarantee under section 7(a) with respect to a small business concern on the 
same basis as if such trust were the same legal entity as such concern. 
(2) For purposes of this Act, the term “qualified employee trust” means, 
with respect to a small business concern, a trust -- 
(A) which forms part of an employee stock ownership plan (as 
defined in the National Internal Revenue Code and other pertinent laws on the matter in 
the Philippines -- 
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(I) which is maintained by such concern, and 
(ii) which provides that each participant in the plan is entitled to direct the plan as 
to the manner in which voting rights under qualifLing employer securities which are 
allocated to the account of such participant are to be exercised with respect to a corporate 
matter which (by law or charter) must be decided by a majority of outstanding common 
shares voted; and 
(B) in the case of any loan guarantee under section7 (a) , the trustee of which enters into 
an agreement with the Administrator which is binding on the trust and on such small 
business concern and which provides that-- 
(i) the loan guaranteed under section 7(a) shall be solely for the purchase 
of qualifjrlng employer securities of such concern, 
(ii) all knds acquired by the concern in such purchase shall be used by 
such concern solely for the purposes for which such loan was guaranteed, 
(iii) 
such concern will provide such fund as may be necessary for the 
timely repayment of such loan, and the property of such concern 
shall be available as security for repayment of such loan, and 
(iv) all qualifjrlng employer securities acquired by such trust in such purchase shall be 
allocated to the accounts of participants in such plan who are entitled to share in such 
allocation, and each participant has a non forfeitable right, not later than the date such 
loan is repaid, to all such qualifjring employer securities which are so allocated to the 
participant’s account. 
(3) Under regulations which may be prescribed by the Administrator , a 
trust may be treated as a qualified employee trust with respect to a small business concern 
if -- 
(A) the trust is maintained by an employee organization which 
represents at least 5 1 percent of the employees of such concern, and 
(B) such concern maintains a plan -- 
(i) which is an employee benefit plan which is designed to 
invest primarily in qualifling employer securities (as defined in the Internal Revenue 
Code), 
(ii) which provides that each participant in the plan is 
entitled to direct the plan as to the manner in which voting rights under qualifling 
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employer securities which are allocated to the account of such participant are to be 
exercised with respect to a corporate matter which (by law or charter) must be decided 
by a majority vote of the outstanding common shares voted, 
(iii) which provides that each participant who is entitled to 
distribution from the plan has a right, in the case of qualifling employer securities which 
are not readily tradable on an established market, to require that the concern repurchase 
such securities under a fair valuation formula, and 
(iv) which meets such other requirements applicable to 
employee stock ownership plans as defined in the pertinent provision of the National 
Internal Revenue Code as the Administrator may prescribe, and 
(C) in the case of a loan guarantee under section 7 (a), such 
organization enters into an agreement with the Administration which is described in 
paragraph (2) 03) 
(d) 
For purposes of section 7 of this Act, the term “public or private 
organization for the handicapped” means one -- 
(1) which is organized under the laws of the Philippines or of any State, 
operated in the interest of handicapped individuals, the net income of which does not 
inure in whole or in part to the benefit of any shareholder or other individual; 
(2) which complies with any applicable occupational health and safety 
standard prescribed by the Secretary of Labor and Employment; and 
(3) 
which, in the production of commodities and in the provision of 
services during any fiscal year in which it received financial assistance under this 
subsection, employs handicapped individuals for not less than 75 per centum of the man- 
hours required for the production or provision of the commodities or services. 
(0 For purposes of section 7 of this Act, the term “handicapped individual” 
means a person who has a physical, mental, or emotional impairment, defect, ailment, 
disease, or disability of a permanent nature which in any way limits the selection of any 
type of employment for which the person would otherwise be qualified or qualifiable. 
(g) For purposes of section 7 of this Act, the term “energy measures” includes -- 
(1) solar thermal energy equipment which is either of the active type 
based upon mechanically forced energy transfer or of the passive type based on 
connective, conductive, or radiant energy transfer or some combination of these types; 
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(2) photovoltaic cells and related equipment; 
(3) a product or service the primary purpose of which is conservation of 
energy through devices or techniques which increase the energy efficiency of existing 
equipment, methods of operation, or systems which use fossil kels, and which is on the 
Energy Plan list of the Secretary of Energy or which the Administrator determines to be 
consistent with the intent of this subsection; 
(4) equipment the primary purpose of which is production of energy from 
wood, biological waste, grain or other biomass source of energy; 
(5) equipment the primary purpose of which is industrial cogeneration of 
energy, district heating, or production of energy from industrial waste; 
(6) hydroelectric power equipment; 
(7) wind energy conversion equipment; and 
(8) engineering, architectural, consulting, or other professional services 
which are necessary or appropriate to aid citizens in using of the measures described in 
paragraph (1) through (7) . 
(h) For purposes of this Act, the term “credit elsewhere” means the availability of 
credit from whatever sources on reasonable terms and conditions taking into 
consideration the prevailing rates and terms in the community in or near where the 
concern transacts business, or the homeowner resides, for similar purposes and periods of 
time. 
(I) For purposes of section 7 of this Act, the term “homeowners” includes owners 
and lessees of residential property and also includes personal property. 
(i) For the purpose of section 7 (b) (2) of this Act, the term “small agricultural 
cooperative” means as association (corporate or otherwise) acting pursuant to the 
provisions of the Cooperative Code of the Philippines, whose size not exceed the size 
standard established by the Administration for other similar agricultural small business 
concerns. In determining such size, the Administration shall regard the association as a 
business concern and shall not include the income or employees of any member 
shareholder of such cooperative. 
(k) For the purposes of this Act, the term “disaster” means a sudden event which 
causes severe damaged including, but not limited to, floods, hurricanes, tornadoes, 
earthquakes, fires, explosions, volcanoes, windstorms, landslides or mudslide, tidal 
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waves, commqrcial fishery failures or fishery resource disasters, ocean conditions 
resulting in the closure of customary fishing waters, riots, civil disorders or other 
catastrophes, except it does not include economic dislocations. 
(1) For purposes of this Act -- 
(1) The term “computer crime” means -- 
(A) any crime committed against a small business concern by 
mean of the use of a computer; and 
(B) any crime involving the illegal use of, or tampering with, a 
computer owned or utilized by a small business concern. 
(m) For purposes of this Act, the term “simplified acquisition threshold has the 
meaning given such term in pertinent laws of the Philippines on the matter. 
(n) For the purposes of this Act, a small business concern is a small business 
concern owned and controlled by women if -- 
(1) at least 51 percent of small business concern is owned by one or more 
women or, in the case of any publicly owned business at least 51 percent of the stock of 
which is owned by one or more women; and 
(2) the management and daily business operations of the business are 
controlled by one or more women. 
(0) DEFINITIONS OF BUNDLING OF CON 
CT REQUIREMENTS 
AND RELATED TERMS - In this Act : 
(1) BUNDLED C NTRACT - The term “bundled contract” means a 
contract that is entered into to meet requirements that are consolidated in a bundling of 
contract requirements. 
(2) BUNDLING 
- The term 
“bundling of 
contract requirements” means consolidating 2 or more procurement 
requirements for goods or services previously provided or performed under separate 
smaller contracts into a solicitation of offers for a single contract that is likely to be 
unsuitable for award to a small-business concern due to - 
(A) the diversity, size, or specialized nature of the elements of the 
performance specified; 
(B) the aggregate dollar value of the anticipated award; 
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(C) the geographical dispersion of the contract performance sites; 
or 
@) any combination of the factors described in subparagraphs 
(A), (B), and (C) . 
CT - The term %eparate smaller 
contract”, with respect to a bundling of contract requirements, means a contract that has 
been performed by 1 or more small business concerns or was suitable for award to 1 or 
more small business concerns. 
(p) DEFINITIONS RELATING TO H ~ Z O m S  
- In thus Act : 
(1) 
HISTORICALLY UNDERUTILIZED BUSINESS ZONE - The 
term “historically underutilized business zone” means any area located within 1 or more - 
(A) qualified census tracts; 
(B) qualified nonmetropolitan counties; or 
(C) lands within the external boundaries of an Indian reservation. 
(2) HUBZONE - The term “hubzone” means a historically underutilized 
business zone. 
om SMALL BUS 
- The term “hubzone 
small business concern” means a small business concern - 
(A) that is owned and controlled by 1 or more persons, each of 
whom is a Filipino citizen; and 
(B) the principal office of which is located in a hubzone; or 
(4) QUALIFIED HUBZONE S 
ESS CONCERN - 
(A) 
IN GENERAL - A hubzone small business concern is 
“qualified”, if - 
(i) the small business concern has certified in writing to the 
Administrator (or the Administrator otherwise determines, based on information 
submitted to the Administrator by the small business concern, or based on certification 
procedures, which shall be established by the Administration by regulation) that - 
(I) it is a hubzone small business concern; 
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(It) not less than 35 percent of the employee of the 
small business concern reside in a hubzone, and the small business concern will attempt 
to maintain this employment percentage during the performance of any contract awarded 
to the small business concern on the basis of preference provided under section 31 (b) ; 
and 
(111) with respect to any subcontract entered into by 
the small business concern pursuant to a contract awarded to the small business concern 
under section 3 1, the small business concern will ensure that - 
(aa) in the case of a contract for services 
(except construction), not less than 50 percent of the cost of contract performance 
incurred for personnel will be expended for its employees or for employees of other 
hubzone small business concerns; and 
(bb) 
in the case of a contract for 
procurement of supplies (other than procurement fi-om a regular dealer in such supplies), 
not less than 50 percent of the cost of manufacturing the supplies (not including the cost 
of materials) will be incurred in connection with the performance of the contract in a 
hubzone by 1 or more hubzone small business concerns; and 
(ii) no certification made or information provided by the 
small business concern under clause (I) has been, in accordance with the procedures 
established under section 3 1 (c) (1) - 
(I) successhlly challenged by an interested party; 
or 
(11) otherwise determined by the Administrator to 
be materially false. 
GE IliJ PERCENTAGES - The Administrator may utilize a 
percentage other than the percentage specified under item (aa) or (bb) of subparagraph 
(A) (I) (111), if the Administrator determines that such action is necessary to reflect 
conventional industry practices among small business concerns that are below the 
numerical size standard for businesses in that industry category. 
(C) 
CONSTRUCTION AND OTHER CO TRACTS - 
The 
Administrator shall promulgate final regulations imposing requirements that are similar 
to those specified in subclauses (IV) and (V) of subparagraph (A) (I) on contracts for 
general and specialty construction, and on contracts for any other industry category that 
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, 
would not otherwise be subject to those requirements. The percentage applicable to any 
such requirement shall be determined in accordance with subparagraph (B). 
us 
Administrator shall establish and maintain a list of qualified hubzone small business 
concerns, which list shall, to the extent practicable - 
(I) include the name, address, and type of business with respect to 
each such small business concern; 
(ii) be updated by the Administrator not less than annually; and 
(iii) 
be provided upon request to any agency or other entity. 
Sec. 4. (a) In order to carry out the policies of this Act there is hereby created an agency 
under the name “Small Business Administration” (herein referred to as the 
Administration), which Administration shall be under the general direction and 
supervision of the Office of the President and shall not be affiliated with or be within any 
other agency or department of the 
Government. 
The principal office of the 
Administration shall be located in Metro Cebu in the Visayas. The Administration may 
establish such branch and regional offices in other places in the Philippines as may be 
determined by the Administrator of the Administration. 
As used in this Act, the term “Philippines” includes the Territories and possessions of the 
country as enshrined in the National Territory provision of the Philippines. 
(b) 
(1) 
The management of the Administration shall be vested in an 
Administrator who shall be appointed from civilian life by the President, by and with the 
advice and consent of the Commission on Appointments, and who shall be a person of 
outstanding qualifications known to be familiar and sympathetic with small-business 
needs and problems. The Administrator shall not engage in any other business, vocation, 
or employment than that of serving as Administrator. In carrying out the programs 
administrated by the Small Business Administration including its lending and 
guaranteeing fimctions, the Administrator shall not discriminate on the basis of sex or 
marital status against any person or small business concern applying for or receiving 
assistance from the Small Business Administration, and the Small Business 
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Administration shall give special consideration to veterans of the Armed Forces of the 
Philippines and their survivors or dependents. The President also may appoint a Deputy 
Administrator. . 
The Administrator is authorized to appoint three Associate 
Administrator (for Luzon, Visayas, Mindanao) to assist in the execution of the functions 
vested in the Administration. One of the Associate Administrators shall be designated at 
the time of this appointment as the Associate Administrator for Minority Small Business 
and Capital Ownership Development who shall be an employee in the competitive 
service or in the Senior Executive and a career appointee and shall be responsible to the 
Administrator for the Formulation and execution of the policies and programs under 
section 7 0) and S(a) of this Act which provide assistance to minority small business 
concerns. The Deputy Administrator shall be Acting Administrator of the Administration 
during the absence or disability of the Administrator or in the event of a vacancy in the 
office of the Administrator. 
(2) The Administrator also shall be responsible for -- 
(A) 
establishing and maintaining an external small business 
economic data base for the purpose of providing the Congress and the Administration 
information on the economic condition and the expansion or contraction of the small 
business sector. To that end, the Administrator shall publish on a regular basis national 
small business economic indices and, to the extent feasible, regional small business 
economic indices, which shall include, but need not be limited to, data on -- 
(I) employment, layoffs, and new hires; 
(ii) number of business establishment and the types of such 
establishment such as sole proprietorships, corporations, and partnerships; 
(iii) number of business formation and failures; 
(iv) sales and new orders; 
(v) back orders; 
(vi) investment in plant and equipment; 
(vii) changes in inventory and rate of inventory turnover; 
(viii) sources and amount of capital investment, including 
debt, equity, and internally generated funds; 
(ix) debt to equity ratios; 
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(x) exports; 
(xi) number and dollar amount of mergers and acquisitions 
by size of acquiring and acquired firm; and 
(xi;) concentration ratios; and 
(B) publishing annually a report giving a comparative analysis and 
interpretation of the historical trends of the small business sector as reflected by the data 
acquired pursuant to subparagraph (A) of this subsection, 
(3) RISK MANAGEMENT DATABA 
(A) ESTABLISHMENT. - The Administration shall establish, 
within the management system for the loan programs authorized by subsections (a) and 
(b) of section 7 of this Act, a management information system that will generate a 
database capable of providing timely and accurate information in order to identifl loan 
underwriting, collections, recovery, and liquidation problems. 
(B) INFORMATION T 
BE M T A T N E D .  - In addition to 
such other information as the Administration considers appropriate, the database 
established under subparagraph (A) shall, with respect to each loan program 
described in subparagraph (A), include information relating to- 
(I) the identity of the institution making the guaranteed loan or 
issuing the debenture; 
(ii) the identity of the borrower; 
(iii) the total dollar amount of the loan or debenture; 
(iv) the total dollar amount of government exposure in 
each loan; 
(v) the district of the Administration in which the borrower 
has its principal office; 
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(vi) the principal line of business of the borrower, as 
identified by Standard Industrial Classification Code (or any successor to that system); 
(vii) 
the delinquency rate for each program (including 
number of instances and days overdue); 
(viii) the number and amount of repurchases, losses, and 
recoveries in each program; 
(ix) 
the number of deferrals or forbearances in each 
program (including days and number of instances); 
(x) comparisons on the basis of loan program, lender, 
Administration district and region, for all the data elements maintained; and 
(xi) underwriting characteristics of each loan that has 
entered into default, including term, amount and type of collateral, loan-to-value and 
other actual and projected ratios, line of business, credit history, and type of loan. 
(C) 
DEADLINE FOR OPERATIONAL CAPABILITY - 
The 
database established under subparagraph (A) shall - 
(i) be operational not later than June 30, 2005; and 
(ii) capture data beginning on the first day of the second 
quarter of fiscal year 2005 beginning after such date and thereafter. 
(c) (1) There are hereby established in the Treasury the following revolving 
funds: 
a disaster loan hnd which shall be available for financing functions 
performed under sections 5(e), 7(b) (l), 7(b) (2), 7(b) (3), 7(b) (4), and 7(c) (2) of this 
Act; and (B) a business loan and in vestment fund which shall be available for financing 
functions performed under sections 5(g), 7(a), and $(a) of this Act, and titles 111, IV and 
V of the Small Business Investment Act. 
(A) 
I 
(2) All repayments of loans and debentures, payments of interest and 
other receipts arising out of transactions heretofore or hereafter entered into by the 
Administration (A) pursuant to sections 5 (e) , 7 (b) (I), 7 (b) (2), 7 (6) (3), 7 (b) (4), 7 
(b) (5), 7 (b) (6), 7 (b) (S), 7 (c) (2), and 7 (g) of this Act shall be paid into a disaster loan 
hnd; and (B) pursuant to sections 5 (g), 7 (a), 7 (e), 7 (h), 7 (I), 7 (m), and 8 (a) of this 
Act, and titles 111, IV and V of the Magna Carta for Small Business and Medium- 
Enterprises, shall be paid into the business loan and investment fbnd. 
17 


(3) Unexpended balances of appropriations made to the fund pursuant to 
this subsection, as in effect immediately prior to the effective date of this paragraph, shall 
be allocated, together with related assets and liabilities, to the funds established by 
paragraph (1) in such amounts as the Administrator shall determine. 
(4) The Administration shall submit to the Committees on Appropriations 
or Finance, as the case may be, the Committees on Trade and Commerce of both Houses 
of Congress and as soon as possible aRer the beginning of each calendar quarter, a full 
and complete report on the status of each of the funds established by paragraph (1). 
Business-type budgets for each of the funds established by paragraph (1) shall be 
prepared, 
transmitted to the Committees on Appropriations, the Senate, 
and the 
Committee on Trade and Commerce of both Houses and considered, and enacted in the 
manner prescribed by law . 
(5) (A) The Administration is authorized to make and issue notes to the 
National Treasurer for the purpose of obtaining funds necessary for discharging 
obligations under the revolving funds created by section 4(c) (1) of this Act and for 
authorized expenditures out of the funds. 
Such notes shall be in such form and 
denominations and have such maturities and be subject of such terns and conditions as 
may be prescribed by the Administration with the approval of the National Treasurer. 
Such notes shall bear interest at a rate fixed by the National Treasurer, taking into 
consideration the current average market yield of outstanding marketable obligations of 
the Philippines having maturities comparable to the notes issued by the Administration 
under this paragraph. The National Treasurer is authorized and directed to purchase any 
notes of the Administration issued hereunder, and, for that purpose, the Secretary of the 
Treasury is authorized to use as a public debt transaction the proceeds fiom the sale of 
any securities issued under the Act, as amended, and the purposes from which such 
securities may be issued under such Act, as amended, are extended to include the 
purchase of notes issued by the Administration. All redemptions, purchases, and sales by 
the Secretary of the Treasury of such notes shall be treated as public debt transactions of 
the Philippines. All borrowing authority contained herein shall be effective only to such 
extent or in such amounts as are provided in advance in appropriation Acts. 
(B) (i) Moneys in the funds established in subsection (c) (1) not 
needed for current operations may be paid into miscellaneous receipts of the Treasury. 
(ii) 
Following the close of each fiscal year, the 
Administration shall pay into the miscellaneous receipts of the United States treasury the 
actual interest that the Administration collects during that fiscal year on all financing 
made under this Act. 
18 


(C) Except on those loan disbursements on which interest is paid 
under subsection (B) (ii), the Administration shall pay into miscellaneous receipts of the 
Treasury, following the close of each fiscal year, interest received by the Administration 
on financing fhctions performed under this Act and titles III and V of the Small 
Business Investment Act of 1958 providing the capital used to perform such functions 
originated from appropriated funds. Such payments shall be treated by the Department of 
the Treasury as interest income, not as retirement of indebtedness. 
@) There are authorized to be appropriated, in any fiscal year, 
sums as may be necessary for losses and interest subsidies incurred by the funds 
established by subsection (c) (I), but not previously reimbursed. 
(d) 
There is hereby created the Loan Policy Board of the Small Business 
Administration, which shall consist of the following members, all ex officio. 
The 
administrator, as Chairman, the Secretary of the Treasury, and the Secretary of 
Commerce. Either of the said Secretaries may designate an officer of his Department, 
who has been appointed by the President by and with the advice and consent of the 
Senate, to act in his stead as a member of the Loan Policy Board with respect to any 
matter or matters. The Loan Policy Board shall establish general policies (particularly 
with reference to the public interest involved in the granting and denial of applications for 
financial assistance by the Administration and with reference to the coordination of the 
fbnctions of the Administration with other activities and policies of the Government), 
which shall govern the granting and denial of applications for financial assistance by the 
Administration. 
(e) PROHIBITION ON THE PROWS10 OF ASSISTANCE. -- 
Notwithstanding any other provision of law, the Administration is prohibited from 
providing any financial or other assistance to any business concern or other person 
engaged in the production or distribution of any product or service that has been 
determined to be obscene by a court of a competent jurisdiction. 
(0 
CERTIFICATION OP COMPL 
HlLD SUPPORT 
(1) 
. -- For financial assistance approved after the 
promulgation of final regulations to implement this section, each recipient of financial 
assistance under this Act, including a recipient of a direct loan or a loan guarantee, shall 
certifjr that the recipient is not more than 60 days delinquent under the terms of any -- 
(A) administrative order; 
19 


(B) court order; or 
(C) repayment agreement entered into between the recipient and 
the custodial parent or State agency providing child support enforcement services, that 
requires the recipient to pay child support, as such term is defined in section 462 (b) of 
the Social security Act. 
(2) ENFORCEME T. -- Not later than 6 months after the date of 
enactment of this subsection, the Administration shall promulgate such regulations as 
may be necessary to enforce compliance with the requirements of this subsection. 
Sec. 5 
(a) The Administration shall have power to adopt, alter, and use a seal, 
which shall be judicially noticed. The Administrator is authorized, subject to the civil 
service and classification laws, to select, employ, appoint, and fix the compensation of 
such officers, employees, attorneys, and agents as shall be necessary to carry out the 
provisions of this Act; to define their authority and duties; and to pay the costs of 
qualification of certain of them as notaries public. The Administration, with the consent 
of any board, commission, independent establishment or executive department of the 
Government, may avail itself on a reimbursable or non- reimbursable basis of the use of 
information, services, facilities (including any 
field 
service thereof), officers, and 
employees thereof, in carrying out the provisions of this Act. 
(b) In the performance of, and with respect to, the functions, powers, and duties 
vested in him by this Act the Administrator may -- 
(1) sue and be sued in any court of record of a State having general 
jurisdiction, or in any United States district court, and jurisdiction is conferred upon such 
district court to determine such controversies without regard to the amount in 
controversy; but no attachment, injunction, garnishment, or other similar process, mesne 
or final, shall be issued against the Administrator or his property; 
(2) under regulations prescribed by him, assign or sell at public or private 
sale, or otherwise dispose of for cash or credit, in his discretion and upon such terms and 
conditions and for such considerations as the Administrator shall determine to be 
reasonable, any evidence of debt, contract, claim, personal property, or security assigned 
to or held by him in connection with the payment of loans granted under this Act, and to 
collect or compromise all obligations assigned to or held by him and all legal or equitable 
rights accruing to him in connection with the payment of such loans until such time as 
such obligations may be referred to the Attorney General for suit or collection : 
20 


(3) deal with, complete, renovate, improve, modernize, insure, or rent, or 
sell for cash or credit upon such terms and conditions and for such consideration as the 
Administrator shall determine to be reasonable , any real property conveyed to or 
otherwise acquired by him in connection with the payment of loans granted under this 
Act; 
(4) pursue to final collection, by way of compromise or otherwise, all 
claims against third parties assigned to the Administrator in connection with loans made 
by him. This shall include authority to obtain deficiency judgments or otherwise in the 
case of mortgages assigned to the Administrator. Section 3709 of the Revised Statutes, 
as amended (41 U.S.C., sec. 5), shall not be construed to apply to any contract of hazard 
insurance or to any purchase or contract for services or supplies on account of property 
obtained by the Administrator as a result of loans made under this Act if the premium 
therefor or the amount thereof does not exceed $1,000. The power to convey and to 
execute in the name of the Administrator deeds of conveyance, deeds of release, 
assignments and satisfactions of mortgages, and any other written instrument relating to 
real property or any interest therein acquired by the Administrator pursuant to the 
provisions of this Act may be exercised by the Administrator or by any officer or agent 
appointed by him without the execution of any express delegation of power of attorney. 
Nothing in this section shall be construed to prevent the Administrator fi-om delegating 
such power by order or by power of attorney, in his discretion, to any officer or agent he 
may appoint; 
(5) acquire, in any lawful manner, any property (real, personal, or mixed, 
tangible or intangible), whenever deemed necessary or appropriate to the conduct of the 
activities authorized in section 7(a) and 7(b); 
(6) make such rules and regulations as he deems necessary to carry out 
the authority vested in him by or pursuant to this Act; 
(7) 
in addition to any powers, functions, privileges and immunities 
otherwise vested in him, take any and all actions including the procurement of the 
services of attorneys by contract in any office where an attorney or attorneys are not or 
cannot be economically employed full time to render such services) when he determine 
such actions are necessary or desirable in making, servicing, compromising, modifjmg, 
liquidating, or otherwise dealing with or realizing on loans made under the provisions of 
this Act: 
Provided, That nothing herein shall be construed as authorizing the 
Administrator to contractor otherwise delegate his responsibility for loan servicing to 
other than Administration personnel but with respect to deferred participation loans he 
may authorize participating lending institutions, in his discretion pursuant to regulations 
21 


promulgated by him, to take such actions on his behalf, including, but not limited to the 
determination of eligibility and creditworthiness, and loan monitoring, collection and 
liquidation; 
(8) pay the transportation expenses and per diem in lieu of subsistence 
expenses, in accordance with the Travel Expense Act of 1949, for travel of any person 
employed by the Administration to render temporary services not in excess of the six 
months in connection with any disaster referred to in section 7 (b) from place of 
appointment to, and while at, the disaster area and any other temporary posts of duty and 
return upon completion of the assignment : Provided That the Administrator may extend 
the six-month limitation for an additional six months if the Administrator determines that 
extension is necessary to continue efficient disaster loan making activities; 
(9) accept the services and facilities of Federal, State, and local agencies 
and groups, both public and private, and utilize such gratuitous services and facilities as 
may, from time to time, be necessary, to fbrther the objectives of section 7 (b); 
(10) upon purchase by the Administration of any deferred participation 
entered into under section 7 of this Act, continue to charge a rate of interest not to exceed 
that initially charged by the participating institution on the amount so purchased for the 
remaining term of the indebtedness; 
(1 1) make such investigation as he deems necessary to determine whether 
a recipient of a participant in any assistance under this Act or any other person has 
engaged or is about to engage in any acts or practices which constitute or will constitute a 
violation of any provision of this Act, or of any rule or regulation under this Act. The 
Administration shall permit any person to file with it a statement in writing , under oath 
or otherwise as the Administration shall determine , as to all the facts and circumstances 
concerning the matter to be investigated. For the purpose of any investigation, the 
Administration is empowered to administer oaths and affirmations, subpoena [sic] 
witnesses, compel their attendance, take evidence, and require the production of any 
books, papers, and documents which are relevant to the inquiry. Such attendance of 
witnesses and the production of any such records may be required from any place in the 
United States. In case of contumacy by, or refbsal to obey a subpoena [sic] issued to, any 
person, including a recipient or participant, the Administration may invoke the aid of any 
court of the United States within the jurisdiction of which such investigation or 
proceeding is carried on, or where such person resides or carries on business, in requiring 
the attendance and testimony of witnesses and the production of books, papers, and 
documents; and such court may issue an order requiring such person to appear before the 
Administration, there to produce records, if so ordered, or to give testimony touching the 
22 


matter under investigation. Any failure to obey such order of the court may be punished 
by such court as a contempt thereof. All process in any such case may be served in the 
judicial district whereof such person is an inhabitant or wherever he may be found; and 
(12) 
impose, retain, and use only those fees which are specifically 
authorized by law or which are in effect on September 30, 1994, and in the amounts and 
at the rates in effect on such date, except that the Administrator may, subject to approval 
in appropriations Acts, impose, retain, and utilize, additional fees -- 
(A) not to exceed $100 for each loan servicing action (other than 
a loan assumption) requested after disbursement of the loan, including any substitution 
of collateral, release or substitution of a guarantor, reamortization, or similar action; 
(C) not to exceed 1 percent of the amount of requested financings 
under title Ill of the Small Business Investment Act of 1958 for which the applicant 
requests a commitment from the Administration for hnding during the following year; 
and 
@) 
to recover the direct, incremental cost involved in the 
production and dissemination of compilations of information produced by the 
Administration under the authority of this Act and the Small Business Investment Act of 
1958; and 
(13) collect, retain and utilize, subject to approval in appropriation Acts, 
any amounts collected by fiscal transfer agents and not used by such agent as payment of 
the cost of loan pooling or debenture servicing operations, except that amounts collected 
under this paragraph and paragraph (12) shall be utilized solely to facilitate the 
administration of the program that generated the excess amounts. 
(c) To such extent as he finds necessary to carry out the provisions of this Act, 
the Administrator is authorized to procure the temporary (not in excess of one year) or 
intermittent services of experts or consultants or organizations thereof, including 
stenographic reporting services, by contract or appointment, and in such cases such 
services shall be without regard to the civil-service and classification laws and, except in 
the case of stenographic reporting services by organizations, without regard to section 
3709 of the Revised Statutes, as amended (41 U.S.C., sec. 5). Any individual so 
employed may be compensated at a rate not in excess of the daily equivalent of the 
highest rate payable under section 5332 of title 5, United States Code, including travel 
time, and, while such individual is away from his or her home or regular place of 
business, he or she may be allowed travel expenses (including per diem in lieu of 
subsistence) as authorized by section 5703 of title 5, United States Code. 
23 


(d) Section 3648 of the Revised Statutes (31 U.S.C. 529) shall not apply to 
prepayment of rentals made by the Administration on safety deposit boxes used by the 
Administration for the safeguarding of instruments held as security for loans or for the 
safeguarding of other documents. 
(e) 
(1) 
Subject to the requirements and conditions 
contained in this 
subsection, upon application by a small business concern which is the recipient of a loan 
made under this Act, the Administration may undertake the small business concern’s 
obligation to make the required payments under such loan or may suspend such 
obligation if the loan was a direct loan made by the Administration. 
While such 
payments are being made by the Administration pursuant to the undertaking of such 
obligation or while such obligation is suspended, no such payment with respect to the 
loan may be required fi-om the small business concern. 
(2) The Administration may undertake or suspend for a period of not to 
exceed 5 years any small business concern’s obligation under this subsection only if -- 
(A) without such undertaking or suspension of the obligation, the 
small business concern would, in the sole discretion of the Administration, become 
insolvent or remain insolvent; 
(B) with the undertaking or suspension of the obligation, the small 
business concern would, in the sole discretion of the Administration, become or remain a 
viable small business entity; and 
(C) the small business concern executes an agreement in writing 
satisfactory to the Administration as provided by paragraph (4). 
(3) Notwithstanding the provision of sections 7(a) (4) (6) and 7(I) (1) of 
this Act, the Administration may extend the maturity of any loan on which the 
Administration undertakes or suspends the obligation pursuant to this subsection for s 
corresponding period of time. 
(4) 
(A) Prior to the undertaking or suspension by the Administration 
of any small business concern’s obligation under this subsection, the Administration, 
consistent with the purposes sought to be achieved herein, shall require the small business 
concern to agree in writing to repay to it the aggregate amount of the payments which 
were required under the loan during the period for which such obligation was undertaken 
or suspended, either -- 
24 


(i) 
by periodic payments not less in amount or less 
frequently falling due than those which were due under the loan during such period, or 
(ii) pursuant to a repayment schedule agreed upon by the 
Administration and the small business concern, or 
(iii) by a combination of the payments described in clause 
(I) and clause (ii). 
(B) In addition to requiring the small business concern to execute 
the agreement described in subparagraph (A), the Administration shall, prior to the 
undertaking or suspension of the obligation, take such action, and require the small 
business concern to take such action as the Administration deems appropriate in the 
circumstances, including the provision of such security as the Administration deems 
necessary or appropriate to insure that the rights and interests of the lender (Small 
Business Administration or participant) will be safeguarded adequately during or after the 
period in which such obligation is so undertaken or suspended. 
(5) 
The term “required payments99 with respect to any loan means 
payments of principal and interest under the loan. 
(0 
(1) The guaranteed portion of any loan made pursuant this Act may be 
sold by the lender, and by any subsequent holder, consistent with regulations on such 
sales as the Administration shall establish, subject to the following limitations: 
(A) prior to the Administration’s approval of the sale, or upon any 
subsequent resale, of any loan guaranteed by the Administration, if the lender certifies 
that such loan has been properly closed and that the lender has substantially complied 
with the provisions of the guarantee agreement and the regulations of the Administration, 
the Administration shall review and approve only materials not previously approves; 
(B) all fees due the Administration on a guaranteed loan shall have 
been paid in full prior to any sale; and 
(C) each loan shall have been fully disbursed to the borrower prior 
to any sale. 
(2) After a loan is sold in the secondary market, the lender shall remain 
obligated under its guarantee agreement with the Administration, and shall continue to 
service the loan in a manner consistent with the terms and conditions of such agreement. 
25 


1 
the facilitation, 
I 
(3) The Administration shall develop such procedures as are necessary for 
administration, and promotion of secondary market operations, and for 
(4) Nothing in this subsection or subsection (g) of this section shall be 
interpreted to impede or extinguish the right of the borrower or the successor in interest 
to such borrower to repay (in whole or in part) any loan made pursuant to section 7(a) of 
this Act, the guaranteed portion of which may be included in such trust or pool, or to 
impede or extinguish the rights of any party pursuant to section 7(a) (6) (C) or subsection 
(e) of this section. 
(8) 
(1) 
The Administration is authorized to issue trust certificates 
representing ownership of all or a fractional part of the guaranteed portion of one or more 
loans which have been guaranteed by the Administration under this Act, or under section 
502 of the Small Business Investment Act of 1958 (15 U.S.C. 660) : Provided, that such 
trust certificates shall be based on and backed by a trust or pool approved by the 
Administration and composed solely of the entire guaranteed portion of such loans. 
(2) The Administration is authorized, upon such terms and conditions as 
are deemed appropriate, to guarantee the timely payment of the principal of and interest 
on trust certificates issued by the Administration or its agent for purposes of this 
subsection. Such guarantee shall be limited to the extent of principal and interest on the 
guaranteed portions of loaned which compose the trust or pool. In the event that a loan in 
such trust or pool is prepaid, either voluntarily or in the event of default, the guarantee of 
timely payment of principal and interest on the trust certificates shall be reduced in 
proportion to the amount of principal and interest such prepaid loan represents in the trust 
or pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the 
Administration only through the date of payment on the guarantee. During the term of 
the trust certificate, it may be called for redemption due to repayment or default of all 
loans constituting the pool. 
(3) The full faith and credit of the United States is pledged to the payment 
of all amounts which may be required to be paid under any guarantee of such trust 
certificates issued by the Administration or its agent pursuant to this subsection (0 in an 
26 


amount equal to not more than 50 percent of the portion of the sale price that exceeds 1 10 
percent of the outstanding principal amount of the portion of the loan guaranteed by the 
Administration. Any such fee imposed by the Administration shall be collected by the 
Administration or by the agent which carries out on behalf of the Administration the 
central registration fbnctions required by section (h) of this section and shall be paid to 
the Administration and used solely to reduce the subsidy on loans guaranteed under 
section 7(a) of this Act : Provided, that such fee shall not be charged to the borrower 
whose loan is guaranteed : and Provided further, that nothing herein shall preclude any 
agent of the Administration from collecting a fee approved by the Administration for the 
hnctions described in subsection (h) (2) . 
(€3) 
The Administration is authorized to impose and collect, either 
directly or through a fiscal and transfer agent, a reasonable penalty on late payments of 
the fee authorized under subparagraph (A) in an amount not to exceed 5 percent of such 
fee per month plus interest. 
(5) 
this subsection, it shall be subrogated hlly to the rights satisfied by such payment. 
(A) In the event the Administration pays a claim under a guarantee issued under 
(B) No State or local law, and no Federal law, shall preclude or 
limit the exercise by the Administration of its ownership rights in the portions of loans 
constituting the trust or pool against which the trust certificates are issued. 
(h) 
(1) Upon the adoption of final rules and regulations, the Administration 
shall -- 
(A) 
provide for a central registration of all loans an trust 
certificates sold pursuant to subsections (0 and (g) of this section; 
(B) 
contract with an agent to carry out on behalf of the 
Administration the central registration fbnctions of this section and the issuance of trust 
certificates to facilitate pooling. Such agent shall provide a fidelity bond or insurance in 
such amounts as the Administration determines to be necessary to hlly protect the 
interest of the Government; 
(C) prior to any sale, require the seller to disclose a purchaser of 
the guaranteed portion of a loan guaranteed under this Act and to the purchaser of a trust 
certificate issued pursuant to subsection (g) , information on terms, conditions, and yield 
of such instrument. As issued in this paragraph, if the instrument being sold is a loan, the 
term “seller” does not include (A) an entity which made the loan or (B) any individual or 
entity which sells three or fewer guaranteed loans per year; and 
27 


, 
(D) 
have the authority to regulate brokers and dealers in 
guaranteed loans and trust certificates sold pursuant to subsections (f) and (g) of this 
section. 
(2) Nothing in this subsection shall prohibit the utilization of a book-entry 
or rather electronic form of registration for trust certificates. The Administration may, 
with the consent of the Secretary of the Treasury, use the book-entry system of the 
Federal Reserve System. 
Sec. 6. 
(a) All moneys of the Administration not otherwise employed may 
be deposited with the Treasury of the United States subject to check by authority of the 
Administration. 
The Federal Reserve banks are authorized and directed to act as 
depositories custodians, and fiscal agents for the Administration in the general 
performance of its powers conferred by this Act. Any banks insured by the Federal 
Deposit Insurance Corporation, when designated by the Secretary of the Treasury, shall 
act as custodians and financial agents for the Administration. Each Federal Reserve 
bank, when designated by the Administrator as fiscal agent for the Administration, shall 
be entitled to be reimbursed for all expenses incurred as such fiscal agent. 
(b) The Administrator shall contribute to the employee’s compensation knd, on 
the basis of annual billings as determined by the Secretary of Labor, for the benefit 
payments made from such hnd on account of employees engaged in carrying out 
fbnctions financed by the revolving fimd established by section 4 (c) of this Act. The 
annual billings shall also include a statement of the fair portion of the cost of the 
administration of such hnd, which shall be paid by the Administrator into the Treasury 
as miscellaneous receipts. 
Sec. 7. (a) LOANS TO SMALL BUSINESS C 
S; ALLOWABLE 
PURPOSES; QUAL 
The Administration is empowered to the extent and in such amounts as provided in 
advance in appropriation Acts to make loans for plant acquisition, construction, 
conversion, or expansion, including the acquisition of land, material, supplies, equipment, 
and working capital, and to make loans to any qualified small business concern, including 
those owned by qualified Indian tribes, for purposes of this Act. 
uch financings may be 
made either directly or in cooperation with banks or other financial institutions through 
agreements to participate on an immediate or deferred (guaranteed) basis. These powers 
shall be subject, however, to the following restrictions, limitations, and provisions : 
28 


- No financial assistance shall be 
extended pursuant to this subsection if the applicant can obtain credit elsewhere. No 
immediate participation may be purchased unless it is shown that a deferred participation 
is not available; and no direct financing may be made unless it is shown that a 
participation is not available. 
- Prior to the approval of any 
loan made pursuant to this subsection, or section 503 of the Small Business Investment 
Act of 1958, the Administrator may veri@ the applicant’s criminal background, or lack 
thereof, through the best available means, including, if possible, use of the National 
Crime Information Center computer system at the Federal Bureau of Investigation. 
(2) IN GENERAL. -- Except as provided in subparagraph (B), in an 
agreement to participate in a loan on a deferred basis under this subsection (including a 
loan made under the Preferred Lenders Program), such participation by the 
Administration shall be equal to -- 
(i) 75 percent of the balance of the financing outstanding at 
the time of disbursement of the loan, if such balance exceeds $100,000; or 
(ii) 80 percent of the balance of the financing outstanding 
at the time of disbursement of the loan, if such balance is less than or equal to $100,000. 
(B) PRODUCED PARTICEPATION UPON REQUEST. -- 
GENERAL. -- The guarantee percentage specified 
by subparagraph (A) for any loan under this subsection may be reduced upon the request 
of the participating lender. 
(ii) PROHIBIT10 . --The Administration shall not use 
the guarantee percentage requested by a participating lender under clause (I) as a criterion 
for establishing priorities in approving loan guarantee requests under this subsection. 
(6) INTEREST RATE UNDER 
IFERRED LENDERS 
PRO 
_- 
(9 
L. -- The maximum interest rate for a 
loan guaranteed under the Preferred Lenders Program shall not exceed the maximum 
interest rate, as determined by the Administration, applicable to other loans guaranteed 
under this subsection. 
29 


(ii) 
L 
- For purposes of this subparagraph, the term “Preferred Lenders Program” means any 
program established by the Administrator, as authorized under the provision in section 5 
(b) (7), under which a written agreement between the lender and the Administration 
delegates to the lender -- 
(I) complete authority to make and close loans with 
a guarantee from the Administration without obtaining the prior specific approval of the 
Administration; and 
(II) complete authority to service and liquidate such 
loans without obtaining the prior specific approval of the Administration for routine 
servicing and liquidation activities, but shall not take any actions creating an actual or 
apparent conflict of interest. 
(D) 
PARTICIPATIO 
CAPITAL PROGRAM. - Notwithstanding subparagraph (A), in an agreement to 
participate in a loan on a deferred basis under the Export Working Capital Program 
established pursuant to paragraph (14) (A), such participation by the Administration shall 
not exceed 90 percent. 
(3) No loan shall be made under this subsection-- 
(A) 
if the total amount outstanding and committed (by 
participation or otherwise) to the borrower from the business loan and investment fund 
established by this Act would exceed $750,000, except as provided in subparagraph (B); 
(B) if the total amount outstanding and committed (on a deferred 
basis) solely for the purpose provided in paragraph (16) to the borrower from the business 
loan and investment f k d  established by this Act would exceed $1,250,000, of which not 
more than $750,000 may be used for working capital, supplies or financings under 
section 7(a) (14) for export purposes; and 
(C) if affected either directly or in cooperation with banks or other 
lending institutions through agreement to participate on an immediate basis if the amount 
would exceed $350,000. 
TES AND FEE 
(A) ENTE 
. - Notwithstanding the provisions of the 
constitution of any State or the laws of any State limiting the rate or amount of interest 
which may be charged, taken, received, or reserved, the maximum legal rate of interest 
30 


on any financing made on a deferred basis pursuant to this subsection shall not exceed a 
rate prescribed by the Administration, and the rate of interest for the Administration’s 
share of any direct or immediate participation loan shall not exceed the current average 
market yield on an outstanding marketable obligations of the United States with 
remaining periods to maturity comparable to the average maturities of such loans and 
adjusted to the nearest one-eight of 1 per centum, and an additional amount as determined 
by the Administration, but not to exceed 1 per centum per annum : Provided, that for 
those loans to assist any public or private organization for the handicapped or to assist 
any handicapped individual as provided in paragraph (1 0) of this subsection, the interest 
rate shall be 3 per centum per annum. 
(B) PAYMENT OF ACCRUED INTEREST.- 
(i) I1v GENERAL. - Any bank or other lending institution 
making a claim for payment on the guaranteed portion of a loan made under this 
subsection shall be paid the accrued interest due on the loan fi-om the earliest date of 
default to the date of payment of the claim at a rate not to exceed the rate of interest on 
the loan on the date of default, minus one percent. 
(ii) LOANS SOLD ON SECONDARY MARKET. - If a 
loan described in clause (I) is sold on the secondary market, the amount of interest paid to 
a bank or other lending institution described in that clause from the earliest date of 
default to the date of payment of the claim shall be no more than the agreed upon rate, 
minus one percent. 
(5) No such loans including renewals and extensions thereof may be made 
for a period or periods exceeding twenty-five years, except that such portion of loan 
made for the purpose of acquiring real property or constructing, converting, or expanding 
facilities may have a maturity of twenty-five years plus such additional period as is 
estimated may be required to complete such construction, conversion, or expansion. 
(6) All loans made under this subsection shall be of such sound value or 
so secured as reasonably to assure repayment: Provided, however, That -- 
(A) for loans to assist any public or private organization or to assist 
any handicapped individual as provided in paragraph (10) of this subsection any 
reasonable doubt shall be resolved in favor of the applicant; 
(B) recognizing that greater risk may be associated with loans for 
energy measures as provided in paragraph (12) of this subsection, factors in determining 
“sound value” shall include, but not be limited to, quality of the product or service; 
31 


technical qualifications of the applicant or his employees; sales projections; and the 
financial status need not be as sound as that required for general loans under this 
subsection; and 
(C) (Repealed} 
On that portion of the loan used to refinance existing indebtedness held by a bank or 
other lending institution, the Administration shall limit the amount of deferred 
participation to 80 per centum of the amount of the loan at the time of disbursement: 
Provided krther, That any authority conferred by this subparagraph on the 
Administration shall be exercised solely by the Administration and shall not be delegated 
to other than Administration personnel. 
(7) The Administration may defer payments on the principal of such loans 
for a grace period and use such other methods as it deems necessary and appropriate to 
assure the successfbl establishment and operation of such concern. 
(8) The Administration may make loans under this subsection to small 
business concerns owned and controlled by disabled veterans (as defined in section 
421 l(3) of title 38, United States Code). 
(9) 
The Administration may provide loans under this subsection to 
Provided, 
finance residential or commercial constructions or rehabilitation for sale: 
however, That such loans shall not be used primarily for the acquisition of land. 
(10) The Administration may provide loans under this subsection to assist 
any public or private organization for the handicapped or to assist any and handicapped 
individual in establishing, acquiring, or operating a small business concern. 
(1 1) The Administration may provide loans under this subsection to any 
small business concern, or to any qualified person seeking to establish such a concern 
when it determines that such loan will hrther the policies established in section 2(c) of 
this Act, with particular emphasis on the preservation or rural areas with high proportions 
of unemployed or low-income individuals or owned by low-income individuals. 
(12) 
(A) The Administration may provide loans under this subsection 
to assist any small business concern, including startup, to enable such concern to design 
architecturally or start up, manufacture, distribute, however, That such loan proceeds 
energy measures: Provided, however, That such loan proceeds shall not be used 
primarily for research and development. 
32 


(B) The Administration may provide deferred participation loans 
under this subsection to finance the planning, design, or installation of pollution control 
facilities for the purposes set forth in section 404 of the Small Business Investment Act of 
1958. Notwithstanding the limitation expressed in paragraph (3) of this subsection, a 
loan made under this paragraph may not result in a total amount outstanding and 
committed to a borrower fi-om the business loan and investment fknd of more than 
$1,000,000. 
(1 3 )  The Administration may provide financings under this subsection to 
State and local development companies for the purpose of, and subject to the restrictions 
in, title V of the Small Business Investment Act of 1958. 
(14) 
(A) The Administration may provide extensions of credit, standby 
letters of credit, revolving lines of credit for export purposes and other financing to 
enable small business concerns, including small business export trading companies and 
small business export management companies, to develop foreign markets. A bank or 
participating lending institution may establish the rate of interest on extensions and 
revolving lines of credit as may be legal and reasonable. 
(B) 
When considering loan or guarantee applications, the 
Administration shall give weight to export-related benefits, including opening new 
markets for United States goods and services abroad and encouraging the involvement of 
small businesses, including agricultural concerns, in the export market. 
(C) 
The Administration shall aggressively market its export 
financing program to small businesses. 
(15) 
(A) 
The Administration may guarantee loans under this 
subsection to qualified employee trusts with respect to a small business concern for the 
purpose of purchasing stock of the concern under a plan approved by the Administrator 
which, when carried out, results in the qualified employee trust owning at least 51 per 
centum of the stock of the concern. 
(l3) 
The plan requiring the Administrator’s approval under 
subparagraph (A) shall be submitted to the Administration by the trustee of such trust 
with its application for the guarantee. Such plan shall include an agreement with the 
Administrator which is binding on such trust and on the small business concern and 
which provides that -- 
(i) 
not later the date the loan guaranteed under 
subparagraph (A) is repaid (or as soon thereafter as is consistent with the requirements of 
33 


section 401 (a) of the Internal Revenue Code of 1954), at least 5 1 per centum of the total 
stock of such concern shall be allocated to the accounts of at least 51 per centum of the 
employees of such concern who are entitled to share in such allocation; 
(ii) 
there will be periodic reviews of the role in the 
management of such concern of employees to whose accounts stock is allocated, and 
(iii) 
there will be adequate management to assure 
management expertise and continuity. 
(C) In determining whether to guarantee any loan under this 
paragraph, the individual business experience or personal assets of employee-owners 
shall not be used as criteria, except inasmuch as certain employee-owners may assume 
managerial responsibilities in which case business experience may be considered. 
@) 
For purposes of this paragraph, a corporation which is 
controlled by any other person shall be treated as a small business concern if such 
corporation would, after the plan described in subparagraph (B) is carried out, be treated 
as a small business concern. 
(E) 
The Administration shall compile a separate list of 
applications for assistance under this paragraph, indicating which applications were 
accepted and which were denied, and shall report periodically to the Congress on the 
status of employee-owned firms assisted by the Administration. 
(1 6) 
(A) The Administration may guarantee loans under this paragraph 
to assist any eligible small business concern in an industry engaged in or adversely 
affected by international trade in the financing of the acquisition, construction, 
renovation, modernization, improvement or expansion of productive facilities or 
equipment to be used in the United States in the production of goods and services 
involved in international trade, if the Administration determines that the appropriate 
upgrading of plant and equipment will allow the concern to improve its competitive 
position. Each such loan shall be secured by a first lien position or first mortgage on the 
property or equipment financed by the loan. 
(B) A smalI business concern shall be considered to be engaged in 
or adversely affected by international trade for purposes of this provision if such concern 
is, as determined by the Administration in accordance with regulations that it shall 
develop-- 
34 


(I) 
in a position to significantly expand existing report 
markets or develop new export markets; or 
(11) adversely affected by import competition in that it is -- 
(I) 
cor&-onting increased direct competition with 
foreign firms in the relevant market; and 
(11) 
can demonstrate injury attributable to such 
competition. 
(1 7) The Administration shall authorize lending institutions and other 
entities in addition to banks to make loans authorized under this subsection. 
(18) GUARANTEE FEES. -- 
(A) I N  GENERAL. -- With respect to each loan guaranteed under 
this subsection (other than a loan that is repayable in 1 year or less), the Administration 
shall collect a guarantee fee, which shall be payable by the participating lender and may 
be charged to the borrower, in an amount equal to the sum of -- 
(i) 3 percent of the amount of the deferred participation 
share of the loan that is less than or equal to $250,000; 
(ii) if the deferred participation share of the loan exceeds 
$250,000, 3.5 percent of the difference between -- 
(I) 
share of the loan, whichever is less; and 
$250,000 or the total deferred participation 
(11) $250,000; and 
(iii) if the deferred participation share of the loan exceeds 
$500,000, 3.875 percent of the difference between -- 
(I) the total deferred participation share of the loan; 
and 
(11) $500,000. 
(B) EXCEPTION FOR CERTAIN LOAN . -- Notwithstanding 
subparagraph (A) , if the total deferred participation share of a loan guaranteed under this 
subsection is less than or equal to $80,000, the guarantee fee collected under 
35 


subparagraph (A) shall be in an amount equal to 2 percent of the total deferred 
participation share of the loan. 
(19) 
(A) In addition to the Preferred Lenders Program authorized by 
the provision in section 5(b) (7), the Administration is authorized to establish a Certified 
Lenders Program for lenders who establish their knowledge of Administration laws and 
regulations concerning the guaranteed loan program and their proficiency in program 
requirements. The designation of a lender as a certified lender shall be suspended or 
revoked at any time that the Administration determines that the lender is not adhering to 
its rules and regulations or that the loss experience of the lender is excessive as compared 
to other lenders, but such suspension or revocation shall not affect any outstanding 
guarantee. 
(B) In order to encourage all lending institutions and other entities 
making loans authorized under this subsection to provide loans of $50,000 or less in 
guarantees to eligible small business loan applicants, the Administration shall develop 
and allow participating lenders to solely utilize a uniform and simplified loan form for 
such loans. 
(C) Authority to liquidate loans.- 
0) 
ENERAL. - The Administrator may permit 
lenders participating in the Certified Lenders Program to liquidate loans made with a 
guarantee from the Administration pursuant, to a liquidation plan approved by the 
Administrator. 
(ii) Automatic approval. - If the Administrator does not 
approve or deny a request for approval of a liquidation plan within 10 business days of 
the date on which the request is made (or with respect to any routine liquidation activity 
under such a plan, within 5 business days) such request shall be deemed to be approved. 
(20) 
(A) 
The Administration is empowered to make loans either 
directly or in cooperation with banks or other financial institutions through agreements to 
participate on an immediate or deferred (guaranteed) basis to small business concerns 
eligible for assistance under subsection (j) (10) and section S(a). Such assistance may be 
provided only if the Administration determines that -- 
(I) the type and amount of such assistance requested by 
such concern is not otherwise available on reasonable terms from other sources; 
36 


, 
(ii) with such assistance such concern has a reasonable 
prospect for operating soundly and profitably within a reasonable period of time; 
(iii) the proceeds of such assistance will be used within a 
reasonable time for a plant construction, conversion, or expansion, including the 
acquisition of equipment, facilities, machinery, supplies, or material or to supply such 
concern with working capital to be used in the manufacture of articles, equipment, 
supplies, or material for defense or civilian production or as may be necessary to insure a 
well-balanced national economy; and 
(iv) such assistance is of such sound value as reasonably 
to assure that the terms under which it is provided will not be breached by the small 
business concern. 
(B) 
(I) No loan shall be made under this paragraph if the total 
amount outstanding and committed (by participation or otherwise) to the borrower would 
exceed $750,000. 
(ii) Subject to the provisions of clause (I), in agreements to 
participate in loans on a deferred (guaranteed) basis, participation by the Administration 
shall be not less than 85 per centum of the balance of the financing outstanding at the 
time of disbursement. 
(iii) The rate of interest on financings made on a deferred 
(guaranteed) basis shall be legal and reasonable. 
(iv) Financings made pursuant to this paragraph shall be 
subject to the following limitations: 
(I) No immediate participation may be purchased 
unless it is shown that a deferred participation is not available. 
(11) No direct financing may be made unless it is 
shown that a participation is unavailable. 
(C) A direct loan or the Administration’s share of an immediate 
participation loan made pursuant to this paragraph shall be any secured debt instrument -- 
(I) that is subordinated by its terms to all other borrowings 
of the issuer; 
(ii) the rate of interest on which shall not exceed the 
current average market yield on outstanding marketable obligations of the United States 
37 


with remaining periods to maturity comparable to the average maturities of such loan and 
adjusted to the nearest one-eighth of 1 per centum; 
(iii) the term of which is not more than twenty-five years; 
and 
(iv) the principal on which amortized at such rate as may 
be deemed appropriate by the Administration, and the interest on which is payable not 
less often than annually. 
(21) 
(A) The Administration may take loans on a guaranteed basis 
under the authority of this subsection-- 
(I) 
to small business concern that has been (or can 
reasonably be expected to be) detrimentally affected by-- 
(I) 
the closure (or substantial reduction) of a 
Department Defense installation; or 
(It) the termination (or substantial reduction) of a 
Department of Defense program on which such small business was a prime contractor or 
subcontractor (or supplier) at any tier; or 
(ii) 
to a qualified individual seeking to establish (or 
acquire) and operate a small business concern. 
(El) Recognizing that greater risk may be associated with a loan to 
a small business concern described in subparagraph (A) (I), any reasonable doubts 
concerning the firm’s proposed business plan for transition to nondefense-related markets 
shall be resolved in favor of the loan applicant when making any determination regarding 
the sound value of the proposed loan in accordance with paragraph (6). 
(C) Loans pursuant to this paragraph shall be authorized in such 
amounts as provided in advance in appropriation Acts for the purposes of loans under this 
paragraph. 
(D) For purposes of this paragraph a qualified individual is -- 
(I) a member of the Armed Forces of the United States, 
honorably discharged fi-om active duty involuntarily or pursuant to a program providing 
bonuses or other inducements to encourage voluntary separation or early retirement; 
38 


, 
(ii) an employee of a prime contractor, subcontractor, or 
supplier at any tier of a Department of Defense program whose employment is 
involuntarily terminated (or voluntarily terminated pursuant to a program offering 
inducements to encourage voluntary separation or early retirement) due to the termination 
(or substantial reduction) of a Department of Defense program. 
(E) 
JOB CREATION AND COMMUNITY BENEFIT. -- In 
providing assistance under this paragraph, the Administration shall develop procedures to 
ensure, to the maximum extent practicable, that such assistance is used for projects that-- 
(I) have the greatest potential for -- 
(I) 
creating new jobs for individuals whose 
employment is involuntarily terminated due to reductions in Federal defense 
expenditures; or 
(11) preventing the loss of jobs by employees of 
small business concerns described in subparagraph (A) (I); and 
(ii) 
have substantial potential for stimulating new 
economic activity in communities most affected by reductions in Federal defense 
expenditures. 
(22) The Administration is authorized to permit participating lenders to 
impose and collect a reasonable penalty fee on late payments of loans guaranteed under 
this subsection in an amount not to exceed 5 percent of the monthly loan payment per 
month plus interest. 
(23) ANNUAL FEE.-- 
(A) IN GENERAL. -- With respect to each loan guaranteed under 
this subsection, the Administration shall, in accordance with such terms and procedures 
as the administration shall establish by regulation, assess and collect an annual fee in an 
amount equal to 0.5 percent of the outstanding balance of the deferred participation share 
of the loan. 
(B) PAYER. -- The annual fee assessed under subparagraph (A) 
shall be payable by the participating lender and shall not be charged to the borrower. 
(24) 
NOTIFICATION REQUIREMENT. -- The Administration shall 
notifjr the Committees on Small Business of the Senate and the House of Representatives 
39 


, 
not later than 15 days before making any significant policy or administrative change 
affecting the operation of the loan program under this subsection. 
(25) LIMITATION ON CONDUCTING PILOT PROJECTS. - 
(A) IN GENERAL. - Not more than 10 percent of the total 
number of loans guaranteed in any fiscal year under this subsection may be awarded as 
part of a pilot program which is commenced by the Administrator on or after October 1, 
1996. 
(B) PILOT PROGRAM DEFINED. - In this paragraph, the term 
“pilot program” means any lending program initiative, project, innovation, or other 
activity not specifically authorized by law. 
(C) 
LOW DOCUMENTATION LOAN PROGRAM. - The 
Administrator may carry out the low documentation loan program for loans of $100,000 
or less only through lenders with significant experience in making small business loans. 
Not later than 90 d ys after the date of enactment of this subsection, the Administrator 
shall promulgate regulations defining the experience necessary for participation as a 
lender in the low documentation program. 
7 
(26) CAL,CULATION OF SUBSIDY RATE. - All fees, interest, and 
profits received and retained by the Administration under 
this subsection shall be 
included in the calculations made by the Director of the Office of Management and 
Budget to offset the cost (as that term is defined in section 502 of the Federal Credit 
Reform act of 1990) to the Administration of purchasing and guaranteeing loans under 
this Act. 
(b) Except as to agricultural enterprises as defined in section 18 (b) (1) of this Act, 
the Administration also is empowered to the extent and in such amounts as provided in 
advance in appropriation Acts -- 
(1) 
(A) to make such loans (either directly or in cooperation with 
banks or other lending institutions through agreements to participate on an immediate or 
deferred (guaranteed) basis as the Administration may determine to be necessary or 
appropriate to repair, rehabilitate or replace property9 real or personal, damaged or 
destroyed by or as a result of natural or other disasters, : Provided, That such damage or 
destruction is not compensated for by insurance or otherwise: And provided hrther, That 
the Administration may increase the amount of the loan by up to an additional 20 per 
centum if it determines such increase to be necessary or appropriate in order to protect 
the damaged or destroyed property from possible hture disasters by taking mitigating 
40 


measures, including, but not limited to, construction of retaining walls and sea walls, 
grading and contouring land, relocating utilities and modeng structures; 
@) 
to refinance any mortgage or other lien against a totally 
destroyed or substantially damaged home or business concern : Provided, That no loan 
or guarantee shall be extended unless the Administration finds that (I) the applicant is 
not able to obtain credit elsewhere; (ii) such property is to be repaired, rehabilitated, or 
replaced; (iii) 
the amount refinanced shall not exceed the amount of physical loss 
sustained; and (iv) such amount shall be reduced to the extent such mortgage or lien is 
satisfied by insurance or otherwise; 
(2) to make such loans (either directly or in cooperation with banks or 
other lending institutions through agreements to participate on an immediate or deferred 
(guaranteed) basis as the Administration may determine to be necessary or appropriate to 
any small business concern or small agricultural cooperative located in an area affected 
by a disaster, if the Administration determines that the concern or the cooperative has 
suffered a substantial economic injury as a result of such disaster and if such disaster 
constitutes -- 
(A) a major disaster, as determined by the President under the 
Disaster Relief and Emergency Assistance Act; or 
(€3) 
a natural disaster, as determined by the Secretary of 
Agriculture pursuant to the Consolidated Farmers Home Administration Act of 1961 (7 
U.S.C. 1961) ; or 
(C) a disaster, as determined by the Administrator of the Small 
Business Administration; or 
(D) 
if no disaster declaration has been issued pursuant to 
subparagraph (A), (B), or (C), the Governor of a State in which a disaster has occurred 
may certq to the Small Business Administration that small business concerns or small 
agricultural cooperatives (1) have suffered economic injury as a result of such disaster, 
and (2) are in need of financial assistance which is not available on reasonable terms in 
the disaster stricken area. Upon receipt of such certification, the Administration may 
then make such loans as would have been available under this paragraph if a disaster 
declaration had been issued. 
Provided, That no loan or guarantee shall be extended pursuant to this paragraph (2) 
unless the Administration finds that the applicant is not able to obtain credit elsewhere. 


[THE FOLLQ 
HS F
~
C
~
~
~
G
 
SUBSECTION 7 (c) 
APPLY TO THE ENTW SUBSECTION 7 (b).] 
No loan under this subsection, including renewals and extensions thereos 
may be made for a period or periods exceeding thirty years: Provided, that the 
Administrator may consent to a suspension in the payment of principal and interest 
charges on, and to BSI extension in the maturity of, the Federal share of any loan under 
this subsectioa for a period not to exceed five years if (A) the borrower under such loan is 
a homeowner or a small business concern, (€3) 
the loan was made to enable (0 such 
homeowner to repair or replace his home, or (ii) such concern to repair or replace plant or 
equipment which was damaged or destroyed as the result of a disaster meeting the 
requirements of clause (A) or (€3) of paragraph (2) of this subsection, and (C) the 
Administrator determines such action is necessary to avoid severe financial hardship: 
Provided fbrther, That the provisions of paragraph (1) of subsection (6) of this section 
shall not be applicable to any such loan having a maturity in excess of twenty years. 
Notwithstanding the provisions of any other law, the interest rate on the Administration’s 
share of any loan made under subsection (b), except as provided in subsection (c), shall 
not exceed the average annual interest rate on all interest-bearing obligations of the 
United States then forming a part of the public debt as computed at the end of the fiscal 
year next preceding the date of the loan and adjusted to the nearest one-eight of 1 per 
centum plus one-quarter of 1 per centum: Provided, however, that the interest rate for 
loans made under paragraphs (1) and (2) hereof shall not exceed the rate of interest which 
is in effect at the time of the occurrence of the disaster. In agreements to participate in 
loans on a deferred basis under this subsection, such participation by the Administration 
shall not be in excess of 90 per centum of the balance of the loan outstanding at the time 
of disbursement. Notwithstanding any other provision of law, the interest rate on the 
Administration’s share of any loan made pursuant to paragraph (1) of this subsection to 
repair or replace a primary residence and/or replace or repair damaged or destroyed 
personal property, less the amount of compensation by insurance or otherwise, with 
respect to a disaster occurring on or aRer July 1, 1976, and prior to October 1, 1978, shall 
be : 1 per centum on the amount of such loan not exceeding $10,000, and 3 per centum 
on the amount of such loan lover $10,000 but not exceeding $40,000. The interest rate 
on the Administration’s share of the first $250,000 of all other loans made pursuant to 
paragraph (1) of this subsection, with respect to a disaster occurring on or after July 1, 
1976, and prior to October 1, 1978, shall be 3 per centum. AU repayments of principal on 
ration’s share of any loan made under the above provisions shall first be 
applied to reduce the principal sum of such loan which bears interest at the lower rates 
provided in this paragraph. 
The principal amount of any loan made pursuant to 
paragraph (1) in connection with a disaster which occurs on or d e r  April 1, 1977, but 
42 


prior to January 1, 1978, may be increased by such amount, but not more than $Z,OOO, as 
the Administration determines to be reasonable in light of the amount and nature of loss, 
damage, or injury sustained in order to finance the installation of insulation in the 
property which was lost, damaged, or injured, if the uninsured, damaged portion of the 
property is 10 per centurn or more of the market value of the property at the time of the 
disaster. Not later than June 1, 1978, the Administration shall prepare and transmit to the 
Select Committee on Small Business Act of the enate, the Committee on Shall Business 
of the House of Representatives, and the Committees of the Senate and House of 
Representatives having jurisdiction over measures relating to energy conservation, a 
report an its activities under this paragraph, includq therein an evaluation of the effect 
of such activities on encouraging the installation of insulation in property which is 
repaired 
or replaced after a disaster which is subject to this paragraph, and its 
recommendations with respect to the continuation, modification, or termination of such 
activities. 
In the administration of the disaster loan program under paragraphs (X), (2) , and 
(4) of this subsection, in the case of property loss or damage or injury resulting f?om a 
major disaster as determined by the President or a disaster as determined by the 
Administrator which occurs on or &er January 1, 1971, and prior to July I, 1973, the 
Small Business Administration, to the extent such loss or damage or injury is not 
compensated for by insurance or otherwise -- 
(A) may make any loan for repair, rehabititation, or replacement 
of property damaged or destroyed without regard to whether the required financial 
assistance is otherwise available from private sources; 
(B) may, in the case of the total destruction or substantial property 
damage of a home or business concern, refinance any mortgage or other liens outstanding 
against the destroyed or damaged property if such property is to be repaired, 
rehabilitated, or replaced, except that (1) in the case of a business concern, the amount 
refinance shall not exceed the amount of physical loss sustained, and (2) in the case of a 
home, the amount of each monthly payment of principal and interest on the loan after 
refinancing under this clause SW 
be not les$ than the amount of each such payment 
made prior to such refinancing; 
(C) 
may, in the case of a loan made under clause (A) or a 
mortgage or other lien refinanced under clause (B) in connection with the destruction oc 
or substantial damage to, property owned and used as a residence by an individual who 
by reason of retirement, disability, or other similar circumstances relies for support on 
survivor, disability, or retirement benefits under a pension, insurance, or other program, 
43 


consent to the suspension of the payments of the principal of that loan, mortgage, or lien 
during the lifetime of that individual and his spouse for so long as the Administration 
determines that making such payments would constitute a substantial hardship; 
(D) shall, notwithstanding the provisions of any other law and 
upon presentation by the applicant of proof of loss or damage or injury and a bona fide 
estimate of cost of repair, rehabilitation, or replacement, cancel the principal of any loan 
made to cover a loss or damage or injury resulting from such disaster, except that-- 
(I) with respect to a loan made in connection with a disaster 
occurring on or aRer January 1, 1971, but prior to January 1, 1972, the total amount so 
canceled shall not exceed $2,500, and the interest on the balance of the loan shall be at a 
rate of 3 per centum per annum; and 
(ii) with respect to a loan made in connection with a 
disaster occurring on or after January 1, 1972, but prior to July 1, 1973, the total amount 
so canceled shall not exceed $5,000, and the interest on the balance of the loan shall be at 
a rate of 1 per centum per annum. 
With respect to any loan referred to in clause (D) which is outstanding on the date of 
enactment of this paragraph, the Administrator shall -- 
(I) make such change in the interest rate on the balance of 
such loan as is required under that clause effective as of such date of enactment; and 
(ii) 
in applying the limitation set forth in that clause with 
respect to the total amount of such loan which may be canceled, consider as part of the 
amount so canceled any part of such loan which previously canceled pursuant to section 
23 1 of the Disaster Relief Act of 1970. 
Whoever wrongfully misapplies the proceeds of a loan obtained under this 
subsection shall civilly liable to the Administrator in an amount equal to one-and-one half 
times the original principal amount of the loan. 
(E) A State grant made on or prior to July 1, 1979, shall not be 
considered compensation for the purpose of applying the provisions of section 312(a) of 
the Disaster Relief and Emergency Assistance Act to a disaster loan under paragraph (l), 
(Z), or (4) of this subsection. 
(c) 
(I) The Administration may further extend the maturity of or renew any 
loan made pursuant to this section, or any loan transferred to the Administration pursuant 
to Reorganization Plan Numbered 2 of 1954, or Reorganization Plan Numbered 1 of 
44 


L 
1957, for additional periods not to exceed ten years beyond the period stated therein, if 
such extension or renewal will aid in the orderly liquidation of such loan. 
(2) 
During any period in which principal and interest charges are 
suspended on the Federal share of any loan, as 
provided in subsection (b), the 
administrator shall upon the request of any person, firm, or corporation having a 
participation in such loan, purchase such participation, or assume the obligation of the 
borrower, for the balance of such period, to make principal and interest payments on the 
non-Federal share of such loan : Provided, that no such payments shall be made by the 
Administrator in behalf of any borrower unless (I) the Administrator determines that such 
action is necessary in order to avoid a default, and (ii) the borrower agrees to make 
payments to the Administration in an aggregate amount equal to the amount paid in its 
behalf by the Administrator, in such manner and at such times (during or afker the term of 
the loan) as the Administrator shall determine having due regard to the purposes sought 
to be achieved by this paragraph. 
(3) 
With respect to a disaster occurring on or after October 1, 1978, 
and prior to the effective date of this Act, on the Administration’s share of loans made 
pursuant to paragraph (1) of subsection (b) -- 
(A) 
if the loan proceeds are to repair or replace a primary 
residence and/r repair or replace damaged or destroyed personal property, the interest rate 
shall be 3 percent on the first $55,000 of such loan; 
(B) 
if the loan proceeds are to repair or replace property 
damaged or destroyed and if the applicant is a business concern which is unable to obtain 
sufficient credit elsewhere, the interest rate shall be as determined by the Administration, 
but not in excess of 5 percent per annum; and 
(C) if the loan proceeds are to repair 
or replace property 
damaged or destroyed and if the applicant is a business concern which is able to obtain 
sufficient credit elsewhere, the interest rate shall not exceed the current average market 
yield on outstanding marketable obligations of the United States with remaining periods 
to maturity comparable to the average maturities of such loans and adjusted to the nearest 
one-eighth of one percent, and an additional amount as determined by the Administration, 
but not to exceed 1 percent: Provided, That three years after such loan is hlly disbursed 
and every two years thereafter for the term of the loan, if the Administration determines 
that the borrower is able to obtain a loan from non-Federal sources at reasonable rates 
and terms for loans of similar purposes and periods of time, the borrower shall, upon 
request by the Administration, apply for and accept such a loan in sufficient amount to 
45 


repay the Administration : Provided further, That no loan under subsection (b) (1) shall 
be made either directly or in cooperation with banks or other lending institutions through 
agreements to participate on an immediate or deferred basis, if the total amount 
outstanding and committed to the borrower under such subsection would exceed 
$500,000 for each disaster, unless an applicant constitutes a major source of employment 
in an area suffering a disaster, in which case the Administration, in its discretion, may 
waive the $500,000 limitation. 
(4) Notwithstanding the provisions of any other law, the interest rate on 
the Federal share of any loan made under subsection (b) shall be -- 
(A) 
in the case of 
a homeowner 
unable to secure credit 
elsewhere, the rate prescribed by the Administration but not more than one-half the rate 
determined by the Secretary of the Treasury taking into consideration the current average 
market yield on outstanding marketable obligations of the United States with remaining 
periods to maturity comparable to the average maturities of such loans plus an additional 
charge of not to exceed one per centum per annum as determined by the Administrator, 
and adjusted to the nearest one-eighth of one per centum but not to exceed 8 per centum 
per annum; 
(B) in the case of a homeowner able to secure credit elsewhere, 
the rate prescribed by the Administration but not more than the rate determined by the 
Secretary of the Treasury taking into consideration the current average market yield on 
outstanding marketable obligations of the United States with remaining periods to 
maturity comparable to the average maturates of such loans plus an additional charge of 
not to exceed I per centum per annum as determined by the Administrator, and adjusted 
to the nearest one eight of one per centum; 
(C) 
elsewhere, not to exceed 8 per centum per annum; 
in the case of a business concern unable to obtain credit 
(D) 
in the case of a business concern able to obtain credit 
elsewhere, the rate prescribed by the Administration but not in excess of the rate 
prevailing in private market for similar loans and not more than the rate prescribed by the 
Administration as the maximum interest rate for deferred participation (guaranteed) loans 
under section 7 (a) of this Act. Loans under this subparagraph shall be limited to a 
maximum term of thee years. 
(5) Notwithstanding the provisions of any other law, the interest rate on 
the Federal share of any loan made under subsection (b) (1) AND (B) (2) on account of a 
disaster commencing on or after October 1, 1982, shall be -- 
46 


(A) in the case of a homeowner unable to secure credit elsewhere, 
the rate prescribed by the Administration but not more than one-half the rate determined 
by the Secretary of the Treasury taking into consideration the current average market 
yield on outstanding marketable obligations of the United States with remaining periods 
to maturity comparable to the average maturities of such loan plus an additional charge of 
not to exceed 1 per centum per annum as determined by the Administrator, and adjusted 
to the nearest one-eighth of one per centum, but not to exceed 4 per centum per annum; 
(€3) 
in the case of a homeowner able to secure credit elsewhere, 
the rate prescribed by the Administration but not more than the rate determine by the 
Secretary of the Treasury taking into consideration the current average market yield on 
outstanding marketable obligations of the United States with remaining periods to 
maturity comparable to the average maturities of such loans plus an additional charge of 
not to exceed 1 per centum per annum as determined by the Administrator; and adjusted 
to the nearest one-eight of 1 per centum, but not to exceed 8 per centum per annum; 
(C) 
in the case of a business or other concern, including 
agricultural cooperatives, unable to obtain credit elsewhere, not to exceed 4 per centurn 
per annum; 
@) 
in the case of a business concern able to obtain credit 
elsewhere, the rate prescribed by the Administration but not in excess of the lowest of (I) 
the rate prevailing in the private market for similar loans, (ii) the rate prescribed by the 
Administration as the maximum interest rate for deferred participation (guaranteed) loans 
under section 7(a) of this Act, or (iii) 8 per centum per annum. Loans under this 
subparagraph shall be limited to maximum term of three years. 
(6) Notwithstanding the provisions of any other law such loans, subject to 
the reductions required by subparagraphs (A) and (€3) of paragraph 7(b) (l), shall be in 
amounts equal to 100 per centum of loss. The interest rates for loans made under 
paragraphs 7(b) (1) and (Z), as determined pursuant to paragraph (9, shall be the rate of 
interest which is in effect on the date of the disaster commenced: Provided, That no loan 
under paragraphs 7(b) (1) and (2) shall be made, either directly or in cooperation with 
banks or other lending institutions through agreements to participate on an immediate or 
deferred (guaranteed) basis, if the total amount outstanding and committed to the 
borrower under subsection 7(b) would exceed $1,500,000 for each disaster unless an 
applicant constitutes a major source of employment in an area suffering a disaster, in 
which case the Administration, in its discretion, may waive the $1,500,000 limitation. 
Employees of concerns sharing a common business premises 
determining “major source of employment” status for nonprofit 
shall be aggregated in 
applicants owning such 
47 


premises. Provided further, that the administration, subject to the reductions required by 
subparagraphs (A) and (B) of paragraph 7 (b) (l), shall not reduce the amount of 
eligibility for any homeowner on account of loss of real estate to less than $100,000 for 
each disaster nor for any homeowner or lessee on account of loss of personal property to 
less than $20,000 for each disaster, such sums being in addition to an eligible refinancing 
: Provided firther, that the Administration shall not require collateral for loans of 
$10,000 or less which are made under paragraph (1) of subsection (b). 
With respect to any loan which is outstanding on the date of enactment of this paragraph 
and which was made on account of a disaster commencing on or after October 1, 1982, 
the Administrator shall make change in the interest rate on the balance of such loan as is 
required herein effective as of the date of enactment. 
(7) The Administration shall not withhold disaster assistance pursuant to 
this paragraph to nurseries who are victims of drought disasters. Us used in section 7(b) 
(2) the term “an area affected by a disaster” includes any county, or county contiguous 
thereto, determined to be a disaster by the President, the Secretary of Agriculture or the 
Administrator of the Small Business Administration. 
(d) The Administration shall not fund any Small Business Development Center or 
any variation thereof, except as authorized in section 21 of this Act. 
(e) WSERVED]. 
(0 [RESERVED]. 
(h) 
(1) 
The Administration also is empowered, where other financial 
assistance is not available on reasonable terms, to make such loans (either directly or in 
cooperation with banks or other lending institutions through agreements to participate on 
an immediate or deferred basis) as the Administration may determine to be necessary or 
appropriate -- 
(A) to assist any public or private organization -- 
(I) which is organized under the laws of the United States 
or of any State, operated in the interest of handicapped individuals, the net income of 
which does not inure in whole or in part to the benefit of any shareholder or other 
individual; 
48 


(ii) 
which complies with any applicable occupational 
health and safety standard prescribed by the Secretary of Labor; and 
(iii) which, in the production of commodities and in the 
provision of services during any fiscal year in which it receives financial assistance under 
this subsection, employs handicapped individuals for not less than 75 per centum of the 
man-hours required for the production or provision of the commodities or services; or 
(B) to assist any handicapped individual in establishing, acquiring, 
or operating a small business concern. 
(2) The Administration’s share of any loan made under this subsection 
shall not exceed $350,000, nor may any such loan be made if the total amount 
outstanding and committed (by participation or otherwise) to the borrower from the 
business loan and investment hnd established by section 4(c) (1) (B) of this Act would 
not exceed $350,000. In agreement to participate in loans on a deferred basis under this 
subsection, the Administration’s participation may total 100 per centum of the balance of 
the loan at the time of disbursement. The Administration’s share of any loan made under 
this subsection shall bear interest at the rate of 3 per centum per annum. The maximum 
term of any such loan, including extensions and renewals thereof, may not exceed fifteen 
years. All loans made under this subsection shall be of such sound value or so secured as 
reasonably to assure repayment: Provided, however, That any reasonable doubt shall be 
resolved in favor of the applicant. 
(3) For purposes of this subsection, the term “handicapped individual” 
means a person who has a physical, mental, or emotional impairment, defect, ailment, 
disease, or selection of any type of employment for which the person would otherwise be 
qualified or qualifiable. 
(I) 
(I) The administration also is empowered to make, participate (on an 
immediate basis) in, or guarantee loans repayable in nit more than fifteen years, to any 
small business concern, or to any qualified person seeking to establish such a concern 
when it determines that such loans will fbrther the policies established in section 2 (b) of 
this Act, with particular emphasis on the preservation or establishment of small business 
concerns located in urban or rural areas with high proportions of unemployed or low- 
income individuals, or owned by low-income individuals: Provided, however, that no 
such loans shall be made participated in, or guaranteed if the total of such Federal 
assistance to a single borrower outstanding at any time would exceed $100,000. The 
Administration may defer payments on the principal of such loans for a grace period and 
use such other methods as it deems necessary and appropriate to assure the successkl 
49 


establishment and operation of such concern. The Administration may, in its discretion, 
as a condition of such financial assistance, require that the borrower take steps to improve 
his management skills by participating in a management training program approved by 
the Administration: 
Provided, however, That any management training program so 
approved must be of efficient scope and duration to provide reasonable opportunity for 
the individuals served to develop entrepreneurial and managerial-sufficiency. 
(2) 
The Administration shall encourage, as far as possible, the 
participation of the private business community in the program of assistance to such 
concerns, and shall seek to stimulate new private lending activities to such concerns 
through the use of the loan guarantees, participating in loans, and pooling arrangements 
authorized by this subsection. 
(3) To insure an equitable distribution between urban and rural areas for 
loans between $3,500 and $100,000 made under this subsection the Administration is 
authorized to use the agencies and agreements and delegations developed under title 111 
of the Economic Opportunity Act of 1964, as amended, as it shall determine necessary. 
(4) 
The Administration shall provide for the continuing evaluation of 
programs under this subsection, including full information on the location, income 
characteristics, and types of businesses and individuals assisted, and on new private 
lending activity stimulated, and the results of such evaluation together with 
recommendations shall be included in the report required by section lO(a) of this Act. 
( 5 )  
Loans made pursuant to this subsection (including immediate 
participation in and guarantees of such loan) shall have such terms and conditions as the 
Ad ministration shall determine , subject to the following limitations -- 
(A) there is reasonable assurance of repayment of the loan; 
(B) 
the financial assistance is not otherwise available on 
reasonable terms fi-om private sources or other Federal, State. or local programs; 
(C) the amount of the loa$ together with other hnds available, is 
adequate to assure completion of the project or achievement of the purposes for which the 
loan is made; 
@) 
the loan bears interest at a rate not less than (I) a rate 
determined by the Secretary of the Treasury, taking into consideration the average market 
yield on outstanding Treasury obligations of comparable maturity, plus (ii) such 
additional charge, if any, toward covering other costs of the program as the 
50 


Administration mat determine to be consistent with its purposes: Provided, however, that 
the rate of interest charged on loans made in redevelopment areas designated under the 
Public Works and economic Development Act of 1965 (42 U.S.C. 3 108 et seq.) shall not 
exceed the rate currently applicable to new loans made under section 201 of that Act (42 
U.S.C. 3141); and 
(E) 
fees not in excess of amounts necessary to cover 
administrative expenses and probable losses may be required on loan guarantees. 
(6) The Administration shall take such steps as may be necessary to 
insure that, in any fiscal year, at least 50 per centum of the amounts loaned or guaranteed 
pursuant to this subsection are allotted to small business concerns located in urban areas 
identified by the Administration as having high concentrations of unemployed or low- 
income individuals or to small business concerns owned by low-income individuals. The 
Administration shall define the meaning of low-income as it applies to owner of small 
business concerns eligible to be assisted under this subsection. 
(7) No financial assistance shall be extended pursuant to this subsection 
where the Administration determines that the assistance will be used in relocating 
establishments from area to another if such relocating establishments from one area to 
another if such relocation would result in an increase in unemployment in the area of 
original location. 
0) 
(1) The Administration shall provide financial assistance to public or 
private organizations to pay all or part of the cost of the projects designed to provide 
technical or management assistance to individuals or enterprises eligible for assistance 
under sections 7(I), 7(j) (lo), and 8 (a) of this Act, with special attention to small 
businesses located in areas of high concentration of unemployed or low-income 
individuals, to small businesses eligible to receive contracts pursuant to section 8 (a) of 
this Act. 
(2) 
Financial assistance under this subsection may be provided for 
projects. including, but not limited to -- 
(A) planning and research, including feasibility studies and market 
research; 
(B) 
the identification and development of new business 
opportunities; 
51 


(C) The hrnishing of centralized services with regard to public 
services and Federal Government Programs including programs authorized under section 
7 (I), 7 (j) (lo), and 8 (a) of this Act; 
(D) 
the establishment and strengthening of 
business service 
agencies, including trade associations and cooperatives; and 
(E) the firnishing of business counseling, management training, 
and legal and other related services, with special emphasis on the development of 
management training programs using the resources of the business community, including 
the development of management training opportunities in existing business, and with 
emphasis in all cases upon providing management training of sufficient scope and 
duration to develop entrepreneurial and managerial self-sufficiency on the part of the 
individuals served. 
(3) The Administration shall encourage the placement of subcontracts by 
businesses with small business concerns located in areas of high concentration of 
unemployed or low-income individuals, and with businesses eligible to receive contracts 
pursuant to section 8 (a) of this Act. The Administration may provide incentives and 
assistance to such businesses that will aid in the training and upgrading of potential 
subcontractors or other small business concerns eligible for assistance under sections 7 (I) 
, 7 (i) , and 8 (a) of this Act. 
(A) [ Repealed ] 
(B) [ Repealed ] 
(4) The Administration shall give preference to projects which promote 
the ownership, participation in ownership, or management of small businesses owned by 
low-income individuals and small businesses eligible to receive contracts pursuant to 
section 8 (a) of this Act. 
(5) The financial assistance authorized for projects under this subsection 
includes assistance advanced by grant, agreement, or contract. 
(6) The Administration is authorized to make payments under grants and 
contracts entered into under subsection under this subsection in lump sum or installments, 
and in advance or by way of reimbursements, and in the case of grants, with necessary 
adjustments on account of overpayments or underpayments. 
52 


(7) To the extent feasible, services under this subsection shall be provided 
in a location which is easily accessible to the individuals and small business concerns 
served. 
(8) [Repealed] 
(9) The Administration shall take such steps as may be necessary and 
appropriate, in coordination and cooperation with the heads of other Federal departments 
and agencies, to insure that contracts, subcontracts, and deposits made by the Federal 
Government or with programs aided with federal hnds are placed in such a way as to 
hrther the purposes of sections 7 (I), 7 (‘j), and 8 (a) of this Act. 
(10) There is established within the Administration a small business and 
capital ownership development program (hereinafter referred to as the “Program”) which 
shall provide assistance exclusively for small business concerns eligible to receive 
contracts pursuant to section 8 (a) of this Act. The program, and all other services and 
activities authorized under section 7 0) and 8 (a) of this Act, shall be managed by the 
Associate Administrator for 
Minority Small Business and Capital Ownership 
Development under the supervision of, and responsible to, the Administrator. 
(A) The program shall -- 
(I) 
assist small business concerns participating in the 
program (either through public or private organizations) to develop and maintain 
comprehensive business targets, objectives, and goals developed and maintained in 
conformity with subparagraph (D). 
(ii) provide for such other nonfinancial services as deemed 
necessary for the establishment, preservation, and growth of small business concerns 
participating in the Program, including but not limited to (I) loan packaging, (11) financial 
counseling, (111) accounting and bookkeeping assistance, (IV) marketing assistance, and 
(V) management assistance; 
(iii) 
assist small business concerns participating in the 
Program to obtain equity and debt financing; 
(iv) 
establish regular performance monitoring and 
reporting systems for small business concerns participating in the Program to assure 
compliance with other business plans; 
(v) analyze and report the causes of success and failure of 
small business concerns participating in Program; and 
53 


(vi) provide assistance necessary to help small business 
concerns participating in the Program to procure surety bonds, with such assistance 
including, but not limited to (I) the preparation of application forms required to receive a 
surety bond, (11) special management and technical assistance designed to meet the 
specific needs of small concerns participating in the Program and which have received or 
are applying to receive a surety bond, and (III) preparation of all forms necessary to 
receive a surety bond guarantee from the Administration pursuant to title IV, part B of the 
Small Business Investment Act of 195 8. 
(B) Small business concerns eligible to receive contracts pursuant 
to section 8 (a) of this Act shall participate in the program. 
(C) 
(I) A small business concern participating in any program 
or activity conducted under the authority of this paragraph or eligible for the award of 
contracts pursuant to section 8 (a) on September 1, 1988, shall be permitted continued 
participation and eligibility in such programs or activity for a period of time which is the 
greater of -- 
(I) 9 years less the number of years since the award 
of its first contract pursuant to section 8 (a); or 
(11) its original fixed program participation term 
(plus any extension thereof) assigned prior to the effective date of this paragraph plus 
eighteen months. 
(ii) 
Nothing contained in this subparagraph shall be 
deemed to prevent the Administration from instituting a termination or graduation 
pursuant to subparagraph (F) or (H) for issues unrelated to the expiration of any time 
period limitation. 
(D) 
(I) 
Promptly after certification under paragraph (11) a 
Program Participant shall submit a business plan (hereinafter referred to as the “plan”) as 
described in clause (ii) of this subparagraph for review by the Business Opportunity 
Specialist assigned to assist such Program Participant. the plan may be revision of a 
preliminary business plan submitted by the Program Participant or required by the 
Administration as a part of the application for certification under this section and shall be 
designed to result in the Program Participant eliminating the conditions or circumstances 
upon which the Administration determined eligibility pursuant to section 8 (a) (6). Such 
plan, and subsequent modifications submitted under clause (iii) of this subparagraph, 
shall be approved by the business opportunity specialist prior to the Program Participant 
being eligible for award of a contract pursuant to section 8 (a). 
54 


(ii) 
The plans submitted under this subparagraph shall 
include the following : 
(I) 
An analysis of market potential, competitive 
environment, and other business analyses estimating the Program Participant’s prospects 
for profitable operations during the term of program participation and afker graduation. 
(11) 
An analysis of the Program Participant’s 
strengths and weaknesses with particular attention to correcting any financial, 
managerial, technical, or personnel conditions which are likely to impede the small 
business concern from receiving contracts other those awarded under section 8 (a). 
(111) Specific targets, objectives, and goals, for the 
business development of the Program Participant during the next and succeeding years 
utilizing the results of the analyses conducted pursuant to subclauses (I) and (11). 
(IV) 
A transition management plan outlining 
specific steps to assure profitable business operations after graduation ( to be 
incorporated into the Program Participant’s plan during the first year of the transitional 
stage of Program participation. 
(V) 
Estimates of contract awards pursuant to 
section 8 (a) and fi-om other sources, which the Program Participant will require to meet 
the specific targets, objectives, and goals for the years covered by its plan. The estimates 
established shall be consistent with the provisions of subparagraph (I) and section 8 (a). 
(iii) Each Program Participant shall annually review its 
currently approved plan with its Business Opportunity Specialist and modify such plan as 
may be appropriate. Any modified plan shall be submitted to the Administration for 
approval. The currently approved plan shall be considered valid until such time as 
modified plan is approved by the Business Opportunity Specialist. Annual reviews 
pertaining to years in the transitional stage of program participation shall require, as 
appropriate, a written verification that such Program participant has compiled with the 
requirements of subparagraph (I) relating to attaining business activity from sources other 
that contracts awarded pursuant to section 8 (a). 
(iv) Each Program Participant shall annually forecast its 
needs for contract awards under section 8 (a) for the next program year and the 
succeeding program year during the review of its business plan, conducted pursuant t 
clause (iii). Such forecast shall be known as the section 8 (a) contract support level and 
55 


shall be included in the Program Participant’s business plan. Such forecast shall include - 
(I) the aggregate dollar value of contract support to 
be sought on a noncompetitive basis under section 8 (a), reflecting compliance with the 
requirements of subparagraph (I) relating to attaining business activity from sources other 
than contracts awarded pursuant to section 8 (a), 
(11) 
sought, identified by Standard Industrial Classification (SIC) Code or otherwise, 
the types of contract opportunities being 
(111) 
an estimate of the dollar value of contract 
support to be sought on a competitive basis, and 
(IV) such other information as may be requested by 
the Business Opportunity Specialist to provide effective business development assistance 
to the Program Participant. 
(A) 
A small business concern participating in the program 
conducted under the authority of this paragraph and eligible for the award of contracts 
pursuant to section 8 (a) shall be denied all such assistance if such concern -- 
(I) voluntary elects not to continue participation; 
(ii) completes the period of Program participation as 
prescribed by paragraph (1 5); 
(iii) is terminated pursuant to a termination proceeding 
conducted in accordance with section 8 (a) (9); or 
(iv) 
is graduated pursuant to a graduation proceeding 
conducted in accordance with section $(a) (9). 
(F) For purposes of this section and section 8 (a), the term 
“terminated” and the term “termination” means the total denial or suspension of 
assistance under this paragraph or under section 8 (a) prior to the graduation of the 
participating small business concern or prior to the expiration of the maximum program 
participation term. An action for termination shall be based upon good cause, including - 
- 
(I) the failure by such concern to maintain its eligibility for 
Program participation; 
56 


(ii) 
the failure of the concern to engage in business 
practices that will promote its competitiveness within a reasonable period of time as 
evidenced by, among other indicators, a pattern of unjustified delinquent perf-ormance or 
termination for default with respect to contracts awarded under the authority of section 8 
(a) ; 
(iii) a demonstrated pattern of failing to make required 
submissions or responses to the Administration in a timely manner ; 
(iv) the willful violation of any rule or regulation of the 
Administration pertaining to material issues; 
(v) the debarment of the concern or its disadvantaged 
owners by any agency pursuant to subpart 9.4 of title 48, Code of Federal Regulations (or 
any successor regulation) ; or 
(vi) 
the conviction of the disadvantaged owner or an 
officer of the concern for any offense indicating a lack of business integrity including any 
conviction for embezzlement, theft, forgery, bribery, falsification or violation of section 
16. For purposes of this clause, no termination action shall be taken with respect to a 
disadvantaged owner solely because of the conviction of an officer of the concern (who is 
other than a disadvantaged owner) unless such owner conspired with, abetted, or 
otherwise knowingly acquiesced in the activity or mission that was the basis of such 
officer’s conviction. 
(G) 
The Director of the Division may initiate a termination 
proceeding by recommending such action to the Associate Administrator for Minority 
Small Business and Capital Ownership development. 
Whenever the Associate 
Administrator, or designee of such officer, determines such termination is appropriate, 
within 15 days after making such determination the Program Participant shall be provided 
a written notice of intent to terminate, specifling the reasons for such action. No 
program Participant shall be terminated from the Program pursuant to subparagraph (F) 
without first being afforded an opportunity for a hearing in accordance with section 8 (a) 
(9). 
(H) 
For the purposes of sections 7 (i) and 8 (a) the term 
“graduated” or “graduation” means that the program by substantially achieving the 
targets, objectives, and goals contained in the Concern’s business plan thereby 
demonstrating its ability to compete in the marketplace without assistance under this 
section or section 8 (a). 
57 


(I) 
(I) During the developmental stage of its participation in 
the Program, a Program Participant shall take all reasonable efforts within its control to 
attain the targets contained in its business plan for contracts awarded other than pursuant 
to section 8 (a) (hereinafter referred to as “business activity targets”). Such efforts shall 
be made a part of the business plan and shall be sufficient in scope and duration to satisfjr 
the Administration that the Program Participant will engage [sic] a reasonable marketing 
strategy that will maximize its potential to achieve its business activity targets. 
(ii) During the transitional stage of the Program, a program 
Participant shall be subject to regulations regarding business activity targets that are 
promulgated by the Administration pursuant to clause (iii). 
(iii) The regulation referred to in clause (ii) shall : 
(I) establish business activity targets applicable to 
Program Participants during the fifth year and each succeeding year of Program 
Participation; such targets, for such period of time, shall reflect a reasonably consistent 
increase in contracts awarded other than pursuant to section 8 (a), expressed as a 
percentage of total sales; when promulgating business activity targets the Administration 
may establish modified targets for Program Participants that have participated in the 
Program for a period of longer than four years on the effective date of this subparagraph; 
(11) 
require a Program participant to attain its 
business activity targets; 
(111) provide that, before the receipt of any contract 
to be awarded pursuant to section 8 (a), the Program Participant (if it is in the transitional 
stage) must certi@ that it has complied with the regulations promulgated pursuant to 
subclause (II), or that it is in compliance with such remedial measures as may have been 
ordered pursuant to regulations issued under subclause (V) ; 
(IV) 
require the Administration to review each 
Program Participant’s performance regarding attainment of business activity targets 
during periodic reviews of such Participant’s business plan; and 
(V) 
authorize the Administration to take 
appropriate remedial measures with respect to a Program Participant that has failed to 
attain a required business activity target for the purpose of reducing such Participant’s 
dependence on contracts awarded pursuant to section 8 (a) ; such remedial actions may 
include but are not limited to assisting the Program Participant to expand the dollar 
volume of its competitive business activity or limiting the dollar volume of contracts 
58 


awarded to the Program Participant pursuant to section 8 (a); except for actions that 
would constitute a termination, remedial measures taken pursuant to this subclause shall 
not be reviewable pursuant to section 8 (a) (9). 
(J) 
(I) The Administration shall conduct an evaluation of a 
Program Participant’s eligibility for continued participation in the Program whenever it 
receives specific and credible information alleging that such Program Participating no 
longer meets the requirements for program eligibility. Upon making as finding that a 
Program Participant is no longer eligible, the Administration shall initiate a termination 
proceeding in accordance with subparagraph (F). A Program Participant’s eligibility for 
award of any contract under the authority of section 8 (a) may be suspended pursuant to 
subpart 9.4 of title 48, Code of Federal Regulations (or any successor regulation). 
(ii) 
(I) Except as authorized by subclause (11) or (III), 
no award shall be made pursuant to section 8 (a) to other than a small business concern. 
(11) 
In determining the size of a small business 
concern owned by a socially and economically disadvantaged Indian tribe (or a wholly 
owned business entity of such tribe), each firm’s size shall be independently determined 
without regard to its affiliation with the tribe, any entity of the tribal government, or any 
other business enterprise owned by the tribe, unless the Administrator determines that 
one or more such tribally owned business concerns have obtained, or are likely to obtain, 
a substantial unfair competitive advantage within an industry category. 
(HI) 
Any joint venture established under the 
authority of section 602 (b) of Public Law 100-656, the ‘‘Business Opportunity 
Development reform Act of 1988”, shall be eligible for award of a contract pursuant to 
section 8 (a). 
(1 1) 
(A) The associate Administrator for Minority Small Business and 
Capital Ownership Development shall be responsible for coordinating and formulating 
policies relating to Federal Assistance to small business concerns eligible for assistance 
under section 7 (I) of this Act and small business concerns eligible to receive contracts 
pursuant to section 8 (a) of this Act. 
(B) 
(I) Except as provided in clause (iii), no individual who 
was determined pursuant to section 8 (a) to be socially and economically disadvantaged 
before the effective date of this subparagraph shall be permitted to assert such 
disadvantage with respect t any other concern making application for certification after 
such effective date. 
59 


(ii) Except as provided in clause (iii), any individual upon 
whom eligibility is based pursuant to section 8 (a) (4) shall be permitted to assert such 
eligibility for only one small business concern. 
(5) A socially and economically disadvantaged Indian 
tribe may own more than one small business concern eligible for assistance pursuant to 
section 7 (j) (1 0) and section 8 (a) if -- 
(I) the Indian tribe does not own another firm in 
the same industry which has been determined to be eligible to receive contracts under this 
program, and 
(11) the individuals responsible for the management 
and daily operations of the concern do not manage more than two Program Participants. 
(C) No concern, previously eligible for the award of contracts 
pursuant to section 8 (a), shall be subsequently recertified for program participation if its 
prior participation in the program was concluded for any of the reasons described in 
paragraph (10) (E). 
(D) A concern eligible for the award of contracts pursuant to this 
subsection shall remain eligible for such contracts if there is a transfer of ownership and 
control (as defined pursuant to section 8 (a) (4) to individuals who are determined to be 
socially and economically disadvantaged pursuant to section 8 (a). In the event of such a 
transfer, the concern, if not terminated or graduated, shall be eligible for a period of 
continued participation in the program not to exceed the time limitations prescribed in 
paragraph (1 5). 
Eligibility (hereinafter referred to in this paragraph as the “Division”) that 
shall be made part of the Oflice of Minority Small Business and Capital Ownership 
Development. The Division shall be headed by a director who shall report directly to the 
Associate Administrator for Minority Small Business and Capital Ownership 
Development. The Division shall establish field offices within such regional offices of 
the Administration as may be necessary to perform efficiently its fbnctions and 
responsibilities. 
(E) 
There is established a Division of Program Certification and Eligibility (hereinafter 
referred to in this paragraph as the “Division”) that shall be made part of the Office of 
Minorky Small Business and Capital Ownership Development. the Division shall be 
headed by a director who shall report directly to the Associate Administrator for Minority 
Small Business and Capital Ownership Development. The Division shall establish field 
60 


offices within such regional offices of the Administration as may be necessary to pedorm 
efficiently its fimctions and responsibilities. 
(F) Subject to the provisions ofs ion 8 (a) (9, 
the functions and 
responsibility of the Division are to -- 
(I) 
receive, review and evaluate applications for 
certification pursuant to paragraphs (4), (5), (6) and (7) of section 8 (a); 
(ii) advise each program applicant within 15 days aRer the 
receipt of an application as to whether such application is complete and suitable for 
evaluation and , if not, what matters must be rectified; 
(iii) render recommendations on such applicatians to the 
Associate Administrator for Minority Small Business and Capital Ownership 
Development; 
(iv) 
review and evaluate financial statements and other 
submissions from concerns participating in the program established by paragraph (10) to 
ascertain continued eligibility to receive subcontracts pursuant to section 8 (a); 
(v) make a request for the initiation of termination or 
graduation proceedings, as a appropriate, to the Associate Administrator for Minority 
Small Business and Capital ownership Development; 
(vi) make recommendations to the Associate Administrator 
for Minority Small Business and Capital Ownership Development concerning protests 
fiom applicants that have been denied program admission; 
(vii) decide protests regarding the status of a concern as a 
disadvantaged concern for purposes of any program or activity conducted under the 
authority of subsection (d) of section 8, or any other provision of Federal law that 
references such subsection for a definition of program eligibility; and 
(viii) implement such policy directives as may be issued by 
the Associate Administrator for Minority Small Business and Capital Ownership 
Development pursuant to subparagraph (I) regarding, among other things, the geographic 
distribution of concerns to be admitted to the program and the industrial make-up of such 
concerns. 
(G) An applicant shall not be denied admission into the program 
established by paragraph (10) due soIely to a determination by the Division that specific 
61 


contract opportunities are unavailable to assist in the development of such concern unless 
(1) 
the Government has not previously procured and is 
unlikely to procure the types of products or services offered by the concern; or 
(ii) 
the purchases of such products or services by the 
Federal Government Will not be in quantities sufficient to support the developmental 
needs of the applicant and other Program Participants providing the same or similar items 
or services. 
(H) Not later than 90 days after receipt of a completed application 
for Program certification, the Association Administrator for Minority Small Business and 
Capital Qwnerslip Development shall certifgr a small business concern as a Program 
Participant or shall deny such application. 
(I) 
Thirty days before the conclusion of each fiscal year, the 
Director of the Division shall review all concerns that have been admitted into the 
Program during the preceding 12-month period. The review shall ascertain the number 
of entrants, their geographic distribution and industrial ~
~
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~
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.
 
The Director shall 
also estimate the expected growth of the Program during the next fiscal year and the 
number of additional Business Opportunity Specialists, if any, that will be needed to meet 
the anticipated demand for the Program. The findings and conclusions of the Director 
shall be reported to the Associate Administra,tor for the Minority Small Business and 
Capital Ownership Development by September 30 of each year. 
ased on such report 
and such additional data as may be relevant, the Associate Administrator shall, by 
October 31 of each year, issue policy and program directives applicable to such fiscal 
year that -- 
(I) 
establish priorities for the solicitation of program 
applications from underrepresented regions and industry categories; 
(ii) 
assign staffing levels and allocate other program 
resources as necessary to meet program needs; and 
(iii) establish priorities in the processing and admission of 
new Program Participants as may be necessary to achieve an equitable geographic 
distribution of CQI-I~HIIS across all industry categories in proportions needed to increase 
significantly contract awards to small b~siness C O ~ G ~ ~ T I S  
owned and controlled by socially 
and economically disadvantaged individ~~~~§. 
When ~
o
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i
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such increase the 
Administration shall give due consideration to those industrial categories where Federal 
42 


purchases have been substantial but where the participation rate of such concerns has 
been limited. 
(J) 
(i) The Administration shall conduct an evaluation of a 
Program Participant’s eligibility for cont~nued p ~ i c ~ p ~ t i o n  
in the Program whenever it 
receives specific and credible information all 
Paaicipant no 
longer meets the requirements for Program eligibility. Upon making a findin 
Program Participant is no longer eligible, the A d ~ ~ s t ~ a t i o n  
shall initiate a termination 
proceeding in accordance with subparagraph (IF). 
A Program Participant’s eligibility for 
award of any contract under the authority of section S(a) may be suspended or terminated 
pursuant to subpart 9.4 of title 48, Code of Federal Regulations (or any successor 
regulation). 
(ii) Except as provided under section 602 of the Business 
Opportunity Development Refom Act of 1998 IpL 100-656, 102 Stat. 38533, no award 
shall be made pursuant to section 8 (a) to other than a small business concern. 
(12) 
(A) 
The Administration shall segment the Capital Ownership 
Development Program into ~ W Q  stages : a dev~lop~ental 
stage; and a transitional stage. 
(B) The developmental stage of program participation shall be 
designed to assist the concern in its effort to overcome its economic disadvantage by 
providing such assistance as may be necessary and appropriate to access its markets and 
to strengthen its financial and managerial skills. 
(6) The transitianal stage of program participation shall be 
designed to overcome , insofar as practicable, the remaining elements of economic 
disadvantage and to prepare such concern for graduation from the program. 
(13) A Program Participant, if otherwise eligible, shall be qualified to 
receive the following assistance during the stages of program participation specged in 
paragraph 12 : 
(A) Contract support pursuant to section 
) Financial assistance pursuant to section 7 (a) (20). 
(C) A maximum of two exe~ptions &om the ~
~
~
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of 
section 1 (a) of the Act entitled “An Act providing conditions for the # ~ ~ c h a ~ e  
of supplies 
and the making of contracts by the United States, and for other purposes”, approved June 
30, 1936 (45, Stat. 2036), which exemptions shall apply only to contracts awarded to 
pursuant to section 8 (a) and shall onIy be used to allow for contingent agreements by a 
63 


small business concern to acquire the machinery, equipment, facilities, or labor needed to 
perform such contracts. No exemption shall be made pursuant to this subparagraph if the 
contract to which it pertains has an anticipated value in excess of $10,000,000. This 
subparagraph shall cease to be effective on October I, 1992. 
(D) A maximum of five exemptions from the requirements of the 
Act entitled “An Act requiring contracts for the construction, alteration and repair of any 
public building or public work of the United States to be accompanied by a pedorrnance 
bond protecting the United States and by an additional bond for the proteaion of persons 
fiirnishing material and labor for the construction, alteration, or repair of said public 
buildings or public works”, approved August 24, 1935 (49 Stat. 799, which exemptions 
shall apply only to cantracts awarded pursuant to section 8 (a), except that, such 
exemptions may be granted under this subparagraph only if -- 
(I) the Administration finds that such concern is unable to 
obtain the requisite bond or bonds -from a surety and that no surety is willing to issue a 
bond subject to the guarantee provision of title IV of the Small Business Investment Act 
of 1958 (15 U.S.C. 692 et seq. ) ; 
(ii) 
the Administration and the agency 
providing the 
contracting opportunity have provided for the protection of persons krnisbg materials 
or labor to the Program Participant by arranging for the direct disbursement of funds due 
to such persons by the procuring agency or through any bank deposits of which are 
insured by the Federal Deposit Insurance Corporation; and 
(iii) 
the contract to which it pertains does not exceed 
$3,000,000 in mount. This subparagraph shall cease to be effective on October 1, 1994. 
(E) Financial assistance whereby the A d ~ ~ ~ s t r ~ t i o n  
may purchase 
in whole or in part, and on behalf of such concerns, skills trainkg or upgrading for 
employees or potential employees of such concerns. Such assistance may be made 
without regard to section 18 (a). Assistance may be made by direct payment to the 
training provider or by reimbursing the Program Participant or the Participant’s 
employee, if such reimbursement is found to be reasonable and appropriate. For 
purposes of this subparagraph the term “training provider” shall mean an institution of 
higher education, a community or vocational college, or an institution eligible to provide 
skills training or upgrading under the Job Training Partnership Act (29 U.S.C. 1501 et 
seq. ) The Administration shall, in consultation with the Secretary of Labor, promulgate 
rules and regulations to implement this subparagraph that establish acceptable training 
and upgading performance standards and provide for such monitoring or audit 
64 


requirements as may be necessary to ensure the integrity of the trainkg effort. No 
financial assistance shall be granted under the subparagraph unless the Administrator 
determines that -- 
(I) such concern has documented that it has first explored 
the use of existing cost-fi-ee or cost-subsidized training programs offered by public and 
private sector a.gencies working with programs of e ~ p l o y ~ e n t  
and training and economic 
development; 
(ii) no more than five employees or potential employees of 
such concern are recipients of any benefits under this subparagraph at any one time; 
(iii) 
no more than $2,500 shall be made available for any 
one employee or potential employee; 
(iv) the length of training or upgrading financed by this 
subparagraph shall be no less than one month nor more than six months; 
(v) 
such concern has given adequate assurance it will 
employ the trainee or upgraded employee for at least six months after the training or 
upgrading financed by this subparagraph has been completed and each trainee or 
upgraded employee has provided a similar assurance to remain within the employ of such 
concern for such period; if such concern, trainee, or upgraded employee breaches this 
agreement, the Administration shdl be entitled to and shall make diligent efforts to obtain 
from the violating party the repayment of all hnds expended on behalf of the violating 
party, such repayment shall be made to the Administration together with such interest and 
costs of collection as may be reasonable; the Violati 
party shall be barred f?om 
receiving any fisther assistance under this subparagraph; 
(vi) the training to be financed may take place either at 
such concern’s facilities or at those of the training provider; and 
(vii) 
such concern will maintain such records as the 
Administration deems appropriate to ensure that the provisions of this paragraph a d  any 
applicable law have not been violated. 
0;) The transfer of technology or surplus property owned by the 
United States to such a concem. Activities designed to effect such transfer shall be 
developed in cooperation with the heads ofFederal agencies and shall include the transfer 
by grant, license, or sale of such technology or property to such a concern. Such 
property may be transferred to Frogram Participants 00 a priority basis. Technology or 
65 


property transferred under this subparagraph shall be used by the concern during the 
noma1 conduct of its business operation and shall not be sold or transferred to any other 
party {other than the Government) during such concern’s term of participation in the 
Program and for one year thereafter. 
(G) Training assistance whereby the Administration shall conduct 
training session to assist individuals and enterprises eligible to receive contracts under 
section 8 (a) in the development of business principles and strategies to enhance their 
ability to successfblIy compete for contracts in the marketplace. 
(H) 
Joint ventures, leader-follow arrangements, and teaming 
agreements between the Program Participant and other Program Participants and other 
business concerns with respect to contracting opportunities for the research, development, 
full scale engineering or production of major systems. Such activities shall be undertaken 
on the basis of programs developed by the agency responsible for the procurement of the 
major system, with the assistance of the Addstration. 
(I) 
Tmsitional management business planning training and 
technical assistance. 
(9 Program Participants in the developmental stage of program 
participation shall be eligible for the assistance provided by subparagraphs (A), (B), (C), 
(Dx (E), c l F ) 7  and (GI- 
(14) 
Program Participants in the transitional stage of 
Program 
participation shall be eligible for the assistance provided by subparagraph (A), @), @?), 
(G), 0, 
and (I) of paragraph (13). 
(15) Subject to the provisions of paragraph (10) (e), a small business 
concern may receive developmental assistance under the program and contracts under 
section 8 (a) for a total period of not longer than nine years, measured @om the date of its 
certification under the authority of such section, of which -- 
(A) no more than four years may be spent in the developmental 
stage Program Participation; and 
(B) no more than five years may be spent in the transitional stage 
of Program Participation. 
(16) 
{A) The Administrator shall develop and implement a process for 
the systematic collection of data on the operaiions of the Program established pursuant to 
paragraph (1 0). 
66 


03) Not later than April 30 of each year, the Administrator shall 
submit a report to the Congress on the Program that shall include the following : 
(I) The average personal net worth of hdividuals who own 
and control concerns that were initially certified for participation in the Program during 
the immediately preceding fiscal year. The Administrator shall also indicate the dollar 
distribution of the net worths, at $50,000 increments, of all suck individuals found to be 
socially and economically disadvantaged. For the first report required pursuant to this 
paragraph the Administrator shalt also provide the data specified in the preceding 
sentence for all eligible individuals in the Program as of the effective date of this 
paragraph. 
(ii) A description and estimate of the benefits and costs 
that have accrued to the economy and the Government in the immediately preceding 
fiscal year due to the operations of those business concern that were pedorming contracts 
awarded pursuant to section 8 (a). 
(iii) 
A compilation and evaluation of those business 
concerns that have exited the Program during the immediately preceding three fiscal 
years. Such compilation and evaluation shall detail the number of concerns actively 
engaged in business operations, those that have ceased or substantially curtailed such 
operations, including the reasons for such actions, and those concerns that have been 
acquired by other firms or organizations owned and controlled by other than socially and 
economically disadvantaged individuals. For those businesses that have continued 
operations after they exited fkom the Program, the Administrator shall also separately 
detail the benefits and costs that have accrued to the economy during the immediately 
preceding fiscal year due to the operations of such concerns. 
(iv) A listing of all participants in the Program during the 
preceding fiscal year identiwng, by State and by Region, for each firm : the name of the 
concern, the race or ethnicity, and gender of the ~i~advantag~d 
lowners, the dollar value 
of contracts received in the preceding year, the dollar amount of advance payments 
received by each concern pursuant to contracts awarded under section 8 (a), and a 
description including (if appropriate) an estimate of the dollar value of all benefits 
received pursuant to paragraphs (13) and (14) and section 7 (a) (20) during such year. 
(v) The total dollar value of contracts and options awarded 
during the preceding fiscal year pursuant to section 8 (a) and such amount expressed as a 
percentage of total sales of (I) all firms participating in the Program during much year; and 
(11) of fims in each of the nine years of program participation. 
67 


, 
(vi) A description of such additional resources or program 
authorities as may be required to provide the types of services needed over the next two- 
year period to service the expected portfolio of firrns certified pursuant to section 8 (a). 
(vii) 
The total dollar value of contracts: and options 
awarded pursuant to section 8 (a) , at such dollar increments as the Administrator deems 
appropriate, for each four digit standard industrial classification code under which such 
contracts and options were classified. 
(e) The first report required by subparagraph (€3) shall pertain to 
fiscal year 1990. 
(k) In carrying out its fbnctions under subsections 7 (I), 7 0) and 8 (a) of this Act, 
the Administration is authorized --- 
(1) to utilize, with their consent, the services and facilities of Federal 
agencies without reimbursement, and, with the consent of any State or political 
subdivision of a State, accept and utilize the services and facilities of such State or 
subdivision without reimbursement; 
(2) to accept, in the name of the Administration, and employ or dispose of 
in fbrtherance of the purposes of this Act, any money or property, real, personal, or 
mixed, tangible, or intangible, received by gift, devise, bequest, or otherwise; 
(3) to accept voluntary and uncompensated services, notwithstanding the 
provisions of section 3679 (b) of the Revised Statutes (31 U.S.C. 665 (b) ); and 
(4) to employ experts and consultants or organizations thereof as 
authorized by section 15 of the Administrative Expenses Act of 1946 (5 U.S.C. %a), 
except that no individual may be employed under the authority of this subsection for 
more than one hundred days in any fiscal year; to compensate individuals so employed at 
rates not in excess of the daily equivalent of the highest rate payable under section 533 of 
title 5, United States code, including travel time; and to allow them, while away f?om 
their homes or regular places of business travel expenses (including per diem in lieu of 
subsistence) as authorized by section 5 of such Act (5 U.S.C. 73b-2) for persons in the 
Government service employed intermittently, while so employed : Provided, however, 
that contracts for such employment may be renewed annually. 
68 


(1) 
(A) PURPOSES. The purposes of the Microloan Program are -- 
(I) 
to assist women, low-income, and minority 
entrepreneurs and business owners, and other such individuals possessing the capabiIity 
to operate successfbl business concern; and 
(ii) 
to assist small business concerns in those areas 
suffering from a lack of credit due to economic downturns; 
(iii) to establish a microloan program to be administered 
by the Small Business Administration -- 
(I) 
to make loans to eligible intermediaries to 
enable such intermediaries to provide small scale loans, particularly loans in amounts 
averaging not more than $7,500, to startup, newly established, or growing small business 
concerns for working capital or the acquisition of materials, supplies, or equipment; 
(I) to make loans to eligible intermediaries that, 
together with non-Federal matching finds, will enable such intermediaries to provide 
small-scale loans, particularly loans in amounts averaging not more than 47,5000, to 
startup, newly establishes, or growing small business concerns for working capital or the 
acquisition of materials, supplies., or equipment; 
(L1) to make grants to eligible intermediaries that, 
together with non-Federal matching funds, will enable such intermediaries to provide 
intensive marketing, management, and technical assistance to microloan borrowers; 
(In) to make grants to eligible nonprofit entities 
that, together with non-Federal matching funds, will enable such entities to provide 
intensive marketing, management, and technical assistance to assist low-income 
entrepreneurs md other low-income individuals obtain private sector financing for their 
businesses, with or without loan guarantees; and 
(1V) to report to the Committees on Small Business 
of the Senate and the House of Representatives on the effectiveness of the microloan 
program and the advisability and feasibility of implementing such a program; and 
(iv) to establish a welfare-to-work macroloan initiative, which shall be 
administered by the Administration, in order to test the feasibility of supplementing the 
technical assistance grants provided under clauses (ii) and (i6) of subparagraph (€3) to 
individuals who are receiving assistance under the State program fiinded under part A of 
title rV ofthe Social §ecurity Act (42 U.S.C. 601 et seq.) or under any comparable State 
69 


fbnded means tested program of assistance for Iow-income individuals, in order to 
adequately assist those individuals in -- 
(I) establishing small businesses; and 
(11) eliminating their dependence on that assistance. 
(13) 
ESTMLISMNT. 
There is established a microloan 
program, under which the Administration may -- 
(I) make direct loans to eligible intermediaries, as provided 
under paragraph (3), for the purpose of making short-term, fixed interest rate microloans 
to startup, newly established, and growing small business concerns under paragraph (6); 
(ii) 
in conjunction with such loans and subject to the 
requirements of paragraph (4), make grants to such intermediaries for the purpose of 
providing intensive marketing, management, and technical assistance to small business 
concerns that are borrowers under this subsection; and 
(iii) subject to the requirements of paragraph (59, make 
grants to nonprofit entities for the purpose of providing marketing, management, and 
technical assistance to low-income individuals seeking to start or enlarge their own 
businesses, if such assistance includes working with the grant recipient ta secure loans in 
amounts not to exceed $2§,000 from private sector lending institutions, with or without a 
loan guarantee from the nonprofit entity. 
(2) ELIGIBILITY FOR ~
~
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~
~
~
A
T
I
~
~
An intermediary shall be 
eligible to receive loans and grants under subparagraphs (€3) {I,) and (B) (ii) of paragraph 
(1) ifit -- 
(A) meets the definition in paragraph (10); and microloans to 
startup, newly established, or growing small microloans to startup, newly established, or 
growing small business concerns and providing, as an integral part of its microloan 
program, intensive marketing, management, and technical assistance to its borrowers. 
(3) LOANS TO INTERMEDI 
. --As part of its application for a loan, 
each intermediary shall submit a description to the Administration of-- 
70 


(I) the type of business to be assisted; 
(10 the size and range of loans to be made; 
eographic area to be served and its 
economic and unemployment characteristics; 
(rv) the status of small business concerns in the 
area to be served and an analysis of their credit and technical assistance needs; 
(V) any marketing, management, and technical 
assistance to be provided in connection with a loan made under this subsection; 
(VI) the local economic credit markets, including 
the costs associated with obtaining credit locally; 
(VII) the qualitications of the applicant to carry out 
the purpose of this subsection; and 
(VIII) 
any plan to involve other technical 
assistance providers (such as caunselors &om the Service Corps of Retired Executives or 
small business development centers) or private sectors lenders in assisting selected small 
business concerns. 
(ii) SELECTION OF INTERMEDrBRDES. -- In selecting 
intermediaries to participate in the program established under this subsection, the 
Administration shall give priority to those applicants that provide loans in amounts 
averaging not more than $7,500. 
M Y  CONTRIBUTION. As a condition of any 
loan made to an intermediary under subparagraph (€3) 
(I) of paragraph (I), the 
Administration shall require the intermediary to contribute not less than 15 percent of the 
loan amount in cash &om nowFederal sources. 
(C) LOAN LIMITS. Notwithstanding subsection (a) (3), no loan 
shall be made under this subsection if the total amount outstanding and committed to one 
intermediary (excluding outstanding grants) fiom the business loan and investment fund 
established by this Act would, as a result of such, exceed $750,000 in the first year of 
such intermediary’s participation in the program, and $3,500,000 in the remaining years 
of the intermediary’s participation in the program, 
@> LOAN LOSS RESERVE 
. The Administration shall, 
by regulation, require each intermediary to establish a loan loss reserve fund, and to 
71 


maintain such reserve fund until all obligations owed to the Administration under this 
subsection are rapid. The Administration shall require the loan loss reserve f%nd to be 
maintained -- 
(I) 
during the initial five years of the intermediary’s 
participation in the program under this subsection, at a level equal to not more than 15 
percent of the outstanding balance of the notes receivable owed to the intermediary; and 
(ii) in each year of participation thereafter, at a level equal 
to not more than the greater of - 
(I) 2 times an amount reflecting the total losses of 
the intermediary as a result of participation in the program under this subsection, as 
determined by the Administrator on a case-by-case basis; or 
(Ll) 10 percent of the outstanding balance of the 
notes receivable owed to the intermediary. 
LE CWEDIT. 
An 
intermediary may make a loan under this subsection of more than $15,000 to a small 
business concern only if such small business concern demonstrates that it is unable to 
obtain credit elsewhere at comparable interest rates and that it has good prospects for 
success. In no case shall an intermediary make a loan under this subsection of more than 
$25,000, or have outstanding or committed to any 1 borrower more than $25,000. 
(F) LOAN DURATION; INTEREST 
(I) LOAN DURATION. -- Loans made by the 
Administration under this subsection shall be for a term of 10 years. 
LE LNTEWST 
TES. -- Except tis 
provided in clause (liii), loans made by the Administration under this subsection to an 
intermediary shall bear an interest rate equal to 1.25 percentage points below the rate 
determined by the Secretary of the Treasury €or obligations of the United States with a 
period of maturity of 5 years, adjusted to the nearest oneeighth of 1 percent. 
(iii) 
RATES 
LICABLE TO CERTAIN S W L  
LOANS. -- Loans macle by the Administration to an intermediary that makes loans to 
small business concerns and entrepreneurs averaging not more than $7,500, shall bear an 
interest rate that is 2 percentage points below the rate determined by the Secretary of the 
Treasury for obligations of the United States with a period of maturity of 5 years, 
adjusted to the nearest oneeighth of 1 percent, 
72 


I 
(iv) RATES APPLIC 
LE TO MULTIPLE SITES OR 
OFFICES. -- The interest prescribed in clause (ii) or (iii) shall apply to each separate 
loan making site or office of 1 intermediary only if such site or office meets the 
requirements of that clause. 
( 4  
BASIS. -- The applicable rate of interest under 
this paragraph shall -- 
(I) be applied retroactively for the first year of an 
intermediary’s participation in the program, based upon the actual lending practices of 
the intermediary as determined by the Administration prior to the end of such year; 
(11) be based in the second and subsequent years of 
an intermediary’s participation in the program, based upon the actual lending practices of 
the intermediary during the term of the intermediary’s participation in the program. 
COWRED INTERRIEDHFUEiS. -- 
The 
interest rates prescribed in this subparagraph shall apply to a11 loans made to 
intermediaries under this subsection on or after October 28, 1991. 
(G) 
DELAYED PAYMENTS. 
The Administration shall not 
require repayment of interest or principal of the loan made to an intermediary under this 
subsection during the first year of the loan. 
(€3) 
FEES; COLLATERAL. 
Except as provided in the 
subparagraph (E3) and @), the Administration shall not charge any fees or require 
collateral other than an assignment of the notes receivable of the microloans with respect 
to any loan made to an intermediary under this subsection. 
AGEI&IENT 
TECM[NICAL 
ASSISTANCE 
S TO ~
~
~
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S
.
Grants made in accordance with 
subparagraph (B) (ii) of paragraph (1) shall be subject to the following requirements : 
(A) 
GWTAPI/IOWT . Except as otherwise provided in 
subparagraph (C) and subject to subparagraph OB), each intermediary that receives a loan 
under subparagraph (B) (I) 
of paragraph (1) shall be eligible to receive a grant to provide 
marketing, management, and technical assistance to small business concerns that are 
borrowers under this subsection. 
(C), each 
intermediary meeting the requirements of sttbparagraph (B) may receive a grant of not 
more than 25 percent of the total outstanding balance of loans made to it under this 
subsection. 
Except as provided in subparagraph 
73 


)  IO^. As a condition of any grant made under 
subparagraph (A), except for a grant made to an i n t e ~ d ~ a ~  
that provides not less than 
50 percent of its loans to small business concerns located in or owned by one or more 
residents of an economically distressed area, the ~dmi~istration 
shall require the 
intermediary to contribute an amount equal to 25 percent of the amount of the grant, 
obtained solely from non Federal sources. In addition to cash or other direct hnding, the 
contribution may include indirect costs or in-kind cont~but~ons 
paid for under nan- 
Federal programs. 
(0 
. -- In addition to grants made under 
subparagraph (A), each intermediary shall be eligible to receive a grant equal to 5 percent 
of the total outstanding balance of loans made to the intermediary under this subsection if 
-I 
(I) 
the inte~media~ 
provides not less than 25 
percent of its loans to small business concerns located in or owned by one or more 
residents of an economically distressed area; or 
(11) the intermedi~ has a portfob of loans made 
under this subsection that averages not more than $7,500 during the period of the 
intermediary’s participation. 
(ii) PURPOSES. -- A grant awarded under clause (I) may 
be used to provide rnarketing, ~ ~ a ~ e m e n t ,  
and technical assistance to small business 
concerns that are borrowers under this subsection. 
~
X
C
~
~
~
I
~
~
-- The contribution 
requirements in ~~bparagraph 
to grants made under this paragraph. 
ility for a grant described in s u b p ~ a ~ r a ~ h  
(A) or (G) shall be determined 
separately for each loan-making site or o ce of 1 intermediary. 
(0 
G 
- Each i n t ~ ~ ~ ~ i a ~  
may expend an 
amount not to exceed 25 percent of the grant funds received under paragraph (1) 
74 


to provide information and technical assistance to small business concems that are 
prospective borrowers under this subsection. 
expend not more than 25 percent of the hnds received under aragraph (1) (B) (ii) to 
enter into third party contracts for the provision of technical assistance. 
(I) IN GE 
- The Admi~strat~on 
may accept any 
fkds transferred to the Adm~ni§trat~on 
from other departments or agencies of the Federal 
~ o ~ e ~ e n t  
to make grants in accordance with this sub~ara~aph 
and section 202 (b) of 
the Small Business 
authorization Act of 1997 to ~ a ~ i c i ~ a t i n g  
i n t e ~ e d i a ~ ~ §  
and 
technical assistance providers under paragraph (5), for use in a ~ c o r ~ a ~ ~ e  
with clause (iii) 
lo provide additional technical assistance and related services to recipients of assistance 
under a State program described in paragrap~i (1) (A) (iv) at the time they initially apply 
for assistance under this subparagraph. 
ENTS; 
BUNTS ” Tn 
making grants under this subpara~rap~, 
the A ~ ~ n ~ ~ t r ~ t i o n  
may select, fioni among 
participating intermediaries and technical assistance provider$ d~scribe~ 
in clause (I), not 
more than 20 grantees in fiscal year 2998, not more than 25 grantees in fiscal year 1999, 
and not more than grantees in fiscal year 2000, each of whom may receive a grant under 
this subparagraph in an amount not to exceed $200,000 per year, 
(iii) 
USE OF 
OhJNTS . Grants under this 
subparagraph - 
(I) are in addition to other grants provided under 
this subsection and shall not require the contribution of matching amounts as a condition 
of eligibility; 
(IT) may be used by a grantee - 
(aa) to pay or reimburse a portion of child care 
and transportation costs of recipients of assistance described in clause (I), to the extent 
such costs are not otherwise: paid by State block grants under the Child Care 
lock @rant Act of 1990 (42 W. .C. 9958 et seq.); and 
(bb) 
for m a r k ~ t ~ n ~  
~ a ~ a ~ ~ ~ ~ n t ,  
and 
technical assistance to recipients of assistance described in clause (I). 
75 


accepting any transfer of fbnds under clause (I) from a department or agency of the 
Federal Government, the A d ~ ~ s t r a t i o n  
shall enter into a 
Understanding with the depa~m~nt 
or agency, which shall - 
(I) specify the terns and conditions of the grants 
under this subparagraph; and 
(%I) 
provide for approp~ate monitoring of 
expenditures by each grantee under this subpara~a~h 
and each recipient of assistance 
described in clause (I) who receives assistawe from a grantee under this s~bpara~aph, 
in order to ensure compliance with this subparagraph by those grantees and recipients of 
assistmce. 
(5) PRIVATE SECT 
CAL ASSISTAtPaCE 
f p a r a ~ a ~ h  
(1) shall 
S .  Grants made in accordance with s u b ~ a r a ~  
be subject to the following req~irem~~ts: 
(A) 
S .  
Subject to the requirements of 
subparagraph (B), the Administration may make not more than 25 grant annually, each in 
amounts not to exceed $125,000 for the purpose specifi 
in subpara~aph (SI @I of 
paragraph (1 ). 
UTION. As a condition of my grant made under 
subparagraph (A), the A~rnin~str~~ion 
shall require the grant recipient to contribute an 
amount equal to 20 percent of the amount of the grant,  obtain^^ solely from non-Federal 
sources. In addition to cash or other direct fbnding, the cont~bution may include indirect 
costs or in-kind contributions may include indirect costs or ~ n - ~ ~ d  
~ n ~ ~ b u t i o n s  
paid for 
under non-Federal programs. 
us 
, An eligible intermediary shall make short- 
terni, fixed rate loans to startup, newly established and growing sniall business concerns 
from the funds made available to it under §~b~ara~raph 
( )(i) of paragraph (1) for 
working capital and the acquisition of materials, supplies, fiirniture, fixture and 
equipment. 
76 


(€3) 
PORTFOLIO 
T. To the extent practicable, 
each intermediary that operates a microloan program under this subsection shall maintain 
a microloan portfolio with an average loan size of not more than $10,000, 
laws of any State or the constitution of any State p e ~ a i ~ n g  
to the rate or amount of 
interest that may be charged, taken, received or reserved on a loan, the maximum rate of 
interest, to be charged on a microloan funded under this subsection shall not exceed the 
rate of interest applicable to a loan made to an intermediary by the Ad~inistration -- 
(i> in the case of a loan of more than $7,500 made by the 
intermediary to a small business concern or entrepreneur by more than 7.75 percentage 
points; and 
fii) in the case of a loan of more than $7,500 made by the 
intermediary to a small business concern or entrepreneur by more than 8.5 percentage 
points. 
(D) 
CTION. 
The ~ d ~ n ~ s ~ r a t ~ o n  
shall not 
review individual microloans made by i n t ~ ~ ~ d i a ~ ~ ~  
prior to approval. 
(E> 
USE 
OR 
In addition to other eligible small businesses 
ATTON BUS 
concerns [sic], borrowers under any program under this ~ u b § ~ ~ ~ u n  
may include 
individuals who will use the loan proceeds to establish for-profit or non-profit child care 
establishments or business providing for-profit transportation services. 
(A) 
wing the program 
authorized by this subsection, the ~
d
~
~
~
t
r
a
t
~
~
~
 
may hnd, on a competitive basis, not 
more than 200 microloan programs. 
(El) 
STATEE 
. -- During any fiscal year, a State 
shall not receive new loan fbnds from the A ~ ~ n ~ s t r a t i o n  
that exceed 125 percent of the 
State’s pro rata share of the microloan program ~ u t ~ o r i ~ a t i o ~  
during such fiscal year, 
such share to be based on the popu~ation of the State, as compared to the population of 
the United States. If, however, at the b e ~ i n ~ ~ ~  
of the fourth quarter of a fiscal year the 
~ ~ ~ i n i s t r ~ t j Q n  
determines that a portion of ~ ~ ~ r u p ~ ~ t ~ d  
microloan hnds are unlikely to 
be awarded during that year, the ~ ~ ~ ~ ~ ~ t r a t i o ~  
may make a ~ ~ i ~ i o ~ a ~  
funds ava~able to a 
State in excess of 125 percent of the pro rate share ofthat 
77 


(8) EQUITIPBLE DIST 
UTION OF IlVTE 
s. 
3- In 
approving microloan program appl~cants under this subsection, the Admi~stration shall 
select such intermediaries as will ensure appropriate ava~~ab~ity 
of loans for small 
businesses in all industries located throughout each State, p~rtic~~arly 
those located in 
urban and in rural areas. 
, -- The Adm~istr~tion 
may procure technical 
assistance for intermediaries participating in the Wcroloan ~ r ~ ~ r a m  
to ensure that such 
intermediaries have the howledge, skills, and understan~i~g 
of microlending practice 
necessary to operate successfbl microloan programs. 
) ASSISTANCE AMOUNT. -- The Administration shall 
transfer 7 percent of its annual appropriation for loans and loan guarantees under this 
subsection to the Administration’s Salaries and Expense Account for the specific p~rpose 
of providing 1 or more technical assistance grants to experienced microlending 
organizations and national and regional nonprofit organizations that have d ~ ~ o n ~ t r a t e d  
experience in providing training support for micro enterprise development and financing 
to achieve the purpose set forth in paragraph (A). 
(6) 
- Of amounts made available to carry 
out the welfare-to-work microloan initiative under paragraph (1) (A) (iv) in any fiscal 
year, the Administration may use not more than 5 percent to provide technical assistance, 
either directly or through contractors, to welfare-to-work microloan initiative grantees, to 
ensure that, as grantees they have the ~ ~ w l e d ~ e ,  
skills, and understanding of 
microlending and welfare-to-work transition, and other related issues, to operate a 
successfbl. welfare-to-work microloan initiative. 
(10) 
n November 1,1995, the 
Adininistration shall submit to the committees on Small Business of the Senate and the 
House of ~ ~ p r e s e ~ t a t ~ v e s  
a report, including the A d ~ ~ s t r ~ t i o n ’  
s ~ v a l ~ a t ~ o n  
of the 
effectiveness of the first 3 1l2 years of the microloan program and the following: 
(A) the numbers and locations of the i n t e ~ ~ d ~ a ~ ~ s  
funded to 
conduct microloan programs; 
) the amount of each loan and each grant to intermediaries; 
78 


1 
(C) 
a description of the matching contributions of each 
intermedia,ry; 
> 
intermediaries to small business concern borrowers; 
the numbers and amounts of microloans made by the 
(E) the repayment history of each intermediary; 
(F> a ~e§cr~ption 
of the loan portfolio of each i ~ t e r ~ ~ ~ i a ~  
including the extent to which it [provides microloans to small business concerns in rural 
areas; and 
(G) 
any r~commendat~~ns 
for leg~slative changes that would 
improve program operations. 
TTBNS. For purposes ofthis subsection -- 
(A) the tern "intermediary" mean 
(I) a private, nonprofit entity; 
(ii) 
a private nonprofit comm~nit~ development 
corporation; 
(iii) 
a ~ o n s o ~ i ~ ~ ~  
of private, nonprofit organizations or 
nonprofit community development c o ~ ~ r a t i ~ n s ;  
(iv) 
a. quasi-governmental economic development entity 
(such as a planning and development di~t~ct), 
other than a State, county, mmicipal 
government, or any agency thereot if-- 
(I) 
no application is received from an eligible 
nonprofit organization; or 
(11) the ~ ~ ~ ~ s t r a t ~ o n  
~
~
t
~
r
~
n
~
s
 
that the needs of 
a region or geographic area are not adequately served by an existing, eligible nonprofit 
organization that has submitted an application; or 
(v) an agency of or nonprofit entity ~ § t a b ~ ~ s h ~ d  
by a Native 
vement, that seeks to borrow or has bor~owed lrunds & ~ m  
the 
usiness Administration to make microloans to small business c o n c ~ ~ §  
under this 
erican Tribunal 
subsection; 
79 


I 
(B) the term 6‘microloan” means a short-term, fixed rate loan of 
not more than $25,000, made by an i n t e ~ e d ~ a ~  
to a startup, newly established, or 
growing small business concern; 
(C) the term ““rural area” means any ~olitical subdi~ision or 
unincorporated area -- 
(I) 
in a no~etropolitan county (as defined by the 
Secretary of Agriculture) or its equivalent thereoc or 
(ii) in a n o ~ ~ t r ~ p ~ l i t a n  
county or its equivalent that has a 
resident population of less than 20,000 if this Small Business Administration has 
determined such political subdivision or area to be niral; and 
the tern “economically di~tre~sed 
area” , as used in paragraph 
($), means a county or equivalent division of local government of a State in which the 
small business concern is located, in which, according to the most recent data available 
from the bureau of the Census, Department of Comm~r~e, 
not less than 40 percent of 
residents have an annual income that is at or below the poverty level. 
OT. -- In lieu of making 
direct loans to i n t e ~ e d i a ~ e s  
as authorized i 
during fiscal years 1995 
through 1997, the ~ d m i ~ s t r a t ~ ~ n  
may, on a pilot program basis, pa~i~ipate 
on a deferred 
basis of not less tlian 90 percent and not more than 100 percent on loans made to 
intermediaries by a for-profit or nonprofit entity or by alliances of such entities, subject to 
the following conditions : 
, 
(4 
S. -- In carrying out this paragraph, the 
Administration shall not participate in providing financing on ra deferred basis to more 
than I O  intermediaries in rural areas. 
F L  
. -- The term of each loan shall not be 
required to repay any interest or p~n~ipal. 
During the second through fifth years of the 
loan, the i n t e r ~ e d i ~ ~  
shall be required to pay interest only. 
uring the sixth through 
tenth years of the loan, the inte~ediary shall be required to make interest payments and 
fully amortize the principal. 
ATE. -- The interest rate on each loan shall be 
the rate specified by paragraph (3) (F) for direct loans. 
( 13) 
EVALUATI 
. -- On January 31,1999, and anrsually t h ~ r ~ ~ e r ,  
the ~ ~ ~ n i s t r a t i o n  
shalI 


1 
submit to the Committees on Small Business of the House of Representatives and the 
Senate a report on any monies distributed pursuant to paragraph (4) (F). 
Sec. 8. 
(1) It shall be the duty of the Administration and it is hereby 
empowered, whenever it determines such action is and it is hereby empowered, whenever 
it determines such action is necessary or appropriate -- 
(a) 
(A) to enter into contracts with the United States Government and 
any department, agency, or officer thereof having procurement powers obligating the 
Administration to hrnish articles, equipment, supplies, services, or materials to the 
Government or to perform construction work for the Government. In any case in which 
the administration certifies to any officer of the Government having procurement powers 
that the Administration is competent and responsible to perform any specific Government 
procurement contract to be let by any such officer shall be authorized in his discretion to 
let such procurement contract to the Administration upon such terms and conditions as 
may be agreed upon between the Administration and the procurement officer. Whenever 
the Administration and such procurement officer fail to agree, the matter shall be 
submitted for determination to the Secretary or the head of the appropriate department or 
agency by the Administrator. Not latter than 5 days from the date the Administration is 
notified of a procurement officer’s adverse decision, the Administration may notifjr the 
contracting officer of the intent to appeal such adverse decision, and within 15 days of 
such date the Administrator shall file a written request for a reconsideration of the 
adverse decision with the Secretary of the department or agency head. For the purposes 
of this subparagraph, a procurement officer’s adverse decision includes a decision not to 
make available for award pursuant to this subsection a particular procurement 
requirement or the failure to agree on the terms and condition of a contract to be awarded 
noncompetitively under the authority of this subsection. Upon receipt of the notice of 
intent to appeal, the Secretary of the department or the agency head shall suspend hrther 
action regarding the procurement until a written decision on the Administrator’s request 
for consideration has been issued by such Secretary or agency head, unless such officer 
makes a written determination that urgent and compelling circumstances which 
significantly affect interest of the United States will not permit waiting for a 
reconsideration of the adverse decision. 
If the Administrator’s request for 
reconsideration is denied, the Secretary of the Department or agency head shall specifL 
the reasons why the selected firm was determined to be incapable to perform the 
procurement requirement, and the findings supporting such determination, which shall be 
made a part of the contract file for the requirement. A contract may not be awarded 
under this subsection if the award of the contract would result in a cost to the awarding 
agency which exceeds a fair market price; 
81 


. 
(B) to arrange for the performance of such procurement contracts 
by negotiating or otherwise letting subcontracts to socially and economically 
disadvantaged small business concerns for construction work, services, or the 
manufacture, supply, assembly of such articles, equipment, supplies, materials, or parts 
thereof, or servicing or processing in connection therewith, or such management services 
as may be necessary to enable the Administration to perform such contracts; 
(C) to make an award to a small business concern owned and 
controlled by socially and economically disadvantaged individuals which has completed 
its period of Program Participation as prescribed by section 7 (i) (1 5), if -- 
(I) the contract will be awarded as a result of an offer 
(including price) submitted in response to a published solicitation relating to a 
competition conducted pursuant to subparagraph (D); and 
(ii) 
the prospective contract Awardee was a Program 
Participant eligible for award of the contract on the date specified for receipt of offers 
contained in the contract solicitation; and 
(D) 
(I) A contract opportunity offered for award pursuant to 
this subsection shall be awarded on the basis of competition restricted to eligible Program 
Participant if -- 
(I) there is reasonable expectation that at least two 
eligible Program Participants will submit offers and that award can be made at a fair 
market price, and 
(11) 
the anticipated award price of the contract 
(including options) will exceed $5,000,000 in the case of a contract opportunity assigned 
a standard industrial classification code for manufacturing and $3,000,000 (including 
options) in the case of all other contract opportunities. 
(ii) 
The Association Administrator for Minority Small 
Business and Capital Ownership Development, on a nondelegable basis, is authorized to 
approve a request from an agency to award a contract opportunity under this subsection 
on the basis of competition restricted to eligible Program Participants even if the 
anticipated award price is not expected to exceed the dollar amounts specified in clause 
(I) (TI) . Such approvals shall be granted only on a limited basis. 
(2) Notwithstanding subsections (a) and (c) of the first section of the Act 
entitled “An Act requiring contracts for the construction, alteration, and repair of any 
82 


public building or public work of the United States to be accompanied by a performance 
bond protecting the United States and by additional bond for the protection of persons 
hrnishing material and labor for the construction, alteration, or repair of said public 
buildings or public works,” approved August 24, 1935 (49 Stat. 793), no small business 
concern shall be required to provide any amount of any bond as a condition of receiving 
any subcontract under this subsection if the Administrator determines that such amount is 
inappropriate for such concern in performing such contract : Provided, That the 
Administrator shall exercise the authority granted by the paragraph only if -- 
(A) the administration takes such measures as it deems appropriate 
for the protection of persons hrnishing materials and labor to a small business receiving 
any benefit pursuant to this paragraph; 
(B) the Administration assists, insofar as practicable, a small 
business receiving the benefits of this paragraph to develop, within a reasonable period of 
time, such financial and other capability as may be needed to obtain such bonds as the 
Administration may subsequently require for the successfbl completion of any program 
conducted under the authority of this subsection; 
(C) the Administration finds that such small business is unable to 
obtain the requisite bond or bonds from a surety and that no surety is willing to issue such 
bond or bonds subject to the guarantee provisions of Title IV of the Small Business 
Investment Act of 1958; and 
(D) the small business is determined to be a startup concern and 
such concern has not been participating in any program conducted under the authority of 
this subsection for a period exceeding one year. 
The authority to waive bonds provided in this paragraph (2) may not be exercised after 
September 30, 1988. 
(3) 
(A) Any Program Participant selected by the Administration to 
perform a conduct to be let noncompetitively pursuant to this subsection shall, when 
practicable, participate in any negotiation of the terms and conditions of such contract. 
(B) 
(I) For purposes of paragraph (1) a “fair market price” 
shall be determined by the agency offering the procurement requirement to the 
Administration, accordance with clauses (ii) and (iii). 
(ii) The estimate of a current fair market price for a new 
procurement requirement, or a requirement that does not have a satisfactory procurement 
83 


history, shall be derived form a price or cost analysis. Such analysis may take into 
account prevailing market conditions, commercial prices for similar products or services, 
or data obtained from any other agency. Such analysis shall consider such cost or pricing 
data as may be timely submitted by the Administration. 
(iii) 
The estimate of a current fair market price for a 
procurement requirement that has a satisfactory procurement history shall be based on 
recent award prices adjusted to insure comparability. Such adjustments shall take into 
account differences in quantities, perf‘ormance times, plans, specifications, transportation 
costs, packaging and packaging costs, labor and materials costs., overhead costs, and any 
other additional costs which may be deemed appropriate. 
(C) An agency offering a procurement requirement for potential 
award pursuant to this subsection shall, upon the request of the Administration, promptly 
submit to the Administration a written statement detailing the method used by the agency 
to estimate the current fair market price for such contract, identifjring the information 
,studies, and analyses, and other data used by such agency. The agency’s estimate of the 
current fair market price (and any supporting data furnished to the Administration) shall 
not be disclosed to any potential offer or (other than the Administration). 
(D) A small business concern selected by the Administration to 
perform or negotiate a contract to be let pursuant to this subsection may request the 
Administration to protect the agency’s estimate of the fair market price for such contract 
pursuant to paragraph (1) (A). 
(4) 
(A) 
For purposes of this section, the term “socially 
and 
economically disadvantaged small business concern” means any small business concern 
which meets the requirements of subparagraph ( 
(I) which is at least 51 per centum unconditionally owned 
by -- 
(I) 
one or more socially and economically 
disadvantaged individuals, 
(11) an economically disadvantaged Indian tribe (or 
a wholly owned business entity of such tribe), or 
(111) 
an economically disadvantaged Native 
Hawaiian organization, or 
84 


, 
, 
(ii) in the case of any publicly owned business, at least 51 
per centum of the stock of which is unconditionally owned by -- 
(I) 
one or more socially and economically 
disadvantaged individuals, 
(11) 
an economically disadvantaged Indian Tribe 
(or a wholly owned business entity of such tribe), or 
(111) 
an economically disadvantaged Native 
Hawaiian organization. 
(€3) 
A small business concern meets the requirements of this 
subparagraph if the management and daily business operations of such small concern are 
controlled by one or more -- 
(I) 
socially and economically disadvantaged individuals 
described in subparagraph (A) (I) (I) or subparagraph (A) (ii) (I), or 
(ii) 
members of an economically disadvantaged Indian 
tribe described in subparagraph (A) (I) (11) or subparagraph (A) (ii) (11) or 
(iii) 
Native Hawaiian organizations described in 
subparagraph (A) (I) (111) or subparagraph (A) (ii) (111). 
(6) Each Program Participant shall certify, on an annual basis, that 
it meets the requirements of this paragraph regarding ownership and control. 
(5) Socially disadvantaged individuals are those who have been subjected 
to racial or ethnic prejudice or cultural bias because of their identity as a member of a 
group without regard to their individual qualities. 
(6) 
(A) 
Economically disadvantaged individuals are those socially 
disadvantaged individuals whose ability to compete in the free enterprise system has been 
impaired due to diminished capital and credit opportunities as compared to other in the 
same business area who are not socially disadvantaged. In determining the degree of 
diminished credit and capital opportunities that Administration shall consider, but not be 
limited to, the assets and net worth of such socially disadvantaged individuals. In 
determining the economic disadvantaged of an Indian tribe, the Administration shall 
consider, where available, information such as the following: the per capita income of 
members of the tribe excluding judgment awards, the percentage of the local Indian 
population below the poverty level, and the tribe’s access to capital markets. 
85 


(l3) 
Each Program Participant shall annually submit to the 
Administration -- 
(I) a personal financial statement for each disadvantaged 
owner; 
(ii) 
a record of all payments made by the Program 
Participant to each of its disadvantaged owners or to any person or entity affiliated with 
such owners; and 
(iii) 
such other information as the Administration may 
deem necessary to make the determinations required by this paragraph. 
(6) 
(I) Whenever, on the basis of information provided by a 
Program Participant pursuant to subparagraph @) or otherwise, the Administration has 
reason to believe that the standards to establish economic disadvantage pursuant to 
subparagraph (A) have not been met, the Administration shall conduct a review to 
determine whether such Program Participant and its disadvantaged owners continue to be 
impaired in their ability to compete in the free enterprise system due to diminished capital 
and credit opportunities when compared to other concerns in the same business area, 
which are not socially disadvantaged. 
(ii) 
If the administration determines, pursuant to such 
review, that a Program Participant and its disadvantaged owners are no longer 
economically disadvantaged for the purpose of receiving assistance under this subsection, 
the Program Participant shall be graduated pursuant to section 7 (‘j) (IO) (G) subject to the 
right to a hearing as provided for under paragraph (9). 
(D) 
(I) Whenever, on the basis of information provided by a 
Program Participant pursuant to subparagraph (El) or otherwise, the Administration has 
reason to believe that the amount of fbnds or other assets withdrawn from a Program 
Participant for the personnel benefit of its disadvantaged owners or any person or entity 
affiliated with such owners may have been unduly excessive, the Administration shall 
conduct a review to determine whether such withdrawal of fbnds or other assets was 
detrimental to the achievement of the targets, objectives, and goals contained in such 
Program Participant’s business plan. 
(ii) If the Administration determines, pursuant to such 
review, that hnds or other assets have been withdrawn to the detriment of the Program 
Participant’s business, the Administration shall -- 
86 


, 
(I) initiate a proceeding to terminate the Program 
Participant pursuant to section 7 0) (10) (F), subject to the right to a hearing under 
paragraph (9); or 
(11) require an appropriate reinvestment of fbnds or 
other assets and such other steps as the Administration may deem necessary to ensure the 
protection of the concern. 
(E) Whenever the Administration computes personal net worth for 
any purpose under this paragraph, it shall exclude from such computation -- 
(I) the value of investments that disadvantaged owners 
have in their concerns, except that such value shall be taken into their account under this 
paragraph when comparing such concerns to other concerns in the same business area 
that are owned by other socially disadvantaged persons; 
(ii) the equity that disadvantaged owners have in their 
primary personal residences, except that any portion of such equity that is attributable to 
unduly excessive withdrawals from a Program Participant or a concern applying for 
program participation shall be taken into account. 
(7) 
(A) No small business concern shall be deemed eligible for any 
assistance pursuant to this subsection unless the Administration determines that with 
contract, financial, technical, and management support the small business concern will be 
able to perform contracts which mat be awarded to such concern under paragraph (1) (C) 
and has reasonable prospects for success in competing in the private sector. 
(B) 
Limitations established by the Administration in its 
regulations and procedures restricting the award of contracts pursuant to this subsection 
to a limited number standard industrial classification codes in an approved business plan 
shall not be applied in a manner that inhibits the logical business progression by a 
participating small business concern into areas of industrial endeavor where such concern 
has the potential for success. 
(8) All determinations made pursuant to paragraph (5) with respect to 
whether a group has 
been subjected o prejudice or bias shall be made by the 
Administrator after consultation with the Associate Administrator for Minority Small 
Business and Capital Ownership Development. All other determinations made pursuant 
to paragraphs (4), (9, (6), and (7) shall be made by the Associate Administrator for 
Minority Small Business and Capital Ownership Development under the supervision of, 
and responsible to the Administrator. 
87 


(9) 
(A) 
Subject to the provisions of subparagraph (E), the 
Administration, prior to taking any action described in subparagraph (B), shall provide 
the small business concern that is the subject of such action, an opportunity for a hearing 
on the record, in accordance with chapter 5 of title 5, United States Code. 
(B) The actions referred to in subparagraph (A) are -- 
(I) denial of program admission based upon a negative 
determination pursuant to subparagraph (4), (5), or (6); 
(ii) a termination pursuant to section 7 (‘j) (10) (I?); 
(iii) a graduation pursuant to section 7 0) (10) (G); and 
(iv) the denial of a request to issue a waiver pursuant to 
paragraph (21) (B). 
(C) The Administration’s proposed action, in any proceeding 
conducted under the authority of this paragraph, shall be sustained unless it is found to be 
arbitrary, capricious, or contrary to law. 
(D) A decision rendered pursuant to this paragraph shall be the 
final decision of the Administration and shall be binding upon the Administration and 
those within its employ. 
(E) 
The adjudicator selected to preside over a proceeding 
conducted under the authority of this paragraph shall decline to accept jurisdiction over 
any matter that -- 
(I) does not, on its face, allege facts that, if proven to be 
true, would warrant reversal or modification of the Administration’s position; 
(ii) is untimely filed; 
(iii) is not filed in accordance with the rules of procedure 
governing such proceedings; or 
(iv) 
has been decided by or is the subject of an 
adjudication before a court of competent jurisdiction over such matters. 
(F) 
Proceedings conducted pursuant to the authority of this 
paragraph shall be completed and a decision rendered, insofar as practicable, within 
ninety days after a petition for a hearing is filed with the adjudicating office. 


(10) 
The Administration shall develop and implement an outreach 
program to inform and recruit small business concerns to apply for eligibility for 
assistance under this subsection. Such program shall make a sustained and substantial 
effort to solicit applications for certification fi-om small business concerns located in 
areas of concentrated unemployment or underemployment or within labor surplus areas 
and within States having relatively few Program Participants and from small 
disadvantaged business concerns in industry categories that have not substantially 
participated in the award of contracts let under the authority of this subsection. 
(1 1 ) 
To the maximum extent practicable, construction subcontracts 
awarded by the Administration pursuant to this subsection shall be awarded within the 
counter State where the work is to be performed. 
(12) 
(A) 
The Administration shall require each concern eligible to 
receive subcontracts pursuant to this subsection to annually prepare and submit to the 
Administration a capability statement. 
Such statement shall briefly describe such 
concern's various contract performance capabilities and shall contain the name and 
telephone number of the Business Opportunity Specialist assigned such concern. The 
Administration shall separate such statements by those primarily dependent upon local 
contract support and those primarily requiring a national marketing effort. Statements 
primarily dependent upon local contract support shall be disseminated to appropriate 
buying activities in the marketing area of the concern. The remaining statements shall be 
disseminated to the Directors of Small and Disadvantaged Business Utilization for the 
appropriate agencies who shall fkther distribute such statements to buying activities with 
such agencies that may purchase the types of items or services described on the capability 
statements. 
(B) Contracting activities receiving capability statements shall, 
within 60 days after receipt, contract the relevant Business Opportunity Specialist to 
indicate the number type and approximate dollar value of contract opportunities that such 
activities may be awarding over the succeeding 12-month period and which may be 
appropriate to consider for award to those concerns for which it has received capability 
statements. 
(C) Each executive agency reporting to the Federal Procurement 
Data System contract actions with an aggregate value in excess of $50,000,000 in fiscal 
year 1988, or in any succeeding fiscal year, shall prepare a forecast of expected contract 
opportunities or classes of contract opportunities for the next and succeeding fiscal years 
that small business concerns, including those owned and controlled by socially and 
economically disadvantaged individuals, are capable of performing. Such forecast shall 
89 


be periodically revised during such year. To the extent such information is available, the 
agency forecasts shall specify: 
(I) 
The approximate number of individual contract 
opportunities (and the number of opportunities within a class) 
(ii) 
The approximate dollar value, or range contract 
opportunities. 
(iii) The anticipated time (by fiscal year quarter) for the 
issuance of a procurement request. 
(iv) 
The activity responsible for the award and 
administration of the contract. 
(D) The head of each executive agency subject to the provisions of 
subparagraph (C) shall within 10 days of completion hmish such forecasts to -- 
(I) the Director of the Ofice of Small and Disadvantaged 
Business Utilization established pursuant to section 15 (k) for such agency; and 
(ii) the Administrator. 
(E) The information reported pursuant to subparagraph (D) may be 
limited to the classes of items and services for which there are substantial annual 
purchases. 
(F) Such forecast shall be avaiIabIe to small business concerns. 
(13) For purposes of this subsection, the term “Indian tribe” means any 
Indian tribe, band,. nation, or other organized group or community of Indians, including 
any Alaska Native village or regional or village corporation (within the meaning of the 
Alaska Native Claims Settlement Act) which -- 
(A) is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as Indians, or 
(B> is recognized as such by the State in which such tribe, band, 
nation, group, or community resides. 
(14) 
(A) 
A concern may not be awarded a contract under this 
subsection as a small business concern unless the concern agrees that -- 
90 


(I) 
in the case of a contract for services (except 
construction), at least 50 percent of the cost of contract p e ~ Q ~ a n c e  
incurred for 
personnel shall be expended for employees of the concern; and 
(ii) 
in the case of a contract for procurement of supplies 
(other than procurement fi-~m a regular dealer in such s ~ ~ p l ~ e s ~  
, the concern will pe~orm 
work for at least 50 of the cost of ma~ufac~uring 
the supplies (not ~ c ~ ~ ~ d ~ n g  
the cost of 
materials). 
(B) The A d ~ n ~ s t ~ a t o r  
may change the percentage under clause (I) 
or (ii) of subparagraph (A) if the Administrator determines that such change is necessary 
to reflect conventional industry practices amo 
business concerns that are below the 
numerical size standard for businesses in that industry category. 
A percentage 
established under the preceding sentenGe may not differ f b m  a percentage established 
under section 15 (0). 
(C) 
The ~ d ~ i n i s t ~ a t ~ o ~  
shall establish, through public rule 
making, requirements similar to those specified in subparagraph (A) to be applicable to 
contracts for general and speciahy c o ~ s t ~ c t ~ o ~  
and to  contact^ for any otlier industry 
category not otherwise subject to the requirements of such subparagraph. The percentage 
applicable to any such r~q~irements 
shall be d ~ t e ~ e d  
in accor~ance with subparagraph 
), except that such a percentage may not differ fi-om a percentage established under 
section 15 (a) for the same industry category. 
(IS) 
For purposes of this subs~ction, the term “Native Hawaiian 
rganization” means any community service organization sewing Native Hawaiian in the 
(A) 
is a not-for-profit organ~ati~n 
~harlered by the State of 
Hawaii, 
) is controlled by Native 
(6) whose bus~ness advities will principally benefit such Native 
Hawaiians. 
(16) 
(A) The Administra~ion shall award sosole source contracts under 
this section to any small business concern r e c o ~ e n d e d  by the procuring agency 
offering the contract oppo~nity 
if -- 
(I) the Program ~ a ~ i c ~ p a n t  
is dete~~ined 
to be responsibl~ 
contractor with respect to performance of such contract op 
91 


(ii) the award of such contract would be consistent with the 
Program Participant’s business plan; and 
(iii) the award of the contract would mot result in the 
artkipant exceeding the r e q u i r e ~ ~ t s  
estab~ished by section 7 0) (IO) (I). 
) To the n i a ~ m u ~  
extent ~ r a c t i ~ ~ l e ~  
the ~ d ~ ~ s ~ r a t ~ o n  
s h d  
promote the equitable ~ e o ~ r a ~ ~ c  
distribution of s ~ i e  
source contracts awarded pursuant 
to this subsection. 
(17) 
(A) 
An otherwise r e s p o ~ s ~ b ~ ~  
business concern that is in 
compliance with the requirements of subparagraph (El) 
shall not be denied the 
opportunity to submit and have considered its offer for any procurement contract for the 
supply of a product to be let pursuant to this subsection or subsection (a) of section 15 
solely because such concern is other than the actual manufacturer or processor of the 
product to be supplied under the contract. 
@) To be in co~p~iance 
with the require~ents referred to in 
subparagraph (A), such a ~L~siness 
concern shall -- 
(I) be primarily engaged in the wholesa~e or retail trade; 
(ii) be a small business concern under the  mer^^^ size 
standard for the Standard Industrial Classification Code assigned to the contract 
solicitation on which the oPer is being made; 
(iii) be a regular dealer, as defined pursuant to section 35 
(a) of title 41, United States Code (popularly referred to as the ~ ~ ~ s l ~ - ~ ~ a l e y  
Public 
Contracts Act), in the product to be offered the Government or be specifically exempted 
fkom such section by section 7 (i) (13) (6); and 
(iv) represent that it will s u p ~ ~ y  
the product of a domestic 
small business manufacturer or processor unless a waiver of such requirement is granted - 
(It) 
by the A d ~ ~ s t ~ a t o r ,  
after reviewing a 
determination by the contracting oficer that no small business ma~ufacturer or processor 
can r ~ ~ s o ~ a b ~ y  
be expected to offer a product m ~ e ~ i ~ ~  
the s
~
~
~
~
~
c
a
t
~
~ i n c l ~ i ~ i n ~  
period of performance) required of an offer or by the solic~tat~on; 
or 
92 


(TI) by the A ~ m ~ s t r a t o r  
for as product ( or class of 
products), aRer ~ e t ~ ~ i n ~ n g  
that no small business ~ a n ~ f a c ~ r ~ r  
QT processor is available 
to participate in the Federal pro~uren~ent 
market. 
(18) 
(A) No person within the employ of the Admi~$tratio~ 
shall, 
during the term of such e~~loyment 
and for a period of two years &er such 
employment has been terminated, engage in any activity or transaction specified in 
subparagraph (B) with respect to any rogram Participant during such person's term of 
employment, if such person participated personally (either directly or indirectly) in 
decision-rnaking responsibilities relating to such Program Pai~~cipant 
or with respect to 
the administration of any a s $ i s t a ~ ~ ~  
provided to rogram Participants generally under this 
subsection, section 7 0) (lo), or section 7 (a) (20). 
) The activities and transac;tions p
~
~
~
b
~
t
~
~
 
by subparagraph (A) 
include -- 
(I) the buying, selling, or receiving (except by inheritance) 
of any legal or beneficial ownership of stock or any other ownership interest or the right 
to acquire any such interest; 
(ii) the entering into or execution of any written or oral 
agreement (whether or not legally edorceable) to purchase or otherwise obtain any right 
or interest described in clause (I); or 
(iii) the receipt of any other benefit or right that may be an 
incident of ownership. 
(C) 
(I) The employees d e s ~ ~ ~ t e ~  
in clause (ii) shall annually 
submit a written certification to the 
~ d m ~ ~ s t r a t i o n  
r ~ ~ a r ~ i n ~  
compliance with the 
requirements of this paragraph. 
(ii) The employees re€erred to in clause (I) are -- 
(I) regional admini$tratQrs; 
(11) district directors; 
the Associate A
~
~
~
~
t
r
~
~
o
r
 
for Minority 
Small Business and Capital 
loyees whose principal duties relate to the 
award of contracts or the provision of other assi§tan~e ~
u
~
~
~
~
t
to this ~ b ~ ~ c ~ i o n  
or 
section 7 0) (1 0); and 
93 


(V) such other employees as the Administrator may 
deem appropriate. 
(iii) 
Any present or former employee of 
the 
Administration who violates this paragraph shall be subject to a civil penalty, (assessed by 
the attorney General, that shall not exceed 300 per centum of the ~~u~ 
mount of 
gain such employee realized or could have realized as a result of engaging in those 
activities and transactions prescribed by the s u ~ p a r a ~ a ~ h  
(iv) In addition to any other remedy or sanction provided 
for under the law or regulation, any person who falsely certifies pursuant to clause (IO 
sliall be subject to a civil penalty under the Program Fraud Civil 
(31 U.S.C. 3801-3812). 
(19) 
(A) Any employee of the ~dmi~stration 
who has authority to 
take, direct others to take, recommend, or approve any slction with respect to any program 
or activity conducted pursuant to this subsection 7 o), shall not, with respect to any such 
action, exercise or threaten to exercise such authority on the basis of the political activity 
or affiliation of any party. Employees of the A~m~i$~ratjon 
shall ~xpediti~u§ly 
report to 
the Inspector General of the Administration any such action for which such employee’s 
participation has been solicited or directed. 
) 
Any employee who willfblly and ~ o ~ n g l y  
violates 
subparagraph (A) shall be subject to ~ s c i p ~ i n a ~  
action which may consist of separation 
fiom service, reduction in grad, suspension, or reprimand. 
(C) ~ubp~ragraph 
(A) shall not apply to any action taken as a 
penalty or other enforcement of a violation of any law, rule, or regulation prohibiting or 
restricting political activity. 
(D) The p~o~bitions 
of s ~ b ~ a r a g r a p ~  
(A), and remedial measures 
provided for under subparagraphs (Is) and (6) with regard to such prohibitions, shall be 
in addition to, and not in lieu of, any other prohi~~tion§, 
~ ~ a $ u r ~ s  
or liabilities that may 
rise under any other provision of law. 
(20) 
(A) Small business conce~s participati 
in the ~ r o ~ r a ~  
Under 
section 7 (j) (10) and eIigible to receive contracts pursuant to this section shall 
serniamually report to their assigne 
usiness ~ p p o r t u ~ ~  
Speci~l~st 
the following: 
94 


(I) 
A listing of any agents, representatives, attorneys, 
accountants, consultants, and other 
parties (other than em~loyees~ receiving 
compensation to assist in obtaining a Federal contract for such Program Participant. 
(ii) The amount of ~ o ~ p e n s a t ~ o n  
received by any person 
listed under clause (IO during the relevant reporting period and a description of the 
activities performed in return for such compensation. 
usiness Q)pp~~-t~tnity 
Specialist shall promptly review 
and forward such report to the Associate A d ~ ~ s t r a t o r  
for 
capital Ownership Development. Any report that raises a swspicion of improper activity 
shall be reported immediately to the Inspector General of the Administration. 
(C) The failure to submit a report pursuant to the r e ~ ~ i r ~ m e ~ t s  
of 
this subsection and applicable re lations termhation proceeding pursuant to section 7 0) 
(10) (Q. 
(21) 
(A) Subject to the provisions of subparagrap~i (B), a contract 
(including options) awarded pursuant to this subsection shall be performed by the 
concern that initially received such contract. ~ o t ~ t h s t a n ~ i n ~  
the provisions of the 
preceding sentence, if the owner or owners upon whom eligibility was based relinquish 
ownership or control of such concern, or enter into any a g r ~ e m ~ ~ t  
to relinquish such 
ownership or control, such contract or option shall be terminated for the convenience of 
the Government, except that no repurchase costs or other d
a
~
~
~
~
s
 
may be assessed 
against such concerns due solely to the provisions of this subparagraph. 
he Administrator may, 011 a n o ~ d e ~ ~ g a b ~ e  
basis, waive the 
requirements of subparagraph (A) only if one of the fol~owin~ 
conditions exist: 
(I) When it is necessary for the owners of the concern to 
surrender partial control of such concern on a tempora~ basis in order to obtain equity 
financing. 
(ii) 
The head of the contracting 
ency for which the 
contract is being performed certifies that t e ~ n a t i o ~  
of the contract would severely 
impair attainment of the agency’s program objectives or ~ $ s i ~ n s ;  
wners~p and control of the concern that is 
p e ~ o ~ i n g  
the contract will pass to another small business concern that is a program 
participant, but only if the acquiring firm would otherwise be eligible to receive the 
award directly pursuant to subsection (a); 
95 


, 
(iv) The individuals upon whom eligibility was based are 
no longer able to exercise control of the concern due to ~ncapacity or death; 
en, in order to raise equity capital, it is necessary 
for the disadva~tag~d 
owners of the concern to r ~ ~ n ~ ~ i s h  
owners~p of a majority of the 
voting stock of such concern, but only if -- 
(I) such concern has exited the Capital 
evelopment Program; 
(D) 
the disad~~taged 
owners will maintain 
ownership of the largest single outstanding block voting stock (including stock held by 
affiliated parties); and 
1 
the di~advantag~~ 
QWHS 
will maintain 
control of daily business operations. 
(C) 
The Administrator may waive the requirements of 
subparagraph (A) if -- 
(I) in the case of su~para~raph 
(B) (I), (ii) and (iv), he is 
requested to do so prior to the actual ~ e ~ i n q u i s ~ e n t  
ofownership or control; and 
(ii) in the case of ~ u b p a r a ~ ~ ~ p h  
) (iii), he is requested to 
do so as soon as possible after the incapacity or death occurs. 
) Concerns, performing contracts awa 
pursuant to this 
subsection shall be required to notify the A d ~ ~ s t r a t ~ o n  
i~mediately upon entering an 
agreement (either oral or writing) to transfer all or part of its stock or other ownership 
interest to any other party. 
(E) ~ o ~ i t h s t ~ ~ ~ i n g  
any other provi~~on 
of law, for the puiposes 
of determining ownership and control of a concern under this section, any potential 
ownership interests held by i n v ~ s t ~ ~ n t  
compan~e~ 
licensed tinder the ~
~
a
~
l
 
Business 
Investment Act of 1958 shall be treated in the same manner as interest. held by the 
individuals upon whom eligibility is based. 
(b) It shall also be the duty QE the A d ~ ~ s ~ r a t i o n  
and it is hereby empowered, 
whenever it determines such action is ~
~
c
~
~
s
~
~
 
- 
(1) 
(A) to provide t
e
~
~
~
~
a
~
 
and ~ a n ~ g e ~ i ~  
aids to small business 
Concerns, by advising and counseli~g on matters in c o n n ~ ~ t ~ ~ ~  
with Government 
procurement and property disposal and on policies, principles, and practi~~s 
of 
96 


management, including but not limited to cost accounting, methods of financing, business 
insurance, accident control, wage incentives, computer security, and methods 
engineering, by coop~ratin~ 
and advising, with voluntary business, professional, 
educational, and other nonprofit organ~za~io~s9 
associations, and institutions and with 
other Federal and State agencies, by ~ a ~ ~ t a ~ ~ i n g  
a ~ l e ~ n ~ h o ~ s ~  
for i ~ o r m a t ~ o i ~  
concerning the managing, financing and operation of small-business enterprises, 
including information on the benefits and risks of ~ a n c ~ $ ~ n g ,  
by d ~ s s e ~ n a t ~ ~ g  
such 
information, and by such other activities as are deemed appropriate by the 
Administration. Such assistance also may be provided to small business concerns by the 
Administration through cooperation with a profit-making concern (hereafter in this 
paragraph referred to as a ‘6C0SponSor”) to provide ~ r a j ~ ~ ~ :  
Provided, that the 
Administration shall take such actions as it deems appropriate to ensure that any 
Administration program participating in such cosponsored activities receives appropriate 
recognition and publicity, and that the cooperation does not constitute or imply an 
endorsement by the ~dn~~nistration 
of the products or services of the cosponsor, to avoid 
unnecessary promotion of the products or services of the cosponsor, and to minimize 
utilization of my one cosponsor in a marketing area. Such actions shall include, but not 
be limited to : (I) developing an agreement, executed on behalf of the agency by an 
employee of the agency in Washin~on9 
Distrkt of Columbia, and who shall approve, in 
advance, any printed materials to be d ~ s ~ ~ b u t e d  
at the conference, which specifies the 
standard terns and conditions of the cooperation, the: use of which shall be mandatory; 
(ii) prohibiting any fee or charge Erom being imposed upon any small business concern 
for receiving assistance in excess of a minimal amount to cover the direct costs of 
providing such assistance; (iii) prohibiting the release to the cosponsor of any of the 
Ad~n~stration’s 
lists of names and addresses of small business concerns; and (iv) 
requiring that all printed materials which contain the names of both the Administration 
and the cosponsor include a prominent disclaimer that the cQ~per~tion 
does not constitute 
or imply an endorsement by the A d ~ n ~ s t r ~ t i o n  
of the  prod^^^^ or services of the 
cosponsor. In the case of cosponsored activities which include the participation of a 
Federal, State, or local public official or agency, the Adm~nistration shall take such 
actions as it deems necessary to ensure that the cooperation does not constitute or imply 
an endorsement by the ~ d ~ ~ s t r a ~ i ~ n  
of or 
e undue recognition to the public official 
or agency, and the Ad~i~stration 
shall ensure that it receives a p ~ r o p ~ a ~ e  
r ~ c ~ g ~ t ~ o ~  
in 
all cosponsored printed materials, whether the: p a ~ ~ c ~ ~ a n t  
is a profit m a ~ n g  
concern or a 
governmental agency or public o 
1 To establish, conduct, and publicize, and to recruit, select, and 
train volunteers for (and to enter into contracts, grants, co~perativ~ 
a ~ r e ~ ~ e ~ t s  
thereof), 
volunteer programs, inchxding a Service Corps of 
) and an 
97 


Active Corps of Executive (sic) (ACE) for the purposes of section 8 (b) (1) (A) of this 
Act; and to facilitate the imp~ementation of such volunteer programs the Administration 
may maintain at its heddquarters and pay the expenses ofa team of A d ~ ~ s t r a t i o n  
deems 
appropriate: Provided, that any such payments made pursuant to this subpara~a~h 
shall 
be effective only to such extent or in such amounts as are p r o ~ ~ e d  
in advance in 
appropriation Acts. 
(C) To allow any individual or group of persons ~ a ~ ~ c i p a t i n ~  
with 
it in furtherance of the purposes of 
subpara~aphs (A) and 
Administration’s office facilities and related mater~a~ 
and sewices as the Administration 
deems appropriate, including clerical and $ t e n o ~ a p ~ ~  
sewices : 
(I) 
such volunteers, while carrying out activities under 
section 8 (b) (1) of this tpct shall be deemed Federal employees for the purposes of the 
Federal tort claims provisions in title 28, United States Code; and for the purposes of 
subchapter I of chapter 1 of title 5, United States Code (relative to compensation to 
Federal employees for work injuries) shall be deemed civil e ~ p l o y ~ s  
of the United 
States within the meaning of the term “employee” as ~ e ~ n e d  
in section 8101 of title 5, 
United States Code, and the provisions of that sLib~hapt~r 
shall apply except that in 
computing compensation benefits for disability OF death, the ~onthly pay of a volunteer 
shall be deemed that received under the entrance salary for a grade 
(ii) 
the ~dmi~strator 
is authorized to reimburse such 
volunteers for all necessary out-of-pocket expenses incident to their provision of services 
under this Act, or in connection with attendance at meetings sponsored by the 
Administration, or for the cost of malpractice insurance, as the A d ~ ~ s t r a t o r  
shall 
determine, in accordance with regulations which he or she shall prescribe, and, while they 
are ca.rrying out such activities away &om their homes or regular places of business, for 
travel expenses (including per diem in lieu of $~bs~~tence) 
as authorized by section 5703 
of title 5 ,  United States ode, for individuals serving without pay; and 
(iii) such vol~nteers shall in no way provide services to a 
client of si;rch Administration with a delinqu~n~ 
loan outsta~din~, 
except upon a specific 
request signed by such client for assistance in ~onne~tion 
with such matter. 
) ~~twithstandin~ 
any other provision of law, no payment for 
supportive services or re~mbur§em~nt 
of out-of-pocket expen§~s made to persons serving 
pursuant to section 8 (b) (1) ofthis Act shail be subject to any tax or charge or be treated 
as wages or compensation for the purposes of un~mployme~t, 
disability, r~tirement, 
public assistance, or similar benefit payments, or ~ i ~ i ~ u m  
wage laws. 
98 


(E) In carrying out its hnctions under sub~ara~apli 
(A), to make 
grants (including contracts and cooperative a~~ements) 
to any public or private 
institution of higher education for the e s t ~ ~ ~ ~ s ~ e n t  
and operation of a small business 
institute, which shall be used to provide business counsel in^ and assistance to small 
business concerns through the activities of students enrolle at the instihtion, which 
students shall be entitled to receive educational credits for their activities. 
(F) ~ o t w i t h s t a n d ~ ~  
any other provisions of law and pursuant to 
regulations which the A d ~ ~ § t r a t o r  
shall prescribe, counsel may be employed and 
counsel fees, court costs, bail, and other expenses ~ n ~ i d e n t ~  
to the defense of volunteers 
may be paid in judicial or administrative proceedings arising 
directly out of the 
performance of activities p ~ ~ s ~ a ~ t  
to section 8 (b) (1) of this Act, as amended (IS U.S.C. 
637 (b) (1) ) to which volunteers have been made parties. 
(G) In carrying out its functions under this Act, and to carry out 
the activities authorized by title IV of the Women’s 
Administration is authorized to accept, in the name of the Admhistration, and employ or 
dispose of in furtherance of the purposes of this Act, imy money or property, real, 
personal, or mixed, tangible, or 
i ~ t a ~ g i b ~ ~ ,  
received by giR, devise, bequest, or 
otherwise; and, hrther, to accept gratuitous services and eacilities. 
ership Act of 19 
(2) to make a complete inventory of all prod~ctive facilities of small 
business concerns or to arrange for such inventory to be made by any other governmental 
agency which has the facilities. In making any such jnventory, the appropriate agencies 
in several States may be requested to fuidsh an inventory of the productive facilities of 
small business concerns in each respective State if such an inveiltory is available or in 
prospect; 
(3) to coordinate and to ascertain the means by which the productive 
capacity of small business concerns can be more effectively utilized; 
(4) to consult and ~oope~ate 
with o%cers of the ~
a
v
~
~
~
~
n
t
 
having 
procurement or property disposal powers, in order to utilize the potential productive 
capacity of plants operated by small business concerns; 
(5) to obtain infixmation as to  tho^$ and practices which Government 
prime contractors utilize in letting subcontracts and to take action to ~ncoura~e 
the letting 
of subcontracts by prime contractors to small business concerns at prices and on 
conditions and terms which are fair and equitable; 
99 


(6) to determine within any industry the concerns, firms, persons, 
corporations, partnerships, cooperatives, or other business enterprises which are to 
designated “smail business concerns” for the purpose of e~ectuatin~ 
the provisions of 
this Act. To carry out this pu ose the Ad~ini~trator, 
when re~uest~d 
to do so, shalf 
issue in response to each such request an appropriate certificate certifying an individual 
concern as a “small business concern” in accordance with criteria expressed in this Act. 
Any such certificate shall be subject to revocation when the concern covered thereby 
ceases to be a “small business concern”. Offices of the G o v e ~ e n t  
having procurement 
or lending powers, or engaging in the disposal of Federal property or ailocating materials 
or suppiies, or p r o ~ ~ ~ ~ ~ a t i ~ ~  
regulations affecting the d~st~~utjon 
of materials or 
supplies, shall accept as conclusive the Administration’s deteknation as to which 
enterprises are to be designated “small business concem~,~’ 
as authorized and directed 
under this paragraph; 
(7) 
(A) to certifjr the Governnient ~rocurement officers, and officers 
engaged in the sale and disposal of Federal property, with respect to all elements of 
resposibility, including, but not limited to, capability, com~et~nc;y, 
capacity, credit, 
integrity, perseverance, and tenacity, of any small business concern or group of such 
concerns to receive and perform a specific Government contract. 
A Government 
procurement officer or an officer engaged in the sale and disposal of Federal property 
may not, for any reason specified in the p r e ~ ~ ~ i ~ g  
sentence, ~ r e c ~ u d ~  
any small business 
concern or group of such concerns from being awarded such contract without referring 
the matter for a final disposition to the A ~ ~ n ~ s ~ r a t i o n .  
E a  Government procurement officer finds that an otherwise 
qualified small business concern may be ineligible due to the provisions of section 35 (a) 
of title 41, United States Code (the ~ a ~ ~ h - ~ e a l e y  
blic Contracts Act), he shall notie 
the Administration in writing of such finding. The A ~ ~ ~ ~ s t r a t ~ o ~  
shall review such 
finding and shall either dismiss it and certify the small business concern io be eligible 
Government contractor for a specific G o v e ~ e n t  
contract or if it concurs in the finding, 
forward the matter to the Secretary of Labor for the find dispo~it~o~, 
in which case the 
A~m~nistration 
may certifjr the small business concern only if the Secretary of Labor 
finds the small business concern not to be in violation 
(C) In any case in which a small business coiicern or group of 
such concerns has been certified by the A ~ ~ ~ s t r ~ t ~ o ~  
pursuant to (A) or 
responsible or eligible Government contractor as to il spec;%s ~
o
~
~
~
e
~
t
contract, the 
officers of the Government having procurement or property disposal powers are directed 
to accept such certification as conclusive , and shall let such Govement contract to 


such concern or group of concerns without requiring it to meet any other requirement or 
responsibility or eligibility. Notwithstanding the first sentence of this subparagraph, the 
Administration may not establish an exemption from referral or notification or refbse to 
accept a referral or notification from a Government procurement officer made pursuant 
to subparagraph (A) or (B) of this paragraph, but nothing in this paragraph shall require 
the processing of an application for certification if the small business concern to which 
the referral pertains declines to have the application processed. 
(8) to obtain fiom any Federal department, establishment, or agency 
engaged in procurement or in the financing of procurement or production such reports 
concerning the letting of contracts and subcontracts and the making of loans to business 
concerns as it may deem pertinent in carrying out its hnctions under this Act; 
(9) to obtain fiom any Federal department, establishment, or agency 
engaged in the disposal of Federal property such reports concerning the solicitation of 
bids, time of sale, or otherwise as it may deem pertinent in carrying out its fbnctions 
under this Act; 
(10) to obtain from suppliers of materials information pertaining to the 
method of filling orders and the bases for allocating their supply, whenever it appears 
that any small business is unable to obtain materials from its normal sources; 
(1 1) to make studies and recommendations to the appropriate Federal 
agencies to insure that a fair proportion of the total purchases and contracts for property 
and services for the Government be placed with small business enterprises, to insure 
that a fair proportion of the total sales of Government property be made to small business 
concerns, and to insure a fair and equitable share of materials, supplies, and equipment to 
small business concerns; 
(12) to consult and cooperate with all the Government agencies for the 
purpose of insuring that small business concerns shall receive fair and reasonable 
treatment from such agencies; 
(13) 
to establish such advisory boards and committees as may be 
necessary to achieve the purposes of this Act and of the Small Business Investment Act 
of 1958; to call meetings of such boards and committees from time to time; to pay the 
transportation expenses and a per diem allowance in accordance with Section 5703 of 
title 5, United States Code, to the members of such boards and committees for travel and 
subsistence expenses incurred at the request of the Administration in connection with the 
travel to points more than fifty miles distant fiom the homes of such members in 
attending the meetings of such boards and Committees; and to rent temporarily, within 
10 1 


the District of Columbia or elsewhere, such hotel or other accommodations as are needed 
to facilitate the conduct of such meetings; 
(14) to provide at the earliest practicable time such information and 
assistance as may be appropriate, including information concerning eligibility for loans 
under section 7 (b) (3), to local public agencies ( as defined in section 110 (h) of the 
Housing Act of 1949) and to small business concerns to be displaced by Federally aided 
urban renewal projects in order to assist such small business concerns in reestablishing 
their operations; 
(15) to disseminate, without regard to the provisions of section 3204 of 
title 39, United States Code, data and information, in such forms as it shall deem 
appropriate, to public agencies, private organizations, and the general public; 
(16) to make studies of matters materially affecting the competitive 
strength of small business, and of the effect on small business of Federal laws, programs, 
and regulations, and to make recommendations to the appropriate Federal agency or 
agencies for the adjustment of such programs and regulations to the needs of small 
business; and 
(17) 
to make grants to, and enter into contracts and cooperative 
agreements with, educational institutions, private businesses, veterans’, nonprofit 
community-based organizations, and Federal, State, and local departments and agencies 
for the establishment and implementation of outreach programs for disabled veterans (as 
defined in section 421 l(3) of title 38, Unites States Code). 
(c) [Reserved]. 
(d) 
(1) It is the policy of the United States that small business concerns, 
qualified Hubzone small business concerns, small business concerns owned and 
controlled by socially and economically disadvantaged individuals and small business 
concerns owned and controlled by women, shall have the maximum practicable 
opportunity to participate in the performance of contracts let by any Federal agency, 
including contracts and subcontracts for subsystems, assemblies, components, and related 
services for major systems. It is krther the policy of the United States that its prime 
contractors establish procedures to ensure the timely payment of amounts due pursuant to 
the terms of their subcontracts with small business concerns, qualified Hubzone small 
business concerns, small business concerns owned and controlled by socially and 
economically disadvantaged individuals, and small business concerns owned and 
controlled by women. 
102 


(2) The clause stated in paragraph (3) shall be included in all contracts let 
by any Federal agency except any contract which -- 
(A) does not exceed the simplified acquisition threshold; 
(€3) 
including all subcontracts under such 
contracts will be 
performed entirely outside of any State, territory, or possession of the United States, the 
District of Columbia, or the Commonwealth of Puerto Rico; or 
(C) is for services which are personal in nature. 
(3) The clause required by paragraph (2) shall be as follows : 
“(A) It is the policy of the United States that small business 
concerns, qualified Hubzone small business concerns, small business concerns owned 
and controlled by social and economically disadvantaged individuals, and small business 
concerns owned and controlled by women shall have the maximum practicable 
opportunity to participate in the performance of contracts let by any Federal agency, 
including contracts and subcontracts for subsystems, assemblies, components, and related 
services for major systems. It is hrther the policy of the United States that its prime 
contracts established procedures to ensure the timely payment of amounts due pursuant 
to the terms of their subcontracts with small business concerns, qualified Hubzone small 
business concerns owned and controlled by socially and economically disadvantaged 
individuals, and small business concerns owned and controlled by women. 
“(B) The contractor hereby agrees to carry out this policy in the 
awarding of subcontracts to the fbllest extent consistent with the efficient pedormance of 
this contract. The contractor further agrees to cooperate in any studies or surveys as may 
be conducted by the United States Small Business Administration or the awarding 
agency of the United States as may be necessary to determine the extent of the 
contractor’s compliance with this clause. 
“(C) As used in this contract, the term “small business concern” 
shall mean a small business as defined pursuant to section 3 of the Small Business Act 
and relevant regulations promulgated pursuant thereto. The term” small business concern 
owned and controlled by socially and economically disadvantaged individuals’ shall 
mean a small business concern -- 
“(I) which is at least 51 per centum owned by one or more 
socially and economically disadvantaged individuals; or, in the case of any publicly 
103 


owned business, at least 51 per centum of the stock of which is owned by one or more 
socially and economically disadvantaged individuals; and 
“(ii) whose management and daily business operations are 
controlled by one or more of such individuals. The contractor shall presume that socially 
and economically disadvantaged individuals include Black Americans, Hispanic 
Americans, Native Americans, Asian Pacific Americans, and other minorities, or any 
other individual found to be disadvantaged by the Administration pursuant to section 8 
(a) of the Small Business Act. 
“(D) The term “small business concern owned and controlled by 
women” shall mean a small business concern -- 
(I) which is at least 51 per centum owned by one or more 
women; or, in the case of any publicly owned business, at least 51 per centum of the 
stock of which is owned by one or more women; and 
(ii) whose management and daily business operations are 
controlled by one or more women. 
“(E) 
Contractors acting in good faith may rely on written 
representations by their subcontractors regarding their status as either a small business 
concern or a small business concern owned and controlled by socially and economically 
disadvantaged individuals.” 
“(F) In this contract, the term “qualified Hubzone small business 
concern” has the meaning given that term in section 3 (p) of the Small Business Act.” 
(4) 
(A) Each solicitation of an offer for a contract to be let by a 
Federal Agency which is to be awarded pursuant to the negotiated method of 
procurement and which may exceed $1,000,000, in the case of a contract for the 
construction of any public facility, or $500,000, in the case of all other contracts, shall 
contain a clause notieing potential offering 
companies of the provisions of this 
subsection relating to contracts awarded pursuant to the negotiated method of 
procurement. 
(B) Before the award of any contract to be let, or any amendment 
or modification to any contract let, by any Federal agency which -- 
(I) is to be awarded, or was let, pursuant to the negotiated 
method of procurement; 
104 


(ii) is required to include the clause stated in paragraph (3), 
(iii) may exceed $1,000,000 in the case of a contract for 
the construction of any public facility, or $500,000 in the case of all other contracts, and 
(iv) 
which offers subcontracting 
possibilities, 
the 
apparent successful offer or shall negotiate with the procurement authority a 
subcontracting plan which incorporates the information prescribed in paragraph (6). The 
subcontracting plan shall be included in and made a material part of the contract. 
(C) 
If, within the time limit prescribed in regulations of the 
Federal agency concerned, the apparent successll offeror fails to negotiated the 
subcontracting plan required by this paragraph, such offer or shall become ineligible to 
be awarded the contract. Prior compliance of the offer or with other such subcontracting 
plans shall be considered by the Federal agency in determining the responsibility of that 
offer or for the award of the contract. 
(D) 
No contract shall be awarded to any offeror unless the 
procurement authority determines that the plan to be negotiated by the offeror pursuant to 
this paragraph provides the maximum practicable opportunity for small business 
concerns, small business concerns owned and controlled by socially and economically 
disadvantaged individuals, and small business concerns owned and controlled by women 
to participate in the performance of the contract. 
(E) notwithstanding any other providing of law, every Federal 
agency, in order to encourage subcontracting opportunities for small business concerns, 
qualified Hubzone small business concerns, and small business concerns owned and 
controlled by the socially and economically disadvantaged individuals as defined in 
paragraph (3) of this subsection and for small business concerns owned and controlled by 
women, is hereby authorize to provide such incentives as such Federal agency may deem 
appropriate in order to encourage such subcontracting oppo~u~ties 
as may be 
commensurate with the efficient and economical performance of the contract: Provided, 
That, this subparagraph shall apply only to contracts let pursuant to the negotiated 
method of procurement. 
(F) 
(I) 
Each contract subject to the requirements of this 
paragraph or paragraph (5) shall contain a clause for the payment of liquidated damages 
upon a finding that a prime contractor has failed to make good faith effort to comply with 
the requirements imposed on such contractor by this subsection. 
105 


(ii) The contractor shall be afforded an opportunity to 
demonstrate a good faith effort regarding compliance prior ti the contracting officer’s 
final decision regarding the imposition of damages and the amount thereof. The final 
decision of a contracting officer regarding the contractor’s obligation to pay such 
damages, or the amounts thereof, shall be subject to the Contract isputes Act of 19% 
(41 U.S.C> 401-613). 
(iii) each agency shall ensure that the goals offered by the 
apparent successfU1 bidder or offeror are attainable in relation to -- 
(I) the subcontracting opportunities available to the 
contractor, commensurate with the efficient and economical performance of the contract; 
(11) the pool of eligible subcontractors available to 
fulfill the subcontracting opportunities; and 
(111) the actual performance of such contractor in 
hlfilling the subcontracting goals specified in prior plans. 
(G) The following factors shall be designated by the Federal 
agency as significant factors for purposes of evaluating offers for a bundled contract 
where the head of agency determines that the contract offers a significant opportunity: 
(I) A factor that is based on the rate provided under the 
subcontracting plan for small business participation in the performance of the contract. 
(ii) For the evaluation of past performance of an offeror, a 
factor that is based on the extent to which the offeror attained applicable goals for small 
business participation in the performance of Contracts. 
(5) 
(A) Each solicitation of a bid for any contract to be let, or any 
amendment or modification to any contract let, by any Federal agency which -- 
(I) is to be awarded pursuant to the formal advertising 
method of procurement, 
(ii) is required to contain the clause stated in paragraph (3) 
of this subsection, 
(iii) may exceed $1,000,000 in the case of a contract for 
the construction of any public facility, or $500,000, in the case of all other contracts, and 
106 


(iv) 
offers subcontracting possibilities, shall contain a 
clause requiring any bidder who is selected to be awarded a contract to submit to the 
Federal agency concerned a subcontracting plan which incorporates the information 
prescribed in paragraph (6). 
) If, within the time limit prescribed in regulations of he Federal 
agency concerned, the bidder selected to be awarded the contract fails to submit the 
subcontracting plan required by this paragraph, such bidder shall become ineligible to be 
awarded the contract. Prior compliance of the bidder with such subcontracting plans 
shall be considered by the Federal agency in determining the responsibility of such bidder 
for the award of the contract. The subcontracting plan of the bidder awarded the contract 
shall be included in and made a material part ofthe contract. 
(6) Each subcontracting plan required under paragraph (4) or (5) shall 
include -- 
(A) percentage goals for the utilization as subcontractors of small 
business concerns, qualified 
zone small business concerns, small business concerns 
owned and controlled by socially and economically disadvantaged individuals, and small 
business concerns owned and controlled by women; 
(B) the name of an individual within the employ of the offeror or 
bidder who will administer the subcontracting program or the offeror or bidder and a 
description of the duties of such individuals; 
(61) a description of the efforts the offeror or bidder will take to 
assure that small business concerns, qualified Hubzone small business concerns, small 
business concerns owned and controlled by the socially and economically disadvantaged 
individuals, and small business concerns owned and controlled by women will have an 
equitable opportunity to compete for subcontracts; 
(D) assurances that the offeror or bidder will include the clause 
required by paragraph (2) of this subsection in all subcontracts which offer krther 
subcontracting opportunities, and that the offeror or bidder will require all subcontractors 
(except small business concerns) who receive subcontracts in excess of $1,000,000 in the 
case of a contract for the construction of any public facility, or in excess of $500,000 in 
the case of all other contracts, to adopt a plan similar to the plan required under paragraph 
(4) or (5); 
(E) assurances that the offeror or bidder will submit such periodic 
reports and cooperate in any studies or surveys as may be required by the Federal agency 
107 


or the Administration in order to determine the extent of compliance by the offeror or 
bidder with the subcontracting plan; and 
(F) a recitation of the types of records the successhl offeror or 
bidder will maintain to demonstrate procedures which have been adopted to comply with 
the requirements and goals set forth in this plan, including the establishment of source 
lists of small business concerns, qualified Hubzone small business concerns, small 
business concerns owned and controlled by socially and economically disadvantaged 
individuals, and small business concerns owned and controlled by women ; and efforts to 
identify and award subcontracts to such small business concerns. 
(7) The provisions of paragraph (4), (5), and (6) shall not apply to 
offerors or bidders who are small business concerns. 
(8) The failure of any contractor or subcontractor to comply in good faith 
with -- 
(A) the clause contained in paragraph (3) of this subsection, or 
(El) any plan required of such contractor pursuant to the authority 
of this subsection to be included in its contract or subcontract, shall be a material breach 
of such contract or subcontract. 
(9) Nothing contained in this subsection shall be construed to supesede 
the requirements of Defense Manpower Policy Number 4A (32A CFR Chap. 1) or any 
successor policy. 
(10) In the case of contracts within the provisions of paragraphs (4), (S), 
and (6), the Administration is authorized to -- 
(A) assist Federal agencies and businesses in complying in their 
responsibilities under the provisions of this subsection, including the formulatrion of 
subcontracting plans pursuant to paragraph (4); 
(B) review any solicitation for any contract to be let pursuant to 
paragraphs (4) and (5) to determine the maximum practicable opportunity for small 
business concerns, qualified Hubzone small business concerns, small business concerns 
owned need controlled by socially and economically disadvantaged individuals and small 
business concerns owned and controlled by women to participate as subcontractors in the 
performance of any contract resulting from any solicitation, and to submit its findings, 
which shall be advisory in nature, to the appropriate Federal agency; and 
108 


(6) evaluate compliance with subcontracting plans, either on a 
contract-by-contract basis, or in the case contractors [sic} having multiple contracts, on 
an aggregate basis. 
(1 I) For purposes of d e t e ~ ~ n g  
the attainment of subcontract utilization 
goal under any subcontracting plan entered into with any executive agency pursuant to 
this subsection, a mentor firm providing development assistance to a prot, g, firm under 
the pilot Mentor-Protg, Program established pursuant to section 831 of the National 
Defense Authorization Act for Fiscal Year 1991 (Public Law 101-510; 10 USC 2301 
note) shall be granted credit for such assistance in accordance with subsection (8) of such 
section. 
(e) 
(1) Except as provided in subsection (g) -- 
(A) an executive agency intending to -- 
(I) solicit bids or proposals for a contract for property or 
services for a price expected to exceed $25,000; 
(ii) place an order, expected to exceed $25,000, under a 
basic agreement, basic ordering agreement, or similar arrangement, shall hrnish for 
publication by the Secretary of Commerce a notice described in subsection (b) of this 
section; 
(B) an executive agency intending to solicit bids or proposals for a 
contract for property or services shall post, for a period ofnot less than ten days, in public 
place at the contracting office issuing the solicitation a notice of solicitation described in 
subsection (f) -- 
(I) in the case of an executive agency other than the 
Department of efense, if the contract is for a price expected to exceed $10,000, but not 
to exceed $25,000; and 
(ii) 
in the case of the 
contract is for a price expected to exceed $5,000, but not to exceed $25,000; and 
(C) 
an executive agency awarding a contract for property or 
services for a price exceeding $100,000, or placing an order referred to in clause (A) (ii) 
exceeding $100,000, shall fbrnish for publication by the ecretary of Commerce a notice 
109 


announcing the award or order if there is likely to be any subcontract under such contract 
or order. 
(2) The Secretary of Commerce shall publish promptly in the Commerce 
Business each notice required by paragraph (1). 
(3) Whenever an executive agency is required by paragraph (1) (A) to 
hrnish a notice to the Secretary of Commerce, such executive agency may not -- 
(A) issue the solicitation earlier than 15 days after the date on 
which the notice is published by the Secretary of Commerce; or 
(B) in the case of a contract or order estimated to be greater than 
the simplified acquisition threshold, establish a deadline for the submission os all bids or 
proposals in response to the notice required by paragraph (1) (A) that -- 
(I) in the case of an order a basic agreement, basic ordering 
agreement, or similar arrangement, is earlier than the date 30 days after the date the 
notice required by paragraph (1) (A) (ii) is published; 
(ii) 
in the case of a solicitation for research and 
development, is earlier than the date 45 days after the date the notice required by 
paragraph (1) (A) (I) is published; or 
(iii) in any other case, is earlier than the date 30 days after 
the date the solicitation is issued. 
(f) Each notice of solicitation required by subparagraph (A) or (B) of subsection 
(e) (1) shall include -- 
(1) an accurate description of the property or services to be contracted for, 
which description (A) shall not be unnecessarily restrictive of competition, and (J3) shall 
include, as appropriate, the agency nomenclature, National Stock Number or other part 
number, and a brief description of the item’s form, fit, or fbnction, physical dimensions, 
predominant material of manufacture, or similar information that will assist a prospective 
contractor to make an informed business judgment as to whether a copy of the solicitation 
should be requested; 
(2) provisions that -- 
1 IO 


(A) state whether the technical data required to respond to the 
solicitation will not be fkrnished as part of such solicitation, and identifl the source in the 
Government, if any, from which the technical data may be obtained; and 
(B) state whether an offeror, its product, or service must meet a 
qualification requirement in order to be eligible for award, and, if so, identify the office 
from which a qualification requirements may be obtained; 
(3) the name, business address, and telephone number of the contracting 
officer; 
(4) a statement that all responsible sources may submit a bid, proposal, or 
quotation (as appropriate) which shall be considered by the agency; 
(5) in the case of a procurement using procedures other than competitive 
procedures, a statement of the reason justifying the use of such procedures and the 
identity of the intended source; and 
(6) in the case of a contract in an amount estimated to be greater than 
$25,000 but not greater than the simplified acquisition threshold -- 
(A) a description of the procedures to be used in awarding the 
contract; and 
(B) a statement specifying the periods for prospective offerors and 
the contracting officer to take the necessary preaward and award actions. 
(g) 
(1) A notice is not required under subsection (e) (1) if -- 
(A) the proposed procurement is for an amount for greater than the 
simplified 
acquisition threshold and is to be made through a system with interim 
FACNET capability certified pursuant to section 30A (a) (1) of the Office of Federal 
Procurement Policy Act or with full FACNET Capability certified pursuant to section 
30A (a) (2) of such Act; 
(B) 
(I) the proposed procurement is for an amount not greater 
than $250,000 and is to be made through a system with full FACNET capability certified 
pursuant to section 30A (a) (2) of the Office of Federal Procurement Policy Act; and 
111 


(ii) a certification has been made pursuant to section 30A 
(b) of such Act the at Government-wide FACNET capability has been implemented. 
(6) the notice would disclose the executive agency’s needs the 
disclosure of such needs would compromise the national security; 
(D) the proposed procurement would result from acceptance of -- 
(I) any unsolicited proposal that demonstrate a unique and 
innovative research concept and the publication of any notice of such unsolicited research 
proposal would disclose the originality of thought or innovativeness of the proposal or 
would disclose proprietary information associated with the proposal; or 
(ii) a proposal submitted under section 9 of this Act; 
(E> the procurement is made against an order placed under a 
requirements contract; 
(F) the procurement is made for perishable subsistence supplies; 
(G) 
the procurement 
is for utility services, over than 
telecommunication services, and only one source is available; or 
(Et) the procurement is for the services of an expert for use in any 
litigation or dispute (including preparation for any foreseeable litigation or dispute) that 
involves or could involve the Federal Government in any trial, hearing, or proceeding 
before any court, administrative tribunal, or agency, or in any part of an alternative 
dispute resolution process, whether or not the expert is expected to testirjr. 
(2) 
The requirements of subsection (a) (1) (A) do not apply to any 
procurement under conditions described in paragraph (2), (3), (4), (5), or (7) of section 
303 (c) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253 
(c) ) or paragraph (2), (3), (4)’ (9, or (7) of section 2304 (c) of title 10, United States 
Code. 
(3) The requirements of subsection (a) (1) (A) shall not apply in the case 
of any procurement for which the head of the executive agency makes a determination in 
writing, after consultation with the Administrator for Federal Procurement Policy and the 
112 


Administrator of the Small Business Administration, that it is not appropriate or 
reasonable to publish a notice before issuing a solicitation. 
(h) 
(1) An executive agency may not award a contract using procedures other 
than competitive procedures unless -- 
(A) except as provided in paragraph (2), a written justification for 
the use of such procedures has been approved -- 
(I) 
in the case of a contract for a amount exceeding 
$100,000 (but equal to or less than $l,OOO,OOO), by the advocate for competition for the 
procuring activity (without hrther delegation); 
(ii) in the case of a contract for an amount exceeding 
$1,000,000 (but equal to or less than $lO,OOO,OOO), by the head of the procuring activity 
or delegate who, if a member of the Armed Forces, is general or flag officer, or, if a 
civilian, is serving in a position in grade GS-16 or above under the General Schedule (or 
in a comparable or higher position under another schedule); or 
(iii) in the case of a contract for an amount exceeding 
$10,000,000, by the senior procurement executive of the agency designated pursuant to 
section 16 (3) of the Office of the Federal Procurement Policy Act (41 U.S.C. 414 (3) ) 
(without hrther delegation ) ; and 
(B) all other requirements applicable to the use of such procedures 
under title I11 of the Federal Property and Administrative Services Act of 1949 (41 
U.S.C. 251 et seq.) or chapter 137 of title 10, United States Code, as appropriate, have 
been satisfied. 
(2) The same exceptions as are provided in section 303 (9 (2) of the 
Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253 (f) (2) or 
section 2304 (0 (2) of title 10, United States Code, shall apply with respect tothe 
requirements of paragraph (1) (A) of this subsection in the same manner as such 
exceptions apply to the requirements of section 303 (0 (1) of such Act or section 2304 (f) 
(1) of such title, as appropriate. 
(1) An executive agency shall make available to any business concern, or the 
authorized representative of such concern, the complete solicitation package for any on- 
going procurement announced pursuant to a notice under subsection (e). An executive 
113 


agency may require the payment of a fee, not exceeding the actual cost of duplication, for 
a copy of such package. 
(i) For purposes of this section, the term “executive agency” has the meaning 
provided such term in section 4 (I) of the Ofice of Federal Procurement Policy Act (41 
U.S.C. 403 (1)). 
(k) NOTICES OF 
- Notices of subcontracting opportunities may be 
submitted for publication in the Commerce 
(A) a business concern awarded a contract by an executive agency 
subject to subsection (e) (1) (C); and 
) a business concern that is a subcontractor or supplier (at any 
tier) to such contractor having a subcontracting opportunity in excess of $10,000. 
(2) CONTENT OF NOTICE - The notice a subcontracting opportunity 
shall include - 
(A) a description of the business opportunity that is comparable to 
the description specified in paragraphs (I), (2), (3), and (4) of subsection (f); and 
(B) the due date for receipt of offers. 
Sec. 9. (a) Research and development are major factors in the growth and progress of 
industry and the national economy. 
The expense of carrying on research and 
development programs s beyond the means of many s~all-business concerns, and such 
concerns are handicapped in obtaining the benefits of research and development 
programs conducted at Government expense. These small business concerns are thereby 
placed at a competitive disadvantage. This weakens the competitive free enterprise 
system and prevents the orderly development of the national economy. It is the policy of 
the Congress that assistance be given to small-business concerns to enable them to 
undertake and to obtain the benefits of research and d e v e ~ o ~ ~ e n t  
in order to maintain and 
strengthen the competitive free enterprise system and the national economy. 
(b) It shall be the duty of the Administration, and it is hereby empowered -- 
114 


(1) to assist small-business concerns to obtain Government contracts for 
research and development; 
(2) to assist sm~l-business concerns to obtain the benefits of research and 
development pehformed under Government contracts or at overnment expense; 
(3) 
to provide technical assistance to small-business concerns to 
accomplish the purposes of this section; and 
(4) to develop and maintain a source file and on information program to 
assure each qualified and interested small business concern the opportunity to participate 
in Federal agency small business innovation research programs and small business 
technology transfer pilot programs; 
(5) to coordinate with participating agencies a schedule for release of 
solicitations, and to prepare a master release schedule so as to maximize 
small businesses’ opportunities to respond to solicitations; 
(6) to independently survey and monitor the operation of SB 
programs within participating Federal agencies; and 
(7) to report not less than annually to the Committee on Small Business of 
epresentatives on the 
and STTR programs of the Federal agencies and the Administration’s information 
the Senate and the Committee on Small 
and monitoring efforts related to the SB 
(c) 
The Administration is authorized to consult and cooperate with all 
Government agencies and to make studies and recommendations to such agencies, and 
such agencies are authorized and directed to cooperate with the Administration in order 
to carry out and to accomplish the purposes of this section. 
(d) 
(1) The Administrator is authorized to consult with representatives of 
small-business concerns with a view to assisting and encouraging such firms to undertake 
joint programs for research and development carried out through such corporate or other 
mechanism as may be most appropriate for the purpose. Such joint programs may, 
among other things, include the following purposes: 
(A) 
to construct, acquire, or establish laboratories and other 
facilities for the conduct of research; 
115 


) to undertake and utilize applied research; 
(6) to collect research information related to a particular industry 
and disseminate it to participating members; 
(D) to conduct applied research on a protected, proprietary, and 
contractual basis with member or nonmember firms, 
ernment agencies, and others; 
(E) to prosecute applications for patents and render patent services 
for participating members; and 
(IF) 
to negotiate and grant licenses under patents held under the 
joint program, and to establish corporations designed to exploit particular patents 
obtained by it. 
(@) The Administrator may, aRer consultation with the Attorney General 
and the Chairman of the Federal Trade Commission, and with prior written approval of 
the Attorney General, approve any agreement between small business firms providing for 
a joint program of research and development, if the Administrator finds that the joint 
program proposed will maintain and strengthen the free enterprise system and the 
economy of the Nation. The Administrator or the Attorney General may at any time 
withdraw his approval of the agreement and the joint program of research and 
development covered thereby, if he finds that the agreement or the joint program carried 
on under it is no longer in the best interests of the competitive free enterprise system and 
the economy of the Nation. 
copy of the statement of any such finding and approval 
intended to be within the coverage of this subsection, and a copy of any modification or 
withdrawal of approval, shall be published in the Federal 
egister. The authority 
conferred by this subsection on the Administrator shall not be delegated by him. 
(3) No act or omission to act pursuant to and within the scope of any joint 
program for research and development, under an agreement approved by the 
Administrator under this subsection, shall be construed to be within the prohibitions of 
theantitrust laws or the Federal Trade Commission Act. Upon publication in the Federal 
Register of the notice of withdrawal of his approval of the agreement granted under this 
subsection, either by the Administrator or by the Attorney 
neral, the provisions of this 
subsection shall not apply to any subsequent act or omission to act by reason of such 
agreement or approval. 
(e) For the purpose of this section -- 
116 


(1) the term “extramural budget” means the sum of the total obligations 
minus amounts obligated for such activities by employees of the agency in or through 
Government-owned, Government-operated facilities, except that for the Department of 
Energy it shall not include amounts obligated for atomic energy defense programs solely 
for weapons activities or for naval reactor programs, and except that for the Agency for 
evelopment it shall not include amounts obligated solely for general 
institutional support of international research centers or for grants to foreign countries; 
(2) the term “Federal agency” means an executive agency as defined in 
section 105 of title 5, United States Code, or a m3itary department as defined in section 
102 of such title, except that it does not include any agency within the Intelligence 
Community (as the term is defined in section 3.4 (9 of Executive Order 12333 or its 
successor orders); 
(3) 
the term “funding agreement” means any contract, grant, or 
cooperative agreement entered into between any Federal agency and any small business 
for the performance of experimental, developmental, or research work funded in whole or 
in part by the Federal Government; 
(4) the term “Small Business Innovation Research Program” or “SBW” 
means a program under which a portion of a Federal agency’s research or research and 
development effort is reserved for award to small business concerns through a uniform 
process having -- 
(A) a first phase for determining, insofar as possible, the scientific 
and technical merit and feasibility of ideas that appear to have commercial potential, as 
described in subparagraph (B), submitted pursuant to SB 
program solicitations; 
) a second phase, to further develop proposals which meet 
particular program needs, in which awards shall be made based on the scientific and 
technical merit and feasibility of the proposals, as evidenc~d by the first phase, 
considering, among other things, the proposal’s commercial potential, as evidenced by -- 
(I) 
the small-business concern’s record of successklly 
commercializing SB 
or other research; 
(ii) 
the existence of second phase knding commitments 
from private sectors or non-SB 
funding sources; 
117 


(iii) the existence of third phase, follow-on commitments 
for the subject of the research; and 
(iv) the presence of other indicators of the commercial 
potential of the idea; and 
(C) where appropriate, a third phase -- 
(I) 
in which commercial applications of SB 
research or research and development are fbnded by non-Federal sources of capital or, for 
products or services intended for use by the Federal Government, by follow-on non-SBIR 
Federal hndings award; and 
(ii) 
for which awards from non-SB 
Federal hnding 
sources are used for the continuation of research or research and development that has 
been competitively selected using peer review or scientific review criteria; 
(59 the term” research” or “research and development” means any activity 
a systematic, intensive study directed toward greater knowledge or 
understanding of the subject studied; (B) a systematic study directed specifically toward 
applying new knowledge to meet a recognized need; or (6) a systematic application of 
knowledge toward the production of useful materials, devices, and systems or methods, 
including design, development, and improvement of prototypes and new processes to 
meet specific requirements; 
(6) the term “Small usiness Technology Transfer Program” or “STT 
means a pilot program under which a portion of Federal agency’s extramural research or 
research and development effort is reserved for award to small business concerns for 
cooperative research and development through a uniform process having -- 
(A) 
a first phase, to determine, to the extent possible, the 
scientific, technical, and commercial merit and feasibility of ideas submitted pursuant to 
program solicitations; 
9 a second phase, to hrther develop proposed ideas to meet 
particular program needs, in which awards shall be made based on the scientific, 
technical, and commercial merit and feasibility of the idea, as evidenced by the first 
phase and by other relevant information; and 
118 


(6) where appropriate, a third phase-- 
(I) 
in which commercial applications of STTR fbnded 
research or research and development are hnded by non-Federal sources of capital or, for 
products or services intended for use by the Federal Government, by follow-on non- 
Federal knding awards; and 
(ii) 
for which awards from non-ST 
Federal fbnding 
sources are used for the continuation or research or research and development that has 
been competitively selected using peer review or scientific review criteria; 
(7) the term” cooperative research and development” means research or 
research and development conducted jointly by a small business concern and a research 
institution in which not less than 40 percent of the work is performed by the smali 
business concern, and not less than 30 percent of the work is performed by the research 
institution; and 
(8) 
the term “research institution” means a nonprofit institution, as 
defined in section 4(5) of the Stevenson-Wydler Technology innovation Act of 1980, and 
includes federally fbnded research and development centers, as identified by the National 
Scientific Foundation in accordance with the government wide 35(c) (1) of the office of 
the Federal procurement Policy Act (or any successor regulation thereto). 
S FORT 
PRO 
-- 
. -- Each Federal agency 
which has an extramural budget for research or research and development in excess of 
$100,000,000 for fiscal year 1992, or any fiscal year thereafter, shall expend with small 
business concerns -- 
(A) not less than 1.5 percent of such budget in each fiscal years 
1993 and 1994; 
(B) not less than 2.0 percent of such budget in each fiscal years 
1995 and 1996; and 
(C) not less than 2.5 percent of such budget in each fiscal year 
programs which meet the requirements 
thereafier, specifically in connection with S 
of this section, policy directives, and regulations issued under this section. 
119 


TATIQNS.-- A Federal agency shall not -- 
(A) use any of its S 
budget established pursuant to paragraph 
(1) for the purpose of hnding administrative costs of the program, including costs 
associated with salaries and expenses; or 
(B) make available for the purpose of meeting the requirements of 
paragraph (1) an amount of its extramural budget for basic research which exceeds the 
percentages specified in paragraph (1). 
(3) E ~ C ~ ~ S ~ Q N  
agreements with small business concerns for research or research and development 
which result from competitive or single source selections other than an SBIR program 
shall not be considered to meet any portion of the percentage requirements of paragraph 
(1). 
(g) Each Federal agency required by subsection (0 to establish a small business 
innovation research program shall, in accordance with this Act and regulations issued 
hereunder -- 
(1) 
unilaterally determine categories of projects to be in its SBIR 
program; 
(2) issue small business innovation research solicitations in accordance 
with a schedule determined cooperatively with the Small Business Administration; 
(3) 
unilaterally determine research topics within the agency’s SB 
solicitations, giving special consideration to broad research topics and to topics that 
hrther 1 or more critical technologies, as identified by -- 
(A) the national Critical Technologies Panel (or its successor) in 
the 1991 report required under section 603 of the National Science and Technology 
rganization, and Priorities Act of 1976, and in subsequent reports issued under 
that authority; or 
) 
the Secretary of Defense, in the 1992 report issued in 
accordance with section 2522 of title 10, United States Code, and in subsequent reports 
issued under that authority; 
120 


(4) 
unilaterally receive and evaluate proposals resulting from SBIR 
proposals; 
(5) subject to subsection (l), unilateraIIy select awardees for its SBIR 
hnding agreements and inform each awardee under such agreement, to the extent 
possible, of the expenses of the awarded that will be allowable under the knding 
agreement; 
(6) 
administration to another agency); 
administer its own SBIR hnding agreements (or delegate such 
(7) make payments to recipients of BTR fbnding agreement on the basis 
of progress toward or completion of the hnding agreement requirements and , in all 
cases, make payment to recipients under such agreement in full, subject to audit, on or 
before the last day of the 12-month period beginning on the date of completion of such 
requirements; and 
(8) make an annual report on the SBR program to the §mall Business 
Administration and the Office of Science and Technology Policy. 
(h) In addition to the requirements of subsection (0, each Federal agency which 
has a budget for research or research and development in excess of $20,000,000 for any 
fiscal year beginning with fiscal year 1983 or subsequent fiscal year shall establish goals 
specifically for fbnding agreements for research or research and development to small 
business concerns, and no goal established under this subsection shall be less than the 
percentage of the agency's research and developmental budget expended under finding 
agreements with small business concerns in the immediately preceding fiscal year. 
(1) Each Federal agency required by this section to have an S If% program or to 
establish goals shall report annually to the Small usiness Adm~n~stration 
to number of 
awards pursuant to grants, contracts, or cooperative agreements over $10,000 in amount 
and the dollar value of all such awards, identifying SB 
awards and comparing the 
number and amount of such awards with awards to other than small business concerns. 
0') 
(1) POLICY D 
CTIVES. -- The Small usiness Administration, after 
consultation with the administrator of the Ofice of Federal Procurement Policy, the 
irector of the Office of Science and Technology Policy, and the Intergovernmental 
anagement and Budget, shall, within one hundred and 
evelopment Act of 
Mairs Division of the Ofice of 
twenty days of the enactment of the Small Business Innovation 
121 


1982, issue policy directives for the general conduct of the SBIR programs within the 
Federal Government, including providing for -- 
(A) simplified, standardized, and timely S IR solicitations; 
(€3) 
a simplified, standardized funding process which provides for 
(I) the timely receipt and review of proposals; 
(ii) outside peer review for at least phase two proposals, it 
appropriate; 
(iii) 
protection of proprietary information provided in 
proposals; 
(iv) selection awardees; 
(v) retention of rights in data generated in performance of 
the contract by the small business concern; 
(vi) transfer of title to property provided by the agency to 
the small business concern if such a transfer would be more cost effective than recovery 
of the property by the agency; 
(vii) cost sharing; and 
(viii) cost principles and payment schedules; 
(C) 
exemptions from the regulations under paragraph (2) if 
national security or intelligence hnctions dearly would be jeopardized; 
(D) minimizing regulatory burden associated with participating in 
the SBR program for the small business concern which will stimulate the cost-effective 
conduct of Federal research and development and the likelihood of commercialization of 
the results of research and development conducted under the SBIR program; 
(E) simplified, standadized, and timely annual report on the SBIR 
program to the Small Business Administration and the Office of Science and Technology 
Policy; 
122 


) 
standardized and orderly withdrawal from program 
participation by an agency having a SBIR program, at the discretion of the 
Administration, such directives may require a phased withdrawal over a period of time 
sufficient in duration to minimize any adverse impact on small business concerns; and 
(g) the voluntary participation in a SBIR program by a Federal 
agency not required to establish such a program pursuant to subsection (9. 
(2) MODIFICATIONS. -- Not later than 90 days aRer the enactment of 
the Small Business Research and Development Enhancement Act of 1992, the 
Administrator shall mod@ the policy directives issued pursuant to this subsection to 
provide for -- 
(A) retention by a small business concern of the rights to data 
generated by the concern in the performance of an SBIR award for a period of not less 
than 4 years; 
(B) continued use by a small business concern participating in the 
third phase of the SBIR program, as a directed bailment, of any property transferred by a 
Federal agency to the small business concern in the second phase of an SBIR program for 
a period of not less than 2 years, beginning on the initial date of the concern’s 
participation in the third phase of such program; 
(C) procedures to ensure, to the extent practicable, than an agency 
which intends to pursue research, development, or production of a technology developed 
by a small business concern under an SBIR program enters into follow-on non-SBIR 
fkding agreements with the small business concern for such research, development, or 
production; 
(D) an increase to $100,000 in the first phase of an SBIR program, 
and to $750,000 in the second phase of an SBIR program, and an adjustment of such 
amounts once every 5 years to reflect economic adjustments and programmatic 
considerations; 
(E) a process for notIfling the participating SBIR agencies and 
potential SBIR participants of the 1991, 1992,and the current critical technologies, as 
identified -- 
123 


(I) by the National 
ritical Technologies Panel ( or its 
successor), in accordance with section 603 of the National science and Technology 
Policy, Organization, and Priorities Act of 1976; or 
(ii) by the Secretary of Defense, in accordance with 
section 2522 of title 10, United States Code; 
0;) enhanced outreach efforts to increase the participation of 
socially and economically disadvantaged small business concerns, as defined in section 8 
(a) (4), and the participation of small businesses that are 51 percent owned and controlled 
by women in technological innovation and in SBW programs, inchding the third phase 
of such programs, and the collection of data to document such participation; 
(G) technical and programmatic guidance to encourage agencies 
to develop gap-fhding programs to address the delay between an award for the first 
phase of an SBIR program and the application for and extension of an award for the 
second phase of such program; 
procedures to ensure that a small business concern that 
submits a proposal for a fimding agreement for the first phase of an SBIR program and 
that has received more than 15 second phase SBW awards during the preceding 5 fiscal 
years is able to demonstrate the extent to which it was able to secure third phase funding 
to develop concepts resulting from previous second phase SBIR awards; and 
(I) procedures to ensure that agencies participating in the SBIR 
program retain the information submitted under subparagraph (H) at least until the 
General Accounting Office submits the report required under section 105 of the Small 
Business Research and Development Enhancement Act of 1992. 
(k) meserved]. 
(1) 
REPORTING OF AWARDS MADE FROM SINGLE PROPOSAL, TO 
MULTIPLE AWARD WINNERS, OR TO CRITICAL TECHNOLOGY TOPICS -- 
(1) SINGLE PROPOSALS. -- If a Federal agency required to establish as 
SBIR program under subsection (t) makes an award with respect to an SBlR solicitation 
topic or subtopic for which the agency received only 1 proposal, the agency shall provide 
written justification for making the award in its next quarterly report to the 
Administration and in the agency’s next annual report required under subsection (g) (8). 
124 


(2) MULTIPLE AWARDS. -- An agency referred to in paragraph (1) 
shall include in its next annual report required under subsection (g) (8) an accounting of 
the awards the agency has made for the first phase of an S IR program during the 
reporting period to entities that have received more than 15 awards for the second phase 
of an SBIR program during the preceding 5 fiscal years. 
(3) CRITICAT, TECHNOLOGY AWARDS. -- An agency referred to in 
paragraph (1) shall include its next annual report required under subsection (g) (8) an 
accounting of the number of awards it has made to critical technology topics, as defined 
in subsection (g) (3), including an identification of the specific critical technologies 
topics, and the percentage by number and dollar amount of the agency’s total SBIR 
awards tosuch critical technology topics. 
(m) TERMINATION. -- The authorization to carry out the Small Business 
Innovation Research Program under this section shall terminate on October 1,2000. 
(n) REQUIRED EXPENDITURES FOR STTR BY FEDERAL AGENCIES. -- 
(1) REQUIRED EXPENDITURE AMOUNTS - With respect to fiscal 
years 1998, 1999,2000, and 2001, each Federal agency that has an extramural budget for 
research and development, in excess of $1,000,000,000 for that fiscal year, is authorized 
to expend with smalI business concerns not less than 0.15 percent of that extramural 
budget specifically in connection with STTR programs that meet the requirements of this 
section and any policy directives and regulations issued under this section. 
(2) LIMITATIONS. -- A Federal agency shall not -- 
(A) use any of its STTR budget established pursuant to paragraph 
(1) for the purpose of fkding administrative costs of the program, including costs 
associated with salaries and expenses, or, in the case of small business concern or a 
research institution, costs associated with salaries, expenses, and administrative overhead 
(other than those direct or indirect costs allowable under guidelines of the Office of 
Management 
and Budget and the government wide Federal Acquisition Regulation 
issued in accordance with section 25 (e) (1) of the Ofice of Federal Procurement Policy 
Act); or 
(B) make available for the purpose of meeting the requirements of 
paragraph (1) an amount of its extramural budget for basic research which exceeds the 
percentage specified in paragraph (1). 
125 


(3) EXCLUSION OF C 
NS. -- Funding 
agreements with small business concerns for research or research and development with 
result from competitive or single source selections other than an ST 
program shall not 
be considered to meet any portion of the percentage requirements of paragraph (1). 
AGENCY STT 
TY. -- Each Federal agency required 
to establish an STTR program in accordance with subsection (n) and regulations issued 
(1) 
unilaterally determine categories of projects to be included in its 
STTR program; 
(2) issue STTR solicitations in accordance with a schedule determined 
cooperatively with the Administration; 
(3) 
unilaterally determine research topics within the agency's STTR 
solicitations, giving special consideration to broad research topics and to topics that 
further 1 or more critical technologies, as identified -- 
(A) by the National Critical Technologies Panel (or its successor) 
in reports required under section 603 of the National Science and Technology Policy, 
Organization, and Priorities Act of 1976; or 
(B) by the Secretary of Defense, in accordance with section 2522 
of title 10, United Staes Code; 
(4) 
unilaterally receive and evaluate proposals resulting &om STTR 
solicitations; 
(5) unilaterally select awardees for its STTR hnding agreements and 
inform each awardee under such an agreement, to extent possible, of the expenses of the 
awardee that will be allowable under the fbnding agreement; 
(6) 
administration to another agency); 
administer its own sttr hnding agreements (or delegate such 
(7) make payments to recipients of STTR fbnding agreements on the basis 
of progress toward or completion of the hnding agreements requirements and, in all 
cases, make payments to recipients under such agreements in full, subject to audit, on or 
126 


before the last day of the 12-month period beginning on the date of the completion of 
such requirements; 
(8) 
include, as part of its annual performance plan as required by 
subsections (a) and (b) of section I1 15 of title 3 1, United tates Code, a section on its 
program, and shall submit such section to the Committee on mall Business of the 
Senate, and the Committee on Science and the Committee on Small Business of the 
House of Representatives; 
(9) 
program outputs and outcomes; 
collect such data from awardees as is necessary to assess STTR 
(10) submit an annual report on the STT program to the Administration 
and the Office of Science and Technology Policy; 
(1 1) develop a model agreement not later than July 3 1, 1993, to be 
approved by the Administration, for allocating between small business concerns and 
research institutions intellectual property rights and rights, if any, to carry out follow-on 
research, development, or commercialization; 
(12) develop, in consultation with the Office of Federal procurement 
Policy and the Office of Government Ethics, procedures to ensure that federally fbnded 
research and development centers ( as defined in subsection (e) (8) that participate in 
STTR agreements -- 
(A) are free from organizational conflicts of interests relative to 
the STTR program; 
) 
do not use privileged information gained through work 
agency personnel in the 
performed for an ST 
development of an ST 
agency or private access to STT 
(6) use outside peer review, as appropriate; and 
(13) not later than July 31, 1993, develop procedures for assessing the 
commercial merit and feasibility of 
proposals as evidenced by -- 
commercializing 
(A) 
the small business concern's record of successhlly 
or other research; 
127 


) the existence of second phase fbnding commitments from 
private sector or non-STTR hnding sources; 
(C) the existence of third phase follow-on commitments for the 
subject of the research; and 
(ID) the presence of other indicators of the commercial potential of 
the idea. 
(p) STTR POLICY D 
(1) ISSUANCE.-- The Administrator shall issue a policy directive for the 
general conduct of the STTR programs within the Federal Government. Such policy 
directive shall be issued after consultation with -- 
(A) 
the heads of each of the Federal agencies required by 
subsection (n) to establish an STT 
) the Commissioner of Patents and Trademarks; and 
(C) the Director of the Ofice of Federal Procurement Policy. 
(2) CONTENTS. -- The Policy directives required by paragraph (1) shall 
provide for -- 
(A) simplified, standardized, and timely STT 
) a simplified, standardized hnding process that provides for -- 
(I) the timely receipt and review of proposals; 
(ii) outside peer review, if appropriate; 
(iii) protection of proprietary information provided in 
proposals; 
(iv) selection of awardees 
128 


(v) retention by a small business concern of the rights to 
data generated by the concern in the performance of an STTR award for a period of not 
less than 4 years; 
(vi) 
continued use by a small business concern, as a 
directed bailment, of any property transferred by a Federal agency to the small business 
concern in the Second phase of the STT program for a period of not less than 2 years, 
beginning on the initial date of the concern’s participation in the third phase of such 
program; 
(vii) cost sharing; 
(viii) cost principles and payment schedules; and 
(ix) 1- year awards for the first phase of an STTR program, 
generally not to exceed $100,000 and 2- year awards $500,000, greater or lesser amounts 
to be awarded at the discretion of the awarding agency; 
(6) minimizing regulatory burdens associated with participation in 
STTR programs; 
) guidelines for a model agreement, to be used by all agencies, 
for allocating between small business concerns and research institutions intellectual 
property rights and research institutions intellectual property rights and rights, if any, to 
carry out follow-on research, development, or commercialization; 
(E) procedures to ensure that -- 
(I) 
a recipient of an ST 
award is a small business 
concern, as defined in section 3 and the regulations promulgated thereunder; and 
(ii) such small business concern exercises management and 
control of the performance of the 
hnding agreement pursuant to a business plan 
providing for the commercialization of the technology that is the subject matter of the 
award; and 
(F) procedures to ensure, to the extent practicable, that an agency 
which intends to pursue research, development, or production of a technology developed 
by a small business concern under an STT 
* 
program enters into follow-on, non-STT 
129 


fbnding agreements with the small business concern for such research, development, or 
production. 
(1) m GENE 
. -- Each Federal agency required by this section to 
conduct an SB 
program may enter into an agreement with a vendor selected under 
paragraph (2) to provide small business concerns engaged in SB 
projects with technical 
assistance services, such as access to a network of scientists and engineers engaged in a 
wide range of technologies, or access to technical and business literature available 
through on-line data bases, for the purpose of assisting such concerns in -- 
(A) making letter technical decisions concerning such projects; 
(B) solving technical problems which arise during the conduct of 
such projects; 
(C) minimizing technical risks associated with such projects; and 
) developing and commercializing new commercial products 
and processes resulting from such projects. 
(2) VENDOR SELECTION. -- Each agency may select a vendor to assist 
small business concerns to meet the goals listed in paragraph (1) for a term not to exceed 
3 years. Such selection shall be competitive and shall utilize merit-based criteria. 
CAL ~ S S I S T ~ C E .  
-- 
(A) FWST PHASE. -- Each agency referred to in paragraph (1) 
may provide services described in paragraph (1) to first phase SB 
award recipients in 
an amount equal to not more than $4,000, which shall be in addition to the amount of the 
recipient’s award. 
E. -- Each agency referred to in paragraph (1) 
recipient to purchase, with hnds available 
awards, services described in paragraph (I), in an amount equal to not 
may authorize any se 
more than $4,000 per year. 
PHASE AGREE 
TS. -- 
130 


(1) IN 
. -- I n the case of a small business concern that is 
awarded a fknding agreement for the second phase of an 
TTR program, a 
Federal agency may enter into a third phase agreement with that business concern for 
additional work to be performed during or aRer the second phase period. The second 
phase fknding agreement with the small business concern may, at the discretion of the 
agency awarding the agreement, set out the procedures applicable to third phase 
agreements with that agency or any other agency. 
. -- In this subsection, the term “third phase agreement” 
r non-STTR hnded contract as described in paragraph 
means a follo 
(4) (6) 
or paragraph (6) (C) of subsection (e). 
(3) INTELLECTUAL ~
~
Q
~
E
~
T
~
 
GTS. -- Each fknding agreement 
program shall include provisions setting forth the respective 
rights of the United States and the small business concern with respect to intellectual 
property rights and with respect to any right to carry out follow-on research. 
(s) OUTREACH 
(1) DEFINITION OF ELIGIBLE TATE - h this subsection, the term 
“eligible State” means a 
(A) if the total value of contracts awarded to the State during 
fiscal year 1995 under this section was less than $5,000,000; and 
(B) they certifies to the Administration described in paragraph (2) 
that the State will, upon the receipt of assistance under this subsection, provide matching 
hnds from non-Federal sources in an amount that is not less than 50 percent of the 
amount provided under this subsection. 
(2) PR 
famounts made available to carry out 
this section for fiscal year 1998, 1999, 2000, or 2001 the Administrator may expend with 
eligible States not more than $2,000,000 in each such fiscal year in order to increase the 
participation of small business concerns located in those States in the program under this 
section. 
E - The amount of assistance provided to 
an eligible State under this subsection in any fiscal year - 
13 1 


(A) shall be equal to twice the total amount of matching funds 
from non-federal sources provided by the State; and 
) shall not exceed $100,000. 
F A S S ~ S T ~ ~ ~  
- Assistance provided to an eligible State 
under this subsection shall be used by the State, in consultation with State and local 
departments and agencies, for programs and activities to increase the participation of 
small business concerns located in the State in the programs under this section, including 
- 
(A) the establishment of quantifiable performance goals, including 
goals relating to - 
(I) the number of program awards under this section made 
to small business concerns in the State; and 
(ii) the total amount of Federal research and development 
contracts awarded to small business concerns in the 
(B) 
the provision of competition outreach support to small 
business in the State that are involved in research and development; and 
(C) 
the development and dissemination of educational and 
promotional information relating to the programs under this section to small business 
concerns in the State. 
rogram information relating to the 
and STTR programs shall be included by each Federal agency in any update or 
revision required of the Federal agency under section 306 (b) of title 5, United States. 
Sec.lO.(a) The Administration shall, as soon as practicable each fiscal year make a 
comprehensive annual report to the President, the resident of the Senate, the Senate 
Select Committee on Small Business, and the Speaker of the House of representatives. 
Such report shall include a description of the state of small business in the Nation and the 
several States, and a description of the operations of the Administration under this 
chapter including, but not limited to, the general lending, disasted relief, Government 
regulation relief, procurement and property disposal, research development, technical 
assistance, dissemination of data and information, and other fbnctions under the 
132 


jurisdiction of the Administration during previous fiscal year. Such report shall contain 
recommendations for strengthening or improving such programs, or, when necessary or 
desirable to implement more effectively congressional policies and proposals, for 
establishing new or alternative programs. In addition, such report shall include the names 
of the business concerns to whom contracts are let and for whom financing is arranged by 
the Administration, together with the amounts involved. 
th respect to minority small 
business concerns, the report shall include the proportion of loans and other assistance 
under this Act provided to such concerns, the goals of the Administration for the next 
fiscal year with respect to such concerns, and recommendations for improving assistance 
to minority small business concerns under this Act. 
(b) The Administration shall make a report to the President, the President of the 
Senate, and the Speaker of the House of Representatives, to the Senate Select Committee 
usiness, and to the Committee on Small 
usiness of the House of 
Representatives, as soon as practicable each fiscal year, showing 
as accurately as 
possible for each such period the amount of fbnds appropriated to it that it has expended 
in the conduct of 
each of its principal activities such as lending, procurement, 
contracting, and providing technical and managerial aids. Such report shall contain the 
number and amount of loans, the number of applications, the total amount applied for, 
and the number and amount of defaults for each type of equipment or service for which 
loans are authorized by this Act. Such report shall provide such information separately 
on each type of loan made under paragraphs (10) through (15) of section 7(a) and 
separately for all other loan programs. 
In addition, the information on loans shall be 
supplied on a monthly basis to the Committee on Small usiness of the Senate and the 
Committee on Small Business of the House of 
(c) [Repealed] 
(d) For the purpose of aiding in carrying out the national policy to ensure that a 
fair proportion of the total purchases and contracts for property and services for the 
Government be placed with small business enterprises, and to maintain and strengthen 
the overall economy of the Nation, the 
efense shall make an annual 
report to the Committees on Small Business of the Senate and the House of 
Representatives showing the amount of fbnds appropriated to the Department of Defense 
which have been expended, obligated, or contracted to be spent with small business 
concerns and the amount of such fbnds expended, obligated, or contracted to be spent 
with firms other than small business in the same fields of operation; and such reports 
133 


shall show separately the hnds expended, obligated or contracted to be spent for basic 
and applied scientific research and development. 
(e) The Administration and the Inspector General of the Administration shall 
retain all correspondence, records of inquiries, memoranda, reports, books, and records, 
including memoranda as to all investigations conducted by or for the Administration, for 
a period of at least one year from the date of each thereof, and shall at all times keep the 
same available for inspection and examination by the Senate Select Committee on Small 
Business and the Committee on Small Business of the House of Representatives, or their 
duly authorized representatives. 
(2) The Committee on Small Business of either the Senate or the House of 
Representatives may request that the Office of the Inspector General of the 
Administration conduct an investigation of any program or activity conducted under the 
authority of section 7 0) or 8 (a). Not later than thirty days after the receipt of such a 
request, the Inspector General shall inform the committee, in writing, of the disposition of 
the request by such office. 
(0 To the text deemed necessary by the Administrator to protect and preserve 
small business interests, the Administration shall consult and cooperate with other 
departments and agencies of the Federal Government in the formulation by the 
Administration of policies affecting small-business concerns. When requested by the 
Administrator, each department and agency of the Federal Government shall consult and 
cooperate with the Administration in the formulation by the Administration of policies 
affecting small business concerns. 
When requested by the Administrator, each 
department and agency of the Federal Government shall consult and cooperate with the 
Administration in the formulation by such department or agency of policies affecting 
small-business concerns, in order to insure that small business interests will be 
recognized, protected, and preserved. This subsection shall not require any department or 
agency to consult or cooperate with the Administration in any case where the head of 
such department or agency determines that such consultation or cooperation would 
unduly delay action which must be taken by such department or agency to protect the 
national interest in an emergency. 
(g) The Administration shall transmit, not later than December 31 of each year, 
to the Senate Select Committee on Small Business and Committee on Small Business of 
the House of Representatives a sealed report with respect to -- 
134 


(1) 
complaints alleging illegal conduct by employees of the 
Administration which were received an acted upon by the Administration during the 
preceding fiscal year; and 
(2) investigations undertaken by the Administration, including external 
and internal audits and security and investigation reports. 
(h) The Administration shall transmit, not later than March 3 1 of each year, to the 
Committees on Small Business of the Senate and House of Representatives a report on 
the secondary market operations during the preceding calendar year. This report shall 
include, but not be limited to, (1) the number and the total dollar amount of loans sold 
into the secondary market and the distribution of such loans by size of loan, size of 
lender, geographic location of lender, interest rate, maturity , lending servicing fees, 
whether the rate is fixed or variable, and premium paid; (2) the number and dollar amount 
of loans resold in the secondary market with a distribution by size of loan, interest rate, 
and premiums; (3) the number and total dollar amount of pools formed; (4) the number 
and total dollar amount of loans in each pool; (5) the dollar amount, interest rate, and 
terms on each loan in each pool and whether the rate is fixed or variable; (6) the number, 
face value, interest rate, and terms of the trust certificates issued for each pool; (7) to the 
maximum extent possible, the use by the lender of the proceeds of sales of loans in the 
secondary market for additional lending to small business concerns; and (8) an analysis 
of the information reported in (1) through (7) to assess small businesses’ access to capital 
at reasonable rates and terms as a result of secondary market operations. 
Sec. 11. 
(a) The President is authorized to consult with representatives of small 
business concerns with a view to encouraging the making by such persons with the 
approval of the President of Voluntary agreements and programs to hrther the objectives 
of this Act. 
(b) No act or omission to act pursuant to this Act which occurs while this Act is 
in effect, if requested by the President pursuant to a voluntary agreement or program 
approved under subsection (a) of this section and found by the President to be in the 
public interest as contributing to the national defense, shall be construed to be within the 
prohibitions of the antitrust laws of the Federal Trade Commission Act of the United 
States. A copy of each such request intended to be within the coverage of this section 
and any modification or withdrawal thereof, shall be krnished to the Attorney General 
and the Chairman of the Federal Trade Commission when made, and it shall be published 
in the Federal Register unless publication thereof would, in the opinion of the President, 
endanger the national security. 
135 


(c) The authority granted in subsection (b) of this section shall be delegated only 
(1) to an official who shall for the purpose of such delegation be required to be appointed 
by the President by and with the advice and consent of the Senate, (2) upon the condition 
that such official consult with the Attorney General and the Chairman of the Federal 
Trade Commission not less than ten days before making any request or finding 
thereunder, and (3) upon the condition that such official obtain the approval of the 
Attorney General to any request thereunder before making the request. 
(d) Upon withdrawal of any request or finding hereunder, or upon withdrawal by 
the Attorney General of his approval of the voluntary agreement or program on which the 
request or finding is based, the provisions of this section shall not apply to any 
subsequent act, or omission to act, by reason of such finding or request. 
Sec. 12. The President may transfer to the Administration any functions, powers, and 
duties of any department or agency which relate primarily to small-business problems. 
In connection with any such transfer, the President may provide for appropriate transfers 
of records, property, necessary personnel, and unexpended balances of appropriations and 
other fbnds available to the department or agency from which the transfer is made. 
Sec. 13. No loan shall be made or equipment, facilities, or services fkrnished by the 
Administration under this Act to any business enterprise unless the owners, partners, or 
officers of such business enterprise (1) certlfl to the Administration the names of any 
attorneys, agents, or other persons engaged by or on behalf of such business enterprise for 
the purpose of expediting applications made to the Administration for assistance of any 
sort, and the fees paid or to be paid to any such persons; (2) execute an agreement 
binding any such business enterprise for a period of two years after any assistance is 
rendered by the Administration to such business enterprise, to refrain from employing , 
tendering any office or employment to , or retaining for professional service, any person, 
who, on the date such assistance or any part thereof was rendered, or within one year 
prior thereto, shall have served as an officer, attorney, agent, or employee of the 
Administration occupying a position or engaging in activities which the Administration 
shall have determined involve discretion with respect to the granting of assistance under 
this Act; and (3) fkrnish the names of lending institutions to which such business 
enterprise has applied for loans together with dates, amounts, terms, and proof of refusal. 
Sec. 14. To the fkllest extent the Administration deems practicable, it shall make a fair 
charge for the use of Government-owned property and make and let contracts on a basis 
that will result in a recovery of the direct cost incurred by the Administration. 
136 


Sec. 15. 
(a) To effectuate the purposes of this Act, small business concerns within 
the meaning of this Act shall receive any award or contract or any part thereof, and be 
awarded any contract for the sale of Government property, as to which it is determined by 
the Administration and the contracting procurement or disposal agency (1) to be in the 
interest of maintaining or mobilizing the Nation’s full productive capacity, (2) to be in 
the interest of war or national defense programs, (3) to be in the interest of assuring that a 
fair proportion of the total purchases and contracts for property and services for the 
Government in each industry category are placed with small-business concerns, or (4) to 
be in the interest of assuring that a fair proportion of the total sales or Government 
property be made to small-business concerns; but nothing contained in this Act shall be 
construed to change any preferences or priorities established by law with respect to the 
sale of electrical power or other property by the Government or any agency thereof. 
These determinations may be made for individual awards or contracts or for classes of 
awards or contracts. If a proposed procurement includes in its statement of work goods 
or services currently being performed by a small business, and if the proposed 
procurement is in a quantity or estimated dollar value the magnitude of which renders 
small business prime contract participation unlikely, or if a proposed procurement for 
construction seeks to package or consolidate discrete construction projects, or the 
solicitation involves an unnecessary or unjustified bundling of contract requirements, as 
determined by the Administration, the ~rocurement Activity shall provide a copy of the 
proposed procurement to the Procurement Activity’s Small Business Procurement Center 
epresentative at least 30 days prior to the solicitation’s issuance along with a statement 
explaining (1) why the proposed acquisition cannot be divided into reasonably small lots 
(not less than economic production runs) to permit offers on quantities less than the total 
requirement, (2) why delivery schedules cannot be established on a realistic basis that 
will encourage small business participation to the extent consistent with the actual 
requirements of the Government. (3) why the proposed acquisition cannot be offered so 
as to make small business participation likely, (4) why construction cannot be procured as 
separate discrete projects, or (5) why the agency has determined that the bundled contract 
(as defined in section 3 (0) is necessary and justified. The thirty -day notification process 
shall occur concurrently with other processing steps required prior to the issuance of the 
ithin 15 days after receipt of the proposed procurement and accompanying 
statement, if the Procurement Center Representative believes that the procurement as 
proposed will render small business prime contract participation unlikely, the 
Representative shall recommend to the rocurement Activity alternative procurement 
met hods which would increase small business prime contracting opportunities. 
Whenever the Administration and the contracting procurement agency fail to agree, the 
matter shall be submitted for the determination to the S e ~ r e t ~  
or the head of the 
137 


appropriate department or agency by the Administrator. For purposes of clause (3) of the 
first sentence of this subsection, an industry category is a discrete group of similar goods 
and services. Such groups shall be determined by the Administration in accordance with 
the four-digit standard industrial classification codes contained in the Standard Industrial 
Classification Manual published by the 
agement and budget, except that 
the Administration shall limit such an industry category to a greater extent than provided 
under such classification codes if the A d ~ ~ s t r a t i o n  
receives evidence indicating that 
krther segmentation for purposes of this paragraph is warranted due to special capital 
equipment needs or special labor or geographic requirements or to recognize a new 
industry. A market for goods or services may not be segmented under the preceding 
sentence due to geographic requirements unless the Government typically designates the 
area where work for the contracts for such goods or services is to be performed and 
overnment purchases comprise the major portion of the entire domestic market for such 
goods or services and, due to the foxed location of facilities, high mobilization costs, or 
similar economic factors, it is unreasonable to expect competition from business concerns 
located outside of the general areas where such concerns are located. A contract may not 
be awarded under this subsection if the award of the contract would result in cost to the 
awarding agency which exceeds a fair market price. 
(b) With respect to any work to be performed the amount of which would exceed 
the maximum amount of any contract for which a surety may be guaranteed against loss 
under section 41 1 of the Small Business  vestment Act of 1958 (15 U.S.C. 694 (b)), the 
contracting procurement agency shall, to the extent practicable, place contracts so as to 
allow more than one shall business concern to perform such work. 
(c) 
(1) As used in this subsection: 
(A) The term “Committee” means the Committee for the Purchase 
ther Severely Handicapped established under the first section of the 
hases of Blind-made Products, and 
Act entitled ‘‘An Act to create a Committee on 
for other purposes”, approved June 25, 1938 (41 
) The term “public or private organization for the handicapped” 
has the same meaning given such term in section 3 (e). 
(C) The term “handicapped individual” has the same meaning 
given such term in section 3 (f). 
138 


(2) 
(A) During fiscal year 1995, public or private organizations for the 
handicapped shall be eligible to participate in programs authorized under this section in 
an aggregate amount not to exceed $40,000,000. 
) 
None of the amounts authorized for participation by 
subparagraph (A) may be placed on the procurement list maintained by the Committee 
pursuant to section 2 of the Act entitled “An Act to create a Committee on Purchases of 
roducts, and for other purposes”, approved June 25, 1938 (41 U. 
(3) The Administrator shall monitor and evaluate such participation. 
(4) 
(A) Not later than ten days aRer the announcement of a proposed 
award of a contract by an agency or department to a public or private organization for 
the handicapped, a for-profit small business concern that has experiences or is likely to 
experience severe economic injury as the result of the proposed award may file an appeal 
of the proposed award with the Administrator. 
) If such a concern files an appeal ofa proposed award under 
subparagraph (A) and the Administrator, aRer consultation with the Executive Director 
of the Committee, finds that that concern has experienced or is likely to experience 
severe economic injury as the result of the proposed award, not later than thirty days after 
the filing of the appeal, the Administration shall require each agency and department 
having procurement powers to take such action as may be appropriate to alleviate 
economic injury sustained or likely to be sustained by the concern. 
(5) Each agency and department having procurement powers shall report 
to the Office of Federal Procurement Policy each time a contract subject to paragraph (2) 
(A) is entered into., and shall include in its report the amount of the next higher bid 
submitted by a for-profit small business concern. The 
ffice of Federal Procurement 
Policy shall collect date reported under the preceding sentence through the Federal 
procurement data system and shall report to the Administration which shall notify all 
such agencies and departments when the maximum amount of awards authorized under 
paragraph (2) (A) has been made during any fiscal year. 
(6) For the purposes of this subsection, a contract may be awarded only if 
at least 75 per centum of the direct labor performed on each item being produced under 
the contract in the sheltered workshop or performed in providing each type of service 
under the contract by the sheltered workshop is performed by handicapped individuals. 
139 


(7) Agencies awarding one or more contracts to such an organization 
pursuant to the provisions of this subsection may use multiyear contracts, if appropriate. 
(d) For purposes of this section priority shall be given to the awarding of 
contracts and the placement of subcontracts to small business concerns which shall 
perform a substantial proportion of the production on those contracts and subcontracts 
within areas of concentrated unemp~oyment or underemployment or within labor surplus 
areas. Notwithstanding any other provision of law, total labor surplus area set-asides 
efense Manpower Policy Number 4 (32A C.F. . Chapter 1) or any 
successor 
policy shall be authorized if the Secretary or his designee specifically 
determines that there is a reasonable expectation that offers will be obtained from a 
sufficient number of eligible concerns so that awards will be made at reasonable prices. 
As soon as practicable and to the extent possible, in determining labor surplus areas, 
consideration shall be given to those persons who would be available for employment 
were suitable employment available. Until such definition reflects such number, the 
present criteria of such policy shall govern. 
(I) IN GENE 
- To the maximum extent practicable, procurement 
strategies used by the various agencies having contracting authority shall facilitate the 
maximum participation of small business concerns as prime contractors, subcontractors, 
and suppliers. 
(A) IN GEM3 
efore proceeding with an acquisition 
strategy that could lead to a contract containing consolidated procurement requirements, 
the head of an agency shall conduct market research to determine whether consolidation 
of the requirements is necessary and justified. 
) FACTORS - For purposes of subparagraph (A), consolidation 
of the requirements may be determined as being necessary and justified if, as compared 
to the benefits that would derived from contracting to meet those requirements if not 
consolidated, the Federal Government would derive &om the consolidation measurably 
substantial benefits, including any combination of benefits that, in combination, are 
measurably substantial. 
enefits described in the preceding sentence may include the 
following: 
140 


(I) Cost savings. 
uality improvements. 
eduction in acquisition cycle times. 
(iv) Better terms and conditions. 
(v) Any other benefits. 
CTION COSTS MOT DETE 
ATIVE - The 
reduction of administrative or personnel costs alone shall not be a justification for 
bundling of contract: requirements unless the cost savings are expected to be substantial in 
reiation to the dollar value of the procurement requirements to be consolidated. 
(3) STRATEGY ~ ~ E C ~ I C A T I O ~ S  
- If the head of a contracting agency 
determines that a proposed procurement strategy for a procurement involves a substantial 
bundling of contract requirements, the proposed procurement strategy shall - 
{A) identifjr specifically the benefits anticipated to be derived 
fi-om the bundling of contract requirements; 
) 
set forth an assessment of the specific impediments to 
participation by small business concerns as prime contractors that result from the 
bundling of contract requirements and specie actions designed to maximize small 
business participation as subcontractors (including suppliers) at various tiers under the 
contract or contracts that are awarded to meet the requirements; and 
(C) include a specific determination that the anticipated benefits of 
the proposed bundled contract justifjr its use. 
GT TE 
G - In the case of solicitation of offers for a 
bundled contract that is issued by the head of an agency, a small business concern may 
submit an offer that provides for use of a particular team of subcontractors for the 
performance of the contract. The head of the agency shall evaluate the offer in the same 
manner as other offers, with due consideration the capabilities of all of the proposed 
subcontractors. If a small business concern teams under this paragraph, it shall not affect 
its status as a small business concern for any other purpose. 
(0 [deleted]. 
14 1 


(g) 
(1) 
The President shall annually establish Government-wide goals for 
procurement contracts awarded to small business concerns, small business concerns 
owned and controlled by socially and economically disadvantaged individuals, and small 
business concerns owned and controlled by wornen. The Government-wide goal for 
participation by small business concerns shall be established at not less than 20 percent of 
the total value of all prime contract awards for each fiscal year. The Government-wide 
goal for participation by small business concerns owned and controlled by socially and 
economically disadvantaged individuals shall be established at not less than 5 percent of 
the total value of all prime contract and subcontract awards for each fiscal year. The 
government-wide goal for participation by small business concerns owned and controlled 
by women shall be established at not less 5 percent ofthe total value of all prime contract 
and subcontract awards for each fiscal year. Notwithstanding the Government-wide goal, 
each agency shall have an annual presents, for the agency, the maximum practicable 
opportunity for small business concerns, small business concerns owned and controlled 
by socially and economically disadvantaged individuals, and small business concerns 
owned and controlled by women to participate in the performance of contracts let by such 
agency. The Administration and the Administrator of the %ce of Federal Procurement 
Policy shall, when exercising their authority pursuant to paragraph (Z), 
insure that the 
cumulative annual prime contract goals for all agencies meet or exceed the annual 
Government-wide prime contract goal established by the 
resident pursuant to this 
paragraph. 
(2) The head of each Federal agency shall, after consultation with the 
Administration, establish goals for the participation by small business concerns, by small 
business concerns owned and controlled by socially and economically disadvantaged 
individuals, and by small business concerns owned and controlled by women in 
procurement contracts of such agency having a value of $25,000 or more. Goals 
established under this subsection shall be jointly established by the Administration and 
the head of each Federal agency and shall realistically reflect the potential of small 
business concerns and small business concerns owned and controlled by socially and 
economically disadvantaged individuals to perform such contracts and to perform 
subcontracts under such contracts. Whenever the Administration and the head of any 
Federal agency fail to agree on established goals, the disagreement shall be submitted to 
the Administrator of the Office of Federal Procurement Policy for final determination. 
For the purpose of establishing goals under this subsection, the head of each Federal 
agency shall make consistent efforts to annually expand participation by small business 
concerns from each industry category in procurement contracts of the agency, including 
participation by small business concerns and owned and controlled by socially and 
142 


economically disadvantaged individuals and participation by small business concerns 
owned and controlled by women. The head of each Federal agency, in attempting to 
attain such participation, shall consider -- 
(A) contracts awarded as the result of unrestricted competition; 
and 
) contracts awarded after competition restricted to eligible small 
business concerns under this section and under the program established under section 8 
(a). 
(h) 
(1) At the conclusion of each fiscal year, the head of each Federal agency 
shall report to the Administration on the extent of participation by small business 
concerns, small business concerns owned and controlled by socially and economically 
disadvantaged individuals, and small business concerns owned and controlled by women 
in procurement contracts of such agency. 
Such reports shall contain appropriate 
justifications for failure to meet the goals established under subsection (8) of this section. 
(2) The Administration shall annually compile and analyze the reports 
submitted by the individual agencies pursuant to paragraph (1) and shall submit them to 
the President. 
The Administration’s submission to the President shall include the 
folIowing : 
(A) 
The Government-wide goals for participation by small 
business concerns, small business concerns owned and controlled by socially and 
economically disadvantaged individuals, and small business concerns owned and 
controlled by women and the performance in attaining such goals. 
(€3) 
The goals in effect for each agency and the agency’s 
performance in attaining such goals. 
(C) An analysis of any failure to achieve the Government-wide 
goals or any individuals agency goals and the actions planned by such agency (and 
approved by the Administration) to achieve the goals in the succeeding fiscal year. 
) The number and dollar value of contracts awarded to small 
business concerns, small business concerns owned and controlled by socially and 
economically disadvantaged individuals and small business concerns owned and 
controlled by women through -- 
(I) noncompetitive negotiation, 
143 


(ii) 
competition restricted to small business concerns 
owned and controlled by sociaIIy and economically disadvantaged individuals, 
(iii) competition restricted to small business concerns, and 
(iv) unrestricted competitions, for each agency and on a 
Government-wide basis. 
(E) The number and dollar value of subcontracts awarded to small 
business concerns, small business concerns owned and controlled by socially and 
economically disadvantaged individuals and small business concerns owned and 
controlled by women. 
0;) The number and dollar value of prime contracts and 
subcontracts awarded to small business concerns owned and controlled by women. 
(3) The President shall include the information required by paragraph (2) 
in each annual report to the Congress on the state of small business prepared pursuant to 
section 303 (a) of the Small Business Economic Policy Act of 1980 (15 U.S.C. 63 Ib (a)). 
(I) Nothing in this Act or any other provision of law precludes exclusive small 
business set-asides for procurements of architectural and engineering services, research, 
development, test and evaluation, and each Federal agency is authorized to develop such 
set-asides to fbrther the interests of small business in those areas. 
(i) 
(I) Each contract for the purchase of goods and services that has an 
anticipated value greater than $2,5000 but not greater than 4100,000 shall be reserved 
exclusively for small business concerns unless the contracting officer is unable to obtain 
offers for two or more small business concerns that are competitive with market prices 
and are competitive with regard to the quality and delivery of the goods or services being 
purchased. 
(2) in carrying out paragraph (l), a contracting officer shall consider a 
responsive offer timeIy received fi-om an eligible small business offeror. 
(3) Nothing in paragraph (1) shall be construed as precluding an award of 
a contract with a value not greater than $100,000 under the autho~ty of subsection (a) of 
section 8 of this Act, section 2323 of title 10, United States Code, section '712 of the 
144 


Business Opportunity Development Reform Act of 1988 (Public Law 100-656; 15 U.S.C. 
644 note), or section 7102 of the Federal Acquisition Streamlining Act of 1994. 
(k) There is hereby established in each Federal agency having procurement 
powers an office to be known as the “Office of Small and Disadvantaged Business 
Utilization”. 
The management of each such office shall be vested in an officer or 
employee of such agency who shall -- 
(1) be known as the “Director of Small and Disadvantaged Business 
Utilization” for such agency’ 
(2) be appointed by the head of such agency, 
(3) be responsible only to, and report directly to, the head of such agency 
or to the deputy of such head, except that the director for the Ofke of the secretary of 
Defense shall be responsible only to, and report to, such Secretary or the Secretary’s 
designess, 
(4) be responsible for the implementation and execution of the functions 
and duties under sections 8 and 15 of this Act which relate to such agency, 
(5) identify proposed solicitations that involved significant bundling of 
contract requirements, and work with the agency acquisition officials and the 
Administration to revise the procurement strategies for such proposed solicitations where 
appropriate to increase the probability or participation by small businesses as prime 
contractors, or to facilitate small business participation as subcontractors and suppliers, if 
a solicitation for a bundled contract is to be issued 
(6) assist small business concerns to obtain payments, late payments 
interest penalties, or infomation due to such concerns fiom an executive agency or a 
contractor, in conformity with chapter 39 of title 31, United States Code, or any other 
protection for contractors or subcontractors (including suppliers) that is included in the 
Federal Acquisition Regulation or any individual agency supplement to such 
Government-wide regulation; 
(7) have supervisory authority over such personnel of such agency to the 
extent that the functions and duties of such personnel relate to hnctions and duties under 
sections 8 and 15 of this Act, 
145 


(8) assign a small business technical adviser to each office to which the 
Administration has assigned a procurement center representative -- 
(A) who shall be a full-time employee of the procuring activity 
and shall be well qualified, and technically trained and familiar with the supplies or 
services purchased at activity, and 
(B) whose principal duty shall be to assist the Administration 
procurement center representative in his duties and functions relating to sections 8 and 15 
of this Act, 
(9) cooperate, and consult on a regular basis, with the Administration with 
respect to carrying out the functions and duties described in paragraph (4) of this 
subsection, and 
(10) 
make recommendations to contracting officers as to whether a 
particular contract requirement should be awarded pursuant to subsection (a), or section 8 
(a) of this Act or section 2323 of title 10, United States Code. Such recommendations 
shall be made with due regard to the requirements of subsection (m), and the failure of 
the contracting officer to accept any such recommendations shall be documented and 
included within the appropriate contract file. This subsection shall not apply to the 
administration. 
(I) 
(1) The Administration shall assign to each major procurement center a 
breakout procurement center representative with such assistance as may be appropriated. 
The breakout procurement center representative shall carry out the activities described 
in paragraph (2), and shall be an advocate for the breakout of items for procurement 
through full and open competition, whenever appropriate, while maintaining the integrity 
of the system in which such items are used, and an advocate for the use of full and open 
competition, whenever appropriate, for the procurement of supplies and services by such 
center. Any breakout procurement center representative assigned under this subsection 
shall be in addition to the representative referred to in subsection (Is) (6). 
(2) In. addition to carrying out the responsibilities assigned by the 
Administration, breakout procurement center representative is authorized to -- 
(A) 
attend any provisioning conference or similar evaluation 
session during which determinations are made as to whether requirements are to be 
146 


procured through other than hll and open competition and make recommendations with 
respect to such requirements to the members of such conference or session; 
@) review, at any time, restrictions on competition previously 
imposed on items through acquisition method coding or similar procedures, and 
recommend to personnel of the appropriate activity the prompt reevaluation of such 
limitations; 
(C) review restrictions on competition arising out of restrictions 
on the rights of the United States in technical data, and, when appropriate, recommend 
that personnel of the appropriate activity initiate a review of the validity of such an 
asserted restriction; 
@) obtain from any governmental source, and make available to 
personnel of the appropriate activity, technical data necessary for the preparation of a 
competitive solicitation package for any item of supply or service previously procured 
noncompetitive due to the unavailability of such technical data; 
(E) have access to procurement records and other data of the 
procurement center commensurate with the level of such representative’s approved 
security clearance classification; 
(I?) 
receive unsolicited engineering proposals and, when 
appropriate (I) conduct a value analysis of such proposals to determine whether such 
proposal, if adopted, will result in lower costs to the United States without substantially 
impending legitimate acquisition objectives and forward to personnel of the appropriate 
activity recommendations with respect to such proposal, or (ii) forward such proposals 
without analysis to personnel of the activity responsible for reviewing such proposals 
and who shall hrnish the breakout procurement center representative with information 
regarding the disposition of any such proposal; and 
(G) 
review the systems that account for the acquisition and 
management of technical data within the maximum availability and access to data needed 
for the preparation of offers to sell to the United States those supplies to which such data 
pertain which potential offerors are entitled to receive. 
(3) A breakout procurement center representative is authorized to appeal 
the failure to act favorably on any recommendation made pursuant to paragraph (2). 
Such appeal shall be filed and processed in the same manner and subject to the same 
147 


, 
conditions and limitations as an appeal filed by the Administrator pursuant to subsection 
(a)- 
(4) The Administration shall assign and co-locate at least two small 
business technical advisers to each major procurement center in addition to such other 
advisers as may be authorized from time to time. The sole duties of such advisers shall 
be assist the breakout procurement center representative for the center to which such 
advisers are assigned in carrying out the fbnctions described in paragraph (2) and the 
representatives referred to in subsection (k) (6). 
(5) 
(A) The breakout procurement center representative and technical 
advisers assigned pursuant to this subsection shall be -- 
(I) full-time employees of the Administration; and 
(ii) 
hlIy qualified, technically trained, and familiar with 
the supplies and services procured by the major procurement center to which they are 
assigned. 
(B) In addition to the requirements of subparagraph (A), each 
breakout procurement center representative, and at least one technical adviser assigned to 
such representative, shall be an accredited engineer. 
(C) The Administration shall establish personnel positions for 
breakout procurement representatives and advisers assigned pursuant to this subsection 
which are classified at a grade level of the General Schedule sufficient to attract and 
retain highly qualified personnel. 
(6) For purposes of this subsection, the term “major procurement center” 
means a procurement center that, in the opinion of the Administrator, purchases 
substantial dollar amounts of other than commercial items and which has the potential to 
incur significant savings as the result of the placement of a breakout procurement center 
representative. 
(7) 
(A) At such times as the Administrator deems appropriate, the 
breakout procurement center representative shall conduct familiarization sessions for 
contracting officers and other appropriate personnel of the procurement center to which 
such representative is assigned. Such sessions shall acquaint the participants with the 
148 


provisions of this subsection and shall instruct them in methods designed to fbrther the 
purposes of such subsection. 
) The breakout procurement center representative shall prepare 
and personally deliver an annual briefing and report to the head of the procurement center 
to which such representative is assigned. Such briefing and report shall detail the past 
and planned activities of the representative and shall contain such recommendations for 
improvement in the operation of the center as may be appropriate. The head of such 
center shall personally receive such briefing and report and shall, within sixty calendar 
days after receipt, respond, in writing, to each recommendation made by such 
representative. 
(m) (1) Each agency subject to the requirement of section 2323 of title 10, 
Unite States Code, shall, when implementing such requirements -- 
(A) establish policies and procedures that insure that there will be 
no reduction in the number of dollar value of contracts awarded pursuant to this section 
and section 8 (a) in order to achieve any goal to other program objective; and 
) assure that such requirements will not alter or change the 
procurement process used to implement this section or section 8 (a). 
(2) All procurement center representative (including those referred to I 
subsection (k) (6), in addition to such other duties as may be assigned by the 
Administrator, shall -- 
(A) monitor the performance of the procurement activities to 
which they are assigned to ascertain the degree of compliance with the requirements of 
program (1); 
) 
report to their immediate supervisors all instances of 
noncompliance with such requirements; and 
(6) increase, insofar as possible, the number and dollar value of 
procurements that may be used for the programs established under this section, section 8 
(a), and section 2323 of title 10, United States Code. 
(n) For purposes of this section, the determination of labor surplus areas shall be 
made on the basis of the criteria in effect at the time of the determination, except that any 
149 


minimum population criteria shall not exceed twenty-five thousand. Such determination, 
as modified by the preceding sentence, shall be made by the Secretary of Labor. 
(0) (1) A concern may not awarded a contract under subsection (a) as a small 
business concern unless the concern agrees that -- 
(A) in the case of a contract for services (except construction), at 
least 50 percent of the cost of contract performance incurred for personnel shall be 
expended for employees of the concern; and 
(B) in the case of a contract for procurement of supplies (other 
than procurement from a regular dealer in such supplies), the concern will perform work 
for at least 50 percent of the cost of manufacturing the supplies (not including the cost of 
materials). 
(2) The Administrator may change the percentage under subparagraph(A) 
or (B) of paragraph (1) in the Administrator determines that such change is necessary to 
reflect conventional industry practices among business concerns that are below the 
numerical size standard for businesses in that industry category. 
(3) 
The Administrator shall establish, through public rulemaking, 
requirements similar to those specified in paragraph (1) to be applicable to contracts for 
general and specialty construction and to contracts for any other industry category not 
otherwise subject to the requirements of such paragraph. The percentage applicable to 
any such requirement shall be determined in accordance with paragraph (2). 
hoever makes ant statement knowing it to be false, or whoever willhlly 
overvalues, for the purpose of obtaining for himself or for any applicant any loan, or 
extension thereof by renewal, deferment of action , OF otherwise, or the acceptance, 
release, or substitution of security therefor, or for the purpose of influencing in any way 
the action of the Administration, or for the purpose of obtaining money, property, or 
anything of value, under this Act, shall be punished by a fine of not more than $5,000 or 
by imprisonment for not more than two years, or both. 
oever, being connected in any capacity with the Administration, (1) 
embezzles, abstracts, purloins, or willhlly misapplies any moneys, hnds, securities, or 
other things of value, whether belonging to it or pledged or otherwise entrusted to it, or 
(2) with intent to defraud the Administration or any other body politic or corporate, or 
any individual, or to deceive any officer, auditor, or examiner of the administration 
150 


makes any false entry in any book, report, or statement of or to the Administration, or 
without being duly authorized, draws any order or issues, puts forth, or assigns any note, 
debenture, bond, or other obligation, or draR, bill of exchange, mortgage, judgment or 
decree thereof, or (3) with intent to defraud participates or shares in or receives directly 
or indirectly any money, profit, property, or benefit through any transaction, loan, 
commission, contract, or any other act of the Administration, or (4) gives any 
unauthorized information concerning any future action or plan of the Administration 
which might affect the value of securities, or having such knowledge, invests or 
speculates, directly or indirectly, in the securities or property of any company or 
corporation receiving loans or other assistance from the Administration, shall be punished 
by a fine of not more than $10,000 or by imprisonment for not more than five years, or 
both. 
(c) Whoever, with intent to defraud, knowingly conceals, removes, disposes of, 
or converts to his own use or to that of another, any property mortgages or pledged to or 
held by, the Administration, shall be fined not more than $5,000 or imprisoned not more 
than five years, or both; but if the value of such property does not exceed $100, he shall 
be fined not more than $1,000 or imprisoned not more than one year, or both. 
(d) 
(1) Whoever misrepresents the status of any concern or person as a “small 
business concern,” a “qualified HUBZone small business concern,” a “small business 
concern owned and controlled by socially and economically disadvantaged individuals” 
or a small business concern[s] owned and controlled by women”, in order to obtain for 
oneself or another any -- 
(A) prime contract to be awarded pursuant to section 9, 15, or 3 I; 
(B) subcontract to be awarded pursuant to section 8 (a); 
(C) subcontract that is to be included as part or all of a goal 
contained in a subcontracting plan required pursuant to section 8(d); or 
(D) 
prime or subcontract to be awarded as a result, or in 
furtherance, of any other provision of Federal Law that specifically references section 
8(d) for a definition of program eligibility, shall be subject to the penalties and remedies 
described in paragraph (2). 
(2) Any person who violates paragraph (1) shall -- 
151 


(A) 
imprisonment for not more than 10 years, or both; 
be punished by a fine of not more than $500,000 or by 
(€3) 
be subject to the Administrative remedies prescribed by the 
Program Fraud Civil Remedies Act of 1986 (3 1 U.S.C. 3801- 3812); 
(C) be subject to suspension and debarment as specified in subpart 
9.4 of title 48, Code of Federal Regulations (or any successor regulation) on the basis that 
such misrepresentation indicates a lack of business integrity that seriously and directly 
affects the present responsibility to pedorm any contract awarded by the Federal 
Government or a subcontract under such a contract; and 
(D) be ineligible for participation in any program or activity 
conducted under the authority of this Act or the Small Business investment Act of 1958 
(I5 U.S.C. 661et seq.) for a period not to exceed 3 years. 
(e) Any representation of the status of any concern or person as a “small business 
concern”, a “HUBZone small Business concern”, a “small business concern owned and 
controlled by socially and economically disadvantaged individuals”, or a “smaI1 business 
concerns[s] owned and controlled by women” in order to obtain any prime contract or 
subcontract enumerated in subsection (d) of this section shall be in writing. 
(f) Whoever falsely certifies past compliance with the requirements of section 
70) (10) (I) of this Act shall be subject to the penalties prescribed in subsection (d). 
See. 17. Any interest held by the Administration in property, as security for a loan, shall 
be subordinate to any lien on such property for taxes due on the property to a State, or 
political subdivision thereof, in any case where such lien would, under applicable State 
law, be superior to such interest if such interest were held by any party other than the 
United States. 
Sec. 18. 
(a) the Administration shall not duplicate the work or activity of any other 
department or agency of the Federal Government and nothing contained in this Act shall 
be construed to authorized any such duplication unless such work or activities expressly 
provided for in this Act. If loan applications are being refbsed or loans denied by such 
other department or agency responsible for such work or activity due to administrative 
withholding from the obligation or withholding from apportionment , or due to the 
administratively declared moratorium, then, for purposes of this section, no duplication 
shall be deemed to have occurred. 
152 


(b) As used in this Act -- 
(I) 
“agricultural enterprises” means those businesses engaged in the 
production of food and fiber, ranching, and raising of livestock, aquaculture, and all other 
farming and agricultural related industries; and 
(2) “credit elsewhere” means the availability of sufficient credit from 
non-Federal sources at reasonable rates and terms, taking into consideration prevailing 
private rates and terms in the community in or near where the concern transacts business 
for similar purposes and periods to time. 
Sec. 19. If any provision of this Act, or the application thereof to any person or 
circumstances, is held invalid, the remainder of this Act, and the application of such 
provision to other person or circumstances, shall nor be affected thereby. 
Sec. 20. 
(1) For fiscal year 1985 and every year thereafter, there are hereby 
authorized to be appropriated such sums as may be necessary and appropriate to carry out 
the provisions and the purposes of this Act other than those for which appropriations are 
specifically authorized. For fiscal year 1986 and every year thereafter, there are hereby 
authorized to be appropriated such sums as may be necessary and appropriate to be 
available solely (1) to carry out the provisions and purposes of the Small Business 
Development Center Program in section 21, but not to exceed the level as specified in 
subsection (a) of such section, (2) to pay the expenses of the National Small Business 
Development Center Advisory Board as provided in section 21 (h), and (3) to reimburse 
centers for participation in evaluations as provided in section 21 0’). All appropriations 
whether specifically or generally authorized shall remain available until expended. 
(a) 
(2) Notwithstanding any other provisions of law, the Administration shall 
enter into commitments for direct loans and to guarantee loans, debenturs, payments of 
rentals, or other amounts due under qualified contracts and other types of financial 
assistance and enter into commitments to purchase debentures and preferred securities 
and guarantee sureties against loss pursuant to programs under this Act and the Small 
Business Investment Act of 1958, in the hll amounts provided by the law subject only to 
(A) the availability of qualified applications, and (B) limitations contained in 
appropriations Acts. Nothing in this paragraph authorizes the Administration to reduce 
or limit its authority to enter into such commitments. 
Subject to approval in 
appropriations Acts, amounts authorized for preferred securities, debentures or 
participating securities under title I11 of the Small Business Investment Act of 1958 may 
153 


be obligated in one fiscal year and disbursed or guaranteed in any 1 or more of the 4 
subsequent fiscal years. 
(3) There are authorized to be transferred from the disaster loan revolving 
knd such sums as may be necessary and appropriate for administrative expenses of the 
Administration . 
(4) Except as may be otherwise specifically provided by law, the amount 
of deferred participation loans authorized in this section -- 
(A) shall mean the net amount of the loan principal guaranteed by 
the Small Business Administration (and does not include any amount which is not 
guaranteed); and 
(B) 
shall be available for a national program, except that the 
Administration may use not more than an amount equal to 10 percent of the amount 
authorized each year for any special or pilot program directed to identified sectors of the 
small business community or to specific geographic regions of the United States. 
(b) There are authorized to be appropriated to the Administration for fiscal year 
1991 such sums as may be necessary to carry out the provisions of this Act and the Small 
Business Investment Act of 1958. There also are hereby authorized to be appropriated 
sums as may be necessary and appropriate for the carrying out of the provisions and 
purposes, including administrative, of sections 7 (b) (1) and 7 (b) (2) of this Act; and 
there are authorized to be transferred from the disaster loan revolving fimd sums as may 
be necessary and appropriate for such administrative expenses. 
(c) FISCAL YEAR 1998 - 
(1) PROGILcplw LEVELS - The following program levels are authorized 
for fiscal year 1998: 
(A) For the programs authorized by this Act, the Administration is 
authorized to make - 
(I) $40,000,000 in technical assistance grants, as provided 
in section 7(m); and 
154 


(ii) $60,000,000 in direct loans, as provided in section 7 
(B) For the programs authorized by this Act, the Administration id 
authorized to make $16,040,000,000 in deferred participation loans and other financings. 
Of such sum, the Administration is authorized to make - 
(I) $12,000,000,000 in general business loans as provided 
in section 7 (a); 
(ii) $3,000,000,000 in financings as provided in section 7 
(a) (13) of this Act and section 504 of the Small Business Investment Act of 1958; 
(iii) $1,000,000,000 in loans as provided in section 7 (a) 
(21); and 
(iv) $40,000,000, in loans as provided in section 7(m). 
(C) For the programs authorized by title 111 of the Small Business 
Investment Act of 1958, the Administration is authorized to make - 
(I) $700,000,000 in purchases of participating securities; 
and 
(ii) $600,000,000 in guarantees of debentures. 
(D) For the programs authorized by part 
oftitle IV of the Small 
Business Investment Act of 1958, the Administration is authorized to enter into 
guarantees not to exceed $2,000,000,000, of which not more than $650,000,000 may be 
in bonds approved pursuant to section 41 1 (a) (3) of that Act. 
(E) The Administration is authorized to make grants or enter into 
cooperative agreements - 
(I) for the Service Corps of Retired Executives program 
authorized by section 8 (b) ( l), $4,000,000; and 
(ii) for activities of small business development centers 
pursuant to section 21 (c) (3) (G), $15,000,000 to remain available until expended. 
155 


DITIONaL AUTHOREAT1 
(A) There are authorized to be appropriated to the Administration 
for fiscal year 1998 such sums as may be necessary to carry this Act, including 
Administrative expenses and necessary loan capital for disaster loans pursuant to section 
7(b), and to carry out the Small Business Investment Act of 1958, including salaries and 
expenses of the Administration. 
(B) Notwithstanding subparagraph (A), for fiscal year 1998 - 
(I) no funds are authorized to be provided to carry out the 
loan program authorized by section 7 (a) (21) except by transfer from another Federal 
department or agency to the Administration, unless the program level authorized for 
general Business loans under paragraph (1) (B) (I) is fully funded; and 
(ii) the Administration may not approve loans on behalf of 
the Administration or on behalf of any other department or agency, by contract or 
otherwise, under terms and conditions other those specifically authorized under this Act 
or the Small Business Investment Act of 1958, except that it may approve loans under 
section 7 (a) (21) of this Act in gross amounts of not more than $1,250,000. 
(3) HUBZONE PROGRAM - There are authorized to be appropriated to 
the Administration to carry out the program under section 3 1, $5,000,000 for fiscal 1998. 
(d) FISCAL YEAR 1999 - 
(I) PROGRAM LEVELS - The following program level are authorized 
for fiscal year 1999: 
(A) For the programs authorized by this Act, the Administration is 
authorized to make - 
(I) $40,000,000 in technical assistance grants as provided 
in section 7(rn); and 
(ii) 
$60,000,000 in direct loans, as provided in section 
156 


(B) For the programs authorized by this Act, the Administration is 
authorized to make $17,5~0,000,000 in deferred participation loans and other financings. 
Of such sum, the Administration is authorized to make - 
(I) $13,000,000,000 in general business loans as provided 
in section 7(a); 
(ii) $3,500,000,000 in fmancings as provided in section 7 
(a) (13) of this Act and section 504 of the Small Business Investment Act of 1958; 
(iii) $1,000,000,000 in loans as provided in section 7(a) 
(21); and 
(iv) $40,000,000 in loans as provided in section 7 (m). 
(C) For the programs authorized by title 111 of the Small Business 
Investment Act of 1958, the Administration is authorized to make - 
(I) $800,000,000 in purchases of participating securities; 
and 
(ii) $700,000,000 in guarantees of debentures. 
(D) For the programs authorized by part 
of title IV of the Small 
Business Investment Act of 1958, the Administration is authorized to enter into 
guarantees not to exceed $2,000,000,000, of which not more than $650,000,000 may be 
in bonds approved pursuant to section 41 l(a) (3) of that Act. 
(E) 
cooperative agreements - 
The Administration is authorized to make grants or enter 
(I) for the Service Corps of Retired Executives program 
authorized by section 8 (b) (I), $4,500,000; and 
(ii) for activities of small business development centers 
pursuant to section 21 (c) (3) (G), not to exceed $15,000,000, to remain available until 
expended. 
(2) ADDITIONAL AUTHORIZATIONS - 
157 


(a) There authorized to be appropriated to the Administration for 
fiscal year 1999 such sums as may be necessary to carry out this Act, including 
administrative expenses and necessary loan capital for disaster loans pursuant to section 
7(b), and to carry out the Small Business Investment Act of 1958, including salaries and 
expenses of the administration. 
(B) Notwithstanding subparagraph (A), for fiscal year 1999 - 
(I) no hnds are authorized t be provided to carry out the 
loan program authorized by section 7(a) (21) except by transfer from another Federal 
department or agency to the Administrator, unless the program level authorized for 
general business loans under paragraph (1) (B) (I) is fully funded; and 
(ii) the Administration may not approve loans on behalf of 
the administration or on behalf of any other department or agency, by contract or 
otherwise, under terms and conditions other than those specifically authorized under this 
Act or the Small Business Investment Act of 1958, except that it may approve loans 
under section 7 (a) (21) of this Act in gross amounts of not more than $1,250,000. 
(3) HUBZONEPRO 
- There are authorized to be appropriated to 
the Administration to carry out the program under section 31, $5,000,000 for fiscal year 
1999. 
(e) FISCAL YEAR 2000 - 
(1) PROGRAM LEVELS - The following program levels are authorized 
for fiscal year 2000: 
(A) For the programs authorized by this Act, the Administration is 
authorized to make - 
(I) $40,000,000 in technical assistance grants as provided 
in section 7(m); and 
(ii) $60,000,000 in direct loans, as provided in section 7 


(B) For the program authorized by this Act, the Administration is 
authorized to make $20,040,000 in deferred participation loans as other financings. Of 
such sum, the Administration is authorized to make - 
(I) $14,500,000,000 in general business loans as provided 
in section 7(a); 
(ii) $4,500,000,000 in financings as provided in section 7 
(a) (13) of this Act and section 504 of the Small Business Investment Act of 1958; 
(iii) $1,000,000,000 in loans as provided in section 7(a) 
(21); and 
(iv) $40,000,000 in loans as provided in S ~ C ~ ~ Q I I  
7(m). 
(C) For the programs authorized by title 111 of the Small Business 
Investment Act of 1958, the Administration is authorized to make - 
(I) $900,000,000 in purchases of participating securities; 
and 
(ii) $800,000,000 in guarantees of debentures. 
(D) For the programs authorized by part B title IV of the Small 
Business Investment Act of 1958, the Administration is authorized to enter into 
guarantees not to exceed $2,000,000,000, of which not more than $650,000,000 may be 
in bonds approved pursuant to section 41 1 (a) (3) of that Act. 
(E) 
cooperative agreements - 
The Administration is authorized to make grants or enter 
(I) for the Service Corps of Retired Executives program 
authorized by section 8(b) (I), $5,000,000; and 
(ii) 
for activities of small business development centers 
pursuant to section 21 (c) (3) (G), not to exceed $15,000,000 to remain available until 
expended. 
(2) ADDITIONAT, AUTHORIZATION - 
159 


(A) There are authorized to be appropriated to the administration 
for fiscal year 2000 such sums as may be necessary to carry out this Act, including 
administrative expenses and necessary loan capital for disaster loans pursuant to section 
7(b), and to carry out the Small Business Investment Act of 1958, including salaries and 
expenses of the Administration. 
(B) Notwithstanding subparagraph (A), for fiscal year 2000 - 
(I) no funds are authorized to be provided to carry out the 
loan program authorized by section ?(a) (21) except by transfer from another Federal 
department or agency to the Administration, unless the program level authorized for 
general business loans under paragraph (1) (B) (I) is fully funded; and 
(ii) the Administration may not approve loans on behalf of 
the Administration or on behalf of any other department or agency, by contract or 
otherwise, under terms and conditions other than those specifically authorized under this 
Act or the Small Business Investment Act of 1958, except that it may approve loans 
under section 7(a) (21) of this Act in gross amounts of nor more than $1,250,000. 
(3) 
HUBZOWE PRO 
- There are authorized to be 
appropriated to the Administration to carry out the program under section 3 1, $5,000,000 
for fiscal year 2000. 
Sec,. 21. 
(a) 
(1) The Administration is authorized to make grants (including 
contracts and cooperative agreements) to any State government or any agency thereof, 
any regional entity, any State chartered development, credit or finance corporation , any 
women’s business center operating pursuant to section 29, any public or private 
institution of higher education, including but not limited to any land-grant college or 
university, any college or school of business, engineering, commerce, or agriculture, 
community college or junior college, or to any entity formed by two or more of the above 
entities (herein referred to as “applicants”) to assist in establishing small business 
development centers and to any such body for: small business oriented employment or 
natural resources development programs; studies, research, and counseling concerning 
the managing, financing, and operation of small business enterprises; management and 
technical assistance regarding small business participation in international markets, 
export promotion and technology transfer, delivery or distribution of such services and 
information; and providing access to business analysts who can refer small business 
concerns to available experts: 
Provided, That after December 31, 1990, the 
Administration shall not make a grant to any applicant other than an institution of higher 
160 


education or a women’s business center opemtiiig pursuznt to section 29 2s a ~rnzlil 
Business Development Center unless the applicant was receiving a grant (including a 
contrac.t or cooperative agreement) on sit& dzte. The 24dministraticn shall r e p i r e  arty 
applicant for a small business center grant with performance commencifig on or after 
January 1, 1992 to have its own budget md to prhisrilj; u t i h  izstiiutions Gf kiglza. 
education and women’s business centers opening pursuant to section 29 to provide 
services to the small business c.ommunity. The term of smh grants shall be made os a 
calendar year basis or to coincide with the Federal fiscal year. 
(2) The Small Business Developmeat Centers shall vmrk in close cornpetion with 
the Administration’s regional and local offices, the Department of Commerce, 
appropriate Federal, State and local agelicks and the small business communitJr io serve 
as an active information dissemination and service delivery mechanism for existing trade 
promotion, trade finance, trade adjustment, trade remedy and trade dat’ta mileetion 
programs of particular utility for small business. 
(3) The Small Business Development Cezter Program shalt be under, the genemi 
management and oversight of the Administration, for the delivery of programs and 
services to the snzall business cornriiunity. Siich prq.pzs md ser&xs shzll be jointly 
developed, negotiated, and agreed upon, with full participation of both parties, pursuant 
to an executed cooperative agreement between the Small Business Development Ceilter 
applicant and the Administration 
(A) 
Small busiiness d e . v e l o ~ ~ ~ ~ ~ t  
centers are mthorized to form an 
associa.tion to pursue matters of common concern. If more than a majority of the small 
busine.ss development centers which are operating prsumt to agrceizents with the 
Administrations are members of such an association, the Administration is aktthorized and 
directed to recognize the existence and activities of sac,$ iia assoc.iatjrrn and 
c n n ~ ~ i t  
with it and develop documents (i) 
announcing the annual scope of activities pursuant to 
this sei:tian, (.ii) reql-lesting prc?posals io &j:iit;ej- a;&?tance 2s pvkk3.j in this .E;ecfim md 
rpttT,-e!qmerrl: C&Et.l. PrQgrgq spi..i.lficaHy &&dkg the. rS~v€!.innmmt 
- -r ------ 
Qf 1-epiatiQn.s gzc! 
(iii) governing the general operations and administration of the SmaIl Business 
a uniform negotiated cooperative agreement for use on an annual basis when entering 
into individual negotiated agreements with small business development centers. 
. .  
1
.
 
(0) _Pmyisi_t2ns 0- 
ncn:erp&>g 
z$&ts, 
cost nrrtnmnles. 
r------r --- sgcj g ~ p ~ m s t ~ ~ t i y e  
requirements for Federal grants, contracts and cooperative agreements which are included 
in uniform requirements of OEce of Management and Budget (0 ) Circulars shall be 
161 


iricarporated by reference and shall not be set &rth in sulmwy or other form in 
regulations. 
n an annual basis, the Small Busi~ess Deve!~,prnent Ce:iter she!! 
review and coordinate public and private partnerships and cosponsorships with the 
Administration f'or the purpose of' more ~~~~~~t~ leveraging available resourcw oil ii 
National and a State basis. 
(4) SMALL BUSINESS DEVELOPMENT CENTER ~~O~~~ 
LEVEL. -- 
(-4) 
IN GENE 
. -- The ~
~
~
~
~
§
~
r
~
t
~
o
~
 
shall -require as a c~ndition of 
any grant (or amendment or modification thereof) made to an applicant under this 
section, that a matching amount (excluding any fees collected from r
~
~
~
~
~
~
~
of such 
assistance) equal to the amount of such grant be provided from sources other than the 
Federal Goveniment, to be comnpriised of not less thm 5Q percrrrt cash and not mi3re than 
50 percent of indirect costs and in-kind contributions. 
(B) ~~~~~T~~~ 
- The matchkg miourit ~~~~r~~~~ 
iit ~
~
~
~
a
r
(A) shall not include any indirect costs or in-kind contributions derived from any Federal 
program. 
(C) NATIONAL PRO 
__ 
(i) INGENERAL - 
(I) GRANT ~~~@~~~ 
- Subjec: to subclauses 
(11) and (111), the amount ofa grant received by a State under this section shall be equal to 
the greater of $500,000, or the sum of - 
@a> the State's pro rata share of the natic-nd 
program, based upon the population of the State as compared to the total population of 
the United States; and 
(If) PRO K4T.A ~~~~~~~~~ 
- E the anrclunt 
imide available to carry out this section for any fiscal year is insufficient to carry out 
162 


subclause (I) (bb), the A ~ ~ ~ s ~ r ~ t ~ o n  
shall make p'o rata reductions in the amouats 
othenvise payable to States under subclause (I) (bb). 
(111) 
~~~~~~ 
~~~~~~~~~~ 
- 
The 
amount of a grant receive by a State under this section shall not exceed the amount of 
matchiirig fimds 6om sources other than the Federal Covermient provided by the State 
under subparagraph (A). 
(ii) E
~
~
~
~
T
~
-- Chits pr~t.l'ded to iz  all btisiiless 
development center by the Administration or another agency to carry out the provisions 
of subsection (6) (3) (G) shall not be included in the calfcu!aiion ofma~imlml fbndi:ig ofa 
small business development center. 
(iii)  AT^^^^ ~~~~~A~~ 
-- There are authorized to 
be appropriated to carry out the national program under this section -- 
(I) $85,000,000 for fiscal year 1998; 
(11) $90,000,000 for fiscal year 1999; 
The amourit fur which a sniall business ~ e ~ ~ l o p n ~ ~ n t  
center is eligible under tIGs 
paragraph shall be based upon the amount of the national program in effect as ofthe data 
for commencement of performance of the small business development center's grant. 
(A) 
l[N GENERAL. -- Subject to the ~ o ~ ~ ~ t ~ o ~ ~ s  
set forth in 
subparagraph (B), a small business development center may enter into a contract with a 
Federal department or agency to provide specific assistance to small business concerns. 
(B) CONrnACT ~~~~~~~~~~~. 
-- Before bidding on 8 
contract described in subparagraph (A), a small business development center shall receive 
approval from the Associate Administrator of the small brzsitiess development cmter 
program of the subject and general scope of the contract. 
Each approval under 
subparagraph (A) shall be based upon a determination that the contract will provide 
163 


assistance to small business concerns and that perfbriimice of the contract will not hinder 
the small business development center in carrying out the terms of the grant received by 
the small business development center from the Administration. 
(C) 
~~~~~~~~~~ 
FROM ~~-~~~~~~ 
~
~
~
-- A 
contract under this paragraph shall not be subject to the matching knds or elisibility 
requirements or paragraph (4). 
(D) ADDITIONAL ~
~
~
~
~
~
-- ~
~
t
~
~
~
t
~
~
~
t
a
any other 
provision of law, a contract for assistance under this paragraph shall not be applied to any 
Federal department or agency's small business, w e ~ i ~ ~ ~ e ~ ~ ~ r i ~ d  
business, or socially and 
economically disadvantaged business contracting goal under section 1 5(g). 
(6) Any applicant which is fUnded by the ~
~
m
~
n
~
~
as a small 
Business Development Center may apply for an additional grant to used solely to assist -- 
(A) with the development aid ~
~
l
~
a
~
~
~
~
e
~
~
t
of expo~%~ 
by smalf 
business concerns; 
(B) in technology transfer; and 
(C) with uutreach, d e ~ ~ ~ o ~ ~ e n t ,  
and ~ ~ ~ ~ a n s e ~ ~ i ~ ~ ~ t  
of minority 
owned small business startups or expansions, KUBZone small business concerns, 
veteran-owned sniall business startups or expatisions, m d  ~
~
~
~
~
~
~
-
0
~
7
small business 
startups or expansions, in communities impacted by base closings or military or corporate 
downsizing, or in rural or under sewed s o ~ ~ u ~ t ~ e s ;  
as provided under s ~ ~ ~ a ~ a ~ ~ a ~ h
(B) through (G) of subsection (c) (3). Applicants for such additional grants shall comply 
with all of the provisions of this section, including providhg matcbing funds, except that 
funding under this paragraph shall be effective for any fiscal year to the extent provided 
in advance in appropriations Acts and shall be in addition tu the dollar progag 
limitations specified in paragraphs (4) and (5). 
No recipient of fimds under this 
paragraph shall receive a grant whish rvould exceed its pro rzta share of a $15,000 
program based upon the populations to be served by the SmdI Business Development 
Center as compared to the total poputation of the Unites States. The ~~~~~~ 
arnount of 
eligibility for any State shall be $100,000 
(17) 
(1) Financial assistance shall not be made available to any zppfic-ant if 
approving such assistance would be inconsistent with a plan for the area involved which 
has been adopted by an agency recognized by the State government as authorized to do 
164 


so and approved by the A d ~ i ~ s t ~ - a t ~ o n  
in ac-codame with the standards aid 
requirements established pursuant to this section. 
(2) An applicant may apply to participate i ~ i  the pr~gram by submitting t3 
the Administration for approval a plan naming those authorized in subsection (a) to 
participate in the prograin, the geoy-apilic a m  to be sei~ed, the sewices that it would 
provide, the method for delivering services, a budget, and any other information and 
assurances the Admillistration niay require to insure that the ajyhx-mt will carry orlt the 
activities eligible for assistance. 
The Administration is authorized to approve, 
conditioiially approve or reject a plaa or conibkation of plam subnl_tted. In all cases, the 
Administration shall review plans for conformity with the plan submitted pursuant to 
paragraph (1) of this subsection, and with a view toward providhg small business with 
the most comprehensive and coordinated assistance in the State or part thereof to be 
served. 
(3) 
At the discretion of the ~ ~ ~ r ~ s t r a ~ ~ o ~ i ,  
the ~
~
~
~
~
~
s
t
~
-
is 
authorized to permit a small business development center to provide advice, information 
and assistance, as described in subsection (c)? to s d l  business located outside the State, 
but only to the extent such businesses are located within close geographical proximity to 
the small business development center, as determined by the Administration. 
(c) 
(1) 
Applicants receiving grants under this section shall assist sma!! 
businesses in solving problems concerning operations, manufacturing, engineering, 
technology exchange and development, persome1 a ~ ~ ~ s t ~ ~ t ~ o ~ ~ ,  
marketkg, sales, 
merchandising, finance, accounting, business strategy development, and other disciplines 
required for small busitless growth and expansion, ~ ~ ~ ~ i o ~ ~ a t i o ~ ,  
increased productivity, 
and management improvement, and for decreasins industry economic concentrations. 
(2) A small business develop~ient center shall provide sci-vices as close as 
possible to small businesses by providing extension services and utilizing satellite 
locatioiis wlieii necessary. The facilities and stdT d 
each Small Business Developmelit 
Center shall be located in such places as to provide maximum accessibility and benefits 
to the small business which the center is interided to setlie. To the extent possible, it also 
shall make fiill use of other Federal and State government programs that are concerned 
with aiding small business A small business development center shall have -- 
(A) a hll-time stag inc.Iuudkg s hll-time director who shall have 
the authority to make expenditures under the center's budget and who shall manage the 
program activities; 
165 


business clients; 
(C) access tu te~hiwlogy tmisrs"~ agetits tc? provide state of ad 
technology to small business through coupling with national and regional technology data 
sources; 
(D) 
access to information specialists to assist in providing 
information searches and referrals to small business; 
(E) access to part-time professional specialists to conduct research 
or to provide counseling assistance whenever the need arises; and 
(F) access to laboratory and adaptive engineering facilities 
(3) 
Services provided by a stna!l business d ~ v € ~ ~ p ~ ~ ~ t  
center shall 
include, but shall not be limited to -- 
(A) 
hrilishing one-to-one indiyidual counseling to small 
businesses, including - 
(T) working with individuals to increase awareness of basic 
credit practices and credit requirements; 
(ii) u70rking with individuals to develop business plans, 
financial packages, credit applications, and contract proposals; 
(iii) 
working with the A
~
~
~
i
~
~
i
~
t
~
~
~
~
o
to develop arid 
provide informational tools for use in working with individuals on pre-business startup 
planning, existing business expansion, and export planning; and 
(iv) working with ~ ~ ~ d ~ y ~ d u a ~ s  
referred by the local ofEces 
of the Administration and Administration participating lenders; 
(B) assisting in technology transfer, research and development, 
including applied research, and coupling from existing sources to small businesses, 
including -- 
(I) working to increase the access of small businesses to 
the capabilities of automated flexible manufacturing systems; 
166 


(3) 
workjrrg t,hsgggh eestir!g fl&\yGrks 2nd &v&pir!g 
new networks for technology transfer that encourage partnership between the small 
business and academic conmtur!i!ties io help com~~er~ialize 
u~iversity-based research a d  
development and introduce university-based engineers and scientists to their counterparts 
in small technology-based firms; and 
(iii) 
exploririg the viability of deveiopirzg shared 
production facilities, under appropriate circumstances; 
(C> in cooperatior! with the IpPpaX=t~e!llc 0
'
 
Cnflmerrfe arid other 
relevant Federal agencies, actively assisting small business in exporting by identifjring 
atid developing potetitial export markets, fkilitati~g exp-t trznsactions, devdopirzg 
linkages between United States small business firms and prescreened foreign buyers, 
assisting sniall businesses to participate 111 intermtiom1 trade shows, assisting s z ~ d  
businesses in obtaining export financing, and facilitating the development or reorientation 
of marketing and production strategies; where zppmpriate, the Smt!l Business 
Development Center and the Administration may work in cooperation with the State to 
establish a State international trade center for these purposes; 
(0) developing a progrm iz cojunctioti with the Exp~rt-111qm-t 
Bank and local and regional Administration oEces that will enable Small Business 
Development Centers to serve as an informatinn i~etwnrk and to assist smdl business 
applicants for Export-Import Bank financing programs, and otherwise identify and help 
to make available export financing programs to small businesses; 
(E) working closely with the md business ccnmudy, smalfi 
business consultants, State agencies, universities and other appropriate groups to make 
translation serviccs inore readily availab!e to small busi-n-ess fmns diihg sewices more 
readily available to small business firm doing business, or attempting to develop 
business, in foerign markets; 
(F) in provldiitg assistance wder this subsectinn, qxjicar~ts shall 
cooperate with the Department of Commerce and other relevant Federal agencies to 
iiicreasc access to available export. mzket kGormzti.=tn systemf-, i~icP~dkg 
the C&IS 
system; 
(6) assisting smai! businesses to d e d n p  2nd img!ement sirattiegic 
business plans to timely and effectively respond to the planned closure (or reduction) of 
a Department of Defense facility within the community, or actual or projected reductions 
167 


in such firm’s business base due to the actual or projected term~r?atior? 
(or reductio-n-) ofa 
Department ofDefense program or a contract in support of such program -- 
adverse impacts of -- 
(I) ti?. cjesurft (e;* rg?jGc&:g of the &pr,rtmf-nt of 
Defense facility on the small business concerns providing goods or services to such 
facility or to the military and civilian persomel ~ur~-e~tly 
stationed or workii3g zt wch 
facility; and 
(Tf) the termin31tiat:i (Of redGctiot1) or 31 DepaI-ment 
of Defense program (or contracts under such program) on the small business concerns 
participating in such program as a prime contractor, subcontractor or supplier at any tier; 
(ii) by developirlg, ill ColljJnCtioa Tith appropriate Federal, 
State, and local governmental entities and other private sector organizations, the 
parameters of a trailsition adjjilstment prograrr? adaptzble te the aeeds of indi~idua! smaf! 
business concerns; 
(iii) 
by cn&c.t&g 
qprQpt;,a$e p t - q p l z  to i t & m  the 
affected small business community regarding the anticipated adverse impacts identified 
under clause (I) and the economic adjustment assistance available to such firms; and 
(iv) by assistti1g smd!! business r.csnr~erns to develop and 
implement an individualized transition business plan. 
(€1) rnaintainigg current b&mzatinn cnmmi~ig Federal, State, 
and local regulations that affect small businesses and counsel small businesses on 
methods of compliance. Counseling and tecfmo!r-?gy devefopment sha!! be provided when 
necessaty to help small businesses find solutions for complying with environmental, 
energy, health, safety, and other Federal, State, and local regulations; 
general small business problems for which there are no ready solutions; 
(3) 
providing axid maiiitai~h-g a c.oir,=rehmskw libray tbzt 
contains current information and statistica1 data needed by small businesses; 
168 


(IC) rnstimLilning a l~orkiflg refsttionship and open collX2uDjcatinns 
with the financial and investment communities, legal associations, local and regional 
private consultants, and focal and regional smaf! business g_r:jups and associatiens in 
order to help address the various needs of the small business community; 
(L) cmidwtirig in-depth sm-veys fbr kml smzU business groups ir! 
order to develop general information regarding the local economy and general small 
business strengths and weaknesses in the locality; 
(&I) 
in coopersttior? with the Depiz13merit of Coz~-me~ce, the 
Administration and other relevant Federal agencies, actively assisting rural small 
busliiesses in exportins by identi*ng 
md developi~g pntez~tia! e x p t  mst~kets &r mrd 
small businesses, facilitating export transactions for rural small businesses, developing 
linltagcs betwccii U~lited States' rural smd! businesses a d  prescrcened foreigz 'u~yers, 
assisting rural small businesses to participate in international trade shows, assisting rural 
small businesses in obtaining expm-t finmcing and dewlopkg mdceting aid pmdlzcfiorz 
strategies; 
(N) assisting rural small businesses -- 
(I) in dCvi;lopi_~g markctifig ZEd prodwtior: str2tegies that 
will enable them to better compete in the domestic market-- 
businesses; 
fiii) 
by maki~g a~ai!able managerial assistance to mraf 
small business concerns; and 
(iv) by providing infnrrmtkrt and assist:lnc.e. in nbtaining 
financing for business startups and expansion; 
(0) in c.oIijl_znr.tion with the U~Gted States Travel Tmrism 
Administration, assist rural small business in developing the tourism potential of rural 
communities by -- 
(I) 
identi@ing the cdtural, historic, recreationat, ~ n d  
scenic resources of such communities; 
169 


(iii) assisting small business C O ~ C P ~ ~ S  
to obtain capita! fim 
starting or expanding businesses primarily serving tourists; 
(P) milintEii!lil?g lists of !oca! and P%??d 
'5' 
private corisUlta!lts to 
whom small businesses can be referred; 
(Q) providing infbrmition to snra!! business ~ancerns regarding 
compliance with regulatory requirements; 
(R) developing i~&iimztinnal puh!imtlions, estab!ishg resax-ce 
centers of reference materials, and distributing compliance guides published under 
section 3 13 (a) of the Small Business Regulatory Enforcement Fairness Act of 1996; 
(S) providirrg smdl huskess utvners with zccess t.3 a wide variety 
of export-related information by establishing on-line computer linkages between small 
business developinelit centers md an intematiurral trade data i115irxatia netwmk with 
ties to the Export Assistance Center program. 
(4) A small business developmeat miter shag continue to rrpgi-zde and 
modify its services, as needed, in order to meet the changing and evolving needs of the 
small business community. 
(5) In addition to the methods pmc&d 
in se~fiotl 22(c) (2), a ma!! 
business development center shall utilize and compensate as one of its resources qualified 
small business vendors, includitig blrt not Iir~ited to, primte mmzgaxxnt canstrlta~ts, 
private consulting engineers and private testing laboratories, to provide services as 
described in this subser,ttioir 
to m a l  busixsses on behalf of such small busixss 
development center. 
(4) In any State (A) in ~ b i ~ h  
the AdminktmioI? 113s not m d e  a grant: 
pursuant to paragraph (I) of subsection (a), or (€3) in which no application for a grant has 
been made by a Small Business Development Cexiter pwrsumt to paragraph (6) of si& 
subsection within 60 days after the effective date of any grant under subsection (a) (1) to 
such center or the date the Administration rmtifies :he grmtee under s&sectim (a) (1) 
that finds are available for grant applications pursuant to subsection (a) (6)3 whichever 
date occiirs last, the Administration may make grants to anon-profit entity in that State to 
170 


carry out the activities specified 111 paragraph (6) of srrbsestion (a). Any such applicants 
shall comply with the matching funds requirement of paragraph (4) of subsection (a). 
Such grants shall be effec.tive for any fiscal year only to the extent provided in advance in 
appropriations Acts, and each State shall be limited to the pro rata share provisions of 
paragraph (6) of subsection (a). 
(7) 
In performing thc services identified in paragraph (317 the Small 
Business Development Centers shall work in close cooperation with the Administration's 
regional and local offices, the local smd business ccmunify, arid appropriate State and 
local agencies. 
(8) 
The Associate AdmInktrator for Smdl Buskms Deve!opmeat 
Centers, in consultation with the Small Business Development Centers, shall develop and 
implement an inforinattion sharing system. Subject to amounts approved in advance in 
appropriations Acts, the Administration may make grants or enter cooperative 
agreements with one or more centers to carry out the pmvisions ofthis paragraph. Said 
grants or cooperative agreements shall be awarded for periods of no more than five years 
duration. The matching hnds provisions of subsection (z) shall not be apphble to 
grants or cooperative agreements under this paragraph. The system shall 
' 
(A) allow Small Business Devebpment Ceniers participating in 
the program to exchange information about their programs; and 
(€3) provide information central to technology transfer. 
(d) Where appropriate, the Small Business Devebpment Centers shall work in 
conjunction with the relevant State agency and the Department of Commerce to develop 
a comprehensive plan for enhancing the export potential of small businesses located 
within the State. This plan may involve the cohnding and staffing of a State Ofice of 
International Trade within the State Small Business Development Center, usid joint Sfate 
and Federal fiinding, and any other appropriate measures directed at improving the export 
performances of small businesses within the State. 
(e) Laboratories operated a d  hnded by the Federa! Govermtent are acfh~rked 
and directed to cooperate with the Administration in developing and establishing 
programs to support small busifiess development seriters by niakng fzdities md 
equipment available; providing experiment station capabilities in adaptive engineering; 
providing library and technical information processing capabilities; and providing 
171 


professional staff for consulting. 
laboratories for such services. 
The Administration is authorized to reimburse the 
(f) The National Science Foundation is zuthorized and directed to cooperate with 
the Administration and with the Small Business Development Centers in developing and 
establishing program to support the centers. 
(g) 
The National Aeronautics and Space A
~
~
s
~
~
~
t
~
~
n
 
aid industrial 
application centers supported by the National Aeronautics and Space Administration are 
authorized and directed to cooperate with small business development centers 
participating in this program. The National Aeronautics and Space Administration shall 
report a~.mudlly on the pefiormance of such industrial application centers with 
recommendations to the Administration and the Congress on how such industrial 
application centers can be strengthened and expcmded. The Nation4 Aeronautics and 
Space Administration shall include in its report to Congress information on the ability of 
industrial application centers to interact with the Nation’s small business community and 
recommendations to the Administrations on continued funding. 
(1) 
~~~~~~ 
_m 
~~~~~~~~~~~. - The ~
~
~
~
~
s
t
~
~
t
o
r
shall 
appoint an Associate Administrator for Small Business Development Centers who shall 
report to an official who is not more thm one l e d  below the Office afthe Adnkistratnr 
and who shall serve without regard to the provisions of title 5 governing appointments in 
the competitive service, and without regard to chapter 51, aid subchapter 111 of chapter 
53 of such title relating to classification and General Schedule pay rates, but at a rate not 
less than the rate of GS-17 of the General Schedule. 
(2) Duties. - 
Administrator for Small Business Development Centers shall be to administer the small 
business development center program. 
Duties of the poition shall inchde 
recommending the annual program budget, reviewing the annual budgets submitted by 
each applicant, establishing appropriate 6nding levels therehre, selectkg zpplicmts to 
participate in this program, implementing the provisions of this section, maintaining a 
clearinghouse to provide for the dissemination and exchange of information between 
172 


small business development centers and conducting audits of recipients of grants under 
this section. 
EVIENTS. - In carrying out the 
duties described in this subsection, the Associate Administrator shall confer with and 
seek the advice of the Board established by subsection (I) and Administration officials in 
areas served by the small 
business development centers; however, the Associate 
Administrator shall be responsible for the management and ~dmin~strat~on 
of the 
program and shall not be subject to the approval or concurrence of such Administration 
officials. 
( I )  
(1) There is established a National Small Business Development Center 
Advisory Board (herein referred to as “Board”) which shall consist of nine members 
appointed fi-om civilian life by the Administrator and who shall be persons of outstanding 
qualifications known to be familiar and sympathetic with small business needs and 
problems. No more than three members shall be from universities or affiliates and six 
shall be from small businesses or associations representing small businesses. At the time 
of the appointment of the Board, the Administrator shall designate one-third of the 
members and at least one fi-om each category whose term shall end in two years from the 
date of appointment, a second third whose terms shall end in three years from the date of 
appointment, and the final third whose term shall end in four years from the date of 
appointment. Succeeding Boards shall have three-year terms, with one-third of the Board 
changing each year. 
(2) The Board shall elect a Chairman and advise, counsel, and confer with 
the Associate Administrator for Small Business Development Centers in carrying out the 
duties described in this section. The Board shall meet at least semiannually and at the 
call of the Chairman of the Board. Each member of the Board shall be entitled to be 
compensated at the rate not in excess of their per diem equivalent of the highest rate of 
pay for individuals occupying the position under GS-18 of the General Schedule for each 
day engaged in activities of the Board and shall be entitled to be reimbursed for expenses 
as a member of the Board. 
(j) 
(1) Each small business development center shall establish an advisory 
board. 
(2) Each small business development center advisory board shall elwt a 
chairman and advise, counsel, and confer with the director of the small business 
development center on all policy matters pertaining to the operation of the small business 
173 


development center, including who may be eligible to receive assistance from, and how 
local and regional private consultants may participate with the small business 
development center. 
(k) PROGRAM EXAMINATION 
~ E ~ T ~ ~ ~ A T r O ~ ~  
-- 
(1) 
E X m A T I O N .  -- Not later than 180 days aRer the date of 
enactment of this subsection, the Administration shall develop and implement a bienniel 
programmatic and frnancial examination of each small business development center 
established pursuant to this section. 
(2) 
CERTIFICATION. -- The Administration may provide financial 
support, by contract or otherwise, to the association authorized by subsection (a) (3) (A) 
for the purpose of developing a small business development center certification program. 
(3 ) 
EXTENSION 
OR 
RENEWAL 
OF 
C O O F E ~ T ~ ~  
AGREEMENTS. - 
(A) JN GENERAL.- In extending or renewing a cooperative 
agreement of a sinall business development center, the Administration shall consider the 
results of the examination and certification program conducted pursuant to paragraphs (1) 
and (2). 
(€3) 
CERTIFICATION REQ 
.- After September 
30,2000, the Administration may not renew or extend any cooperative agreement with a 
small business development center unless the center has been approved under the 
certification program conducted pursuant to this subsection, except that the Associate 
Administrator for Small Business Development Centers may waive such certification 
requirement, in the discretion of the Association Administrator, upon a showing that the 
center is making a good faith effort to obtain certification. 
(1) CONTRACT AUTHORITY. - The authority to enter into contracts shall be in 
effect for each fiscal year only to the extent and in the amounts as are provided in 
advance in appropriation Acts. M e r  the a d ~ ~ s t r a t ~ o ~  
[sic] has entered a contract, 
either as a grant or a cooperative agreement, with any applicant under this section, it shall 
not suspend, terminate, or fail to renew or extend any such contract unless the 
Administration provides the applicant with written notification setting forth the reasons 
therefore and affording the applicant an opportunity for a hearing, appeal, or other 
administrative proceeding under the provisions of chapter 5 of title 5, United States Code. 
174 


If any contract or cooperative agreement under this section with a entity that is covered 
by this section is not renewed or extended, any award of a successor contract or 
cooperative agreement under this section to another entity shall be made on a competitive 
basis. 
(m) PRQHLBITION ON CERTAIN FEES - A small business development center 
shall not impose or othenvise collect a fee or other compensation in connection with the 
provision of counseling services under this section. 
Sec. 2 IA. [Repealed] 
Sec. 22(a) 
Trade which shall implement the programs pursuant to this section. 
There is established within the Administration an Office of International 
(b) The Oflice, working in close cooperation with the Department of Commerce 
and other relevant Federal agencies, Small Business Development Centers engaged in 
export promotion efforts, regional and local Administration offices, the small business 
community, and relevant State and local export promotion programs, shall -- 
(1) 
assist in developing a distribution network for existing trade 
promotion, trade finance, trade adjustment, trade remedy assistance and trade data 
collection program through use of the Administration’s regional and local offices and the 
Small Business Development Center network; 
(2) assist in the aggressive marketing in these programs and the 
dissemination of marketing information, including computerized marketing data, to the 
small business community; and 
(3) give preference in hiring or approving the transfer of any employee 
into the ofice or to a position described in paragraph (8) below to otherwise qualified 
applicants who are fluent in a language in addition to English. Such employees shall 
accompany foreign trade missions if designated by the director of the Office and shall be 
available as needed to translate documents, interpret conversations and facilitate 
multilingual transactions including providing referral lists for translation services if 
required. 
(c) The Office shall promote sales opportunities for small business goods and 
services abroad. To accomplish this objective the office shall -- 
175 


(1) 
in cooperation with the Department of Commerce, other relevant 
agencies, regional and local Administration offices, the Small Business Development 
Center network, and State programs, develop a mechanism for (A) identieing sub- 
sectors of the small business community with strong export potential; (B) identi@ing 
areas of demand in foreign markets; (C) prescreened foreign buyers for commercial and 
credit purposes; and (D) assisting in increasing international marketing by disseminating 
relevant information regarding market leads, linking potential sellers and buyers, and 
catalyzing the formation of joint ventures, where appropriate; 
(2) in cooperation with the Department of Commerce, actively assist 
small businesses in the formation and utilization of export trading companies, export 
management companies and research and development pools authorized under section 9 
of this Act; 
(3) work in conjunction with other Federal agencies, regional and local 
ofices of the Administration, the Small Business Development Center network, and the 
private sector to identify and publicize existing translation services, including those 
available through colleges and universities participating in the Small Business 
Development Center Program; 
(4) work closely with the Department of Commerce and other relevant 
Federal agencies to -- 
(A) 
collect, analyze and periodically update relevant data 
regarding the small business share of United States exports and the nature of State 
exports (including the production of Gross State Produce figures) and disseminate that 
the data to the public and to Congress; 
(€3) 
make recommendations to the Secretary of Commerce and to 
Congress regarding revision of the SIC codes to encompass industries currently 
overlooked and to create SIC codes for export trading companies and export management 
companies; 
(C) 
improve the utility and accessibility of existing export 
promotion programs for small businesses; and 
(D) increase the accessibility of the Export Trading Company 
contact facilitation services; 
176 


(5) 
make available to the small business community information 
regarding conferences on exporting and international trade sponsored by the public and 
private sector; 
(6) provide small businesses with access to current and complete export 
information by -- 
(A) 
making available, at the Administration's regional ofices 
through cooperation with the Department of Commerce, export information, including, 
but not limited to , the worldwide information and trade system and world trade data 
reports; 
(€3) 
maintaining a current list of financial institutions that finance 
export operations; 
(C) maintaining a current directory of all Federal, regional, State 
and private sector programs that provide export information and assistance to small 
businesses; and 
(D) preparing and publishing such reports as it determines to be 
necessary concerning market conditions , sources of financing, export promotion 
programs, and other information pertaining to the needs of small business exporting firms 
so as to insure that the maximum information is made available to small businesses in 
readily usable form; 
(7) encourage through cooperation with the Department of Commerce, 
greater small business participation in trade fairs, shows, missions, and other domestic 
and overseas export development activities of the Department of Commerce; and 
(8) facilitate decentralized delivery of export information and assistance 
to small businesses by assigning full-time export development specialists to each 
Administration regional office and assigning primary responsibility for export 
development to one person in each district ofice. Such specialists shall -- 
(A) assist small businesses in obtaining export information and 
assistance from other Federal departments and agencies; 
(B) maintain a current directory of all programs which provide 
export information and assistance to small businesses within the region; 
177 


(G) 
encourage financial institutions to develop and expand 
programs for export financing; 
(D) 
provide advice to Administration personnel involved in 
granting loans, loan guarantees, and extensions and revolving lines of credit, and 
providing other forms of assistance to small businesses engaged in exports; and 
(E) within one hundred and eighty days of their appointment, 
participate in training programs designed by the Administrator, in conjunction with the 
Department of Commerce and other Federal Departments and agencies, to study export 
programs and to examine small businesses’ needs for export information and assistance. 
(d) The Office shall work in cooperation with the Export-Import Bank of the 
United States , the Department of Commerce, other relevant Federal agencies, and the 
States ro develop a program through which export specialists in the regional offices of 
the Administration, regional and local loan officers, and Smalf Business Development 
Center personnel can facilitate the access of small businesses relevant to export financing 
programs of the Export-Import Bank ofthe United States and to export and pre-export 
financing programs available from the Administration and the private sector. 
To 
accomplish this goal, the Office shall work in cooperation with the Export-Import Bank 
and the small Business comunity, including small business trade associations, to -- 
( 1) aggressively market existing Administration export financing and pre- 
export financing programs; 
(2) 
identi@ financing available under various Export-Import Bank 
programs, and aggressively market those programs to small businesses; 
(3) 
assist in the development of financial intermediaries to existing 
financing programs; 
(4) 
promote greater participation by private financial institutions, 
particularly those institutions already participating in loan programs under this Act, in 
export finance; and 
(5) provide for the participation of appropriate Administration personnel 
in training programs conducted by the Export-import Bank. 
(e) The Office shall-- 
178 


(1) work in cooperation with other Federal agencies and the private sector 
to counsel small businesses with respect to initiating and participating in any proceedings 
relating to the administration of the United States trade laws; and 
(2) work with the Department of Commerce, the Office of the United 
States Trade Representative, and the International Trade Commission to increase access 
to trade remedy proceedings for small businesses. 
(f) The Office shall report to the Committees on Small Business of the House of 
Representatives and the Senate on an annual basis as to its progress in implementing the 
requirements under this section. 
(g) The Office, in cooperation, where appropriate, with the Division of Economic 
Research of the Office of Advocacy, and with other Federal agencies, shall undertake 
studied regarding the following issues and shall report to the Committees on Small 
Business of the House of Representatives and the Senate, and to other relevant 
Committees of the House and Senate within 6 months after the date of enactment of the 
Small Business International Trade and 
Competitiveness Act 
with 
specific 
recommendations on -- 
(1) the viability and cost of establishing an annual., competitive small 
business export incentive program similar to the Small Business Innovation Research 
program and alternative methods of stmcturing such a program; 
(2) methods of streamlining trade remedy proceedings to increase access 
for, and reduce expenses incurred by, smaller firms; 
(3) methods of approving the current small business foreign sales 
corporation tax incentives and providing small businesses with greater benefits from this 
initiative; 
(4) methods identifling potential export markets for United States small 
Businesses; maintaining and disseminating current foreign market data; and devising a 
comprehensive export marketing strategy for United States small business goods and 
services, and shall include data on the volume and dollar amount of goods and services, 
identified by type, imported by United States trading partners over the past 10 years; and 
179 


1 
(5) the results of a survey of major United States trading partners to 
identify the domestic policies, programs and incentives, and the private sector initiatives, 
which eist to encourage the formation and growth of small business. 
Sec. 23. Notwithstanding any other provision of law, rule, or regulations, for purposes of 
section 7 (b) of this Act (15 U.S.C. 636 (b) ), the Administrator shall, with respect to 
small business concerns involved in the fishing industry, treat the recent El Nino - related 
ocean conditions as a disaster under such subsection: 
(1) 
disaster loan assistance shall be provided to the fishing industry 
pursuant to paragraph (2) of such section -- 
(A) the term “recent El Nino-related ocean conditions” means the 
ocean conditions (including high water temperatures, scarcity of prey, and absence of 
normal upwellings) which occurred in the eastern Pacific cean off the west coast of the 
North American Continent during the period beginning with June 1982 and ending at the 
close of December 1983, and which resulted from the climatic conditions occurring in the 
Equatorial Pacific during 1982 and 1983; 
(B) 
the term “fishing industry’, means any trade of business 
involved in (I) the catching, taking, or harvesting of fish (whether or not sold on a 
commercial basis), (ii) any operation at sea or on land, in preparation for, or substantially 
dependent upon, the catching, taking, or harvesting of fish, and (iii) the processing or 
canning of fish (including storage, refrigeration and transportation of fish before 
processing or canning); and 
(C) the term “fish” means finfish, mollusks, crustaceans, and all 
other forms of marine animal plant life other than marine mammals and birds; and 
(2) for purposes of paragraphs (2) through (4) of subsection 7 (b) ofthis 
Act, eligibility of individual applicants shall not in any way be dependent upon the 
number of disaster victims in any county or other political subdivision. 
Sec. 24(a) The Administrator is authorized to make grants or to enter into contracts with 
any state for the purpose of contracting with small businesses to plant tress on land 
owned or controlled by such State or local government. The Administrator shall require 
as a condition of any grant (or amendment or modification thereof) under this section that 
the applicant also contribute to the project a sum equal to at least 25 per centum of a 
particular project cost from sources other than the Federal Government. Such non- 
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Federal money may include in kind contributions, including 
the cost of value of 
providing care and maintenance for a period of three years after the planting of the trees, 
but shall not include any value attributable to the land on which the trees are to be 
planted, nor may any part of any grant be used to pay for land or land charges: Provided, 
that not less than one-half of the amounts appropriated under this section shall be 
allocated to each State, the District of Columbia, and the Commonwealth of Puerto Rico 
on the basis of the population in each area as compared to the total population in all areas 
as provided by the Census Bureau of the Department of Cornmerce in the annual 
population estimate or the decennial census, whichever is most current. 
The 
Administrator may give a priority in awarding the remaining one-half of appropriated 
amounts to applicants who agree to contribute more than the requisite 25 per centum, and 
shall give priority to a proposal to restore an area determined to be a major disaster by the 
President on a date not more than three years prior to the fiscal year for which the 
application is made. 
(b) In order to accomplish the objectives of this section, the Administrator, in 
consultation with appropriate Federal agencies, shall be responsible for formulating a 
national small business tree planting program. Based on this program, a State may 
submit a detailed proposal for tree planting by contract. 
(c) To encourage and develop the capacity of small business concerns, to 
utilize this important segment of our economy, and to permit rapid increases in 
employment opportunities in local communities, grantees are directed to utilize small 
business contractors or concerns in connection with the program established by this 
section, and shall, to the extent practicable, divide the project to allow more than one 
small business concern to perform the work under the project. 
(d) For purposes of this section, agencies of the Federal Government are hereby 
authorized to cooperate with all grantees and with State foresters or other appropriate 
officials by providing without charge, in furtherance of this program, technical sewices 
with respect to the planting and growing of such trees. 
(e) There are authorized to be appropriated to carry out the objectives of this 
section, $15,000,000 for fiscal year 1991 and $30,000,000 for each of the fiscal years 
1992 through 1994, and all of such sums may remain available until expended. 
(0 Notwithstanding any other law, rule, or regulation, the Administration shall 
publish in the Federal Register proposed rules and regulations implementing this section 
within sixty days after the date of enactment of this section and shall publish final rules 
181 


and regulations within one hundred and twenty days of the date of enactment of this 
section. 
(g) As used in this section : 
(1) the term “local government” includes political subdivisions of a State 
such as counties, parishes, cities, towns and municipalities; 
(2) the term “planting” includes watering, application of fertilizer and 
herbicides, pruning and shaping, and other subsequent care and maintenance for a period 
of three years afier the trees are planted; and 
(3) the term “State” includes any agency thereof 
(h) The Administrator shall submit annually to the President and the Congress a 
report on activities within the scope of this section. 
Sec. 25. 
There is hereby established a Central European Small Business 
Enterprise Development Commission (hereinafter in this section referred to as the 
“Commission”). The Commission shall be comprised of a representative of each of the 
following: the Small Business Administration, the Association of American Universities, 
and the Association of Small Business Development Centers. 
(a) 
(b) 
The Commission shall develop in Czechoslovakia, Poland and Hungary 
(hereinafter referred to as “designated Central European countries”) a self-sustaining 
system to provide management and technical assistance to small business owners. 
(1) Not later than 90 days after the eRective date of this section, the 
Commission, in consultation with the Agency for International Development, shall enter 
a contract with one or more entities to - 
(A) determine the needs of small businesses in the designated 
Central European countries for management and technical assistance; 
(B) evaluate appropriate Small Business Development Center- 
programs [sic] which might be replicated in order to meet the needs of each of such 
countries; and 
(C) identify and assess the capability of educational institutions in 
each such country to develop a Small Business Development Center type program. 
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(2) Not later than 18 months after the effective date of this section, the 
Commiddion shall review the recommendations submitted to it and shall formulate and 
contract for the establishment of a three-year management and technical assistance 
demonstration program. 
(e) In order to be eligible to participate, the educational institution in each 
designated Central European country shall -- 
(1) obtain the prior approval of the government to conduct the program; 
(2) agree to provide partial financial support for the program, either 
directly or indirectly, during the second and third years of the demonstration program; 
and 
(3) agree to obtain private sector involvement in the delivery of assistance 
under the program. 
(d) The Commission shall meet and organize not later than 30 days after the date 
of enactment of this section. 
(e) Members of the Commission shall serve without pay except they shall be 
entitled to reimbursement for travel, subsistence, and other necessary expenses incurred 
by them in carrying out their fbnctions in the same manner as persons employed 
intermittently in the Federal Government are allowed expenses under section 5703 of title 
5, United States Code. 
(9 Two Commissioners shall constitute a quorum for the transaction of business. 
Meetings shall be at the call of the Chairperson who shall be elected by the Members of 
the Commission. 
(8) The Commission shall not have any authority to appoint staff, but upon 
request of the Chairperson, the head of any Federal department or agency may detail, on 
a reimbursable basis, any of the personnel of such department or agency to the 
Commission to assist in carry in out the Commission’s hnctions under this section 
without regard to section 3341 of title 5of the United States Code. The Administrator of 
the General Services Administrative shall provide, on a reimbursable basis, such 
administrative support services as the Commission may request. 
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(h) The Commission shall report to Congress not later than December 1, 1991, 
and annually thereafter, on the progress in carrying out the provisions of this section. 
(I) 
There are hereby authorized to be appropriated to the Small Business 
Administration the sum of $3,000,000 for fiscal year 1991, $5,000,000 for fiscal year 
1992, $2,000,000 for each of fiscal years 1993 and 1994, and $1,000,000 for fiscal year 
1995 to carry out the provisions of the section. Such sums shall be disbursed by the 
Small Business Administration as requested by the Commission and may remain 
available until expended. Any authority to enter contracts or other spending authority 
provided for in this section is subject to amounts provided for in advance in 
appropriations Acts. 
Sec. 26. 
OAFice of Rural AEairs (hereafter in this section referred to as the ‘“Office”). 
(a) There is hereby established in the Small Business Administration on 
(b) The OEce shall be headed by a director who shall be appointed by the 
Administrator not later than 90 days after the date of the enactment of this section. 
(c) The Ofice shall -- 
(1) strive to achieve an equitable distribution of the financial assistance 
available from the Administration for small business concerns located in rural areas; 
(2) to the extent practicable, compile annual statistics on rural areas, 
including statistics concerning the population, poverty, job creation and retention, 
unemployment, business failures, and business startups; 
(3) provide information to industries, orgainzations, and State and local 
governments concerning the assistance available to rural small business concerns through 
the Administration and through other Federal departments and agencies; 
(4) 
provide information to industries, organizations, educational 
institutions, and State and local governments concerning programs administered by 
private organizations, educational institutions, and Federal, State, and local governments 
which improve the economic opportunities of rural citizens; and 
( 5 )  work with the United States Tourism and Travel Administration to 
assist small businesses in rural areas with tourism promotion and development. 
184 


Sec. 27. 
(a) 
The Administration is authorized to make grants to conduct 
demonstration programs in 5 States in order to promote tourism activities delivered by 
small businesses. The purpose of the program shall be to demonstrate ways in which the 
economy in rural areas may be improved by encouraging tourism and its resulting 
increase in income and employment in rural areas. The Administration shall require as a 
condition of any grant under thus section that the applicant also contribute to the 
demonstration program a sum equal to at least 25 percent of the amount of the hnding 
requested from the Federal Government. 
(b) There are authorized to be appropriated to carry out the provision of this 
section, $1,000,000 for fiscal year 1992 and such sums may remain available until 
expended. 
(c) Not later than February I, 1993, the Administration shall submit to the 
President and the Congress a report on activities undertaken pursuant to this section. 
Sec. 28 PlLOT TECHNOLOGY ACCESS PROGRAM. 
(a) The Administration, in consultation with the National Institute of Standards 
snd Technology and the National Technical Information Service, shall establish a Pilot 
Technology Access Program, for making awards under this section to Small Business 
Development Centers (hereinafter in this section referred to as “Centers”). 
(b) 
The Administrator of the Small Business Administration shall establish 
competitive, merit-based criteria for the selection of Centers to receive awards on the 
basis of -- 
(1) the ability of the applicant to carry out the purposes described in 
subsection (d) in a manner relevant to the needs of industries in the area served by the 
Center; 
(2) the ability of the applicant to integrate the implementation of this 
program with existing Federal and State technical and business assistance resources; and 
(3) the ability of the applicant to continue providing technology access 
afler the termination of this pilot program. 
185 


(c) To be eligible to receive an award under thie section, an applicant shall 
provide a matching contribution at least equal to that received under such award , not 
more than 50 percent of which may be waived overhead or in-kind contributions. 
(d) Awards made under this section shall be for the purpose of increasing access 
by small businesses to on-line data base services that provide technical and business 
information, and access to technical experts, in a wide range of technologies, through 
such activities as -- 
(1) defraying the cost of access by small businesses to the data base 
services; 
(2) training small businesses in the use of the data base services; and 
(3) establishing a public point of access to the data base services. 
Activities described in paragraphs (1) through (3) may be carried out through contract 
with a private entity. 
(e) Awards previously made under section 21A of this Act may be renewed under 
this section. 
(f) Two years after the date on which the first award was issued under section 
21A of this Act, the General Accounting Office shall submit to the Committee on Small 
Business and the Committee on Science, Space, and Technology of the House of 
Representatives and to the Committee on Small Business and the Committee on 
Commerce, Science, and Transporation of the Senate, an interim report on the 
implementation of the program under such section and this section, including the 
judgments of the participating Centers as to its effect on small business productivity and 
innovation. 
(g) Three years after such date, the General Accounting Ofice shall submit to the 
Committee on Small Business and the Committee on Science, Space, and Technology of 
the House of Representatives and to the Committee on Small Business and the 
Committee on Commerce, Science and Transportation of the Senate, a final report 
evaluating the effectiveness of the Program under section 21A and this section in 
approving small business productivity and innovation. 
186 


(h) There are authorized to be apprpriated to the Small Business Administration 
$5 million for each of fiscal years 1992 through 1995 to carry out this section, and such 
amounts may remain available until expended. 
(I) Centers are encouraged to seek fknding from Federal and non-Federal sources 
other than those provided for in this section to assist small businesses in the identification 
of appropriate technologies to fill1 their needs, the transfer of technologies from Federal 
laboratories, public and private universities, and other public and private institutions, the 
analysis of commercial opportunities represented by such technologies, and such other 
fknctions as the development business planning, market research, and financial packaging 
required for commercialization. Insofar as such Centers these activities, Federal agencies 
are encouraged to employ these Centers to interface with small businesses for such 
purposes as facilitating small business participation in Federal procurement and fostering 
commerciafization of Federally-fbnded research and development. 
Sec. 29 WOMEN’S BUSINESS CENTER PROGRAM 
(a) DEFINITIONS - In this section - 
(1) the term “Assistant Administrator” means the Assistant Administrator 
of the Ofice of Women’s Business Ownership esrablished under subsection (8); 
(2) the term “small business concern owned and controlled by women”, 
either startup or existing, includes any small business concern - 
(A) that is not less than 51 percent owned by 1 or more women; 
and 
(B) the management and daily business operations of which are 
controlled by 1 or more women; and 
(3) the term “women7s business center site” means the location of - 
(A) a women’s business center; or 
(B) 
1 or more women’s business centers, established in 
conjunction with another women’s business center in another location within a State or 
region - 
187 


(I) that reach a distinct population that would otherwise not 
be served; 
(ii) whose services are targeted to women; and 
(iii) whose scope, hnction, and activities are similar to 
those of primary women’s business center or centers in conjunction with which it was 
established. 
(b) 
AUTHORITY - The Administration may provide financial assistance to 
private orgainzations to conduct 5-year projects for the benefit of small business concerns 
owned and controlled by women. The projects shall provide - 
(1) 
financial assistance, including training and counselling in how to 
apply for and secure business credit and investment capital, preparing and presenting 
financial statements, and managing cash flow and other financial operations of a business 
concern; 
(2) management assistance, including training and counselling in how to 
plan, organize, staff, direct, and controf each major activity and fbnction of a small 
business concern; and 
(3) marketing assistance, including training and counselling in identifying 
and segmenting 
domestic 
and international market opportunities, preparing and 
executing marketing plans, developing pricing strategies, locating contract opportunities, 
negotiating contracts, and utilizing varying public relations and advertising techniques. 
(c) CQNDITIONS OF PARTICIPATIONS - 
(1) NQN-FEDERAL CONTRlBUTIONS - As a condition of receiving 
financial assistance authorized by this section, the recipient organization shall agree to 
obtain, after its application has been approved and notice of award has been issue, cash 
contributions from non-Federal sources as follows: 
(A) in the first and second years, 1 non-Federal dollar for each 2 
Federal dollars; 
(B) in the third and fourth years, 1 non-Federal dollars for each 
Federal dollar. 
188 


(2) FORM OF NON- FEDERAL CONTRTBUTIONS - Not more than 
one-half of the nowFederal sector matching assistance may be in the form of in-kind 
contributions that are budget line items only, including ofice equipment and ofice space. 
(3) FORM OF FEDERAL CONTREKJTIONS - The financial assistance 
authorized pursuant to this section may be made by grant, contract, or cooperative 
agreement and may contain such provision, as necessary, to provide for payments in 
lump sum or installments, and in advance or by way of reimbursement. 
The 
Administration may disburse up to 25 percent of each year’s Federal share awarded to a 
recipient organization after notice of the award has been issued and before the non- 
Federal sector matching hnds are obtained. 
(4) 
FAILURE TO OBTAIN NON-FEDERAL, FUNDING - If any 
recipient of assistance fails to obtain the required non- Federal contribution during any 
project, it shall not be eligible thereafter for advance disbursements pursuant to paragraph 
(3) during the remainder of that project, or for any other project for which it is or may be 
fimded by the Administration, and prior to approving assistance to such organization for 
any other projects, the Administration shall specifically determine whether the 
Administration believes that the recepient will be able to obtain the requisite non-Federal 
fbnding and enter a written finding setting forth the reasons for making such 
determination. 
(d) CONTRACT AUTHORITY - A women’s business center may enter into a 
contract with a Federal department or agency to provide specific assistance to women and 
other underserved small business concerns. Performance of such contract should not 
hinder the women’s business centers in carrying out the terms of the grant received by the 
women’s business cenetrs from the Administration. 
(e) SUBMISSION OF 5-yEAR PLAN - Each applicant organization initially 
shall submit a 5-year plan to the Administration on proposed hnd raising and training 
activities, and a recipient organization may receive financial assistance under this 
program for a maximum of 5 years per women’s business center site. 
(0 CRITERIA - The Administration shall evaluate and rank applicant in 
accordance with predetermined selection criteria that shall be stated in terms of relative 
importance. Such criteria and their relative importance shall be made publicly available 
ans stated in each solicitation for applications made by the Administration. The criteria 
shall include - 
189 


(1) the experience of the applicant in conducting programs or ongoing 
efforts designed to impart or upgrade the business skills of women business owners or 
potential owners; 
(2) the present ability of the applicant to commence a project within a 
minimum amount of time; 
(3) the ability of the applicant to provide training and services to be a 
representative number of women who are both socially and economically disadvantaged; 
and 
(4) the location for the women’s business center site proposed by the 
applicant. 
(g) OFFICE OF WOMEN’S BUSlJSJEiSS OWNERSHlp - 
(1) ESTABLISHMENT - There is established within the Administration 
an Office of Women’s Business Ownership, which shall be responsible for the 
administration of the Administration’s programs for the development of women’s 
business enterprises (as defined in section 408 of the Women’s Business Qwnership Act 
of 1988 (15 U.S.C. 631 note)). The Office of Women’s Business Ownership shall be 
administered by an Assistant Administrator, who shall be appointed by the Administrator. 
(2) ASSISTANT ADMMSTRATOR 
OF THE OFFICE OF WOMEN’S 
BUSINESS OWNERSHIP - 
(A) 
QUALIFICATIONS - The position od Assistant 
Administrator shall be a Senior Executive Services position under section 3 132 (a) (2) of 
title 5, United States Code. The Assistant Administrator shall serve as a noncareer 
appointee (as defined in section 3 132 (a) (7) of that title). 
(B) RESPONSIBILITIES AND DUTIES - 
(I) RESPONSIBILITIES - The responsibilities of thge 
Assistant Administrator shall be to administer the programs and services of the Office of 
Women’s Business Ownership established to assist women enterpreneurs in the areas of - 
(I) starting and operating a small business; 
190 


(11) 
development of management and technical 
skills; 
(111) 
seeking Federal procurement opportunities; 
and 
(IV) 
increasing the opportunity for access to 
capital. 
(ii) DUTIES - The Assistant Administrator shall - 
(I) administer and manage the Women’s Business 
Center program; 
(11) 
recommend the annual administrative and 
program budgets for the OEce of Women’s Business Ownership (including the budget 
for the Women’s Business Center program); 
(111) establish appropriate fbnding levels therefore; 
(IV) review the annual budgets submitting by each 
applicant for the Women’s Business Center program; 
(V) select applicants to participate in the program 
under this section; 
(VI) implement this section; 
(MI) maintain a clearinghouse to provide for the 
dissemination and exchange of information between women’s business centers; 
(VIII) 
serve as the vice chairperson of the 
Interagency Committee on Women’s Business Enterprises; 
(IX) 
serve as liaison for the National Women’s 
Business Council; and 
(X) advise the Administrator on appointments to 
the Women’s Business Council. 
191 


(C) CONSULTATION REQUIREMENTS - In carrying out the 
responsibilities and duties described in this paragraph, the Assistant Administrator shall 
confer with and seek the advice of the Administration officials in areas served by the 
women’s business centers. 
(h) PROGRAM EXAMINATION - 
(1) IN GENERAL - Not later than 180 days after the date of enactment of 
the Small Business Reauthorization Act of 1997, the Administrator shall develop and 
implement an annual programmatic and financial examination of each women’s business 
center established pursuant to this section. 
(2) EXTENSION OF CONTRACTS - In extendng or renewing a contract 
with a women’s business center, the Administrator shall consider the results of the 
examination conducted under paragraph (1). 
(I) CONTRACT AUTHORITY - The authority ofthe Administrator to enter into 
contracts shall be in effect for each fiscal year only to the extent and in the amounts as are 
provided in advance in appropriations Acts. After the Administrator has enterd into a 
contract, either as a grant or a cooperative agreement, with any applicant under this 
section, it shall not suspend, terminate, or fial to renew or extend any such contract unless 
the Administrator provides the applicant with written notification setting forth the reasons 
therefore and affords the applicant an opportunity for a hearing, appeal, or other 
administrative proceeding under chapter 5 of title 5, United States Code. 
6) REPORT - The Administrator shall prepare and submit an annual report to the 
Committees on Small Business of the House of Representatives and the Senate on the 
effectiveness of all projects conducted under the authority of this section. Such report 
shall provide information concerning- 
(1) the number of individuals receiving assistance; 
(2) the number of startup business concerns formed; 
(3) the gross receipts of assisted concerns; 
(4) increases or decreases in profits of assisted concrns; and 
(5) the employment increases or decreases of assisted concerns. 
192 


(k) AUTHORIZED OF ~
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- 
(1) IN GENERAI, - There is authorized to be appropriated $8,000,000 for 
each fiscal year to carry out the projects authorized under this section, of which, for fiscal 
year 1998, not more than 5 percent may be used for administrative expenses related to the 
program under this section. 
(2) USE OF AMOUNTS - Amounts made avilable under this subsection 
for fiscal year 1999, and each fiscal year thereafter, may only be used for grant awards 
and may not be used for costs incured by the Administration in connection with the 
management and administration of the program under this section. 
(3) EXPEDITED ACQUISITION - Notwithstanding any other provision 
of law, the Adminsitrator, acting through the Assistant Administrator, may use such 
expidited acquisition methods as the Administrator determines to be appropriate to carry 
out this section, except that the Administrator shall ensure that all small business sources 
are provided a reasonable opportunity to submit proposals. 
Sec. 30 OVERSIGHT OF REGULATORY ENFORCEMENT. 
(a) DEFINITIONS. -- For purposes of this section, the term -- 
(1) “Board” means a Regional Small Business Regulatory Fairness Board 
established under subsection (c); and 
(2) “Ombudsman” means the Small Business and Agriculture Regulatory 
Enforcement Ombudsman designated under subsection (b). 
(b) SBA ENFORCEMENT OMBUDSMAN. -- 
(1) 
Not later than 180 days after the date of enactment of this section, 
the Administrator shall designate a Small Business and Agriculture Regulatory 
Enforcement Ombudsman, who shall report directly to the Administrator, utilizing 
personnel of the Small Business Administration to the extent practicable. Other gaencies 
shall assist the Ombudsman and take actions as necessary to ensure compliance with the 
requirements of this section. Nothing in this section is intended to replace or diminish the 
activities of any Ombudsman or similar officein any other agency. 
(2) The Ombudsman shall -- 
193 


(A) work with each agency with regulatory authority over small 
businesses to ensure that small business concerns that receive or are subject to an audit, 
on-site inspection, compliance assistance effort, or other enforcement related 
communication or contact by agency personnel are provided with a means to comment on 
the enforcement activity conducted by such personnel; 
(B) establish means to receive comment from small business 
concerns regarding actions by agency employees conducting compliance or enforcement 
activities with respect to the small business concern, means to refer comments to the 
Inspector General of the Mected agency in the appropriate circumstances, and otherwise 
seek to maintain the identity of the person and small business concern making such 
comments on a confidential basis to the same extent as employee indentities are protected 
under section 7 of the Inspector General Act of 1978 (5 U.S.C. App.); 
(C) 
based on substantiated comments received from small 
business concerns and the Boards, annually report to Congress and affected agencies 
evaluating the enforcement activities of agency personnel including a rating of the 
responsiveness to small business of the various regional and program offices of each 
agency; 
(D) coordinate and report annually on the activities, findings and 
recommendations of the Boards to the Administrator and to the heads of affected 
agencies; and 
(E) provide the affected agency with an opportunity to comment 
on draft reports prepared under the subparagraph (C), and include a section of the final 
report in which the affected agency may make such comments as are not addressed by the 
Ombudsman in revisions to the draft. 
(c) REGIONAL SMALL BUSINESS REGULATORY FAWPI$ESS BOARDS. -- 
(1) Not later than 180 days after the date of enactment of this section, the 
Administrator shall establish a Small Business Regulatory Fairness Board in each 
regional office of the Small Business Administration. 
(2) Each Board established under paragraph (1) shall -- 
(A) meet at least annually to advise the Ombudsman on matters of 
concern to small businesses relating to the enforcement activities of agencies; 
194 


(B) 
report to the Ombudsman on substantiated instances of 
excessive enforcement actions of agencies against small business concerns including any 
findings or recommendations of the Board as to agency enforcement policy or practice; 
and 
(C) prior to publication, provide comment on the annual report of 
the Ombudsman prepared under subsection (b). 
(3) Each Board shall consist of five members, who are owners, operators, 
or officers of small business concerns, appointed by the Administrator, aRer receiving the 
recommendations of the Chair and ranking minority member of the Committees on Small 
Business of the House of Representatives and the Senate. Not more than three of the 
Board members shall be of the same political party. No member shall be an officer or 
employee of the Federal Government, in either the executive branch ofthe Gongress. 
(4) Members of the Board shall serve at the pleasure of the Administrator 
for terms of three years or less. 
(5) The Administrator shall select a chair from among the members of the 
Board who shall serve at the pleasure of the Administrator for not more than 1 year as 
chair. 
(6) A majority of the members of the Board shall constitute a quorum for 
the conduct of business, but a lesser number may hold hearings. 
(d) POWERS OF THE BOARDS. 
(1) The Board may hold such hearings and collect such information as 
appropriate for carrying out this section. 
(2) The Board may use the United States mails in the same manner and 
under the same conditions as other departments and agencies of the Federal Government. 
(3) The Board may accept donations of services necessary to conduct its 
business, provided that the donations and their sources as disclosed by the Board. 
(4) Members of the Board shall serve without compensation, provided 
that, members of the Board shall be allowed travel expenses, including per diem in lieu of 
subsistence, at rates authorized for employees of agencies under subchapter I of chapter 
195 


57 of title 5, United States Code, while away from their homes or regular place of 
business in the performance of services for the Board. 
Sec. 3 1. HUBZONE PROGRAM 
(a) IN GENERAL - There is established within the Administration a program to 
be carried out by the Administrator to provide for Federal contracting assistance to 
qualified HUBZone small business concerns in accordance with this section. 
(b) ELIGIBLE CONTRACTS - 
(1) DEFINITIONS - In this subsection - 
(A) The term “contracting officer” has the meaning given that the 
term in section 27 (f) (5) of the Office of Federal Procurement Policy Act (41 U.S.C. 423 
(0 (5); and 
(B) the term “kll and open competition” has the meaning given 
that term in section 4 of the OEce of Federal Procurement Policy Act (41 U.S.C. 403). 
(2) AUTHORITY OF CONTUCTINF OFFICER - Notwithstanding any 
other provision of law - 
(A) a contracting officer may award sole source contracts under 
this section to any qualified HUBZone small business concern, if - 
(I) 
the qualified HUBZone small business concern is 
determined to be a responsible contractor with respect to performance of such contract 
opportunity, and the contracting offices does not have a reasonable expectation that 2 or 
more qualified HUBZone small business concerns will offers for the contracting 
opportunity; 
(ii) the anticipated award price of the contract (including 
options) will not exceed- 
(I) $5,000,000, in the case of a contract opportunity 
assigned a standard industrial classification code for manufacturing; or 
(11) $3,000,000, in the case of all other contract 
opportunities; and 
196 


(iii) 
in the estimation of the contracting officer, the 
contract award can be made at a fair and reasonable price; 
(B) a contract opportunity shall be awarded pursuant to this 
section on the basis of competition restricted to qualified HUBZone small business 
concerns if the contracting officer has a reasonable expectation that not less than 2 
qualified HUBZone small business concerns will submit offers and that the award can be 
made at a fair market place; and 
(C) not later than 5 days from the data the Administration is 
notified of a procurement officer’s decision not to award a contract opportunity under this 
section to a Qualified HUBZone small business concern, the Administrator may not@ 
the contracting officer’s decision, and within 15 days of such date the Administrator may 
file a written request for reconsideration of the contracting officer’s decision with the 
Secretary of the department or agency head. 
(3) 
PRICE EVALUATION PREFERENCE IN FULL AND OPEN 
COMPETITIONS - In any case in which a contract is to be awarded on the basis of full 
and open competition, the price offered by a qualified HUBZone small business concerns 
shall be deemed as being lower than the price offered by another offeror (other than 
anothe small business concern), if the price offered by the qualified HUBZone small 
business concern is not more than 10 percent higher than the price offered by the 
otherwise lowest, responsive, and responsible offeror. 
(4) RELATIONSHIP TO OTHER CONTRACTING PREFERENCES - 
A procurement may not be made from a source on the basis of a prefernce provided in 
paragraph (2) or (3), if the procurement would otherwise be made from a different source 
undr section 4124 or 4125 of title 18, United States Code, or the Javits-Wagner-O’Day 
Act (41 U.S.C. 46 et seq.). 
(c) ENFORCEMENT; PENALTIES - 
(1) VERIFICATION OF ELIGIBILITY - In carrying out this section, the 
Administrator shall establish procedures relating to - 
(A) the filing, investigation, and disposition by the Administration 
of any challenge to the eligibility of a small business concern to receive assistance under 
this section (including a challenge, filed by an interested party, relating to the veracity of 
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a certification made or information provided to the Administration by a small business 
concern under section 3 (p) (5); and 
(B) verification by the Administrator of the accuracy of any 
certification made or information provided to the Administration by a small business 
concern under section 3 (p) (5). 
(2) EXAMINATIONS - The procedures established under paragraph (1) 
may provide for program examinations (including random program examinations) by the 
Administrator of any small business concern making a certification or providing 
information to the Administrator under section 3 (p) (5). 
(3) PROVISION OF DATA - Upon the request ofthe Administrator, the 
Secretary of Labor, the Secretary of Housing and Urban Development, and the Secretary 
of the Interior (or the Assistant Secretary for Indian Maim), shall promptly provide to 
the Administrator such information as the Administrator determines to be necessary to 
carry out this subsection. 
(4) PENALTIES - In addition to the penalties described in section 16 (d), 
any small business concern that is determined by the Administrator to have 
misrepresented the status of that concern as a “EWE3Zone small business concern” for 
purposes of this section, shall be subject to - 
(A) section 1001 of title 18, United States Code; and 
(B) sections 3729 through 3733 of title 3 1, United States Code. 
Sec. 32. All laws and parts of laws inconsistent with this Act are hereby repealed to the 
extent of such inconsistency. 
198