177
150 percent of the original principal amount of the 
loan. 
‘‘(9) MAXIMUM LOAN AMOUNT.—The Adminis-
trator shall establish by regulation the maximum 
amount of indebtedness which may be committed to 
any borrower under this subsection. Such regulation 
shall be codified in the Code of Federal Regulations 
and shall specify the conditions under which the Ad-
ministrator shall waive any such maximum based on 
the need to speed economic recovery of the region. 
‘‘(10) 
MAXIMUM
GUARANTEED
PARTICIPA-
TION.—In agreements to participate in loans on a 
deferred basis under this subsection, such participa-
tion by the Administrator shall not be in excess of 
90 percent of the balance of the loan outstanding at 
the time of disbursement. 
‘‘(11) INTEREST RATE.—The interest rate on 
the Federal share of any loan made under para-
graph (1) or (2) shall not exceed the rate of interest 
which is in effect at the time of the occurrence of 
the disaster but shall otherwise be—
‘‘(A) in the case of a homeowner unable to 
secure credit elsewhere, the rate prescribed by 
the Administration but not more than 1⁄2 the 
rate determined by the Secretary of the Treas-
178
ury taking into consideration the current aver-
age market yield on outstanding marketable ob-
ligations 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 percent per year as 
determined by the Administrator, and adjusted 
to the nearest 1⁄8 of 1 percent, but not to ex-
ceed 4 percent per year; 
‘‘(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 obliga-
tions of the United States with remaining peri-
ods to maturity comparable to the average ma-
turities of such loans plus an additional charge 
of not to exceed 1 percent per year as deter-
mined by the Administrator, and adjusted to 
the nearest 1⁄8 of 1 percent, but not to exceed 
8 percent per year; 
‘‘(C) in the case of a business or other con-
cern, including agricultural cooperatives, unable
179
to obtain credit elsewhere, not to exceed 4 per-
cent per year; or 
‘‘(D) in the case of a business concern able 
to obtain credit elsewhere, the rate prescribed 
by the Administration but not to excess of the 
lowest of—
‘‘(i) the rate prevailing in the private 
market for similar loans, 
‘‘(ii) the rate prescribed by the Ad-
ministration as the maximum interest rate 
for deferred participation (guaranteed) 
loans under subsection (a), or 
‘‘(iii) 8 percent per year. 
(c) EXTENSION
OR RENEWAL.—Subsection (c) of 
section 7 of the Small Business Act (15 U.S.C. 636) is 
amended to read as follows: 
‘‘(c) EXTENSION OR RENEWAL.—
‘‘(1) IN
GENERAL.—The Administrator may 
further extend the maturity of or renew any loan 
made pursuant to this section for additional periods 
not to exceed 10 years beyond the period stated 
therein, if such extension or renewal will aid in the 
orderly liquidation of such loan.
180
‘‘(2) LIMITATION.—No loan made under sub-
section (b) shall be extended under this subsection 
if the loan has a maturity in excess of 20 years.’’. 
(d) MICROLOAN PROGRAM.—Subsection (m) of sec-
tion 7 of the Small Business Act (15 U.S.C. 636) is 
amended to read as follows:
‘‘(m) MICROLOAN PROGRAM.—
‘‘(1) 
PURPOSES.—The 
purposes 
of 
the 
Microloan Program are—
‘‘(A) to assist women, low-income, veteran, 
and minority entrepreneurs and business own-
ers, small manufacturers, and other individuals 
possessing the capability to operate successful 
business concerns; 
‘‘(B) to assist small business concerns in 
those areas suffering from a lack of credit due 
to economic downturns; 
‘‘(C) to establish a microloan program to 
be administered by the Administrator—
‘‘(i) to make loans to eligible inter-
mediaries to enable such intermediaries to 
provide small-scale loans, particularly loans 
in amounts averaging not more than 
$10,000, to startup, newly established, or 
growing small business concerns for work-
181
ing capital or the acquisition of materials, 
supplies, or equipment; 
‘‘(ii) to make grants to eligible inter-
mediaries that, together with non-Federal 
matching funds, will enable such inter-
mediaries to provide intensive marketing, 
management, and technical assistance to 
microloan borrowers; 
‘‘(iii) to make grants to eligible non-
profit entities that, together with non-Fed-
eral matching funds, will enable such enti-
ties to provide intensive marketing, man-
agement, and technical assistance to assist 
low-income entrepreneurs and other low-in-
come individuals obtain private sector fi-
nancing for their businesses, with or with-
out loan guarantees; 
‘‘(iv) to report to the Committee on 
Small Business and Entrepreneurship of 
the Senate and the Committee on Small 
Business of the House of Representatives 
on the effectiveness of the microloan pro-
gram and the advisability and feasibility of 
implementing such a program nationwide; 
and
182
‘‘(v) to establish a welfare-to-entrepre-
neurship microloan initiative, which shall 
be administered by the Administrator, in 
order 
to 
test 
the 
feasibility 
of 
supplementing the technical assistance 
grants provided under this subsection to 
individuals who are receiving assistance 
under the State program funded under 
part A of title IV of the Social Security 
Act (42 U.S.C. 601 et seq.), or under any 
comparable State funded means tested pro-
gram of assistance for low-income individ-
uals, in order to adequately assist those in-
dividuals in establishing small businesses 
and eliminating their dependence on that 
assistance. 
‘‘(2) ESTABLISHMENT.—There is a Microloan 
Program, under which the Administrator may, con-
sistent with the requirements of this subsection—
‘‘(A) make direct loans to eligible inter-
mediaries for the purpose of making short-term, 
fixed interest rate microloans to startup, newly 
established, and growing small business con-
cerns;
184
experience evidences the capability of the inter-
mediary to assist microloan borrowers. 
‘‘(4) INTERMEDIARY
APPLICATIONS.—As part 
of its application for a loan, each intermediary shall 
submit a description to the Administrator of—
‘‘(A) the type of businesses to be assisted; 
‘‘(B) the size and range of loans to be 
made; 
‘‘(C) the geographic area to be served and 
its economic, poverty, and unemployment char-
acteristics; 
‘‘(D) the status of small business concerns 
in the area to be served and an analysis of their 
credit and technical assistance needs; 
‘‘(E) any marketing, management, and 
technical assistance to be provided in connec-
tion with a loan made under this subsection; 
‘‘(F) the local economic credit markets, in-
cluding the costs associated with obtaining 
credit locally; 
‘‘(G) the qualifications of the applicant to 
carry out the purpose of this subsection; and 
‘‘(H) any plan to involve other technical 
assistance providers (such as counselors from 
the Service Corps of Retired Executives or
185
small business development centers) or private 
sector lenders in assisting selected business con-
cerns. 
‘‘(5) SELECTION OF INTERMEDIARIES.—In se-
lecting intermediaries to participate in the program 
established under this subsection, the Administrator 
shall give priority to those applicants that provide 
loans in amounts averaging not more than $10,000 
and to those applicants that primarily serve small 
manufacturers. 
‘‘(6) INTERMEDIARY
CONTRIBUTION.—As a 
condition of any loan made to an intermediary under 
this subsection, the Administrator shall require the 
intermediary to contribute not less than 15 percent 
of the loan amount in cash from non-Federal 
sources. 
‘‘(7) LOANS TO INTERMEDIARIES.—
‘‘(A) LOAN
LIMITS.—No loan shall be 
made under this subsection if the total amount 
outstanding and committed to one intermediary 
(excluding outstanding grants) from the busi-
ness loan and investment fund established by 
this Act would, as a result of such loan, exceed 
$750,000 
in 
the 
first 
year 
of 
such 
intermediary’s participation in the program,
186
and $3,500,000 in the remaining years of the 
intermediary’s participation in the program. 
‘‘(B) LOAN
DURATION.—Loans made by 
the Administrator under this subsection shall be 
for a term of 10 years. 
‘‘(C) DELAYED PAYMENTS.—The Adminis-
trator shall not require repayment of interest or 
principal of a loan made to an intermediary 
under this subsection during the first year of 
the loan. 
‘‘(D) FEES; COLLATERAL.—Except as oth-
erwise provided in this subsection, the Adminis-
trator shall not charge any fees or require col-
lateral other than an assignment of the notes 
receivable of the microloans with respect to any 
loan made to an intermediary under this sub-
section. 
‘‘(E) INTEREST RATES.—
‘‘(i) IN
GENERAL.—Loans made by 
the Administrator 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 for obligations of the United 
States with a period of maturity of 5
187
years, adjusted to the nearest 1⁄8 of 1 per-
cent. 
‘‘(ii) CERTAIN
SMALL
LOANS.—Not-
withstanding clause (i), loans made by the 
Administrator to an intermediary that 
makes loans to small business concerns 
and entrepreneurs averaging not more 
than $10,000, shall bear an interest rate 
that is 2 percentage points below the rate 
determined by the Secretary of the Treas-
ury for obligations of the United States 
with a period of maturity of 5 years, ad-
justed to the nearest 1⁄8 of 1 percent. 
‘‘(iii) MULTIPLE SITES OR OFFICES.—
Clause (ii) shall apply to each separate 
loan-making site or office of an inter-
mediary only if such site or office meets 
the requirements of that clause. 
‘‘(iv) RATE
BASIS.—The applicable 
rate of interest under this subparagraph 
shall—
‘‘(I) be applied retroactively for 
the first year of an intermediary’s 
participation in the program, based 
upon the actual lending practices of
188
the intermediary as determined by the 
Administrator prior to the end of such 
year; and 
‘‘(II) be based in the second and 
subsequent years of an intermediary’s 
participation in the program, upon the 
actual lending practices of the inter-
mediary during the term of the 
intermediary’s participation in the 
program. 
‘‘(8) LOSS RESERVE OF INTERMEDIARIES.—
‘‘(A) IN
GENERAL.—The Administrator 
shall, by regulation to be codified in the Code 
of Federal Regulations, require each inter-
mediary to establish a loan loss reserve fund, 
and to maintain such reserve fund until all obli-
gations owed to the Administrator under this 
subsection are repaid. 
‘‘(B) AMOUNT OF RESERVE FUND.—The 
Administrator shall require the loan loss reserve 
fund of an intermediary to be maintained at a 
level equal to 15 percent of the outstanding bal-
ance of the notes receivable owed to the inter-
mediary.
189
‘‘(C) 
REDUCTION
OF
REQUIRED 
AMOUNT.—Notwithstanding subparagraph (B), 
the Administrator may reduce the annual loan 
loss reserve requirement of an intermediary to 
reflect the actual average loan loss rate for the 
intermediary during the preceding 5-year pe-
riod, except that in no case shall the loan loss 
reserve be reduced to less than 10 percent of 
the outstanding balance of the notes receivable 
owed to the intermediary. The Administrator 
may reduce the annual loan loss reserve re-
quirement of an intermediary under this sub-
paragraph only if the intermediary dem-
onstrates to the satisfaction of the Adminis-
trator that—
‘‘(i) the average annual loss rate for 
the intermediary during the preceding 5-
year period is less than 15 percent; and 
‘‘(ii) no other factors exist that may 
impair the ability of the intermediary to 
repay all obligations owed to the Adminis-
trator under this subsection. 
‘‘(D) REVIEW BY ADMINISTRATOR.—After 
the initial 5 years of an intermediary’s partici-
pation in the program authorized by this sub-
190
section, the Administrator shall, at the request 
of the intermediary, conduct a review of the an-
nual loss rate of the intermediary. Any inter-
mediary that requests a reduction in its loan 
loss reserve shall be reviewed based on the most 
recent 5-year period preceding the request. 
‘‘(9) LOANS
TO
SMALL
BUSINESS
CONCERNS 
FROM ELIGIBLE INTERMEDIARIES.—
‘‘(A) IN
GENERAL.—An eligible inter-
mediary shall make fixed rate loans to startup, 
newly established, and growing small business 
concerns from the funds made available to it 
under paragraph (7) for working capital and 
the acquisition of materials, supplies, furniture, 
fixtures, and equipment. 
‘‘(B) LOAN AMOUNT.—To the extent prac-
ticable, each intermediary that operates a 
microloan program under this subsection shall 
maintain a microloan portfolio with an average 
loan size of not more than $15,000. An inter-
mediary may make a loan under this subsection 
of more than $20,000 to a small business con-
cern only if such small business concern dem-
onstrates that it is unable to obtain credit else-
where at comparable interest rates and that it
191
has good prospects for success. In no case shall 
an intermediary make a loan under this sub-
section of more than $35,000, or have out-
standing or committed to any 1 borrower more 
than $35,000. 
‘‘(C) INTEREST
LIMIT.—Notwithstanding 
any State limitation on the rate or amount of 
interest that may be charged, taken, received, 
or reserved on a loan, the maximum rate of in-
terest 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 Administrator—
‘‘(i) in the case of a loan of more than 
$10,000 made by the intermediary to a 
small business concern or entrepreneur by 
more than 7.75 percentage points; and 
‘‘(ii) in the case of a loan of not more 
than $10,000 made by the intermediary to 
a small business concern or entrepreneur 
by more than 8.5 percentage points. 
‘‘(D) REVIEW RESTRICTION.—The Admin-
istrator shall not review individual microloans 
made by intermediaries prior to approval.
192
‘‘(E) ESTABLISHMENT OF CHILD CARE OR 
TRANSPORTATION BUSINESSES.—In addition to 
other eligible small businesses concerns, bor-
rowers under any program under this sub-
section may include individuals who will use the 
loan proceeds to establish for-profit or nonprofit 
child care establishments or businesses pro-
viding for-profit transportation services. 
‘‘(10) PROGRAM FUNDING FOR MICROLOANS.—
‘‘(A) NUMBER OF PARTICIPANTS.—Under 
the program authorized by this subsection, the 
Administrator may fund, on a competitive basis, 
not more than 300 intermediaries. 
‘‘(B) MINIMUM ALLOCATION.—Subject to 
the availability of appropriations, of the total 
amount of new loan funds made available for 
award under this subsection in each fiscal year, 
the Administrator shall make available for 
award in each State an amount equal to the 
sum of—
‘‘(i) the lesser of—
‘‘(I) $800,000; or 
‘‘(II) 1⁄55 of the total amount of 
new loan funds made available for
193
award under this subsection for that 
fiscal year; and 
‘‘(ii) any additional amount, as deter-
mined by the Administrator. 
‘‘(C) REDISTRIBUTION.—If, at the begin-
ning of the third quarter of a fiscal year, the 
Administrator determines that any portion of 
the amount made available to carry out this 
subsection is unlikely to be made available 
under subparagraph (B) during that fiscal year, 
the Administrator may make that portion avail-
able for award in any one or more States with-
out regard to subparagraph (B). 
‘‘(11) EQUITABLE
DISTRIBUTION
OF
INTER-
MEDIARIES.—In approving microloan program appli-
cants and providing funding to intermediaries under 
this subsection, the Administrator shall select and 
provide funding to such intermediaries as will ensure 
appropriate availability of loans for small businesses 
in all industries located throughout each State, par-
ticularly those located in urban and in rural areas. 
‘‘(12) MARKETING, MANAGEMENT AND TECH-
NICAL ASSISTANCE GRANTS TO INTERMEDIARIES.—
The Administrator may make grants described in
194
paragraph (2)(B) in accordance with the following 
requirements: 
‘‘(A) GRANT AMOUNTS.—Except as other-
wise provided in subparagraph (C) and subject 
to subparagraph (B), each intermediary that re-
ceives a loan under this subsection shall be eli-
gible to receive a grant to provide marketing, 
management, and technical assistance to small 
business concerns that are borrowers under this 
subsection. Except as provided in subparagraph 
(C), each intermediary meeting the require-
ments of subparagraph (B) may receive a grant 
of not more than 25 percent of the total out-
standing balance of loans made to it under this 
subsection. 
‘‘(B) CONTRIBUTION.—As a condition of 
any grant made under subparagraph (A), the 
Administrator 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 di-
rect funding, the contribution may include indi-
rect costs or in-kind contributions paid for 
under non-Federal programs.
195
‘‘(C) ADDITIONAL TECHNICAL ASSISTANCE 
GRANTS FOR MAKING CERTAIN LOANS.—
‘‘(i) IN GENERAL.—Each intermediary 
that has a portfolio of loans made under 
this subsection that averages not more 
than $10,000 during the period of the 
intermediary’s participation in the program 
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, in addition to grants made 
under subparagraph (A). 
‘‘(ii) PURPOSES.—A grant awarded 
under clause (i) may be used to provide 
marketing, management, and technical as-
sistance to small business concerns that 
are borrowers under this subsection. 
‘‘(iii) CONTRIBUTION
EXCEPTION.—
The contribution requirements in subpara-
graph (B) do not apply to grants made 
under this subparagraph. 
‘‘(D) ELIGIBILITY
FOR
MULTIPLE
SITES 
OR OFFICES.—The eligibility for a grant de-
scribed in subparagraph (A) or (C) shall be de-
196
termined separately for each loan-making site 
or office of an intermediary. 
‘‘(E) ASSISTANCE
TO
CERTAIN
SMALL 
BUSINESS CONCERNS.—
‘‘(i) IN GENERAL.—Each intermediary 
may expend an amount not to exceed 25 
percent of the grant funds received under 
this subsection to provide information and 
technical assistance to small business con-
cerns that are prospective borrowers under 
this subsection. 
‘‘(ii) TECHNICAL
ASSISTANCE.—An 
intermediary shall not expend more than 
25 percent of the funds received under this 
subsection to enter into third party con-
tracts for the provision of technical assist-
ance. 
‘‘(13) PRIVATE
SECTOR
BORROWING
TECH-
NICAL
ASSISTANCE
GRANTS.—Grants described in 
paragraph (2)(C) shall be subject to the following 
requirements: 
‘‘(A) GRANT AMOUNTS.—Subject to the re-
quirements of subparagraph (B), the Adminis-
trator may make not more than 55 grants an-
197
nually, each in amounts not to exceed $200,000 
for the purposes specified in paragraph (2)(C). 
‘‘(B) CONTRIBUTION.—As a condition of 
any grant made under subparagraph (A), the 
Administrator shall require the grant recipient 
to contribute an amount equal to 20 percent of 
the amount of the grant, obtained solely from 
non-Federal sources. In addition to cash or 
other direct funding, the contribution may in-
clude indirect costs or in-kind contributions 
paid for under non-Federal programs. 
‘‘(14) GRANTS FOR MANAGEMENT, MARKETING, 
TECHNICAL ASSISTANCE, AND RELATED SERVICES.—
‘‘(A) IN
GENERAL.—The Administrator 
may procure technical assistance for inter-
mediaries participating in the Microloan Pro-
gram to ensure that such intermediaries have 
the knowledge, skills, and understanding of 
microlending practices necessary to operate suc-
cessful microloan programs. 
‘‘(B) ASSISTANCE AMOUNT.—The Admin-
istrator 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
198
purpose of providing 1 or more technical assist-
ance grants to experienced microlending organi-
zations and national and regional nonprofit or-
ganizations that have demonstrated experience 
in providing training support for microenter-
prise development and financing to achieve the 
purpose set forth in subparagraph (A). 
‘‘(C) 
WELFARE-TO-ENTREPRENEURSHIP 
MICROLOAN
INITIATIVE.—Of amounts made 
available to carry out the welfare-to-entrepre-
neurship microloan initiative in any fiscal year, 
the Administrator may use not more than 5 
percent to provide technical assistance, either 
directly or through contractors, to welfare-to-
entrepreneurship microloan initiative grantees, 
to ensure that, as grantees, they have the 
knowledge, skills, and understanding of micro-
lending and welfare-to-entrepreneurship transi-
tion, and other related issues, to operate a suc-
cessful welfare-to-entrepreneurship microloan 
initiative. 
‘‘(15) EVALUATION
OF
WELFARE-TO-ENTRE-
PRENEURSHIP
MICROLOAN
INITIATIVE.—On Janu-
ary 31, 1999, and annually thereafter, the Adminis-
trator shall submit to the Committee on Small Busi-
199
ness of the House of Representatives and the Com-
mittee on Small Business and Entrepreneurship of 
the Senate a report on the welfare-to-entrepreneur-
ship microloan initiative, including a description of 
the amounts made available to carry out such initia-
tive. 
‘‘(16) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) INTERMEDIARY.—The term ‘inter-
mediary’ means—
‘‘(i) a private, nonprofit entity; 
‘‘(ii) a private, nonprofit community 
development corporation; 
‘‘(iii) a consortium of private, non-
profit organizations or nonprofit commu-
nity development corporations; 
‘‘(iv) a quasi-governmental economic 
development entity (such as a planning 
and development district), other than a 
State, county, municipal government, or 
any agency thereof, if—
‘‘(I) no application is received 
from an eligible nonprofit organiza-
tion; or
200
‘‘(II) the Administrator deter-
mines that the needs of a region or 
geographic area are not adequately 
served by an existing, eligible non-
profit organization that has submitted 
an application; or 
‘‘(v) an agency of or nonprofit entity 
established by a Native American Tribal 
Government, that seeks to borrow or has 
borrowed funds from the Administrator to 
make microloans to small business con-
cerns under this subsection. 
‘‘(B) MICROLOAN.—The term ‘microloan’ 
means a short-term, fixed rate loan of not more 
than $35,000, made by an intermediary to a 
startup, newly established, or growing small 
business concern. 
‘‘(C) RURAL AREA.—The term ‘rural area’ 
means any political subdivision or unincor-
porated area—
‘‘(i) in a nonmetropolitan county (as 
defined by the Secretary of Agriculture) or 
its equivalent thereof; or 
‘‘(ii) in a metropolitan county or its 
equivalent that has a resident population
201
of less than 20,000 if the Administrator 
has determined such political subdivision 
or area to be rural.’’. 
(e) REPEAL OF CERTAIN PROVISIONS OF SECTION 7 
OF THE SMALL BUSINESS ACT.—Section 7 of the Small 
Business Act (15 U.S.C. 636) is amended—
(1) by striking subsection (d) and inserting the 
following: 
‘‘(d) [ Reserved ].’’; 
(2) by striking subsection (h) and inserting the 
following: 
‘‘(h) [ Reserved ].’’; 
(3) by striking subsection (j) and inserting the 
following: 
‘‘(j) [ Reserved ].’’; and 
(4) by striking subsection (k) and inserting the 
following: 
‘‘(k) [ Reserved ].’’. 
(f) CONTINUATION
OF
TEMPORARY
PREDISASTER 
MITIGATION PROGRAM.—
(1) IN GENERAL.—There is a predisaster miti-
gation program under which the Administrator may 
make, under section 7(b)(1) of the Small Business 
Act (15 U.S.C. 636(b)(1)) such loans (either directly 
or in cooperation with banks or other lending insti-
202
tutions through agreements to participate on an im-
mediate or deferred (guaranteed) basis), as the Ad-
ministrator may determine to be necessary or appro-
priate, to enable small businesses to use mitigation 
techniques in support of a formal mitigation pro-
gram established by the Federal Emergency Man-
agement Agency, except that no loan or guarantee 
may be extended to a small business under this 
paragraph unless the Administrator finds that the 
small business is otherwise unable to obtain credit 
for the purposes described in this paragraph. 
(2) TERMINATION.—No loan shall be made 
under this subsection after September 30, 2004. 
(g) EFFECTIVE DATE.—The amendments made this 
section shall apply to loans and grants made, and other 
assistance provided, after the date of the enactment of this 
Act. 
SEC. 208. GOVERNMENT CONTRACT AND BUSINESS DEVEL-
OPMENT ASSISTANCE FOR SMALL BUSINESS 
CONCERNS, ETC. 
(a) IN GENERAL.—Section 8 of the Small Business 
Act (15 U.S.C. 637) is amended by striking subsections 
(a) and (b) and inserting the following new subsections:
203
‘‘(a) GOVERNMENT CONTRACT AND BUSINESS DE-
VELOPMENT ASSISTANCE
FOR SMALL BUSINESS CON-
CERNS.—
‘‘(1) ESTABLISHMENT.—There is within the 
Administration a program to be carried out by the 
Administrator to enhance the competitive viability of 
program participants by providing Government con-
tract and business development assistance to pro-
gram participants consistent with the requirements 
of this section. 
‘‘(2)(A) CONTRACT AUTHORITY.—The Adminis-
trator shall, to the extent that Administrator deter-
mines it to be necessary or appropriate, enter into 
any contract with any contracting officer obligating 
the Administrator to furnish goods or service to the 
Government. 
‘‘(B) NEGOTIATION WITH CONTRACTING OFFI-
CER.—In any case in which the Administrator cer-
tifies to a contracting officer that the Administrator 
is competent and responsible to perform any pro-
curement contract to be let by such officer, such of-
ficer may let such procurement contract to the Ad-
ministrator upon such terms and conditions as may 
be agreed upon between the Administrator and such 
officer.
204
‘‘(C) FAIR
MARKET
PRICE
RESTORATION.—A 
contracting officer shall not let a contract for goods 
or services under this paragraph if the amount of 
such contract exceeds the fair market price of such 
goods or services. 
‘‘(D) APPEAL OF CONTRACTING OFFICER DECI-
SION.—(i) Whenever the Administrator and a con-
tracting officer fail to agree, the matter shall be sub-
mitted for determination by the Administrator to the 
head of the agency of the contracting officer. 
‘‘(ii) Not later than 5 days from the date the 
Administrator is notified of a contracting officer’s 
adverse decision, the Administrator may notify the 
contracting officer of the intent to appeal such ad-
verse decision, and within 15 days of such date the 
Administrator shall file a written request for a re-
consideration of the adverse decision with head of 
the agency. 
‘‘(iii) For purposes of this subparagraph, a con-
tracting 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 conditions of 
a contract to be awarded noncompetitively under the 
authority of this subsection.
205
‘‘(iv) Upon receipt of the notice of intent to ap-
peal, the head of the agency shall suspend further 
action regarding the procurement until a written de-
cision on the Administrator’s request for reconsider-
ation has been issued by such agency head, unless 
the head of the agency makes a written determina-
tion that urgent and compelling circumstances which 
significantly affect interests of the United States will 
not permit waiting for a reconsideration of the ad-
verse decision. 
‘‘(v) If the Administrator’s request for reconsid-
eration is denied, the head of the agency shall speci-
fy the reasons why the selected firm was determined 
to be incapable to perform the procurement require-
ment, and the findings supporting such determina-
tion, which shall be made a part of the contract file 
for the requirement. 
‘‘(E) DETERMINATION OF UNSUITABILITY.—If 
a contracting officer requests the Administrator to 
make the certification described in subparagraph (B) 
with respect to any contract that the Administrator 
determines is not suitable for award under this sub-
section, the Administrator shall notify the con-
tracting officer of the Administrator’s determination 
not later than 3 days after the date of such request.
206
‘‘(F) SUBCONTRACTING
AUTHORITY.—(i) The 
Administrator shall, to the extent that the Adminis-
trator determines it to be necessary or appropriate, 
arrange for the performance of such procurement 
contracts by negotiating or otherwise letting sub-
contracts to program participants for such goods or 
services as may be necessary to enable the Adminis-
trator to perform such contracts. 
‘‘(ii)(I) Except as authorized by subclause (II) 
or (III), no award shall be made pursuant to this 
section to other than a small business concern. 
‘‘(II) In determining the size of a small busi-
ness concern owned by a socially and economically 
disadvantaged Indian tribe (or a wholly owned busi-
ness entity of such tribe), each firm’s size shall be 
independently determined without regard to its af-
filiation with the tribe, any entity of the tribal gov-
ernment, 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 cat-
egory. 
‘‘(III) Any joint venture established under the 
authority of section 602(b) of the Business Oppor-
207
tunity Development Reform Act of 1988 (Public 
Law 100–656) shall be eligible for award of a con-
tract pursuant to this section. 
‘‘(G) DELEGATION OF CONTRACT ADMINISTRA-
TION.—(i) The Administrator and the head of the 
agency making the procurement shall enter into an 
agreement under which a subcontract awarded under 
this subsection shall be administered by the head of 
the agency making the procurement. 
‘‘(ii) Notwithstanding clause (i), the Adminis-
trator shall negotiate and award any such sub-
contract and shall assist the program participant in 
the settlement of any dispute arising from the per-
formance of such subcontract. 
‘‘(iii) Any agreement entered into by the Ad-
ministrator with the head of another agency before 
the date of the enactment of this clause that allows 
such agency head to negotiate or award a contract 
under this subsection shall not apply with respect to 
any subcontract offered for award after such date. 
‘‘(H) AWARD
AFTER
GRADUATION.—The Ad-
ministrator shall, to the extent that the Adminis-
trator determines it to be necessary or appropriate, 
make an award to a small business concern which
208
has completed its period of program participation as 
described in paragraph (21)(F) if—
‘‘(i) the contract will be awarded as a re-
sult of an offer (including price) submitted in 
response to a published solicitation relating to 
a competition conducted pursuant to subpara-
graph (H); and 
‘‘(ii) the prospective contract awardee was 
a program participant eligible for award of the 
contract on the date specified for receipt of of-
fers contained in the contract solicitation. 
‘‘(I) AWARD
THROUGH
COMPETITION.—(i) A 
subcontract offered for award pursuant to this sub-
section shall be awarded on the basis of competition 
restricted to program participants if—
‘‘(I) there is a reasonable expectation that 
at least 2 program participants will submit of-
fers and that award can be made at a fair mar-
ket price; and 
‘‘(II) the estimated anticipated award price 
of the contract (including options) may exceed 
$5,000,000 in the case of a contract oppor-
tunity assigned a North American Industrial 
Classification System code for manufacturing
209
and $3,000,000 (including options) in the case 
of all other contract opportunities. 
‘‘(ii) The Administrator may award a sub-
contract under this subsection on the basis of a com-
petition restricted to program participants if the re-
quirements of clause (i)(I) are met. 
‘‘(J) SOLE SOURCE AWARD.—(i) In the case of 
any subcontract not awarded under subparagraph 
(I), the Administrator shall award such contract sole 
source to a program participant if—
‘‘(I) the program participant is determined 
to be a responsible contractor with respect to 
performance of such contract opportunity; 
‘‘(II) the award of such contract would be 
consistent with the program participant’s busi-
ness plan; and 
‘‘(III) the award of the contract would not 
result in the program participant exceeding the 
requirements 
established 
by 
paragraph 
(21)(G)(iii). 
‘‘(ii) To the maximum extent practicable, the 
Administrator shall promote the equitable geo-
graphic distribution of sole source contracts awarded 
pursuant to this subsection.
210
‘‘(3) SURETY
BONDS.—Notwithstanding sub-
sections (a) and (c) of the first section of the Act 
entitled ‘‘An Act requiring contracts for the con-
struction, alteration, and repair of any public build-
ing or public work of the United States to be accom-
panied by a performance bond protecting the United 
States and by additional bond for the protection of 
persons furnishing material and labor for the con-
struction, alteration, or repair of said public build-
ings or public work,’’ approved August 24, 1935 (49 
Stat. 793; 40 U.S.C. 270a), no program participant 
shall be required to provide any amount of any bond 
as a condition of receiving any subcontract under 
this subsection if—
‘‘(A) the Administrator determines that 
such amount is inappropriate for such program 
participant in performing such contract; 
‘‘(B) the Administrator takes such meas-
ures as the Administrator considers appropriate 
for the protection of persons furnishing mate-
rials and labor to a program participant receiv-
ing any benefit pursuant to this paragraph; 
‘‘(C) the Administrator assists, insofar as 
practicable, a program participant receiving the 
benefits of this paragraph to develop, within a
211
reasonable period of time, such financial and 
other capability as may be needed to obtain 
such bonds as the Administrator may subse-
quently require for the successful completion of 
any program conducted under the authority of 
this subsection; 
‘‘(D) the Administrator finds that such 
program participant is unable to obtain the req-
uisite 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 
‘‘(E) the program participant is deter-
mined to be a startup concern and such concern 
has not been participating in any program con-
ducted under the authority of this subsection 
for a period exceeding one year. 
‘‘(4) SOLE SOURCE CONTRACT NEGOTIATION.—
(A) Any program participant selected by the Admin-
istrator to perform a contract to be let noncompeti-
tively pursuant to this subsection shall, when prac-
ticable, participate in any negotiation of the terms 
and conditions of such contract.
212
‘‘(B) CALCULATION OF FAIR MARKET PRICE.—
(i) For purposes of paragraph (2)(C), a fair market 
price shall be determined by the agency according to 
clauses (ii) and (iii) and submitted along with the 
procurement requirement to the Administrator. The 
submission also shall include any data used by the 
agency in calculating the fair market price. 
‘‘(ii) The estimate of a current fair market 
price for a newprocurement requirement, or a re-
quirement that does not have a satisfactory procure-
ment history, shall be derived from a price or cost 
analysis taking into account prevailing market condi-
tions, commercial prices for similar goods or serv-
ices, and data from other Federal agencies. Such 
analysis shall consider such cost or pricing data as 
may be timely submitted by the Administrator. 
‘‘(iii) The estimate of a current fair market 
price for a procurement requirement that has a sat-
isfactory procurement history shall be based on re-
cent award prices adjusted to insure comparability. 
Such adjustments shall take into account differences 
in quantities, performance times, plans, specifica-
tions, transportation costs, packaging and packing 
costs, labor and materials costs, overhead costs, and
213
any other additional costs which may be deemed ap-
propriate. 
‘‘(iv) The agency’s estimate of the current fair 
market price (and any supporting data furnished to 
the Administrator) shall not be disclosed to any po-
tential offeror (other than the Administrator). 
‘‘(C) A program participant selected by the Ad-
ministrator to perform or negotiate a contract to be 
let pursuant to this subsection may request the Ad-
ministrator to protect the agency’s estimate of the 
fair market price for such contract pursuant to 
paragraph (2)(A). 
‘‘(5) SOCIAL DISADVANTAGE.—(A) Socially dis-
advantaged individuals are those who have been sub-
jected to racial or ethnic prejudice or cultural bias 
because of their identity as a member of a group 
without regard to their individual qualities. 
‘‘(B) Any determination made pursuant to this 
paragraph shall be made by the Administrator and 
shall not be delegated. 
‘‘(6) ECONOMIC
DISADVANTAGE.—(A)(i) Eco-
nomically disadvantaged individuals are those so-
cially disadvantaged individuals whose ability to 
compete in the free enterprise system has been im-
paired due to diminished capital and credit opportu-
214
nities as compared to others in the same business 
area who are not socially disadvantaged. 
‘‘(ii) In determining the degree of diminished 
credit and capital opportunities the Administrator 
shall consider the assets and net worth of such so-
cially disadvantaged individual as it relates to—
‘‘(I) the assets and net worth of a business 
owner who is not socially disadvantaged; and 
‘‘(II) the capital needs of the primary in-
dustry in which the owner of the business is en-
gaged. 
‘‘(iii) In determining the economic disadvantage 
of an Indian tribe, the Administrator shall consider, 
where available, information such as the following—
‘‘(I) the per capita income of members of 
the tribe excluding judgment awards, 
‘‘(II) the percentage of the local Indian 
population below the poverty level; and 
‘‘(III) the tribe’s access to capital markets. 
‘‘(B) For the purpose of this section, an indi-
vidual who has been determined by the Adminis-
trator to be economically disadvantaged at the time 
of program entry shall be deemed to be economically 
disadvantaged for the term of the program.
215
‘‘(C) Whenever the Administrator computes 
personal net worth for the purpose of program 
entry, it shall exclude from such computation—
‘‘(i) the value of investments that dis-
advantaged owners have in their concerns, ex-
cept that such value shall be taken into account 
under this paragraph when comparing such 
concerns to other concerns in the same business 
area that are owned by other than socially dis-
advantaged persons; and 
‘‘(ii) the equity that disadvantaged owners 
have in their primary personal residences. 
‘‘(D) The Administrator shall not establish a 
maximum net worth that prohibits program entry 
that is less than $750,000. 
‘‘(7) PROGRAM PARTICIPANT.—
‘‘(A) DEFINITION.—For purposes of this 
section, the term ‘program participant’ means a 
small business concern which is certified by the 
Administrator that it meets the requirements of 
subparagraph (B) and—
‘‘(i) which is at least 51 percent un-
conditionally owned by—
216
‘‘(I) one or more socially and, at 
the time of program entry, economi-
cally disadvantaged individuals, 
‘‘(II) an economically disadvan-
taged Indian tribe, (or a wholly owned 
business entity of such tribe), or 
‘‘(III) an economically disadvan-
taged Native Hawaiian organization, 
or 
‘‘(ii) in the case of any publicly owned 
business, at least 51 percent of the stock 
of which is unconditionally owned by—
‘‘(I) one or more socially and, at 
the time of program entry, economi-
cally disadvantaged individuals, 
‘‘(II) an economically disadvan-
taged Indian tribe (or a wholly owned 
business entity of such tribe), or 
‘‘(III) an economically disadvan-
taged Native Hawaiian organization. 
‘‘(B) PROGRAM
PARTICIPATION
ELIGI-
BILITY.—A program participant meets the re-
quirements of this subparagraph if the manage-
ment and daily business operations of such 
small concern are controlled by one or more—
217
‘‘(i) socially and, at the time of pro-
gram entry, economically disadvantaged in-
dividuals 
described 
in 
subparagraph 
(A)(i)(I) or subparagraph (A)(ii)(I), 
‘‘(ii) members of an economically dis-
advantaged Indian tribe described in sub-
paragraph 
(A)(i)(II) 
or 
subparagraph 
(A)(ii)(II), or 
‘‘(iii) Native Hawaiian organizations 
described in subparagraph (A)(i)(III) or 
subparagraph (A)(ii)(III). 
‘‘(C) NATIVE HAWAIIAN ORGANIZATION.—
For purposes of this subsection, the term ‘Na-
tive Hawaiian Organization’ means any commu-
nity service organization serving Native Hawai-
ians in the State of Hawaii which—
‘‘(i) is a nonprofit corporation that 
has filed articles of incorporation with the 
director (or the designee thereof) of the 
Hawaii Department of Commerce and 
Consumer Affairs, or any successor agen-
cy, 
‘‘(ii) is controlled by Native Hawai-
ians, and
218
‘‘(iii) whose business activities will 
principally benefit such Native Hawaiians. 
‘‘(D) ANNUAL CERTIFICATION.—Each pro-
gram participant shall certify to the District 
Director for the district in which its principal 
place of business is located, on an annual basis, 
that it meets the requirements of this para-
graph regarding ownership and control by so-
cially disadvantaged individuals. 
‘‘(E) CAPABILITY
DETERMINATION.—The 
term ‘program participant’ shall not include any 
concern unless the Administrator determines 
that with contract, financial, technical, and 
management support the small business concern 
will be able to perform contracts which may be 
awarded to such concern under paragraph 
(2)(F) and has reasonable prospects for success 
in competing in the private sector. 
‘‘(F) SPECIAL RULES ON ELIGIBILITY.—(i) 
Except as provided in clause (iii), no individual 
who was determined pursuant to this section to 
be socially and economically disadvantaged be-
fore the date of the enactment of this subpara-
graph shall be permitted to assert such dis-
advantage with respect to any other concern
219
making application for certification after such 
date. 
‘‘(ii) Except as provided in clause (iii), any 
individual upon whom eligibility is based pursu-
ant to paragraph (5) shall be permitted to as-
sert such eligibility for only one small business 
concern. 
‘‘(iii) A socially and economically disadvan-
taged Indian tribe may own more than one 
small business concern eligible for assistance 
pursuant to this subsection and subsection 8(b) 
if—
‘‘(I) the Indian tribe does not own an-
other firm in the same industry which has 
been determined to be eligible to receive 
contracts under this program, and 
‘‘(II) the individuals responsible for 
the management and daily operations of 
the concern do not manage more than two 
program participants. 
‘‘(iv) No program participant, previously 
eligible for the award of contracts pursuant to 
this subsection, shall be subsequently recertified 
for program participation if its prior participa-
220
tion in the program was concluded for any of 
the reasons described in paragraph (10). 
‘‘(v)(I) A program participant eligible for 
the award of contracts pursuant to this sub-
section shall remain eligible for such contracts 
if there is a transfer of ownership or control of 
the program participant that does not alter the 
eligibility of the program participant as deter-
mined by paragraphs (5), (6), and (7). 
‘‘(II) The program participant shall notify 
the Assistant Administrator for Minority Small 
Business and Capital Ownership of any such 
change in control or ownership and provide the 
Assistant Administrator with sufficient informa-
tion to enable the Assistant Administrator to 
determine that the transfer of ownership and 
control does not alter eligibility for participation 
in the program. 
‘‘(III) In the event of such a alteration of 
ownership or control, the concern, if not termi-
nated or graduated, shall be eligible for a pe-
riod of continued participation in the program 
not to exceed the time limitations prescribed in 
paragraph (27).
221
‘‘(I) the Indian tribe does not own another 
firm in the same industry which has been deter-
mined to be eligible to receive contracts under 
this program, and 
‘‘(II) the individuals responsible for the 
management and daily operations of the con-
cern do not manage more than two program 
participants. 
‘‘(C) No program participant, previously eligible 
for the award of contracts pursuant to this section, 
shall be subsequently recertified for program partici-
pation if its prior participation in the program was 
concluded for any of the reasons described in para-
graph (11). 
‘‘(8) MANAGEMENT
RESTRICTIONS.—(A) The 
Administrator shall not restrict the amount of 
money that may be removed from the program par-
ticipants by its owners. 
‘‘(B) The Administrator shall not impose any 
restrictions on the management of the company ex-
cept insofar as such management would violate other 
eligibility provisions or Federal procurement law. 
‘‘(C) Notwithstanding this provision, the Ad-
ministrator may determine that a program partici-
pant is not capable of performing a specific contract
222
and may choose not to award a contract to a pro-
gram participant. 
‘‘(9) EXPANSION INTO OTHER INDUSTRIES.—
Limitations established by the Administrator in its 
regulations and procedures restricting the award of 
contracts pursuant to this subsection to a limited 
number of North American Industry Classification 
System codes in an approved business plan shall not 
be applied in a manner that inhibits the logical busi-
ness progression by a program participant into areas 
of industrial endeavor where such concern has the 
potential for success. 
‘‘(10) OPPORTUNITY FOR HEARING.—(A) Sub-
ject to the provisions of subparagraph (E), the Ad-
ministrator, prior to taking any action described in 
subparagraph (B), shall provide the program partici-
pant that is the subject of such action, an oppor-
tunity for a hearing on the record after providing 
written notification of an action set forth in para-
graph (B), in accordance with chapter 5 of title 5, 
United States Code. 
‘‘(B) The actions referred to in subparagraph 
(A) are—
223
‘‘(i) denial of program admission based 
upon a negative determination pursuant to 
paragraph (5), (6), or (7); 
‘‘(ii) a termination pursuant to paragraph 
(21)(D); 
‘‘(iii) a graduation pursuant to paragraph 
(21)(F); and 
‘‘(iv) the denial of a request to issue a 
waiver pursuant to paragraph (20)(B). 
‘‘(C) The Administrator’s proposed action, in 
any proceeding conducted under the authority of this 
paragraph, shall be sustained unless the decision is 
not supported by substantial evidence in the record. 
‘‘(D) A decision rendered pursuant to this para-
graph shall be considered final agency action for 
purposes of chapter 7 of title 5, United States Code. 
‘‘(E) The hearing officer 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 Administrator’s position; 
‘‘(ii) is untimely filed;
224
‘‘(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 90 
days after a written notification of the Adminis-
trator taking an action pursuant to subparagraph 
(B). 
‘‘(11) OUTREACH EFFORT.—(A) The Adminis-
trator shall develop and implement an outreach pro-
gram to inform and recruit small business concerns 
to apply for eligibility for assistance under this sub-
section. 
‘‘(B) Such program shall make a sustained and 
substantial effort to solicit applications for certifi-
cation from small business concerns located in areas 
of concentrated unemployment or underemployment 
or within labor surplus areas and within States hav-
ing relatively few program participants and from po-
tentially eligible program participants in industry 
categories that have not substantially participated in
225
the award of contracts let under the authority of 
this subsection. 
‘‘(12) CONSTRUCTION
CONTRACTS.—To the 
maximum extent practicable, construction sub-
contracts awarded by the Administrator pursuant to 
this subsection shall be awarded within the county 
or State where the work is to be performed. 
‘‘(13) CAPABILITY STATEMENT.—
‘‘(A) IN
GENERAL.—The Administrator 
shall require each concern eligible to receive 
subcontracts pursuant to this subsection to an-
nually prepare and submit to the Administrator 
a capability statement. 
‘‘(B) CONTENTS.—Such statement shall 
briefly describe such concern’s various contract 
performance capabilities and shall contain the 
name and telephone number of the employee in 
the district to which the program participant is 
assigned. 
‘‘(C) CLASSIFICATION.—The Administrator 
shall separate such statements by those pro-
gram participants primarily dependent upon 
local contract support and those primarily re-
quiring a national marketing effort.
226
‘‘(D) DISSEMEINATION.—Statements pri-
marily dependent upon local contract support 
shall be disseminated to appropriate buying ac-
tivities 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 agen-
cies who shall further distribute such state-
ments to buying activities with such agencies 
that may purchase the types of items or serv-
ices described on the capability statements. 
‘‘(E) CONTRACTING ACTIVITY COMMUNICA-
TION WITH ADMINISTRATION.—Contracting ac-
tivities receiving capability statements shall, 
within 60 days after receipt, contact the rel-
evant Business Opportunity Specialist to indi-
cate the number, type and approximate dollar 
value of contract opportunities that such activi-
ties may be awarding over the succeeding 12-
month period and which may be appropriate to 
consider for contracting with the Administrator 
and subsequent subcontracting to those con-
cerns for which it has received capability state-
ments.
227
‘‘(14) CONTRACT FORECAST.—(A) Each execu-
tive agency reporting to the Federal Procurement 
Data System contract actions with an aggregate 
value in excess of $50,000,000 shall prepare a fore-
cast 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 economi-
cally disadvantaged individuals, are capable of per-
forming. Such forecast shall be periodically revised 
during such year. To the extent such information is 
available, the agency forecasts shall specify the fol-
lowing: 
‘‘(i) The approximate number of individual 
contract opportunities (and the number of op-
portunities within a class). 
‘‘(ii) The approximate dollar value, or 
range of dollar values, for each contract oppor-
tunity or class of contract opportunities. 
‘‘(iii) The anticipated time (by fiscal year 
quarter) for the issuance of a procurement re-
quest. 
‘‘(iv) The activity responsible for the award 
and administration of the contract.
228
‘‘(B) FORECAST DISSEMINATION.—The head of 
each executive agency subject to the provisions of 
subparagraph (A) shall within 10 days of completion 
furnish such forecasts to the Administrator and the 
Director of the Office of Small and Disadvantaged 
Business Utilization established pursuant to section 
15(k) of this Act for such agency. 
‘‘(C) LIMITS ON DISSEMINATION.—The infor-
mation reported pursuant to subparagraph (B) may 
be limited to classes of items and services for which 
there are substantial annual purchases. 
‘‘(D) FORECAST AVAILABILITY.—Such forecasts 
shall be available to program participants and all 
other small business concerns. 
‘‘(15) PERCENTAGES PERFORMED BY PROGRAM 
PARTICIPANTS.—
‘‘(A) SERVICES
AND
PROCUREMENT.—A 
program participant may not be awarded a con-
tract under this subsection unless the program 
participant agrees that—
‘‘(i) in the case of a contract for serv-
ices (except construction), at least 50 per-
cent of the cost of contract performance 
incurred for personnel shall be expended 
for employees of the concern; and
229
‘‘(ii) in the case of a contract for pro-
curement of supplies (other than procure-
ment from a regular dealer in such sup-
plies), the concern will perform work for at 
least 50 percent of the cost of manufac-
turing the supplies (not including the cost 
of materials). 
‘‘(B) ALTERATION
OF
PERCENTAGES.—
The Administrator 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 among business concerns that are 
below the numerical size standard established 
by the Administrator pursuant to section 3(a) 
of this Act for businesses in that industry cat-
egory. A percentage established under the pre-
ceding sentence may not differ from a percent-
age established under section 15(n) of this Act. 
‘‘(C) CONSTRUCTION CONTRACT REGULA-
TIONS.—(i) The Administrator shall establish, 
by regulation and after the opportunity for no-
tice and comment, requirements similar to those 
specified in subparagraph (A) to be applicable 
to contracts for general and specialty construc-
230
tion and to contracts for any other industry 
category not otherwise subject to the require-
ments of such subparagraph. 
‘‘(ii) The percentage applicable to any such 
requirement shall be determined in accordance 
with subparagraph (B), except that such a per-
centage may not differ from a percentage estab-
lished under section 15(n) of this Act for the 
same industry category. 
‘‘(16) PERFORMANCE EXCEPTION FOR WHOLE-
SALERS AND RETAILERS.—(A) An otherwise respon-
sible program participant that is in compliance with 
the requirements of subparagraph (B) shall not be 
denied the opportunity to submit and have consid-
ered its offer for any procurement contract for the 
supply of a product to be let pursuant to this sub-
section or section 15(a) solely because such concern 
is other than the actual manufacturer or processor 
of the product to be supplied under the contract. 
‘‘(B) To be in compliance with the requirements 
referred to in subparagraph (A), the program partic-
ipant shall—
‘‘(i) be primarily engaged in the wholesale 
or retail trade;
231
‘‘(ii) be a small business concern under the 
size standard for the North American Industrial 
Classification System Code assigned to the con-
tract solicitation on which the offer is being 
made; 
‘‘(iii) be a regular dealer, as defined pursu-
ant to section 1(a) of the Act entitled ‘An Act 
to provide conditions for the purchase of sup-
plies and the making of contracts by the United 
States, and for other purposes’, approved June 
30, 1936 (popularly known as the ‘Walsh-
Healey Act’; 41 U.S.C. 35(a)), in the product 
to be offered the Government or be specifically 
exempted from such section by paragraph 
(24)(C) of this subsection; and 
‘‘(iv) represent that it will supply the prod-
uct of a small manufacturer as defined in sec-
tion 3 of this Act, unless a waiver of such re-
quirement is granted—
‘‘(I) by the Administrator, after re-
viewing a determination by the contracting 
officer that no small manufacturer can rea-
sonably be expected to offer a product 
meeting the specifications (including period
232
for performance) required of an offeror by 
the solicitation; or 
‘‘(II) by the Administrator for a prod-
uct (or class of products), after deter-
mining that no small manufacturer is 
available to participate in the Federal pro-
curement market. 
‘‘(17) RESTRICTION ON ADMINISTRATION EM-
PLOYEES.—
‘‘(A) IN GENERAL.—No person within the 
employ of the Administration shall, during the 
term of such employment and for a period of 
two years after such employment has been ter-
minated, engage in any activity or transaction 
specified in subparagraph (B) with respect to 
any program participant if such person partici-
pated personally (either directly or indirectly) in 
decision-making responsibilities relating to such 
program participant or with respect to the ad-
ministration of any assistance provided to pro-
gram participants generally under this sub-
section, section 8(b), or section 7(a)(20). 
‘‘(B) PROHIBITED
TRANSACTIONS.—The 
activities and transactions prohibited by sub-
paragraph (A) include—
233
‘‘(i) the buying, selling, or receiving 
(except by inheritance) of any legal or ben-
eficial 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 enforceable) to purchase or oth-
erwise obtain any right or interest de-
scribed in clause (i); or 
‘‘(iii) the receipt of any other benefit 
or right that may be an incident of owner-
ship. 
‘‘(C) 
EMPLOYEE
CERTIFICATION
AND 
PENALITIES.—(i) The employees designated in 
clause (ii) shall annually submit a written cer-
tification to the Administrator regarding com-
pliance with the requirements of this para-
graph. 
‘‘(ii) The employees referred to in clause 
(i) are— 
‘‘(I) regional administrators; 
‘‘(II) district directors;
234
‘‘(III) the Assistant Administrator for 
Minority Small Business and Capital Own-
ership Development; 
‘‘(IV) employees whose principal du-
ties relate to the award of contracts or the 
provision of other assistance pursuant to 
this subsection or section 8(b); and 
‘‘(V) such other employees as the Ad-
ministrator may designate. 
‘‘(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 
percent of the maximum amount of gain such 
employee realized or could have realized as a re-
sult of engaging in those activities and trans-
actions prescribed by subparagraph (B). 
‘‘(iv) In addition to any other remedy or 
sanction provided for under law or regulation, 
any person who falsely certifies pursuant to 
clause (i) shall be subject to a civil penalty 
under the Program Fraud Civil Remedies Act 
of 1986 (31 U.S.C. 3801–3812). 
‘‘(18) PROHIBITION ON POLITICAL ACTIVITY.—
235
‘‘(A) IN GENERAL.—Any employee of the 
Administration who has authority to take, di-
rect others to take, recommend, or approve any 
action with respect to any program or activity 
conducted pursuant to this subsection or section 
8(b), shall not, with respect to any such action, 
exercise or threaten to exercise such authority 
on the basis of the political activity or affili-
ation of any party. Employees of the Adminis-
tration shall expeditiously report to the Inspec-
tor General of the Administration any such ac-
tion for which such employee’s participation has 
been solicited or directed. 
‘‘(B) PENALTIES.—Any employee who will-
fully and knowingly violates subparagraph (A) 
shall be subject to disciplinary action which 
may consist of separation from service, reduc-
tion in grade, suspension, or reprimand. 
‘‘(C) 
EXCEPTION.—Subparagraph 
(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 po-
litical activity. 
‘‘(D) OTHER LAWS NOT AFFECTED.—The 
prohibitions of subparagraph (A), and remedial
236
measures provided for under subparagraphs (B) 
and (C) with regard to such prohibitions, shall 
be in addition to, and not in lieu of, any other 
prohibitions, measures or liabilities that may 
arise under any other provision of law. 
‘‘(19) ANNUAL REPORT TO BUSINESS OPPOR-
TUNITY SPECIALIST.—
‘‘(A) IN GENERAL.—Program participants 
shall semiannually report to their assigned 
Business Opportunity Specialist the following: 
‘‘(i) A listing of any agents, represent-
atives, attorneys, accountants, consultants, 
and other parties (other than employees) 
receiving compensation to assist in obtain-
ing a Federal contract for such program 
participant. 
‘‘(ii) The amount of compensation re-
ceived by any person listed under clause (i) 
during the relevant reporting period and a 
description of the activities performed in 
return for such compensation. 
‘‘(B) SUBMISSIONS TO HEADQUARTERS.—
The Business Opportunity Specialist shall 
promptly review and forward such report to the 
Assistant Administrator for Minority Small
237
Business and Capital Ownership Development. 
Any report that raises a suspicion of improper 
activity shall be reported immediately to the In-
spector General of the Administration. 
‘‘(C) CAUSE FOR TERMINATION.—The fail-
ure to submit a report pursuant to the require-
ments of this subsection and applicable regula-
tions shall be considered good cause for the ini-
tiation of a termination proceeding pursuant to 
paragraph (21)(D) of this section. 
‘‘(20) EFFECT OF CHANGE OF OWNERSHIP AND 
CONTROL.—
‘‘(A) IN GENERAL.—
‘‘(i) Subject to the provisions of sub-
paragraph (B), a contract (including op-
tions) awarded pursuant to this subsection 
shall be performed (as performance is de-
fined in paragraphs (15) and (16)) by the 
program participant that initially received 
such contract. 
‘‘(ii) Notwithstanding the provisions 
of clause (i), if the owner or owners upon 
whom eligibility was based relinquish own-
ership or control of such concern, or enter 
into any agreement to relinquish such own-
238
ership or control, such contract or option 
shall be terminated for the convenience of 
the Government, except that no repurchase 
costs or other damages may be assessed 
against such concerns due solely to the 
provisions of this subparagraph. 
‘‘(B) WAIVER.—The Administrator may, 
on a nondelegable basis, waive the requirements 
of subparagraph (A) only if one of the following 
conditions exist: 
‘‘(i) When it is necessary for the own-
ers of the concern to surrender partial con-
trol of such concern on a temporary basis 
in order to obtain equity financing. 
‘‘(ii) The head of the contracting 
agency for which the contract is being per-
formed certifies that termination of the 
contract would severely impair attainment 
of the agency’s program objectives or mis-
sions. 
‘‘(iii) Ownership and control of the 
concern that is performing the contract 
will pass to another small business concern 
that is a program participant, but only if 
the acquiring firm would otherwise be eligi-
239
ble to receive the award pursuant to this 
subsection. 
‘‘(iv) The individuals upon whom eligi-
bility was based are no longer able to exer-
cise control of the concern due to inca-
pacity or death. 
‘‘(v) When, in order to raise equity 
capital, it is necessary for the disadvan-
taged owners of the concern to relinquish 
ownership of a majority of the voting stock 
of such concern, but only if—
‘‘(I) such concern has exited the 
Capital Ownership Development Pro-
gram; 
‘‘(II) the disadvantaged owners 
will maintain ownership of the largest 
single outstanding block of voting 
stock (including stock held by affili-
ated parties); and 
‘‘(III) the disadvantaged owners 
will maintain control of daily business 
operations. 
‘‘(C) TIMING OF WAIVER REQUEST.—The 
Administrator may waive the requirements of 
subparagraph (A) if—
240
‘‘(i) in the case of subparagraph 
(B)(i), (ii) and (iv), he is requested to do 
so prior to the actual relinquishment of 
ownership or control; and 
‘‘(ii) in the case of subparagraph 
(B)(iii), he is requested to do so as soon as 
possible after the incapacity or death oc-
curs. 
‘‘(D) 
NOTIFICATION
TO
ADMINIS-
TRATOR.—Concerns 
performing 
contracts 
awarded pursuant to this subsection shall be re-
quired to notify the Administration immediately 
upon entering an agreement (either oral or in 
writing) to transfer all or part of its stock or 
other ownership interest to any other party. 
‘‘(E) TREATMENT OF SMALL BUSINESS IN-
VESTMENT
COMPANY
INTEREST.—Notwith-
standing any other provision of law, for the 
purposes of determining ownership and control 
of a concern under this section, any potential 
ownership interests held by investment compa-
nies licensed under the Small Business Invest-
ment Act of 1958 shall be treated in the same 
manner as interests held by the individuals 
upon whom eligibility is based.
241
‘‘(21) CONDITIONS OF PARTICIPATION.—
‘‘(A) DURATION.—A program participant 
shall be permitted to continue participation in 
such program for a period of time which is 9 
years. Nothing contained in this subparagraph 
shall be deemed to prevent the Administrator 
from instituting a termination or graduation 
pursuant to subparagraph (F) or (H) for issues 
unrelated to the expiration of any time period 
limitation. 
‘‘(B) BUSINESS
PLAN
SUBMISSION.—(i) 
Promptly after certification as a participant in 
the program established by this section, a pro-
gram participant shall submit a business plan 
(hereinafter referred to as the ‘plan’) as de-
scribed in clause (ii) of this subparagraph for 
review by the Business Opportunity Specialist 
assigned to assist such program participant. 
‘‘(ii) The plan may be a revision of a pre-
liminary business plan submitted by the pro-
gram participant or required by the Adminis-
trator as a part of the application for certifi-
cation under this subsection and shall be de-
signed to result in the program participant 
eliminating the conditions or circumstances
242
upon which the Administrator determined eligi-
bility pursuant to paragraph (7) of this section. 
‘‘(iii) Such plan, and subsequent modifica-
tions submitted under clause (v), shall be ap-
proved by the Business Opportunity Specialist 
prior to the program participant being eligible 
for award of a contract pursuant to this sub-
section. 
‘‘(iv) The plans submitted under this sub-
paragraph shall include the following: 
‘‘(I) An analysis of market potential, 
competitive environment, and other busi-
ness analyses estimating the program par-
ticipant’s prospects for profitable oper-
ations during the term of program partici-
pation and after graduation. 
‘‘(II) An analysis of the program par-
ticipant’s strengths and weaknesses with 
particular attention to correcting any fi-
nancial, managerial, technical, or personnel 
conditions which are likely to impede the 
program participant from receiving con-
tracts other than those awarded under this 
section.
243
‘‘(III) 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 (II). 
‘‘(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 transi-
tional stage of program participation). 
‘‘(V) Estimates of contract awards 
pursuant to this subsection and from other 
sources, which the program participant will 
require to meet the specific targets, objec-
tives, and goals for the years covered by its 
plan. 
‘‘(v) Each program participant shall annu-
ally 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 District Director 
for approval. The currently approved plan shall 
be considered valid until such time as a modi-
244
fied plan is reviewed by the Business Oppor-
tunity Specialist and approved by the District 
Director. 
‘‘(vi) Annual reviews pertaining to years in 
the transitional stage of program participation 
shall 
require, 
as 
appropriate, 
a 
written 
verification that such program participant has 
complied with the requirements of paragraph 
(21)(G) of this section relating to attaining 
business activity from sources other than con-
tracts awarded pursuant to this section. 
‘‘(vii) Each program participant shall an-
nually forecast its needs for contract awards 
under this section for the next program year 
and the succeeding program year during the re-
view of its business plan, conducted pursuant to 
clause (v). Such forecast shall be known as the 
‘section 8(a) contract support level’ and shall be 
included in the program participant’s business 
plan. Such forecast shall include—
‘‘(I) the aggregate dollar value of con-
tract support to be sought on a non-
competitive basis under this section, re-
flecting compliance with the requirements 
of paragraph (21)(G) relating to attaining
245
business activity from sources other than 
contracts awarded pursuant to this section, 
‘‘(II) the types of contract opportuni-
ties being sought, identified by North 
American Industrial Classification System 
Code or otherwise, 
‘‘(III) an estimate of the dollar value 
of the section 8(a) contract support level 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 de-
velopment assistance to the program par-
ticipant. 
‘‘(C) CONDITIONS FOR DENIAL OF ASSIST-
ANCE.—A program participant shall be denied 
all such assistance if such concern—
‘‘(i) voluntarily elects not to continue 
participation; 
‘‘(ii) completes the period of Program 
participation as prescribed by paragraph 
(27); 
‘‘(iii) is terminated or graduated pur-
suant to proceedings conducted in accord-
ance with paragraph (10).
246
‘‘(D) TERMINATION
DEFINED.—For pur-
poses of this subsection, the term ‘terminated’ 
and the term ‘termination’ means the total de-
nial or suspension of assistance under this 
paragraph or under this section prior to the 
graduation of the program participant or prior 
to the expiration of the maximum program par-
ticipation term. An action for termination shall 
be based upon good cause, including—
‘‘(i) the failure by such concern to 
maintain its eligibility for program partici-
pation; 
‘‘(ii) the failure of the concern to en-
gage in business practices that will pro-
mote its competitiveness within a reason-
able period of time as evidenced by, among 
other indicators, a pattern of unjustified 
delinquent performance or terminations for 
default with respect to contracts awarded 
under the authority of this subsection; 
‘‘(iii) a demonstrated pattern of fail-
ing to make required submissions or re-
sponses to Administration officials or em-
ployees in a timely manner;
247
‘‘(iv) the willful violation of any rule 
or regulation of the Administrator per-
taining 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 disadvan-
taged owner or an officer of the concern 
for any offense indicating a lack of busi-
ness integrity including any conviction for 
embezzlement, theft, forgery, bribery, fal-
sification or violation of section 16. For 
purposes of this clause, no termination ac-
tion shall be taken with respect to a dis-
advantaged owner solely because of the 
conviction of an officer of the concern (who 
is other than a disadvantaged owner) un-
less such owner conspired with, abetted, or 
otherwise knowingly acquiesced in the ac-
tivity or omission that was the basis of 
such officer’s conviction. 
‘‘(E) INITIATION
OF
TERMINATION
PRO-
CEEDING.—(i) The District Director may ini-
248
tiate a termination proceeding by recom-
mending such action to the Assistant Adminis-
trator for Minority Small Business and Capital 
Ownership Development. 
‘‘(ii) Whenever the Assistant Administrator 
determines such termination is appropriate, 
within 15 days after making such a determina-
tion the program participant shall be provided 
a written notice of intent to terminate, speci-
fying the reasons for such action. 
‘‘(iii) No program participant shall be ter-
minated from the program pursuant to sub-
paragraph (D) without first being afforded an 
opportunity for a hearing in accordance with 
paragraph (10). 
‘‘(iv) If a termination proceeding is initi-
ated against a program participant, such partic-
ipant shall be ineligible from receiving assist-
ance pursuant to this section until the final dis-
position of the termination action. 
‘‘(v) If the program participant is rein-
stated upon final decision by the Administrator 
pursuant to paragraph (10), the time during 
which the program participant did not receive
249
assistance shall be added on to the original pro-
gram term end date. 
‘‘(F) GRADUATION
DEFINED.—For the 
purposes of this subsection and subsection 8(b) 
the term ‘graduated’ or ‘graduation’ means that 
the program participant is recognized as suc-
cessfully completing the program by substan-
tially achieving the targets, objectives, and goals 
contained in the concern’s business plan thereby 
demonstrating its ability to compete in the mar-
ketplace without assistance under this section. 
‘‘(G) BUSINESS
ACTIVITY
TARGETS.—(i) 
During the developmental stage of its participa-
tion in the program, a program participant 
shall take all reasonable efforts within its con-
trol to attain the targets contained in its busi-
ness plan for contracts awarded other than pur-
suant to this subsection (hereinafter referred to 
as ‘business activity targets.’). 
‘‘(ii) Such efforts shall be made a part of 
the business plan and shall be sufficient in 
scope and duration to satisfy the Administrator 
that the program participant will engage in a 
reasonable marketing strategy that will maxi-
250
mize its potential to achieve its business activity 
targets. 
‘‘(iii) During the transitional stage of the 
program a program participant shall be subject 
to regulations regarding business activity tar-
gets that are promulgated by the Administrator 
such regulations shall: 
‘‘(I) Establish business activity tar-
gets applicable to program participants 
during the fifth year and each succeeding 
year of program participation. 
‘‘(aa) Such activity targets shall, 
for such period of time, reflect a rea-
sonably consistent increase in con-
tracts awarded other than pursuant to 
this subsection, expressed as a per-
centage of total sales. 
‘‘(bb) The Administrator may es-
tablish modified business activity tar-
gets for program participants that 
have participated in the program for a 
period of longer than four years on 
the date of the enactment of this Act. 
‘‘(II) Require the program participant 
to certify that it has met its business activ-
251
ity targets or that it is in compliance with 
such remedial measures as may have been 
ordered pursuant to regulations issued 
under subclause (III) prior to the receipt 
of any contract awarded pursuant to this 
subsection. 
‘‘(III) Authorize the Administrator 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 this section. 
‘‘(aa) Such remedial actions may 
include assisting the program partici-
pant to expand the dollar volume of 
its competitive business activity or 
limiting the dollar volume of contracts 
awarded to the program participant 
pursuant to this subsection. 
‘‘(bb) Unless the remedial meas-
ures taken pursuant to subclause (aa) 
bar the award of contracts to program 
participants, no remedial measures
252
shall be reviewable pursuant to para-
graph (10). 
‘‘(H) ELIGIBILITY REVIEW.—(i) The Ad-
ministrator shall conduct an evaluation of a 
program participant’s eligibility for continued 
participation in the program whenever it re-
ceives specific and credible information alleging 
that such program participant no longer meets 
the requirements for program eligibility. 
‘‘(ii) Upon making a finding that a pro-
gram participant is no longer eligible, the Ad-
ministrator shall initiate a termination pro-
ceeding in accordance with subparagraphs (D) 
and (E). 
‘‘(iii) A program participant’s eligibility for 
award of any contract under the authority of 
this section may be suspended pursuant to sub-
part 9.4 of title 48, Code of Federal Regula-
tions (or any successor regulation). 
‘‘(22) CERTIFICATION AND REVIEW BY ADMIN-
ISTRATOR.—
‘‘(A) ASSISTANT ADMINISTRATOR COORDI-
NATION.—The Assistant Administrator for Mi-
nority Small Business and Capital Ownership 
Development shall be responsible for coordi-
253
nating and formulating policies relating to Fed-
eral assistance to small business concerns eligi-
ble for assistance under section 7(i) of this Act 
and program participants. 
‘‘(B) DIVISION
OF
PROGRAM
CERTIFI-
CATION AND ELIGIBILITY.—(i) There is estab-
lished a Division of Program Certification and 
Eligibility (hereinafter referred to in this para-
graph as the ‘Division’) in the Office of Minor-
ity Small Business and Capital Ownership De-
velopment. The Division shall be headed by a 
Director who shall report directly to the Assist-
ant Administrator for Minority Small Business 
and Capital Ownership Development. The Divi-
sion shall establish field offices within such re-
gional offices of the Administration as may be 
necessary to perform efficiently its functions 
and responsibilities. 
‘‘(ii) Subject to the provisions of paragraph 
(5)(B), the functions and responsibility of the 
Division of Program Certification and Eligi-
bility are to—
‘‘(I) receive, review and evaluate ap-
plications for certification pursuant to 
paragraphs (5), (6), and (7);
254
‘‘(II) advise each program applicant 
within 15 days after the receipt of an ap-
plication as to whether such application is 
complete and suitable for evaluation and, if 
not, what matters must be rectified; 
‘‘(III) render recommendations on 
such applications to the Assistant Adminis-
trator for Minority Small Business and 
Capital Ownership Development; 
‘‘(IV) review and evaluate financial 
statements and other submissions from 
concerns participating in the program es-
tablished by this subsection to ascertain 
continued eligibility to receive subcontracts 
pursuant to this section; 
‘‘(V) make a request for the initiation 
of termination or graduation proceedings, 
as appropriate, to the Assistant Adminis-
trator for Minority Small Business and 
Capital Ownership Development; 
‘‘(VI) make recommendations to the 
Assistant Administrator for Minority Small 
Business and Capital Ownership Develop-
ment concerning protests from applicants 
that have been denied program admission;
255
‘‘(VII) decide protests regarding the 
status of a concern as a disadvantaged 
concern for purposes of any program or ac-
tivity conducted under the authority of 
subsection (d), or any other provision of 
Federal law that references such sub-
section for a definition of program eligi-
bility; and 
‘‘(VIII) implement such policy direc-
tives as may be issued by the Assistant 
Administrator for Minority Small Business 
and Capital Ownership Development pur-
suant to subparagraph (E) regarding, 
among other things, the geographic dis-
tribution of concerns to be admitted to the 
program and the industrial make-up of 
such concerns. 
‘‘(C) PROGRAM ADMISSION AND CONTRACT 
OPPORTUNITIES.—An applicant shall not be de-
nied admission into the program established by 
this subsection due solely to a determination by 
the Division of Program Certification and Eligi-
bility that specific contract opportunities are 
unavailable to assist in the development of such 
concern unless—
256
‘‘(i) the Government has not pre-
viously procured and is unlikely to procure 
the types of products or services offered by 
the concern on a prime contract basis; 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. 
‘‘(D) CERTIFICATION
DECISION.—Except 
as provided in paragraph 5(B), not later than 
90 days after receipt of a completed application 
for program certification, the Assistant Admin-
istrator for Minority Small Business and Cap-
ital Ownership Development shall certify a 
small business concern as a program partici-
pant or shall deny such application. 
‘‘(E) DIVISION REVIEW.—
‘‘(i) Thirty days before the conclusion 
of each fiscal year, the Director of the Di-
vision of Program Certification and Eligi-
bility shall review all concerns that have 
been admitted into the program during the 
preceding 12-month period.
257
‘‘(ii) The review shall ascertain the 
number of entrants, their geographic dis-
tribution, and their industrial classifica-
tion. The Director shall also estimate the 
expected growth of the program during the 
next fiscal year and the number of addi-
tional Business Opportunity Specialists, if 
any, that will be needed to meet the antici-
pated demand for the program. 
‘‘(iii) The findings and conclusions of 
the Director shall be reported to the As-
sistant Administrator for Minority Small 
Business and Capital Ownership Develop-
ment by September 30 of each year. 
‘‘(iv) Based on such report and such 
additional data as may be relevant, the As-
sistant Administrator shall, by October 31 
of each year, issue rules as that term is de-
fined in section 551(4) of title 5, United 
States Code, applicable to such fiscal year 
that—
‘‘(I) establish priorities for the 
solicitation of program applications 
from underrepresented regions and in-
dustry categories;
258
‘‘(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 pro-
gram participants as may be nec-
essary to achieve an equitable geo-
graphic distribution of concerns and a 
distribution of concerns across all in-
dustry categories in proportions need-
ed to increase significantly contract 
awards to small business concerns 
owned and controlled by socially and 
economically disadvantaged individ-
uals. When considering such increase 
the Administrator shall give due con-
sideration to those industrial cat-
egories where Federal purchases have 
been substantial but where the partici-
pation rate of such concerns has been 
limited. 
‘‘(23) STAGES OF PROGRAM PARTICIPATION.—
‘‘(A) IN GENERAL.—The Capital ownership 
Development Program established by this sub-
259
section shall have a developmental stage and 
transitional stage. 
‘‘(B) DEVELOPMENTAL
STAGE.—The de-
velopmental stage of program participation 
shall be designed to assist the concern in its ef-
fort 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. 
‘‘(C) TRANSITIONAL STAGE.—The transi-
tional stage of program participation shall be 
designed to overcome, insofar as practicable, 
the remaining elements of economic disadvan-
tage and to prepare such concern for gradua-
tion from the program. 
‘‘(24) TYPES
OF
ASSISTANCE
PROVIDED
BY 
THE
ADMINISTRATOR.—The Administrator shall 
make available during the developmental and transi-
tional stages the following assistance: 
‘‘(A) Contract support pursuant to this 
section. 
‘‘(B) Financial assistance pursuant to sec-
tion 7(a)(20).
‘‘(C) A maximum of two exemptions from 
the requirements of section 1(a) of the Walsh-
260
Healey Act, which exemptions shall apply only 
to contracts awarded pursuant to this section 
and shall only be used to allow for contingent 
agreements by a small business concern to ac-
quire the machinery, equipment, facilities, or 
labor needed to perform such contracts. No ex-
emption shall be made pursuant to this sub-
paragraph if the contract to which it pertains 
has 
an 
anticipated 
value 
in 
excess 
of 
$10,000,000. 
‘‘(D)(i) Financial assistance whereby the 
Administrator may purchase in whole or in 
part, and on behalf of such concerns, skills 
training or upgrading for employees or potential 
employees of such concerns. 
‘‘(ii) For purposes of this subparagraph 
the term ‘training provider’ shall mean an insti-
tution of higher education, a community or vo-
cational college, or an institution eligible to pro-
vide skills training or upgrading under the Job 
Training Partnership Act or title I of the Work-
force Investment Act of 1998. 
‘‘(iii) Assistance may be made by direct 
payment to the training provider or by reim-
bursing the program participant or the partici-
261
pant’s employee, if such reimbursement is 
found to be reasonable and appropriate. 
‘‘(iv) The Administrator shall, in consulta-
tion with the Secretary of Labor, promulgate 
rules and regulations to implement this sub-
paragraph that establish acceptable training 
and upgrading performance standards and pro-
vide for such monitoring or audit requirements 
as may be necessary to ensure the integrity of 
the training effort. 
‘‘(v) No financial assistance shall be grant-
ed under this subparagraph unless the Adminis-
trator determines each of the following: 
‘‘(I) The program participant has doc-
umented that it has first explored the use 
of existing cost-free or cost-subsidized 
training programs offered by public and 
private sector agencies working with pro-
grams of employment and training and 
economic development. 
‘‘(II) No more than 5 employees or 
potential employees of the program partici-
pant are recipients of any benefits under 
this subparagraph at any one time.
262
‘‘(III) No more than $2,500 shall be 
made available for any one employee or po-
tential employee. 
‘‘(IV) The length of training or up-
grading financed by this subparagraph 
shall be no less than 1 month nor more 
than 6 months. 
‘‘(V) The program participant has 
given adequate assurance it will employ the 
trainee or upgraded employee for at least 
6 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 con-
cern for such period. 
‘‘(aa) If such concern, trainee, or 
upgraded 
employee 
breaches 
this 
agreement, the Administrator shall be 
entitled to obtain from the violating 
party the repayment of all funds ex-
pended on behalf of the violating 
party. 
‘‘(bb) Such repayment shall be 
made to the Administrator together
263
with such interest and costs of collec-
tion as may be reasonable. 
‘‘(cc) The violating party shall be 
barred from receiving any further as-
sistance under this subparagraph. 
‘‘(VI) The training to be financed may 
take place either at such concern’s facili-
ties or at those of the training provider. 
‘‘(VII) The program participant will 
maintain such records as the Adminis-
trator deems appropriate to ensure that 
the provisions of this paragraph and any 
other applicable law have not been violated. 
‘‘(E)(i) The transfer of technology or sur-
plus property owned by the United States to 
such a concern. 
‘‘(ii) Activities designed to effect such 
transfer shall be developed in cooperation with 
the heads of Federal 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 program partici-
pants on a priority basis. 
‘‘(iii) Technology or property transferred 
under this subparagraph shall be used by the
264
concern during the normal conduct of its busi-
ness operation and shall not be sold or trans-
ferred to any other party (other than the Gov-
ernment) during such concern’s term of partici-
pation in the program and for one year there-
after. 
‘‘(F) Training assistance whereby the Ad-
ministrator shall conduct training sessions to 
assist individuals and enterprises eligible to re-
ceive contracts under this section in the devel-
opment of business principles and strategies to 
enhance their ability to successfully compete for 
contracts in the marketplace. 
‘‘(G) Joint ventures, leader-follow arrange-
ments, and teaming agreements between the 
program participant and other program partici-
pants and other small business concerns with 
respect to contracting opportunities. Such ac-
tivities shall be undertaken on the basis of pro-
grams developed by the procuring agency with 
the assistance of the Administration. 
‘‘(H) Transitional management business 
planning training and technical assistance. 
‘‘(25) TRANSITIONAL
STAGE
ASSISTANCE.—
Program participants in the developmental stage of
265
program participation shall be eligible for the assist-
ance provided by subparagraphs (A), (B), (C), (D), 
(E), (F), and (G) of paragraph (24). 
‘‘(26) DEVELOPMENTAL STAGE ASSISTANCE.—
Program Participants in the transitional stage of 
Program participation shall be eligible for the assist-
ance provided by subparagraphs (A), (B), (F), (G), 
and (H) of paragraph (24). 
‘‘(27) DURATION OF STAGES.—Subject to the 
provisions of paragraph (21)(A), a program partici-
pant may receive developmental assistance under 
this subsection and contracts under this subsection 
for a total period of not longer than 9 years, meas-
ured from the date of its certification under this 
subsection, of which—
‘‘(A) no more than 5 years may be spent 
in the developmental stage of program partici-
pation; and 
‘‘(B) no more than 4 years may be spent 
in the transitional stage of program participa-
tion. 
‘‘(28) DATA COLLECTION.—
‘‘(A) IN
GENERAL.—The Administrator 
shall develop and implement a process for the 
systematic collection of data on the operations
266
of the program established pursuant to this sec-
tion. 
‘‘(B) REPORT.—Not later than April 30 of 
each year, the Administrator shall submit a re-
port to the Committee on Small Business and 
Entrepreneurship of the Senate and the Com-
mittee on Small Business of the House of Rep-
resentatives on the program that shall include 
the following: 
‘‘(i) A description and estimate of the 
benefits and costs that have accrued to the 
economy and the Government in the imme-
diately preceding fiscal year due to the op-
erations of those business concerns that 
were performing contracts awarded pursu-
ant to this section. 
‘‘(ii) A compilation and evaluation of 
those business concerns that have exited 
the program during the immediately pre-
ceding three fiscal years. Such compilation 
and evaluation shall detail the number of 
concerns actively engaged in business oper-
ations, those that have ceased or substan-
tially curtailed such operations, including 
the reasons for such actions, and those
267
concerns that have been acquired by other 
firms or organizations owned and con-
trolled by other than socially and economi-
cally disadvantaged individuals. 
‘‘(iii) For those businesses that have 
continued operations after they exited from 
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 identifying, by State and by region, 
for each firm: the name of the concern, the 
race or ethnicity, and gender of the dis-
advantaged owners, the dollar value of all 
contracts received in the preceding year, 
the dollar amount of advance payments re-
ceived by each concern pursuant to con-
tracts awarded under this section, and a 
description including (if appropriate) an 
estimate of the dollar value of all benefits 
received pursuant to paragraphs (25) and
268
(26) and section 7(a)(20) during such 
year. 
‘‘(v) The total dollar value of con-
tracts and options awarded during the pre-
ceding fiscal year pursuant to this section 
and such amount expressed as a percent-
age of total sales of—
‘‘(I) all firms participating in the 
program during such year; and 
‘‘(II) firms in each of the nine 
years of program participation. 
‘‘(vi) A description of such additional 
resources or program authorities as may 
be required to provide the types of services 
needed over the next 2-year period to serv-
ice the expected portfolio of firms certified 
pursuant to this section. 
‘‘(vii) The total dollar value of con-
tracts and options awarded pursuant to 
this section, at such dollar increments as 
the Administrator deems appropriate, for 
each 6 digit North American Industrial 
Classification System code under which 
such contracts and options were classified. 
‘‘(b) MANAGEMENT AND TECHNICAL ASSISTANCE.—
269
‘‘(1) CONTRACTS FOR ASSISTANCE.—The Ad-
ministrator shall be required to enter into contracts 
with business concerns, not-for-profit entities, and 
other persons capable of providing management and 
technical assistance, as may be necessary, to partici-
pants in the program established in section 8(a) and 
to small business concerns which have loans guaran-
teed pursuant to section 7(i). 
‘‘(2) SELECTION OF CONTRACTORS.—The Ad-
ministrator shall select contractors based on the ex-
perience in advising small business concerns on fi-
nancial and business operations, including but not 
limited to comprehensive business plans, and other 
functions needed to preserve and expand small busi-
nesses eligible for assistance under paragraph (1). 
To the extent practical, the Administrator shall se-
lect, as contractors, small business concerns but the 
primary evaluation criteria shall be the technical 
ability of the contractor to provide the services set 
forth in this subsection. 
‘‘(3) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to carry out 
this subsection $6,000,000 for each of fiscal years 
2004 and 2005. Such sums shall remain available 
until expended.
270
‘‘(c) COORDINATION WITH OTHER AGENCIES.—The 
Administrator shall take such steps as may be necessary 
and appropriate, in coordination and cooperation with the 
heads of Federal agencies to insure that contracts, sub-
contracts, and deposits made by the Federal Government 
or with programs aided with Federal funds are placed in 
such way as to further the purposes of subsection (a) of 
this section and section 7(i).’’. 
(b) COMMERCIAL MARKETING.—Section 8(d)(10) of 
the Small Business Act (15 U.S.C. 637(d)(10)) is amend-
ed to read as follows: 
‘‘(10) In the case of contracts within the provi-
sions of paragraphs (4), (5), and (6), the Adminis-
trator is authorized to—
‘‘(A) assign at least one commercial mar-
keting representative per state whose primary 
responsibilities shall be to—
‘‘(i) assist Federal agencies and busi-
nesses in complying with their responsibil-
ities under the provisions of this sub-
section, including the formulation of sub-
contracting plans pursuant to paragraph 
(4); 
‘‘(ii) review any solicitation for any 
contract to be let pursuant to paragraphs
271
(4) and (5) to determine the maximum 
practicable opportunity for small business 
concerns, small manufacturers, small busi-
ness concerns owned and controlled by vet-
erans, small business concerns owned and 
controlled by service-disabled veterans, 
qualified HUBZone small business con-
cerns, small business concerns owned and 
controlled by socially and economically dis-
advantaged individuals, small business eli-
gible for participation under section 8(a), 
and small business concerns owned and 
controlled by women to participate as sub-
contractors in the performance of any con-
tract resulting from any solicitation, and to 
submit its findings, which shall be advisory 
in nature, to the appropriate Federal agen-
cy; 
‘‘(iii) evaluate compliance with sub-
contracting plans, either on a contract-by-
contract basis, or in the case of contractors 
having multiple contracts, on an aggregate 
basis including recommendations to the 
contracting officer for an assessment of 
liquidated damages;
272
‘‘(iv) work directly with small busi-
nesses to counsel them on marketing and 
subcontracting to large business prime con-
tractors that have contracts with the Fed-
eral Government; 
‘‘(v) identify large business buyers of 
small business products and services; 
‘‘(vi) assist small businesses in receiv-
ing timely payment from large business 
prime contractors that have contracts with 
the Federal Government; and 
‘‘(vii) perform program reviews of the 
small business outreach programs and sub-
contracting programs of large businesses. 
‘‘(B) Not later than September 30, 2004, 
each state shall be assigned at least one com-
mercial marketing representative, authorized by 
paragraph 10(A) of this section, who must be 
physically located in each state. 
‘‘(C) Not later than 120 days after enact-
ment of this Act, the Administrator shall, after 
the opportunity for notice and comment, pro-
mulgate regulations governing the Administra-
tor’s review of subcontracting plans including
273
the standards for determining good faith effort 
of compliance with the subcontracting plans.’’. 
(c) WOMEN-OWNED SMALL BUSINESS CONCERNS; 
AUTHORITIES OF ADMINISTRATOR.—Subsections (m) and 
(n) of section 8 of the Small Business Act (15 U.S.C. 637 
(m) and (n)) are amended to read as follows: 
‘‘(m) PROCUREMENT PROGRAM FOR WOMEN-OWNED 
SMALL BUSINESS CONCERNS.—
‘‘(1) DEFINITIONS.—In this subsection, the fol-
lowing definitions apply: 
‘‘(A) SMALL BUSINESS CONCERN OWNED 
AND
CONTROLLED
BY
WOMEN.—The term 
‘small business concern owned and controlled by 
women’ has the meaning given such term in 
section 3(n), except that ownership shall be de-
termined without regard to any community 
property law. 
‘‘(2) AUTHORITY TO RESTRICT COMPETITION.—
In accordance with this subsection, a contracting of-
ficer may restrict competition for any contract for 
the procurement of goods or services by the Federal 
Government to small business concerns owned and 
controlled by women, if—
‘‘(A) each of the concerns is not less than 
51 percent owned by 1 or more women who are
274
economically disadvantaged (and such owner-
ship is determined without regard to any com-
munity property law); 
‘‘(B) the contracting officer has a reason-
able expectation that 2 or more small business 
concerns owned and controlled by women will 
submit offers for the contract; 
‘‘(C) the contract is for the procurement of 
goods or services with respect to an industry 
identified by the Administrator pursuant to 
paragraph (4); 
‘‘(D) the anticipated award price of the 
contract (including options) does not exceed—
‘‘(i) $5,000,000, in the case of a con-
tract assigned an industrial classification 
code for manufacturing; or 
‘‘(ii) $3,000,000, in the case of all 
other contracts; 
‘‘(E) in the estimation of the contracting 
officer, the contract award can be made at a 
fair and reasonable price; and 
‘‘(F) each of the concerns—
‘‘(i) is certified by a Federal agency 
or a State government as a small business 
concern owned and controlled by women;
275
‘‘(ii) is certified by a national certi-
fying entity approved by the Administrator 
as a small business concern owned and 
controlled by women; or 
‘‘(iii) certifies to the contracting offi-
cer that it is a small business concern 
owned and controlled by women and pro-
vides adequate documentation in accord-
ance with standards established by the Ad-
ministration to support such certification. 
‘‘(3) WAIVER.—With respect to a small busi-
ness concern owned and controlled by women, the 
Administrator may waive subparagraph (2)(A) if the 
Administrator determines that the concern is in an 
industry in which small business concerns owned 
and controlled by women are substantially underrep-
resented. 
‘‘(4) IDENTIFICATION OF INDUSTRIES.—
‘‘(A) IN
GENERAL.—The Administrator 
shall conduct a study to identify industries in 
which small business concerns owned and con-
trolled by women are underrepresented with re-
spect to Federal procurement contracting. 
‘‘(B) DETERMINATION
BY
CONTRACTING 
OFFICER.—Until such time as the Adminis-
276
trator conducts such study, the determination 
as to whether an industry is under-represented 
by small business concerns owned and con-
trolled by women shall be made by the con-
tracting officer. 
‘‘(C) DEADLINE.—Not later than 90 days 
after the date of the enactment of this subpara-
graph the Administrator shall—
‘‘(i) ensure the completion of the 
study described in this paragraph; 
‘‘(ii) approve national certifying enti-
ties 
for 
the 
purposes 
of 
paragraph 
(2)(F)(ii); and 
‘‘(iii) make determinations in accord-
ance with paragraph (3). 
‘‘(5) ENFORCEMENT; PENALTIES.—
‘‘(A) VERIFICATION
OF
ELIGIBILITY.—In 
carrying out this subsection, the Administrator 
shall use existing procedures established by the 
Office of Hearings and Appeals relating to—
‘‘(i) the filing, investigation, and dis-
position by the Administration of any chal-
lenge to the eligibility of a small business 
concern to receive assistance under this 
subsection (including a challenge, filed by
277
an interested party, relating to the veracity 
of a certification made or information pro-
vided to the Administration by a small 
business concern under paragraph (2)(F)); 
and 
‘‘(ii) verification by the Administrator 
of the accuracy of any certification made 
or information provided to the Administra-
tion by a small business concern under 
paragraph (2)(F). 
‘‘(B) EXAMINATIONS.—The procedures es-
tablished under subparagraph (A) may provide 
for program examinations (including random 
program examinations) by the Administrator of 
any small business concern making a certifi-
cation or providing information to the Adminis-
trator under paragraph (2)(F). 
‘‘(C) PENALTIES.—In addition to the pen-
alties described in section 16(d), any small busi-
ness concern that is determined by the Admin-
istrator to have misrepresented the status of 
that concern as a small business concern owned 
and controlled by women for purposes of this 
subsection, shall be subject to—
278
‘‘(i) section 1001 of title 18, United 
States Code; and 
‘‘(ii) sections 3729 through 3733 of 
title 31, United States Code. 
‘‘(6) PROVISION OF DATA.—Upon the request 
of the Administrator, the head of any Federal de-
partment or agency shall promptly provide to the 
Administrator such information as the Adminis-
trator determines to be necessary to carry out this 
subsection. 
‘‘(n) AUTHORITIES
OF ADMINISTRATOR.—In car-
rying out its functions under subsections 7(i), 8(a), and 
8(b) of this Act the Administrator may do the following: 
‘‘(1) Utilize, with their consent, the services and 
facilities of Federal agencies without reimbursement, 
and, with the consent of any State or political sub-
division of a State, accept and utilize the services 
and facilities of such State or subdivision without re-
imbursement. 
‘‘(2) Accept voluntary and uncompensated serv-
ices, notwithstanding section 1342 of title 31, 
United States Code. 
‘‘(3) Employ experts and consultants or organi-
zations thereof as authorized by section 3109 of title 
5, United States Code. No individual may be em-
279
ployed under the authority of this paragraph for 
more than 100 days in any fiscal year. No individual 
employed under this paragraph may be compensated 
at rates in excess of the daily equivalent of the high-
est rate payable under section 5332 of title 5, 
United States Code, including traveltime. Individuals 
employed under this paragraph may be allowed, 
while away from their homes or regular places of 
business, travel expenses (including per diem in lieu 
of subsistence) as authorized by section 5703 of title 
5, United States Code for persons in the Govern-
ment service employed intermittently. Contracts for 
employment under this paragraph may be renewed 
annually.’’. 
(d) CLERICAL AMENDMENT.—Section 8 of the Small 
Business Act (15 U.S.C. 637) is amended by inserting the 
following section heading: 
‘‘SEC. 8. GOVERNMENT CONTRACT AND BUSINESS DEVEL-
OPMENT ASSISTANCE FOR SMALL BUSINESS 
CONCERNS, ETC.’’. 
SEC. 209. TRAINING AND ASSISTANCE. 
Section 12 of the Small Business Act (15 U.S.C. 641) 
is amended to read as follows:
280
‘‘SEC. 12. TRAINING AND ASSISTANCE. 
‘‘(a) 
ASSISTANCE.—The 
Administrator 
shall 
(through co-sponsorships, small business development cen-
ters, women’s business centers, the Office of Veterans Af-
fairs, and other programs as the Administrator determines 
appropriate) provide technical and managerial assistance, 
advice and guidance on matters of government procure-
ment (at the Federal, State, and local levels) and informa-
tion on the policies, practices, and principles of good man-
agement, and, when appropriate, distribute publications 
and other material on Administration programs to small 
business concerns, including all categories of such con-
cerns defined in section 3 of this Act. 
‘‘(b) VOLUNTEERS.—
‘‘(1) The Administrator shall recruit executive 
volunteers to assist the Administrator in carrying 
out this section. 
‘‘(2) The Administrator shall recruit retired 
and active executives to form the Service Corps of 
Retired Executives and the Active Corps of Execu-
tives. Such executives will be responsible for pro-
viding technical and managerial assistance and ad-
vice to small business concerns. 
‘‘(3) The Administrator shall recruit retired 
and active executives from large and small manufac-
turers to form the Service Corps of Retired Manu-
281
facturing Executives and the Active Corps of Manu-
facturing Executives. Such executives will advise, as-
sist, and train small manufacturers. 
‘‘(4) The Administrator may enter into appro-
priate contracts, grants, or cooperative agreements 
with the volunteers or corps referred to in this sub-
section in order to provide the services set forth in 
this section. 
‘‘(5) The Administrator may maintain the head-
quarters of the corps referred to in this subsection 
and assign, at his discretion, Administration per-
sonnel to assist the volunteers. 
‘‘(6) The volunteers may solicit cash, other per-
sonal property, and in-kind contributions from the 
private sector to be used to carry out their functions 
under this section. The volunteers may use payments 
from the Administrator made pursuant to this sub-
section to assist in such solicitations. 
‘‘(7) The Administrator may permit any indi-
vidual or group of persons participating in the pro-
grams established pursuant to this subsection to use 
any facilities of the Administration, including re-
gional and district offices, as well as clerical and 
computer services.
282
‘‘(8) The volunteers, while carrying out the pur-
poses of this section, shall be deemed Federal em-
ployees for the purposes of the Federal tort claims 
provisions in title 28, United States Code; and for 
the purposes of subchapter I of chapter 81 of title 
5, United States Code (relative to compensation to 
Federal employees for work injuries) shall be 
deemed civil employees of the United States within 
the meaning of the term ‘employee’ as defined in 
section 8101 of title 5, United States Code, and the 
provisions of that subchapter shall apply except that 
in computing compensation benefits for disability or 
death, the monthly pay of a volunteer shall be 
deemed that received under the entrance salary for 
a grade GS–11 employee. 
‘‘(9) The Administrator may reimburse the vol-
unteers for all necessary out-of-pocket expenses inci-
dent to their provision of services under this section, 
or in connection with attendance at meetings spon-
sored by the Administrator, or for the cost of mal-
practice insurance, as the Administrator shall deter-
mine, in accordance with regulations which he or she 
shall prescribe, and, while they are carrying out such 
activities away from their homes or regular places of 
business, for travel expenses (including per diem in
283
lieu of subsistence) as authorized by section 5703 of 
title 5, United States Code, for individuals serving 
without pay. 
‘‘(10) None of the services made available by 
volunteers pursuant to this subsection shall be made 
available to any person or small business concern 
who is delinquent on a loan made pursuant to sec-
tion 7 of this Act or Title V of the Small Business 
Investment Act of 1958 unless such assistance re-
lates solely to addressing the matter of the delin-
quency and a specific request is made in writing to 
the volunteer (and a record of such communication 
is maintained by the volunteer). 
‘‘(11) No payment for supportive services or re-
imbursement of out-of-pocket expenses made to per-
sons serving pursuant to this subsection shall be 
subject to any tax or charge or be treated as wages 
or compensation for the purposes of unemployment, 
disability, retirement, public assistance, or similar 
benefit payments, or minimum wage laws. 
‘‘(12) Under regulations which the Adminis-
trator shall prescribe, counsel may be employed and 
counsel fees, court costs, bail, and other expenses in-
cidental to the defense of volunteers may be paid in 
judicial or administrative proceedings arising directly
284
out of the performance of activities pursuant to this 
subsection to which volunteers have been made par-
ties. 
‘‘(c) SMALL BUSINESS INSTITUTES.—In carrying out 
its functions under this section, the Administrator may 
make grants (including contracts or cooperative agree-
ments) to any public or private institution of higher edu-
cation for the establishment and operation of a small busi-
ness institute, which shall be used to provide business 
counseling and assistance to small business concerns 
through the activities of students enrolled at the institu-
tion, which students shall be entitled to receive educational 
credits for their activities. To the extent practicable, the 
Administrator shall select applicants that demonstrate the 
best capability of serving small manufacturers. 
‘‘(d) BUSINESS GRANTS AND COOPERATIVE AGREE-
MENTS.—
‘‘(1) IN
GENERAL.—In accordance with this 
subsection, the Administrator may make grants to 
and enter into cooperative agreements with any coa-
lition of private entities, public entities, or any com-
bination of private and public entities—
‘‘(A) to expand business-to-business rela-
tionships between large and small businesses 
by—
285
‘‘(i) identifying opportunities for small 
business concerns located in areas of high 
unemployment or low income; 
‘‘(ii) assisting small business concerns 
and small manufacturers in finding oppor-
tunities to supply goods and services to 
other businesses, particularly large busi-
nesses that have previously obtained such 
goods and services from businesses located 
outside of the United States; and 
‘‘(iii) providing such other assistance 
as the Administrator may identify; 
‘‘(B) to maintain a database, to the extent 
practicable, of supply chain management oppor-
tunities for small business concerns and small 
manufacturers; 
‘‘(C) to provide businesses, directly or indi-
rectly, with online information and a database 
of companies that are interested in mentor-pro-
tege programs or community-based, statewide, 
or local business development programs; and 
‘‘(D) by providing businesses with informa-
tion on the best practices used by other busi-
ness concerns in establishing mentor-protege or 
other business development programs.
286
‘‘(2) MATCHING REQUIREMENT.—The Adminis-
trator may make a grant to a coalition under para-
graph (1) only if the coalition provides for activities 
described in paragraph (1) an amount, either in 
kind or in cash, equal to the grant amount. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section, the term ‘supply chain’ means a network of 
facilities and distribution options that performs the 
functions of procurement of materials, trans-
formation of these materials into intermediate and 
furnished products, and distribution of the finished 
products to customers. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There is authorized to be appropriated to carry out 
this subsection $10,000,000, to remain available 
until expended, for each of fiscal years 2004 through 
2005.’’.
SEC. 210. CONTRACTING ASSISTANCE; ETC. 
(a) CERTAIN
DISAGREEMENTS
SUBMITTED
TO 
OMB.—Section 15(a) of the Small Business Act (15 
U.S.C. 644(a)) is amended by striking the sentence begin-
ning ‘‘Whenever the Administrator and the contracting 
procurement agency fail to agree,’’ and inserting the fol-
lowing: ‘‘Whenever the Administration and the contracting 
procurement agency fail to agree, the Administrator shall
287
submit the matter to the Director of the Office of Manage-
ment and Budget, who shall render his decision regarding 
the matter not later than 10 days after receiving the mat-
ter. The Director may not delegate his duties under the 
preceding sentence except to a subordinate official within 
the Office of Management and Budget appointed by the 
President, by and with the advice and consent of the Sen-
ate.’’. 
(b) PROGRAMS FOR BLIND AND HANDICAPPED INDI-
VIDUALS.—Section 15(c) of the Small Business Act (15 
U.S.C. 644(c)) is amended to read as follows: 
‘‘(c) PROGRAMS FOR BLIND AND HANDICAPPED IN-
DIVIDUALS.—
‘‘(1) As used in this subsection: 
‘‘(A) The term ‘Committee’ means the 
Committee for Purchase From People Who Are 
Blind or Severely Disabled established under 
the first section of the Act entitled ‘An Act to 
create a Committee on Purchases of Blind-
made Products, and for other purposes’, ap-
proved June 25, 1938 (41 U.S.C. 46). 
‘‘(B) The term ‘public or private organiza-
tion for the disabled’ means any organization—
‘‘(i) which is organized under the laws 
of the United States or of any State, oper-
288
ated in the interest of disabled individuals, 
the net income of which does not inure in 
whole or in part to the benefit of any 
shareholder or other individual; 
‘‘(ii) which complies with any applica-
ble occupational health and safety pre-
scribed by the Secretary of Labor; and 
‘‘(iii) which in the production of com-
modities and in the provision of services 
during any fiscal year employs disabled in-
dividuals for not less than 75 percent of 
the man-hours required for the production 
or provision of the commodities or services. 
‘‘(C) The term ‘disabled person’ means any 
individual who—
‘‘(i) is a service-disabled veteran; or 
‘‘(ii) has a disability (as defined in 
section 3 of the Americans with Disabil-
ities Act of 1990) which limits such indi-
vidual’s selection of any type of employ-
ment for which such individual would oth-
erwise be qualified or qualifiable. 
‘‘(2) The Administrator shall evaluate the 
placement of products on the procurement list main-
tained by the Committee pursuant to section 2 of
289
the Act entitled ‘An Act to create a Committee on 
Purchases of Blind made Products, and for other 
purposes’, approved June 25, 1938 (41 U.S.C. 47) 
to determine the impact of such placement on for-
profit small business concerns. 
‘‘(3) The Administrator shall monitor and 
evaluate the participation of public or private organi-
zations for the disabled in Federal procurement con-
tracts and shall annually report the results of such 
monitoring and evaluation to the Committee on 
Small Business of the House of Representatives and 
the Committee on Small Business and Entrepre-
neurship of the Senate not later than March 31st of 
each year. This report shall include the impact of 
such participation on for-profit small business con-
cerns. 
‘‘(4)(A) Not later than 10 days after the an-
nouncement of a proposed award of a contract by an 
agency or department to a public or private organi-
zation for the disabled, a for-profit small business 
concern that has experienced or is likely to experi-
ence severe economic injury as the result of the pro-
posed award may file an appeal of the proposed 
award with the Administrator.
290
‘‘(B) If such a concern files an appeal of a pro-
posed award under subparagraph (A) and the Ad-
ministrator, after consultation with the Executive 
Director of the Committee, finds that the concern 
has experienced or is likely to experience severe eco-
nomic injury as the result of the proposed award, 
not later than 30 days after the filing of the appeal, 
the Administrator shall require each agency and de-
partment having procurement powers to take such 
action as may be appropriate to alleviate economic 
injury sustained or likely to be sustained by the con-
cern. 
‘‘(5) Each agency and department having pro-
curement powers shall report to the Office of Fed-
eral Procurement Policy each time a contract subject 
to paragraph (2)(A) is entered into, and shall in-
clude in its report the amount of the next highest 
bid submitted by a for-profit small business concern. 
The Office of Federal Procurement Policy shall col-
lect data reported under the preceding sentence 
through the Federal procurement data system and 
shall report to the Administrator who 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.
291
‘‘(6) For the purposes of this subsection, a con-
tract may be awarded only if at least 75 percent of 
the direct labor performed on each item being pro-
duced 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 disabled individuals. 
‘‘(7) Agencies awarding one or more contracts 
to such an organization pursuant to the provisions 
of this subsection may use multiyear contracts, if 
appropriate.’’. 
(c) MINIMUM SOLICITATION PERIOD.—Section 15(e) 
of the Small Business Act (15 U.S.C. 644(e)) is amended 
by adding at the end the following new paragraph: 
‘‘(5) MINIMUM SOLICITATION PERIOD.—In the 
case of a solicitation of offers for a bundled contract 
that is issued by the head of an agency, small busi-
ness concerns shall be allowed to submit offers for 
a period of not less than 60 days beginning on the 
date the solicitation is issued.’’. 
(d) PROCUREMENT GOALS.—Section 15(g) of the 
Small Business Act (15 U.S.C. 644(g)) is amended to read 
as follows: 
‘‘(g)(1) The President shall before the close of 
each fiscal year establish new Government-wide pro-
292
curement goals for the following fiscal year for pro-
curement contracts awarded to small business con-
cerns, small business concerns owned and controlled 
by service-disabled veterans, qualified HUBZone 
small business concerns, small business concerns 
owned and controlled by socially and economically 
disadvantaged individuals, and small business con-
cerns owned and controlled by women. The Presi-
dent shall not simply readopt the preceding years 
procurement goals. The Government-wide goal for 
participation by small business concerns shall be es-
tablished at not less than 23 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 
service-disabled veterans shall be established at not 
less than 3 percent of the total value of all prime 
contract and subcontract awards for each fiscal year. 
The Government-wide goal for participation by 
qualified HUBZone small business concerns shall be 
established at not less than 3 percent of the total 
value of all prime contract awards. The Government-
wide goal for participation by small business con-
cerns owned and controlled by socially and economi-
cally disadvantaged individuals shall be established
293
at not less than 5 percent of the total value of all 
prime contract awards and not less than 5 percent 
of the total value of all subcontract awards for each 
fiscal year. The Government-wide goal for participa-
tion by small business concerns owned and con-
trolled by women shall be established at not less 
than 5 percent of the total value of all prime con-
tract awards and not less than 5 percent of the total 
value of all subcontract awards for each fiscal year. 
Notwithstanding the Government-wide goal, each 
agency shall have an annual goal that presents, for 
that agency, the maximum practicable opportunity 
for small business concerns, small manufacturers, 
small business concerns owned and controlled by 
service-disabled veterans, qualified HUBZone small 
business concerns, small business concerns owned 
and controlled by socially and economically disadvan-
taged individuals, small business concerns partici-
pating in the program established by section 8(a) of 
this Act, and small business concerns owned and 
controlled by women to participate in the perform-
ance of contracts let by such agency. For the pur-
poses of the preceding sentence, each agency is pro-
hibited from counting towards its procurement goal 
for small business concerns owned and controlled by
294
socially and economically disadvantaged individuals 
any contract awarded to small business concerns 
participating in the program established pursuant to 
section 8(a) of this Act. The Administrator and the 
Administrator of the Office of Federal Procurement 
Policy shall, when exercising their authority pursu-
ant to paragraph (2), insure that the cumulative an-
nual prime contract goals for all agencies meet or 
exceed the annual Government-wide prime contract 
goal established by the President pursuant to this 
paragraph. 
‘‘(2) The head of each Federal agency shall, 
after consultation with the Administrator, establish 
goals for the participation by small business con-
cerns, small manufacturers, small business concerns 
owned and controlled by service-disabled veterans, 
qualified HUBZone small business concerns, small 
business concerns owned and controlled by socially 
and economically disadvantaged individuals, small 
business concerns participating in the program es-
tablished pursuant to section 8(a) of this Act, and 
small business concerns owned and controlled by 
women in procurement contracts of such agency hav-
ing a value of $25,000 or more. For the purposes 
of the preceding sentence, each agency is prohibited
295
from counting towards its procurement goal for 
small business concerns owned and controlled by so-
cially and economically disadvantaged individuals 
any contract awarded to small business concerns 
participating in the program established pursuant to 
section 8(a) of this Act. Goals established under this 
subsection shall be jointly established by the Admin-
istrator and the head of each Federal agency and 
shall realistically reflect the potential of small busi-
ness concerns, small manufacturers, small business 
concerns owned and controlled by service-disabled 
veterans, qualified HUBZone small business con-
cerns, small business concerns owned and controlled 
by socially and economically disadvantaged individ-
uals, small business concerns participating in the 
program established pursuant to section 8(a) of this 
Act, and small business concerns owned and con-
trolled by women to perform subcontracts under 
such contracts. For the purposes of the preceding 
sentence, each agency is prohibited from counting 
towards its procurement goal for small business con-
cerns owned and controlled by socially and economi-
cally disadvantaged individuals any contract awarded 
to small business concerns participating in the pro-
gram established pursuant to section 8(a) of this
296
Act. Whenever the Administrator 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 con-
cerns from each industry category in procurement 
contracts of the agency, including participation by 
small business concerns owned and controlled by 
service-disabled veterans, qualified HUBZone small 
business concerns, small business concerns owned 
and controlled by socially and economically disadvan-
taged individuals, small business concerns partici-
pating in the program established pursuant to sec-
tion 8(a), small business concerns owned and con-
trolled by women, and small manufacturers. For the 
purposes of the preceding sentence, each agency is 
prohibited from counting towards its procurement 
goal for small business concerns owned and con-
trolled by socially and economically disadvantaged 
individuals any contract awarded to small business 
concerns participating in the program established 
pursuant to section 8(a) of this Act. The head of
297
each Federal agency, in attempting to attain such 
participation, shall consider—
‘‘(A) contracts awarded as the result of 
unrestricted competition; and 
‘‘(B) contracts awarded after competition 
restricted to eligible small business concerns 
under this section and under the program es-
tablished under section 8(a).’’. 
(e) REPORTS.—Section 15(h) of the Small Business 
Act (15 U.S.C. 644(h)) is amended to read as follows: 
‘‘(h)(1) At the conclusion of each fiscal year, the head 
of each Federal agency shall report to the Administrator 
on the extent of participation by small business concerns, 
small manufacturers, small business concerns owned and 
controlled by veterans (including service-disabled vet-
erans), qualified HUBZone small business concerns, small 
business concerns owned and controlled by socially and 
economically disadvantaged individuals, small business 
concerns participating in the program established pursu-
ant to section 8(a) of this Act, and small business con-
cerns owned and controlled by women in procurement con-
tracts of such agency. Such reports shall contain appro-
priate justifications for failure to meet the goals estab-
lished under subsection (g) of this section. Additionally, 
such reports shall contain sufficient justification if goals
298
established for the most recent fiscal year end were estab-
lished lower than the same goals for the previous fiscal 
year. 
‘‘(2) The Administrator shall annually compile and 
analyze the reports submitted by the individual agencies 
pursuant to paragraph (1) and shall submit them to the 
President and the Congress. The Administrator’s submis-
sion to the President shall include the following: 
‘‘(A) The Government-wide goals for participa-
tion by small business concerns, small business con-
cerns owned and controlled by service-disabled vet-
erans, qualified HUBZone small business concerns, 
small business concerns owned and controlled by so-
cially and economically disadvantaged individuals, 
small business concerns participating in the program 
established pursuant to section 8(a) of this Act, and 
small business concerns owned and controlled by 
women and the performance in attaining such goals. 
‘‘(B) 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 individual agency 
goals and the actions planned by such agency (and 
approved by the Administrator) to achieve the goals 
in the succeeding fiscal year.
299
‘‘(D) The number and dollar value of prime 
contracts awarded to small business concerns, small 
manufacturers small business concerns owned and 
controlled by service-disabled veterans, qualified 
HUBZone small business concerns, small business 
concerns owned and controlled by socially and eco-
nomically disadvantaged individuals, small business 
concerns participating in the program established 
pursuant to section 8(a) of this Act and small busi-
ness concerns owned and controlled by women. For 
each agency and on a government-wide basis, num-
ber and dollar value of contracts issued through—
‘‘(i) noncompetitive negotiation, 
‘‘(ii) competition restricted to small busi-
ness concerns owned and controlled by socially 
and economically disadvantaged individuals 
‘‘(iii) competition restricted to small busi-
ness concerns participating in the program es-
tablished by section 8(a) of this Act, 
‘‘(iv) competition restricted to small busi-
ness concerns, and 
‘‘(v) unrestricted competitions. 
‘‘(E) The number and dollar value of sub-
contracts awarded to small business concerns, small 
manufacturers, small business concerns owned and
300
controlled by service-disabled veterans, qualified 
HUBZone small business concerns, small business 
concerns owned and controlled by socially and eco-
nomically disadvantaged individuals, small business 
concerns participating in the program established 
pursuant to section 8(a) of this Act, and small busi-
ness concerns owned and controlled by women. 
‘‘(3) The President shall include the information re-
quired by paragraph (2) in each annual report to the Con-
gress 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. 631b(a)). 
‘‘(4) For the purpose of this subsection, the term 
‘small disadvantaged business’ means any small business 
concern that is certified as a ‘small disadvantaged busi-
ness’ by the Administrator.’’. 
(f) RESTRICTED COMPETITION.—Section 15(j) of the 
Small Business Act (15 U.S.C. 644(j)) is amended to read 
as follows: 
‘‘(j)(1) Each contract for the purchase of goods and 
services that has an anticipated value greater than $2,500 
but not greater than $1,000,000 shall be reserved exclu-
sively for small business concerns unless the contracting 
officer is unable to obtain offers from two or more small 
business concerns that are competitive with market prices
301
and are competitive with regard to the quality and delivery 
of the goods or services being purchased. 
‘‘(2) In carrying out paragraph (1), a contracting of-
ficer shall consider a responsive offer timely received from 
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 $1,000,000 under the authority of section 8(a) of 
this Act, section 2323 of title 10, United States Code, sec-
tion 712 of the Business Opportunity Development Re-
form Act of 1988 (Public Law 100-656; 15 U.S.C. 644 
note), or section 7102 of the Federal Acquisition Stream-
lining Act of 1994.’’. 
(g) ASSIGNMENT OF PROCUREMENT CENTER REP-
RESENTATIVES.—Section 15(l) of the Small Business Act 
(15 U.S.C. 644(l)) is amended to read as follows: 
‘‘(l)(1) The Administrator shall assign to each major 
procurement center a procurement center representative 
with such assistance as may be appropriate. The procure-
ment 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 maintain-
ing the integrity of the system in which such items are 
used, and an advocate for the use of full and open competi-
302
tion, whenever appropriate, for the procurement of sup-
plies and services by such center. Any procurement center 
representative assigned under this subsection shall be in 
addition to the representative referred to in subsection 
(k)(6). 
‘‘(2) A procurement center representative is author-
ized to—
‘‘(A) work directly with small businesses to 
counsel them on the Federal market and contracting 
with the Federal Government; 
‘‘(B) identify Federal agency buyers of small 
business products and services; 
‘‘(C) attend any provisioning conference or 
similar evaluation session during which determina-
tions are made as to whether requirements are to be 
procured through other than full and open competi-
tion and make recommendations with respect to 
such requirements to the members of such con-
ference or session; 
‘‘(D) review, at any time, restrictions on com-
petition previously imposed on items through acqui-
sition method coding or similar procedures, and rec-
ommend to personnel of the appropriate activity the 
prompt reevaluation of such limitations;
303
‘‘(E) 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; 
‘‘(F) obtain from any governmental source, and 
make available to personnel of the appropriate activ-
ity, technical data necessary for the preparation of 
a competitive solicitation package for any item of 
supply or service previously procured noncompeti-
tively due to the unavailability of such technical 
data; 
‘‘(G) have access to procurement records and 
other data of the procurement center commensurate 
with the level of such representative’s approved secu-
rity clearance classification; 
‘‘(H) receive unsolicited engineering proposals 
and, when appropriate—
‘‘(i) conduct a value analysis of such pro-
posal to determine whether such proposal, if 
adopted, will result in lower costs to the United 
States without substantially impeding legitimate 
acquisition objectives and forward to personnel 
of the appropriate activity recommendations 
with respect to such proposal, or
304
‘‘(ii) forward such proposals without anal-
ysis to personnel of the activity responsible for 
reviewing such proposals and who shall furnish 
the breakout procurement center representative 
with information regarding the disposition of 
any such proposal; and 
‘‘(iii) review the systems that account for 
the acquisition and management of technical 
data within the procurement center to assure 
that such systems provide the maximum avail-
ability and access to data needed for the prepa-
ration of offers to sell to the United States 
those supplies to which such data pertain which 
potential offerors are entitled to receive. 
‘‘(3) A procurement center representative is author-
ized to appeal the failure to act favorably on any rec-
ommendation made pursuant to paragraph (2). Such ap-
peal shall be filed and processed in the same manner and 
subject to the same conditions and limitations as an ap-
peal filed by the Administrator pursuant to subsection (a). 
‘‘(4) The Administrator 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 to assist the procurement center
305
representative for the center to which such advisers are 
assigned in carrying out the functions described in para-
graph (2) and the representatives referred to in subsection 
(k)(6). 
‘‘(5)(A) The procurement center representatives and 
technical advisers assigned pursuant to this subsection 
shall be—
‘‘(i) full-time employees of the Administration; 
and 
‘‘(ii) fully qualified, technically trained, and fa-
miliar with the supplies and services procured by the 
major procurement center to which they are as-
signed. 
‘‘(B) In addition to the requirements of subparagraph 
(A), each procurement center representative, and at least 
one technical adviser assigned to such representative, shall 
be an accredited engineer. 
‘‘(C) The Administrator shall establish personnel po-
sitions for procurement representatives and advisers as-
signed 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
306
dollar amounts of other than commercial items and which 
has the potential to incur significant savings as the result 
of the placement of a procurement center representative. 
‘‘(7)(A) At such times as the Administrator deems 
appropriate, the 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 provisions of this 
subsection and shall instruct them in methods designed 
to further the purposes of such subsection. 
‘‘(B) The procurement center representative shall 
prepare and personally deliver an annual briefing and re-
port 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 re-
ceipt, respond, in writing, to each recommendation made 
by such representative.’’. 
(h) OTHER DUTIES OF ADMINISTRATOR.—Section 
15 of the Small Business Act (15 U.S.C. 644) is amended 
by adding at the end the following new subsection:
307
‘‘(q)(1) The Administrator shall obtain information 
as to methods and practices which Government prime con-
tractors utilize in letting subcontracts and to take action 
to encourage the letting of subcontracts by prime contrac-
tors to small business concerns and small manufacturers 
at prices and on conditions and terms which are fair and 
equitable. 
‘‘(2) The Administrator shall determine within any 
industry the concerns, firms, persons, corporations, part-
nerships, cooperatives, or other business enterprises which 
are to be designated as small business concerns or small 
manufacturers for the purpose of effectuating the provi-
sions of this Act. To carry out this purpose the Adminis-
trator, when requested to do so, shall issue in response 
to each such request an appropriate certificate certifying 
an individual concern as a small business concern or small 
manufacturer 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 or small manufacturer. Offices of the 
Government having procurement or lending powers, or en-
gaging in the disposal of Federal property or allocating 
materials or supplies, or promulgating regulations affect-
ing the distribution of materials or supplies, shall accept 
as conclusive the Administration’s determination as to
308
which enterprises are to be designated as small business 
concerns or small manufacturers, as authorized and di-
rected under this paragraph. 
‘‘(3)(A) The Administration shall certify to Govern-
ment procurement officers, and officers engaged in the 
sale and disposal of Federal property, with respect to all 
elements of responsibility, including, but not limited to, 
capability, competency, capacity, credit, integrity, perse-
verance, 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 pre-
ceding sentence, preclude any small business concern or 
group of such concerns from being awarded such contract 
without referring the matter for a final disposition to the 
Administration. 
‘‘(B) If a Government procurement officer finds that 
an otherwise qualified small business concern may be ineli-
gible due to the provisions of section 35(a) of title 41, 
United States Code (the Walsh-Healey Public Contracts 
Act), he shall notify the Administration in writing of such 
finding. The Administration shall review such finding and 
shall either dismiss it and certify the small business con-
cern to be an eligible Government contractor for a specific
309
Government contract or if it concurs in the finding, for-
ward the matter to the Secretary of Labor for final dis-
position, in which case the Administration may certify 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 concern 
or group of such concerns has been certified by the Admin-
istration pursuant to (A) or (B) to be a responsible or 
eligible Government contractor as to a specific Govern-
ment contract, the officers of the Government having pro-
curement or property disposal powers are directed to ac-
cept such certification as conclusive, and shall let such 
Government contract to such concern or group of concerns 
without requiring it to meet any other requirement of re-
sponsibility or eligibility. Notwithstanding the first sen-
tence of this subparagraph, the Administration may not 
establish an exemption from referral or notification or 
refuse to accept a referral or notification from a Govern-
ment procurement officer made pursuant to subparagraph 
(A) or (B) of this paragraph, but nothing in this para-
graph shall require the processing of an application for 
certification if the small business concern to which the re-
ferral pertains declines to have the application processed. 
‘‘(4) The Administrator shall obtain from any Fed-
eral department, establishment, or agency engaged in pro-
310
curement or in the financing of procurement or production 
such reports concerning the letting of contracts and sub-
contracts and the making of loans to business concerns 
as it may deem pertinent in carrying out its functions 
under this Act. 
‘‘(5) The Administrator shall obtain from any Fed-
eral 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 functions under this 
Act. 
‘‘(6) The Administrator shall obtain from suppliers 
of materials information pertaining to the method of fill-
ing orders and the bases for allocating their supply, when-
ever it appears that any small business is unable to obtain 
materials from its normal sources. 
‘‘(7) The Administrator shall make studies and rec-
ommendations to the appropriate Federal agencies to in-
sure that a fair proportion of the total purchases and con-
tracts for property and services for the Government be 
placed with small-business enterprises, to insure that a 
fair proportion of Government contracts for research and 
development be placed with small-business concerns, to in-
sure that a fair proportion of the total sales of Govern-
ment property be made to small-business concerns, and
311
to insure a fair and equitable share of materials, supplies, 
and equipment to small-business concerns. 
‘‘(8) The Administrator shall consult and cooperate 
with all Government agencies for the purpose of insuring 
that small-business concerns shall receive fair and reason-
able treatment from such agencies.’’
(i) FEDERAL PROCUREMENT DATA SYSTEM.—Sec-
tion 15 of the Small Business Act (15 U.S.C. 644) is fur-
ther amended by adding at the end the following new sub-
section: 
‘‘(r) The Administrator shall work with the Adminis-
trator of the General Services Administration to establish 
within the data collection capabilities of the Federal Pro-
curement Data System a data element capable of identi-
fying contract awards made as a result of Section 7102(c) 
of the Federal Acquisition Streamlining Act of 1994 (Pub-
lic Law 103–355; 15 U.S.C. 644 note) and Section 
31(B)(3) of this Act. Such data element shall be estab-
lished and populated by Federal agencies awarding con-
tracts as a result of Section 7102(c) of the Federal Acqui-
sition Streamlining Act of 1994 (Public Law 103-355; 15 
U.S.C. 644 note) and Section 31(B)(3) of this Act within 
90 days of the enactment of this Act.’’. 
(j) PRIORITY OF SMALL BUSINESS PROCUREMENT 
PREFERENCES.—Section 15 of the Small Business Act
312
(15 U.S.C. 644) is further amended by adding at the end 
the following new subsection: 
‘‘(s) PRIORITY OF SMALL BUSINESS PROCUREMENT 
PREFERENCES.—
‘‘(1) IN GENERAL.—A contracting officer may 
not make a procurement from a source on the basis 
of a preference provided under any provision of this 
Act referred to in paragraph (2) unless the con-
tracting officer has determined that such procure-
ment cannot be made on the basis of a preference 
provided under another provision of this Act with a 
higher priority under such subsection. 
‘‘(2) ORDER
OF
PRIORITY.—For purposes of 
this subsection, the following provisions of this Act 
are listed in order of priority from highest to lowest: 
‘‘(A) Section 8(a). 
‘‘(B) Section 31(b)(2)(B). 
‘‘(C) Section 31(b)(2)(A). 
‘‘(D) Section 8(m). 
‘‘(3) PRIORITY OF CERTAIN OTHER PROCURE-
MENT PREFERENCES.—A procurement may not be 
made from a source on the basis of a preference pro-
vided under any provision of this Act referred to in 
paragraph (2) if the procurement would otherwise by 
made from a different source under section 4124 or
313
4125 of title 18, United States Code, or the Act en-
titled ‘An Act to create a Committee on Purchases 
of Blind made Products, and for other purposes’, 
approved June 25, 1938 (41 U.S.C. 47).’’. 
(k) PROCUREMENT PROGRAM
FOR VERY SMALL 
BUSINESS CONCERNS.—Section 15 of the Small Business 
Act (15 U.S.C. 644) is further amended by adding at the 
end the following new subsection: 
‘‘(t) PROCUREMENT PROGRAM
FOR VERY SMALL 
BUSINESS CONCERNS.—
‘‘(1) 
ESTABLISHMENT.—The 
Administrator 
shall establish and carry out a program in accord-
ance with the requirements of this subsection to pro-
vide improved access to Federal contract opportuni-
ties for very small business concerns. 
‘‘(2) PROCUREMENT CONTRACTS.—
‘‘(A) IDENTIFICATION
OF
CONTRACTS.—
The Administrator shall identify procurement 
contracts of Federal agencies for award under 
the program. 
‘‘(B) CONTRACT AWARDS.—Under the pro-
gram established pursuant to this subsection, 
the award of a procurement contract of a Fed-
eral agency identified by the Administrator pur-
suant to subparagraph (A) shall be made by the
314
agency to a very small business concern se-
lected, and determined to be responsible, by the 
agency. 
‘‘(C) COMPETITION.—All contract opportu-
nities offered for award under the program 
shall be awarded on the basis of competition 
among very small business concerns. A con-
tracting officer may rely in good faith on a 
written certification that a small business con-
cern is a very small business concern. 
‘‘(3) FINANCIAL ASSISTANCE.—In order to as-
sist very small business concerns receiving contract 
awards under the program, the Administrator shall 
establish a preauthorization program for such con-
cerns for the purpose of receiving financial assist-
ance under section 7(a). 
‘‘(4) VERY
SMALL
BUSINESS
CONCERN.—For 
purposes of this subsection, the term ‘very small 
business concern’ means a small business concern 
that has not more than 15 employees and—
‘‘(A) in the case of a small manufacturer, 
annual gross receipts of not more than 
$2,000,000; or 
‘‘(B) in any other case, annual gross re-
ceipts of not more than $500,000.
315
‘‘(5) 
REGULATIONS.—The 
Administrator 
shall—
‘‘(A) issue proposed regulations to carry 
out this subsection not later than 180 days 
after the date of enactment of this subsection; 
and 
‘‘(B) issue final regulations to carry out 
this subsection not later than 270 days after 
the date of enactment of this subsection.’’. 
(l) OTHER AMENDMENTS TO SECTION 15.—
(1) Section 15(e)(1) of the Small Business Act 
(15 U.S.C. 644(e)(1)) is amended by inserting ‘‘in 
the following order’’ after ‘‘concerns’’. 
(2) Section 15(e)(4) of the Small Business Act 
(15 U.S.C. 644(e)(4)) is amended by striking ‘‘bun-
dled’’. 
(3) Section 15(k)(9) of the Small Business Act 
(15 U.S.C. 644(k)(9)) is amended by striking ‘‘Ad-
ministration’’ and inserting ‘‘Administrator’’. 
(4) Section 15(p)(4)(A) of the Small Business 
Act (15 U.S.C. 644(p)(4)(A)) is amended by strik-
ing ‘‘Administration’’ and inserting ‘‘Adminis-
trator’’.
316
SEC. 211. AUTHORIZATION OF APPROPRIATIONS; ETC. 
Section 20 of the Small Business Act (15 U.S.C. 631 
note) is amended to read as follows: 
‘‘SEC. 20. AUTHORIZATION OF APPROPRIATIONS; ETC. 
‘‘(a)(1) For fiscal year 2004 and each fiscal year 
thereafter, there are authorized to be appropriated such 
sums as may be necessary and appropriate, to remain 
available until expended, and to be available solely—
‘‘(A) to carry out the Small Business Develop-
ment Center Program under section 21, but not to 
exceed the annual funding level, as specified in sec-
tion 21(j)(7); 
‘‘(B) to pay the expenses of the National Small 
Business Development Center Advisory Board, as 
provided in section 21(m)(1); 
‘‘(C) to pay the expenses of the information 
sharing system, as provided in section 21(o); 
‘‘(D) to pay the expenses of the association re-
ferred to in section 21(k) for conducting the certifi-
cation program, as provided in section 21(l); and 
‘‘(E) to pay the expenses of the Administration, 
including salaries of examiners, for conducting ex-
aminations as part of the accreditation program con-
ducted by the association referred to in section 21(l). 
‘‘(2)(A) Notwithstanding any other provision of law, 
the Administrator shall enter into commitments for direct
317
loans and to guarantee loans, debentures, payment of 
rentals, or other amounts due under qualified contracts 
and other types of financial assistance and enter into com-
mitments to purchase debentures and preferred securities 
and to guarantee sureties against loss pursuant to pro-
grams under this Act and the Small Business Investment 
Act of 1958, in the full amounts provided by law subject 
only to—
‘‘(i) the availability of qualified applications; 
and 
‘‘(ii) limitations contained in appropriations 
Acts. 
‘‘(B) Nothing in this paragraph authorizes the Ad-
ministrator to reduce or limit its authority to enter into 
such commitments. 
‘‘(3) Subject to approval in appropriations Acts, 
amounts authorized for preferred securities, debentures or 
participating securities under title III of the Small Busi-
ness Investment Act of 1958 may be obligated in one fiscal 
year and disbursed or guaranteed in any 1 or more of the 
4 subsequent fiscal years. 
‘‘(4) The amount of deferred participation loans au-
thorized in this section—
‘‘(A) shall mean the net amount of the loan 
principal guaranteed by the Administrator (and does
318
not include any amount which is not guaranteed); 
and 
‘‘(B) shall be available for a national program, 
except as otherwise provided in section 7(a). 
‘‘(b) There are authorized to be appropriated to the 
Administration for each fiscal year 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 such sums as may 
be necessary and appropriate for the carrying out of the 
provisions and purposes, including administrative ex-
penses, of sections 7(b) of this Act; and there are author-
ized to be transferred from such sums as may be necessary 
and appropriate for such administrative expenses. 
‘‘(c) FISCAL YEAR 2004.—
‘‘(1) PROGRAM
LEVELS.—The following pro-
gram levels are authorized for fiscal year 2004: 
‘‘(A) For the programs authorized by this 
Act, the Administrator is authorized to make—
‘‘(i) $70,000,000 in technical assist-
ance grants, as provided in section 7(m); 
and 
‘‘(ii) $100,000,000 in direct loans, as 
provided in section 7(m).
319
‘‘(B) For the programs authorized by this 
Act, the Administrator is authorized to make 
$22,000,000,000 in deferred participation loans 
and other financings. Of such sum, the Admin-
istration is authorized to make—
‘‘(i) $16,000,000,000 in general busi-
ness loans as provided in section 7(a); 
‘‘(ii) $5,500,000 in financings as pro-
vided in section 7(a)(13) of this Act and 
section 504 of the Small Business Invest-
ment Act of 1958; and 
‘‘(iii) $500,000,000 in loans as pro-
vided in section 7(a)(21). 
‘‘(C) For the programs authorized by title 
III of the Small Business Investment Act of 
1958, the Administrator is authorized to 
make—
‘‘(i) $5,000,000,000 in purchases of 
participating securities; and 
‘‘(ii) $4,000,000,000 in guarantees of 
debentures. 
‘‘(D) For the programs authorized by part 
B of title IV of the Small Business Investment 
Act of 1958, the Administration is authorized 
to enter into guarantees not to exceed
320
$6,000,000,000, of which not more than 50 
percent may be in bonds approved pursuant to 
section 411(a)(3) of that Act. 
‘‘(E) There is authorized to be appro-
priated $7,000,000 to carry out section 12(b). 
‘‘(2) ADDITIONAL AUTHORIZATIONS.—
‘‘(A) There are authorized to be appro-
priated to the Administration for fiscal year 
2004 such sums as may be necessary to carry 
out this Act not elsewhere provided for, includ-
ing administrative expenses and necessary loan 
capital for disaster loans pursuant to section 
7(b), and to carry out the Small Business In-
vestment Act of 1958, including salaries and 
expenses of the Administration. 
‘‘(B) Notwithstanding any other provision 
of this paragraph, for fiscal year 2004—
‘‘(i) no funds are authorized to be 
provided to carry out the loan program au-
thorized by section 7(a)(21) except by 
transfer from another Federal department 
or agency to the Administration, unless the 
program level authorized for general busi-
ness loans under paragraph (1)(B)(i) is 
fully funded; and
321
‘‘(ii) the Administrator may not ap-
prove loans on behalf of the Administra-
tion or on behalf of any other department 
or agency, by contract or otherwise, under 
terms and conditions other than those spe-
cifically authorized under this Act or the 
Small Business Investment Act of 1958, 
except that he may approve loans under 
section 7(a)(21) of this Act in gross 
amounts of not more than $1,250,000. 
‘‘(d) FISCAL YEAR 2005.—
‘‘(1) PROGRAM
LEVELS.—The following pro-
gram levels are authorized for fiscal year 2005: 
‘‘(A) For the programs authorized by this 
Act, the Administrator is authorized to make—
‘‘(i) $75,000,000 in technical assist-
ance grants as provided in section 7(m); 
and 
‘‘(ii) $105,000,000 in direct loans, as 
provided in section 7(m). 
‘‘(B) For the programs authorized by this 
Act, the Administrator is authorized to make 
$23,000,000,000 in deferred participation loans 
and other financings. Of such sum, the Admin-
istration is authorized to make—
322
‘‘(i) $16,500,000,000 in general busi-
ness loans as provided in section 7(a); 
‘‘(ii) $6,000,000,000 in financings as 
provided in section 7(a)(13) of this Act 
and section 504 of the Small Business In-
vestment Act of 1958; and 
‘‘(iii) $500,000,000 in loans as pro-
vided in section 7(a)(21). 
‘‘(C) For the programs authorized by title 
III of the Small Business Investment Act of 
1958, the Administration is authorized to 
make—
‘‘(i) $5,500,000,000 in purchases of 
participating securities; and 
‘‘(ii) $4,500,000,000 in guarantees of 
debentures. 
‘‘(D) For the programs authorized by part 
B of title IV of the Small Business Investment 
Act of 1958, the Administration is authorized 
to enter into guarantees not to exceed 
$6,000,000,000, of which not more than 50 
percent may be in bonds approved pursuant to 
section 411(a)(3) of that Act. 
‘‘(E) There is authorized to be appro-
priated $7,000,000 to carry out section 12(b).
323
‘‘(2) ADDITIONAL AUTHORIZATIONS.—
‘‘(A) There are authorized to be appro-
priated to the Administration for fiscal year 
2005 such sums as may be necessary to carry 
out this Act not elsewhere provided for, includ-
ing administrative expenses and necessary loan 
capital for disaster loans pursuant to section 
7(b), and to carry out the Small Business In-
vestment Act of 1958, including salaries and 
expenses of the Administration. 
‘‘(B) Notwithstanding any other provision 
of this paragraph, for fiscal year 2005—
‘‘(i) no funds are authorized to be 
provided to carry out the loan program au-
thorized by section 7(a)(21) except by 
transfer from another Federal department 
or agency to the Administration, unless the 
program level authorized for general busi-
ness loans under paragraph (1)(B)(i) is 
fully funded; and 
‘‘(ii) the Administrator may not ap-
prove loans on behalf of the Administra-
tion or on behalf of any other department 
or agency, by contract or otherwise, under 
terms and conditions other than those spe-
324
cifically authorized under this Act or the 
Small Business Investment Act of 1958, 
except that he may approve loans under 
section 7(a)(21) of this Act in gross 
amounts of not more than $1,250,000.’’. 
SEC. 212. SMALL BUSINESS DEVELOPMENT CENTERS. 
(a) IN GENERAL.—Section 21 of the Small Business 
Act (15 U.S.C. 648) is amended to read as follows: 
‘‘SEC. 21. SMALL BUSINESS DEVELOPMENT CENTER PRO-
GRAM. 
‘‘(a) ESTABLISHMENT OF PROGRAM.—The Adminis-
trator is authorized to make grants to any eligible appli-
cant to establish the network of small business develop-
ment centers proposed in the plan submitted by such ap-
plicant under subsection (b). 
‘‘(b) SELECTION OF GRANTEES.—
‘‘(1) APPLICATION.—An eligible applicant may 
apply for a grant under subsection (a) by submitting 
to the Administrator for approval a plan for estab-
lishing a network of small business development cen-
ters. 
‘‘(2) SELECTION.—The Administrator shall se-
lect the applicant that demonstrates it has the budg-
etary and other resources to ensure that it will pro-
vide the most comprehensive and coordinated assist-
325
ance throughout the State. The Administrator shall 
require the grantee to have a separate budget for 
the purpose of operating its network of small busi-
ness development centers and to primarily utilize in-
stitutions of higher education and women’s business 
centers operating pursuant to section 29 to provide 
for the operation of the small business development 
centers. The Administrator may approve, condi-
tionally approve, or reject, a plan or combination of 
plans submitted under this section. The Adminis-
trator may not delegate the authority to select 
grantees under this section except to the Deputy Ad-
ministrator. 
‘‘(3) LIMITATION BY STATE.—
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, the Administrator 
shall select one grantee from each State to 
serve the entire State. 
‘‘(B) UNAVAILABILITY
EXCEPTION.—The 
Administrator may select 2 grantees to serve a 
State if no eligible applicant submits an appli-
cation to serve the entire State. With respect to 
any such State, the Administrator, at the end 
of the 2-year period beginning on the date of 
the selection of such grantees, shall seek appli-
326
cations under this subsection for the purpose of 
replacing such grantees with a single grantee to 
serve the entire State. 
‘‘(C) HISTORICAL
EXCEPTION.—Subpara-
graph (A) shall not apply with respect to any 
State if multiple grantees served such State 
during calendar year 2000 or 2001. 
‘‘(D) CERTAIN TERRITORIES.—In the case 
that no eligible applicant from a qualified terri-
tory applies for a grant under this section, the 
Administrator may select a grantee from any 
State to serve such qualified territory. For pur-
poses of the preceding sentence, the term ‘quali-
fied territory’ means Guam, the United States 
Virgin Islands, American Samoa, and the Com-
monwealth of the Northern Mariana Islands. 
‘‘(4) ELIGIBLE
APPLICANT.—For purposes of 
this section, the term ‘eligible applicant’ means—
‘‘(A) any institution of higher education; 
‘‘(B) any women’s business center oper-
ating pursuant to section 29; or 
‘‘(C) in the case of an entity that was re-
ceiving a grant under this section on December 
31, 1990, any of the following:
327
‘‘(i) Any State government or any 
agency thereof. 
‘‘(ii) Any regional entity. 
‘‘(iii) Any State-chartered develop-
ment, credit or finance corporation. 
‘‘(iv) Any entity formed by two or 
more of the entities described in this para-
graph. 
‘‘(5) REQUIREMENT TO SEEK APPLICATIONS.—
If for any reason a grant under this section is termi-
nated or not renewed, the Administrator shall seek 
applications from eligible applicants with respect to 
such grant. 
‘‘(c) GRANT PROVISIONS.—
‘‘(1) AGREEMENT BETWEEN GRANTEE AND AD-
MINISTRATOR.—The Administrator and the grantee 
shall jointly develop, negotiate, and agree upon the 
terms and conditions of the grant. The grantee shall 
also consult with the district office or offices within 
the State to determine the special services and as-
sistance that are needed by the community or com-
munities served by the grantee’s small business de-
velopment centers. 
‘‘(2) REQUIREMENTS.—Each grant shall—
328
‘‘(A) allow the grantee to serve portions of 
the State by subcontracting the operation of a 
small business development center to another 
entity, provided that such small business devel-
opment centers shall, to the extent feasible, be 
located at institutions of higher education or 
Women’s Business Centers established pursuant 
to section 29 of this Act; 
‘‘(B) ensure that the grantee provides serv-
ices as close as possible to small business con-
cerns by providing extension services and uti-
lizing satellite facilities, including those of any 
subcontractor; 
‘‘(C) ensure that the grantee provides fa-
cilities and staff for each small business devel-
opment center to provide maximum accessibility 
and benefit to small business concerns; 
‘‘(D) ensure that the grantee is utilizing 
the resources of other Federal agencies in pro-
viding the services and assistance set forth in 
subsection (f); 
‘‘(E) allow the grantee to enter into a con-
tract described in subsection (g)(2). 
‘‘(3) PROHIBITION
ON
DELEGATION
TO
DIS-
TRICT OFFICES.—The Administrator shall not dele-
329
gate any authority under paragraph (1) to any em-
ployee of the Administration located in a regional or 
district office. 
‘‘(4) FORM OF GRANT AGREEMENTS.—For pur-
poses of this section, the term ‘grant’ includes any 
contract or cooperative agreement. 
‘‘(5) PROHIBITION
ON
CERTAIN
GRANT
RE-
QUIREMENTS.—The Administrator shall not require, 
and a grant agreement shall not include a require-
ment, that the grantee serve a particular number of 
small business concerns with respect to loans under 
section 7 of this Act or title V of the Small Business 
Investment Act of 1958. 
‘‘(d) TERM, RENEWAL, 
AND
TERMINATION
OF 
GRANTS.—
‘‘(1) TERM
OF
GRANTS.—Each grant made 
under this section shall be made on the basis of a 
calendar year or the Federal fiscal year, as deter-
mined by the Administrator. 
‘‘(2) AUTOMATIC
RENEWAL.—Unless the Ad-
ministrator for cause terminates the grant or the 
grantee decides not to seek renewal of the grant, the 
Administrator and the grantee shall renew the 
agreement and may make mutually satisfactory 
modifications to the agreement. The renewal shall
330
take effect on the date of termination of the old 
agreement. 
‘‘(3) STANDARDS
FOR
TERMINATION.—After 
the opportunity for notice and comment and con-
sultation with the association authorized by sub-
section (k), the Administrator shall promulgate 
standards for determining when cause exists to ter-
minate a grantee. Such standards shall be codified 
in the Code of Federal Regulations and shall take 
into account the grantee’s compliance with the 
standards set forth in the grant agreement, any 
budgetary restrictions faced by the grantee, the 
overall economic climate in the State served by the 
grantee, and the accreditation of the grantee’s small 
business development centers (whether operated by 
the grantee or through a subcontractor) under the 
program established pursuant to subsection (l). 
‘‘(4) NOTICE OF TERMINATION.—If the Admin-
istrator determines that cause exists to terminate a 
grant agreement under this section, the Adminis-
trator shall provide the grantee with written notifi-
cation setting forth the reasons therefore and afford-
ing the applicant an opportunity for a hearing pur-
suant to section 554 of title 5, United States Code.
331
‘‘(e) MANAGEMENT OF SMALL BUSINESS DEVELOP-
MENT CENTERS BY GRANTEES.—
‘‘(1) APPOINTMENT OF GRANTEE DIRECTOR.—
Each Grantee shall appoint a full-time director to 
oversee the operations of the grant, the subcontrac-
tors to the grantee, and the small business develop-
ment centers operated by the grantee. The grantee’s 
director shall be responsible for accounting for any 
Federal funds used by the grantee to carry out the 
requirements of this section. The grantee shall have 
the sole discretion of selecting the director without 
requiring the approval of the Administrator, except 
that the Administrator may terminate the employ-
ment of the grantee’s director if the Administrator 
determines that the grantee’s director is unfit for 
the position because of a prior conviction for a fel-
ony. 
‘‘(2) SMALL BUSINESS DEVELOPMENT CENTER 
STAFF.—Each small business development center 
shall have a staff, which shall be full-time, part-time, 
or on a contract basis, as the grantee may deter-
mine. 
‘‘(3) EXPENDITURES.—Expenditures of funds 
by the grantee shall not require the approval of the 
Administrator except that the Administrator may
332
prohibit an expenditure using Federal funds if, after 
consultation with the General Counsel of the Admin-
istration, the Administrator determines that such ex-
penditure violates Federal law. 
‘‘(f) SERVICES
PROVIDED
BY
THE
GRANTEE 
THROUGH SMALL BUSINESS DEVELOPMENT CENTERS.—
‘‘(1) IN GENERAL.—Each grantee and its sub-
contractors shall assist small business concerns in 
solving problems concerning operations, manufac-
turing, engineering, technology exchange and devel-
opment, personnel administration, marketing, sales, 
merchandising, finance, accounting, business strat-
egy development, and other disciplines required for 
small business growth and expansion, innovation, in-
creased productivity, and management improvement, 
and for decreasing industry economic concentrations. 
Small Business Development Centers shall, in pro-
viding assistance to small manufacturers, coordinate 
such assistance and utilize the resources of the Man-
ufacturing Extension Partnership of the National 
Institutes of Standards and Technology. 
‘‘(2) PERIODIC MODIFICATION.—Each grantee 
or its subcontractors shall continue to upgrade and 
modify its services, as needed, in order to meet the 
changing and evolving needs of the small business
333
community and those of small manufacturers in par-
ticular. 
‘‘(3) ACCESS TO PROFESSIONALS.—Each grant-
ee shall ensure that small business development cen-
ters provide access to: 
‘‘(A) Business analysts to counsel, assist, 
and inform small business clients. 
‘‘(B) Technology transfer agents to provide 
state of art technology to small business con-
cerns through coupling with national and re-
gional technology data sources. 
‘‘(C) Information specialists to assist in 
providing information searches and referrals to 
small business. 
‘‘(D) Part-time professional specialists to 
conduct research or to provide counseling as-
sistance whenever the need arises. 
‘‘(E) Laboratory and adaptive engineering 
facilities. 
‘‘(4) SERVICES.—Each grantee shall ensure 
that the services provided by its network of small 
business development centers include—
‘‘(A) furnishing one-to-one individual coun-
seling to small business concerns, including—
334
‘‘(i) working with individuals to in-
crease awareness of basic credit practices 
and credit requirements; 
‘‘(ii) working with individuals to de-
velop business plans, financial packages, 
credit applications, and contract proposals; 
‘‘(iii) working with the Administration 
to develop and provide informational tools 
for use in working with individuals on pre-
business startup planning, existing busi-
ness expansion, and export planning; and 
‘‘(iv) working with individuals referred 
by the district offices of the Administration 
and Administration participating lenders; 
‘‘(B) assisting in technology transfer, re-
search and development, including applied re-
search, and coupling from existing sources to 
small business concerns, including—
‘‘(i) working to increase the access of 
small business concerns to the capabilities 
of automated flexible manufacturing sys-
tems; 
‘‘(ii) working through existing net-
works and developing new networks for 
technology transfer that encourage part-
335
nership between the small business and 
academic communities to help commer-
cialize university-based research and devel-
opment and introduce university-based en-
gineers and scientists to their counterparts 
in small technology-based firms; 
‘‘(iii) exploring the viability of devel-
oping shared production facilities, under 
appropriate circumstances; and 
‘‘(iv) assisting small manufacturers in 
developing more efficient operations, in-
cluding coordination of assistance with the 
Manufacturing Extension Partnership of 
the National Institutes of Standards and 
Technology; 
‘‘(C) in cooperation with the Department 
of Commerce, the entities providing services 
pursuant to section 8(n) of this Act, and other 
relevant Federal agencies, actively assisting 
small business concerns in exporting by identi-
fying and developing potential export markets, 
facilitating export transactions, developing link-
ages between United States small business 
firms and prescreened foreign buyers, assisting 
small business concerns to participate in inter-
336
national trade shows, assisting small business 
concerns in obtaining export financing, assisting 
small manufacturers in identifying supply chain 
management opportunities, and facilitating the 
development or reorientation of marketing and 
production strategies; where appropriate, the 
grantee and the Administrator may work in co-
operation with the State to establish a State 
international trade center for these purposes; 
‘‘(D) developing a program in conjunction 
with the Export-Import Bank and local and re-
gional Administration offices that will enable 
Small Business Development Centers to serve 
as an information network and to assist small 
business applicants for Export-Import Bank fi-
nancing programs, and otherwise identify and 
help to make available export financing pro-
grams to small business concerns; 
‘‘(E) working closely with the small busi-
ness community, small business consultants, 
State agencies, universities and other appro-
priate groups to make translation services more 
readily available to small business firms doing 
business, or attempting to develop business, in 
foreign markets;
338
‘‘(II) the termination (or reduc-
tion) of a Department of Defense pro-
gram (or contracts under such pro-
gram) on the small business concerns 
participating in such program as a 
prime contractor, subcontractor or 
supplier at any tier; 
‘‘(ii) by developing, in conjunction 
with appropriate Federal, State, and local 
governmental entities and other private 
sector organizations, the parameters of a 
transition adjustment program adaptable 
to the needs of individual small business 
concerns; 
‘‘(iii) by conducting appropriate pro-
grams to inform the affected small busi-
ness community regarding the anticipated 
adverse impacts identified under clause (i) 
and the economic adjustment assistance 
available to such firms; and 
‘‘(iv) by assisting small business con-
cerns to develop and implement an individ-
ualized transition business plan; 
‘‘(H) maintaining current information con-
cerning Federal, State, and local regulations
339
that affect small business concerns and counsel 
small business concerns on methods of compli-
ance. Counseling and technology development 
shall be provided when necessary to help small 
business concerns find solutions for complying 
with environmental, energy, health, safety, and 
other Federal, State, and local regulations; 
‘‘(I) coordinating and conducting research 
into technical and general small business prob-
lems for which there are no ready solutions; 
‘‘(J) providing and maintaining a com-
prehensive library that contains current infor-
mation and statistical data needed by small 
business concerns; 
‘‘(K) maintaining a working relationship 
and open communications with the financial 
and investment communities, legal associations, 
local and regional private consultants, and local 
and regional small business groups and associa-
tions in order to help address the various needs 
of the small business community; 
‘‘(L) conducting in-depth surveys for local 
small business groups in order to develop gen-
eral information regarding the local economy
340
and general small business strengths and weak-
nesses in the locality; 
‘‘(M) in cooperation with the Department 
of Commerce, the Administration and other rel-
evant Federal agencies, actively assisting rural 
small business concerns in exporting by identi-
fying and developing potential export markets 
for rural small business concerns, facilitating 
export transactions for rural small business 
concerns, developing linkages between United 
States’ rural small business concerns and 
prescreened foreign buyers, assisting rural 
small business concerns to participate in inter-
national trade shows, assisting rural small busi-
ness concerns in obtaining export financing and 
developing marketing and production strategies; 
‘‘(N) assisting rural small business con-
cerns—
‘‘(i) in developing marketing and pro-
duction strategies that will enable them to 
better compete in the domestic market—
‘‘(ii) by providing technical assistance 
needed by rural small business concerns;
341
‘‘(iii) by making available managerial 
assistance to rural small business concerns; 
and 
‘‘(iv) by providing information and as-
sistance in obtaining financing for business 
startups and expansion; 
‘‘(O) in conjunction with the United States 
Travel and Tourism Administration, assist 
rural small business in developing the tourism 
potential of rural communities by—
‘‘(i) identifying the cultural, historic, 
recreational, and scenic resources of such 
communities; 
‘‘(ii) providing assistance to small 
business concerns in developing tourism 
marketing and promotion plans relating to 
tourism in rural areas; and 
‘‘(iii) assisting small business concerns 
to obtain capital for starting or expanding 
businesses primarily serving tourists; 
‘‘(P) maintaining lists of local and regional 
private consultants to whom small business con-
cerns can be referred;
342
‘‘(Q) providing information to small busi-
ness concerns regarding compliance with regu-
latory requirements; 
‘‘(R) developing informational publications, 
establishing resource centers of reference mate-
rials, and distributing compliance guides pub-
lished under section 312(a) of the Small Busi-
ness Regulatory Enforcement Fairness Act of 
1996; 
‘‘(S) providing small business owners with 
access to a wide variety of export-related infor-
mation by establishing on-line computer link-
ages between small business development cen-
ters and an international trade data informa-
tion network with ties to the Export Assistance 
Center program; and 
‘‘(T) providing information and assistance 
to small business concerns with respect to es-
tablishing drug-free workplace programs; 
‘‘(U) in the case of a small business devel-
opment center located at an institution of high-
er learning, hosting semi-annually a procure-
ment conference to which the grantee (or its 
subcontractors) invites small business concerns,
343
including small manufacturers, to meet with the 
procurement officials of such institution; and 
‘‘(V) providing comprehensive plans (devel-
oped in cooperation with relevant State and 
Federal agencies) relating to the export poten-
tial of small business concerns, including small 
manufacturers. 
‘‘(g) SPECIAL RULES RELATING TO SMALL BUSI-
NESS DEVELOPMENT CENTERS.—
‘‘(1) SERVICES TO OUT-OF-STATE SMALL BUSI-
NESS CONCERNS.—The Administrator may allow a 
small business development center to serve small 
business concerns located outside the State in which 
such center is located (or, in the case of a State with 
more than one grantee, outside the area served by 
the grantee) to the extent such businesses are lo-
cated within close geographical proximity to the 
small business development center as determined by 
the Administrator. 
‘‘(2) CONTRACTS
WITH
OTHER
AGENCIES.—
Subject to the restrictions set forth in this para-
graph, a grantee (or its subcontractors, with the 
grantee’s approval) may contract with a Federal De-
partment or agency to provide specific assistance to 
small business concerns through its network of small
344
business development centers. Before bidding on a 
contract described in this paragraph, a grantee shall 
receive approval from the Administrator. Before 
granting approval, the Administrator shall consider 
the subject and scope of the contract and the extent 
to which performance of the contract would provide 
assistance to small business and not impair the per-
formance of the grantee’s obligations under this sec-
tion. A contract for assistance under this paragraph 
shall not count toward the achievement of any con-
tracting goal under section 15(g). 
‘‘(3) SMALL BUSINESS VENDORS.—Each grant-
ee shall ensure, to the extent practicable, that its 
network of small business development centers uti-
lize and compensate qualified small business ven-
dors, including private management consultants, pri-
vate consulting engineers, and private testing labora-
tories, to provide services under this section to small 
business concerns. To the extent appropriate for the 
community served by the small business development 
center, such qualified small business vendors should 
include at least one such vendor with expertise in 
manufacturing and assisting small manufacturers. 
‘‘(4) COORDINATION WITH DISTRICT OFFICES, 
ETC.—The grantees shall ensure that the small busi-
345
ness development centers shall work in close co-
operation with the Administration’s regional and dis-
trict offices, the local small business community, and 
appropriate State and local agencies. No action by 
a grantee or its subcontractors or staff shall require 
the approval of any employee in a regional or dis-
trict office of the Administration. Any such employee 
shall, after consultation with district counsel, notify 
the Assistant Administrator for Small Business De-
velopment Centers if such employee believes that the 
grantee or its subcontractors or staff has taken ac-
tion that violates the law or jeopardizes the legal po-
sition of the United States. 
‘‘(5) ASSISTANCE FROM STATE INTERNATIONAL 
TRADE OFFICES.—The grantee may use funds pro-
vided by State international trade offices and co-lo-
cate employees of such offices at small business de-
velopment centers. 
‘‘(6) COORDINATION WITH ADMINISTRATION.—
On an annual basis, the grantee, after consultation 
with the district director, shall review and coordinate 
public and private partnerships and cosponsorships 
with the Administrator for the purpose of more effi-
ciently leveraging available resources on a national 
and a State basis. Should the grantee be unable to
346
consult with the district director, the grantee shall 
consult with the Assistant Administrator for Small 
Business Development Centers. 
‘‘(7) PROHIBITION ON CERTAIN FEES.—Each 
grantee shall ensure that small business development 
centers shall not impose or otherwise collect a fee or 
other compensation in connection with the provision 
of counseling services under this section. 
‘‘(8) PRIVACY REQUIREMENTS.—
‘‘(A) IN GENERAL.—Each grantee shall en-
sure that small business development centers 
shall not disclose the name or address of any 
individual or small business concern receiving 
assistance under this section without the con-
sent of such individual or small business con-
cern, except that—
‘‘(i) the Administrator shall require 
such disclosure if ordered to do so by a 
court in any civil or criminal action; and 
‘‘(ii) if the Administrator considers it 
necessary while undertaking a financial 
audit of a Small Business Development 
Center, the Administrator shall require 
such disclosure for the sole purpose of un-
dertaking such audit.
347
‘‘(B) REGULATIONS.—After notice and 
comment and not later than 180 days after the 
date of the enactment of this subparagraph, the 
Administrator shall issue regulations to estab-
lish standards for requiring disclosures during a 
financial audit under subparagraph (A)(ii). 
‘‘(h) ADDITIONAL GRANTS.—
‘‘(1) IN GENERAL.—Any grantee may apply to 
the Administrator for an additional grant to be used 
solely to assist—
‘‘(A) with the development and enhance-
ment of exports by small business concerns; 
‘‘(B) in technology transfer; 
‘‘(C) with outreach, development, and en-
hancement of minority-owned small business 
startups or expansions, HUBZone small busi-
ness concerns, veteran-owned small business 
startups or expansions, and women-owned small 
business startups or expansions, in communities 
impacted by base closings or military or cor-
porate downsizing, or in rural or underserved 
communities; and 
‘‘(D) small manufacturers. 
‘‘(2) CERTAIN
RULES
TO
APPLY.—Except as 
otherwise provided in this subsection, any additional
348
grant under this subsection shall be subject to rules 
similar to the rules that apply to grants made under 
subsection (a). 
‘‘(3) GRANT AMOUNT.—A grant shall not be 
made under this subsection if such grant which 
would exceed the grantee’s pro rata share of a 
$15,000,000 program based upon the populations to 
be served by the grantee as compared to the total 
population of the United States. The minimum 
amount of eligibility for any State shall be 
$100,000. Any additional grant made under this sec-
tion shall not be taken into account for purposes of 
the dollar program limitations specified in subsection 
(j). 
‘‘(4) REALLOCATION
OF
UNUSED
FUNDS.—If 
the Administrator has not received an application 
for an additional grant from a grantee pursuant to 
this subsection within 90 days after the Adminis-
trator and the grantee have signed an agreement 
pursuant to subsection (c) or within 60 days after 
the grantee and Administrator has renewed an 
agreement pursuant to subsection (c), the Adminis-
trator may make such grant to any eligible applicant 
(determined without regard to so much of subsection 
(b)(4)(C) as precedes ‘1990,’) in that State to carry
349
out the activities specified in this subsection subject 
to the requirements of paragraphs (2) and (3). 
‘‘(i) MATCHING FUNDS.—
‘‘(1) IN GENERAL.—The Administrator shall re-
quire as a condition of any grant (or amendment or 
modification thereof) made to a grantee under this 
section, that a matching amount equal to the 
amount of such grant be provided from sources 
other than the Federal Government, to be comprised 
of not less than 50 percent cash and not more than 
50 percent of indirect costs and in-kind contribu-
tions. 
‘‘(2) RESTRICTION.—The matching amount de-
scribed in paragraph (1) shall not include—
‘‘(A) any indirect costs or in-kind contribu-
tions derived from any Federal program; and 
‘‘(B) any amount received under a contract 
described in subsection (g)(2). 
‘‘(j) FUNDING FORMULA.—
‘‘(1) IN GENERAL.—Subject to paragraph (3), 
the amount of funds to be made available to the 
grantee or grantees within a State under this sub-
section shall be equal to an amount determined in 
accordance with the following formula:
350
‘‘(A) The annual amount made available 
for the Small Business Development Center 
Program under section 20(a), less any reduc-
tions made for expenses authorized by para-
graph (5), shall be divided on a pro rata basis, 
based on the percentage of the population of 
each State, as compared to the population of 
the United States. 
‘‘(B) If the pro rata amount calculated 
under subparagraph (A) for any State is less 
than the minimum funding level under para-
graph (3), the Administrator shall determine 
the aggregate amount necessary to achieve that 
minimum funding level for each such State. 
‘‘(C) The aggregate amount calculated 
under subparagraph (B) shall be deducted from 
the amount calculated under subparagraph (A) 
for States eligible to receive more than the min-
imum funding level. The deductions shall be 
made on a pro rata basis, based on the popu-
lation of each such State, as compared to the 
total population of all such States. 
‘‘(D) The aggregate amount deducted 
under subparagraph (C) shall be added to the 
funds of those States that are not eligible to re-
351
ceive more than the minimum funding level in 
order to achieve the minimum funding level for 
each such State, except that the eligible amount 
of funds made available to any State under this 
subsection shall not be reduced to an amount 
below the minimum funding level. 
‘‘(2) FUNDS AVAILABILITY DETERMINATION.—
The amount of funds that one or more grantees 
within a State are eligible to receive under this sub-
section shall be the amount determined under para-
graph (1), subject to any modifications required 
under paragraph (3), and shall be based on the 
amount available for the fiscal year in which per-
formance of the grant commences, but not including 
amounts distributed in accordance with paragraph 
(4). The amount of funds received by a grant or 
grantees in a State under any provision of this sub-
section shall not exceed the amount of matching 
funds from sources other than the Federal Govern-
ment, as required under subsection (i). 
‘‘(3) MINIMUM FUNDING LEVEL.—The amount 
of the minimum funding level for each State shall be 
determined for each fiscal year based on the amount 
made available for that fiscal year to carry out this 
section, as follows:
352
‘‘(A) If the amount made available is not 
less than $81,500,000 and not more than 
$90,000,000, the minimum funding level shall 
be $500,000. 
‘‘(B) If the amount made available is less 
than $81,500,000, the minimum funding level 
shall be the remainder of $500,000 minus a 
percentage of $500,000 equal to the percentage 
amount by which the amount made available is 
less than $81,500,000. 
‘‘(C) If the amount made available is more 
than $90,000,000, the minimum funding level 
shall be the sum of $500,000 plus a percentage 
of $500,000 equal to the percentage amount by 
which the amount made available exceeds 
$90,000,000. 
‘‘(4) DISTRIBUTIONS.—Subject to paragraph 
(3), if one or more grantees within a State do not 
apply for, or use, their full funding eligibility for a 
fiscal year, the Administration shall distribute the 
remaining funds as follows: 
‘‘(A) If the grant to any State is less than 
the amount received by that State in fiscal year 
2000, the Administrator shall distribute such 
remaining funds, on a pro rata basis, based on
353
the percentage of shortage of each such State, 
as compared to the total amount of such re-
maining funds available, to the extent necessary 
in order to increase the amount of the grant to 
the amount received by that State in fiscal year 
2000, or until such funds are exhausted, which-
ever first occurs. 
‘‘(B) If any funds remain after the applica-
tion of subparagraph (A), the remaining 
amount may be distributed as supplemental 
funds to a grantee or grantees in any State, as 
the Administrator determines, in its discretion, 
to be appropriate, after consultation with the 
association referred to in subsection (k). 
‘‘(5) USE OF AMOUNTS.—Of the amounts made 
available in any fiscal year to carry out this section 
not more than $500,000 may be used by the Admin-
istrator to pay expenses enumerated in subpara-
graphs (B) through (D) of section 20(a)(1). 
‘‘(6) EXCLUSIONS.—Funds made available to 
one or more grantees within a State provided by the 
Administrator or another Federal agency to carry 
out subsection (f)(4), (g)(2), (h), or (o) or for sup-
plemental grants set forth in paragraph (4)(B), shall 
not be included in the calculation of maximum fund-
354
ing to be made available to one or more grantees 
within the State under paragraph (2). 
‘‘(7) AUTHORIZATION
OF
APPROPRIATIONS.—
There is authorized to be appropriated to carry out 
this section $135,000,000 for fiscal year 2004 and 
$145,000,000 for fiscal year 2005. The authority to 
award grants under this section shall be in effect for 
each fiscal year only to the extent and in the 
amounts as are provided in advance in appropria-
tions Acts. 
‘‘(k) FORMATION OF ASSOCIATION.—The grantees’ 
directors are authorized to form an association to pursue 
matters of common concern. If more than a majority of 
the grantees’ directors are members of such an associa-
tion, the Administrator is authorized and directed to rec-
ognize the existence and activities of such an association 
and to consult with it and develop documents—
‘‘(1) announcing the annual scope of activities 
pursuant to this section; 
‘‘(2) requesting proposals to deliver assistance 
as provided in this section; and 
‘‘(3) governing the general operations and ad-
ministration of the Small Business Development 
Center Program, specifically including the develop-
ment of regulations and a uniform negotiated grant
356
‘‘(B) ACCREDITATION
REQUIREMENT.—
The Administrator may not renew any grant 
under this section unless the grantee’s small 
business development centers have been accred-
ited under the program conducted pursuant to 
this subsection, except that the Assistant Ad-
ministrator for Small Business Development 
Centers may waive such accreditation require-
ment if the Assistant Administrator determines 
that the grantee is making a good faith effort 
to obtain accreditation for each of the grantee’s 
small business development centers. 
‘‘(m) SMALL BUSINESS DEVELOPMENT CENTER AD-
VISORY BOARDS.—
‘‘(1) NATIONAL
SMALL
BUSINESS
DEVELOP-
MENT CENTER ADVISORY BOARD.—
‘‘(A) ESTABLISHMENT.—There is estab-
lished a National Small Business Development 
Center Advisory Board (herein referred to as 
‘Board’) which shall consist of nine members 
appointed from civilian life by the Adminis-
trator and who shall be persons of outstanding 
qualifications known to be familiar and sympa-
thetic with small business needs and problems. 
No more than three members shall be from uni-
357
versities or their affiliates and six shall be from 
small business concerns or associations rep-
resenting small business concerns. At the time 
of the appointment of the Board, the Adminis-
trator shall designate one-third of the members 
and at least one from each category whose term 
shall end in two years from the date of appoint-
ment, a second third whose term 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. 
‘‘(B) OPERATION.—The Board shall elect 
a Chairman and advise, counsel, and confer 
with the Assistant 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 the per diem equiva-
lent of the highest rate of pay for individuals 
occupying the position under GS–18 of the 
General Schedule for each day engaged in ac-
358
tivities of the Board and shall be entitled to be 
reimbursed for expenses as a member of the 
Board. 
‘‘(2) LOCAL
SMALL
BUSINESS
DEVELOPMENT 
CENTER ADVISORY BOARDS.—Each grantee’s direc-
tor shall establish an advisory board for the grant-
ee’s network of small business development centers. 
The district director shall have no authority to ap-
prove or disapprove the members of the advisory 
board selected by the grantee’s director. 
‘‘(n) ADMINISTRATION OF PROGRAM.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, the program established by this 
section shall be administered by the Administrator, 
acting through the Assistant Administrator for 
Small Business Development Centers with such 
oversight by the Associate Administrator for Enter-
prise Outreach and Training as the Administrator 
determines to be appropriate. 
‘‘(2) DUTIES
OF
ASSISTANT
ADMINISTRATOR 
FOR SMALL BUSINESS DEVELOPMENT CENTERS.—
The duties of the Assistant Administrator for Small 
Business Development Centers shall include recom-
mending the annual program budget, reviewing the 
annual budgets submitted by each grantee, estab-
359
lishing appropriate funding levels therefore, advising 
the Administrator on the selection of grantees to 
participate in the program, implementing the provi-
sions of this section, maintaining a clearinghouse to 
provide for the dissemination and exchange of infor-
mation between grantees and their subcontractors 
and conducting audits of recipients of grantees 
under this section. 
‘‘(3) CONSULTATION REQUIREMENTS.—In car-
rying out the duties described in paragraph (2), the 
Assistant Administrator shall confer with and seek 
the advice of the advisory boards established pursu-
ant to subsection (m) and the heads of the regional 
and district offices of the Administration. 
‘‘(o) ESTABLISHMENT
OF INFORMATION SHARING 
SYSTEM.—
‘‘(1) IN GENERAL.—The Administrator, in con-
sultation with the grantees, their subcontractors, 
and the association authorized by this section shall 
develop and implement an information sharing sys-
tem. Such system shall—
‘‘(A) allow small business development cen-
ters to exchange information about their pro-
grams;
360
‘‘(B) provide information central to tech-
nology transfer; and 
‘‘(C) provide information central to in-
creased utilization by United States businesses 
of sourcing their procurement requirements 
with small manufacturers. 
‘‘(2) GRANT
AUTHORITY.—The Administrator 
may make grants to one or more grantees to carry 
out the provisions of this subsection. Such grants 
shall be awarded for a period of not to exceed 5 
years. The matching funds requirements of sub-
section (i) shall not be applicable to grants made 
under this subsection. 
‘‘(p) COOPERATION WITH FEDERAL SCIENCE RE-
SEARCH FACILITIES AND AGENCIES.—
‘‘(1) IN GENERAL.—Laboratories operated and 
funded by the Federal Government are authorized 
and directed to cooperate with the Administrator in 
developing and establishing programs to support 
small business development centers by making facili-
ties and equipment available; providing experiment 
station capabilities in adaptive engineering; pro-
viding library and technical information processing 
capabilities; and providing professional staff for con-
361
sulting. The Administrator is authorized to reim-
burse the laboratories for such services. 
‘‘(2) NATIONAL
SCIENCE
FOUNDATION.—The 
National Science Foundation is authorized and di-
rected to cooperate with the Administrator in devel-
oping and establishing programs to support small 
business development centers. 
‘‘(3) NATIONAL AERONAUTICS AND SPACE AD-
MINISTRATION.—The 
National 
Aeronautics 
and 
Space Administration and regional technology trans-
fer centers supported by the National Aeronautics 
and Space Administration are authorized and di-
rected to cooperate with grantees and their small 
business development centers. 
‘‘(q) REGULATIONS.—In promulgating regulations to 
carry out this section, the Administration shall identify, 
and require grantee compliance with, the provisions in-
cluded in uniform requirements of Office of Management 
and Budget (OMB) Circulars which govern audits, cost 
principles and administrative requirements for Federal 
grants, and contracts and cooperative agreements.’’. 
(b) CONFORMING AMENDMENT.—Paragraph (2) of 
section 27(g) of the Small Business Act (15 U.S.C. 
654(g)) is amended by striking ‘‘section 21(c)(3)(T)’’ and 
inserting ‘‘section 21(f)(4)(T)’’.
362
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall take effect on the date of the enactment of this 
Act. 
(2) GRANTS.—To the extent that the amend-
ment made by subsection (a) applies with respect to 
grants, such amendment shall apply to grants made, 
renewed, or terminated after the date of the enact-
ment of this Act. 
(d) TRANSITION RULES.—
(1) MULTIPLE GRANTEES REPLACED WITH SIN-
GLE GRANTEE.—In the case of a State which is 
served by two or more grantees under section 21 of 
the Small Business Act on the date of the enactment 
of this Act, the Administrator shall be required to 
select a new grantee for such State following the se-
lection process set forth in such section (as in effect 
on the day after the date of the enactment of this 
Act) if the grantees serving such State on the date 
of the enactment of this Act were selected after Jan-
uary 1, 2002. 
(2) SMALL BUSINESS DEVELOPMENT CENTER 
ADVISORY BOARDS.—Each member of the National 
Small Business Development Center Advisory Board
363
and each member serving on a local small business 
development center advisory board on the day before 
the date of the enactment of this Act shall continue 
to so serve until the end of such member’s term. 
SEC. 213. ASSIGNMENT OF EMPLOYEES OF THE OFFICE OF 
INTERNATIONAL TRADE. 
Section 22 of the Small Business Act (15 U.S.C. 649) 
is amended by adding at the end the following new sub-
section: 
‘‘(h) In carrying out this section, the Administrator 
shall ensure that the number of full-time equivalent em-
ployees of the Office assigned to the one-stop shops re-
ferred to in section 2301(b) of the Omnibus Trade and 
Competitiveness Act of 1988 (15 U.S.C. 4721(b)) is not 
less than the number of such employees so assigned on 
January 1, 2003.’’. 
SEC. 214. SUPERVISORY AND ENFORCEMENT AUTHORITY 
FOR SMALL BUSINESS LENDING COMPANIES. 
Section 23 of the Small Business Act (15 U.S.C. 650) 
is amended to read as follows:
‘‘SEC. 23. SUPERVISORY AND ENFORCEMENT AUTHORITY 
FOR SMALL BUSINESS LENDING COMPANIES. 
‘‘(a) IN GENERAL.—The Administrator is author-
ized—