I
104TH CONGRESS
1ST SESSION
H. R. 111
To amend the Small Business Act to make modifications to the small business
and capital ownership development program, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 4, 1995
Mr. MFUME introduced the following bill; which was referred to the Committee
on Small Business
A BILL
To amend the Small Business Act to make modifications
to the small business and capital ownership development
program, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Minority Enterprise
Development Act of 1995’’.
TITLE I—AMENDMENTS TO MI-
NORITY 
SMALL 
BUSINESS
AND 
CAPITAL 
OWNERSHIP
DEVELOPMENT PROGRAM
SEC. 101. MINORITY ENTERPRISE DEVELOPMENT PRO-
GRAM.
(a) ESTABLISHMENT.—Section 7(j)(10) of the Small
Business Act (15 U.S.C. 636(j)(10)) is amended—
(1) by striking ‘‘(10) There is established’’ and
all that follows before subparagraph (A) and insert-
ing the following:
‘‘(10)(A) There is established within the Administra-
tion a Minority Enterprise Development Program (herein-
after in this subsection referred to as the ‘Program’),
which shall be administered by the Associate Adminis-
trator for Minority Enterprise Development in accordance
with this paragraph and section 8(a).’’;
(2) by striking subparagraph (B); and
(3) by striking ‘‘(A) The Program’’ and insert-
ing ‘‘(B) The Program’’.
(b) ASSISTANCE UNDER
THE PROGRAM.—Section
7(j)(10)(B)(i) of the Small Business Act, as redesignated
by subsection (a) of this section, is amended by inserting
‘‘Phase III of’’ after ‘‘small business concerns participat-
ing in’’.
SEC. 103. BUSINESS PLAN.
Section 7(j)(10)(D) of the Small Business Act (15
U.S.C. 636(j)(10)(D)) is amended—
(1) in clause (i), by inserting ‘‘Phase III’’ after
‘‘Promptly after’’;
(2) in clause (ii), by striking ‘‘The plans’’ in the
matter preceding subclause (I) and inserting ‘‘The
business plans’’;
(3) by amending clause (iii)(IV) to read as fol-
lows:
‘‘(IV) A transition management plan
outlining specific steps to enhance the
prospect of profitable business operations
after the expiration of the 9-year Phase III
program term specified in paragraph
(15).’’;
(4) in clause (iii)—
(A) in the first sentence by striking ‘‘Each
Program Participant’’ and inserting ‘‘Each
Phase III Program Participant’’; and
(B) in the forth sentence by striking ‘‘the
transitional stage’’ and inserting ‘‘Phase III’’;
and
(5) in clause (iv), by striking ‘‘Each Program
Participant’’ and inserting ‘‘Each Phase III Pro-
gram Participant’’.
SEC. 104. USE OF CONTRACT SUPPORT LEVELS.
Section 7(j)(10)(D) of the Small Business Act (15
U.S.C. 636(j)(10)(D)) is further amended by adding at
the end the following new clause:
‘‘(v) The forecasts of overall business activity con-
tained in the business plan of a Program Participant or
the estimate contained in the section 8(a) contract support
level of such firm shall not be used by the Administration
to make a determination that such firm is ineligible for
the award of a contract to be awarded pursuant to section
8(a).’’.
SEC. 105. PHASE III REQUIREMENTS.
Section 7(j)(10)(I) of the Small Business Act (15
U.S.C. 636(j)(10)(I)) is amended—
(1) in clause (i), by striking ‘‘During the devel-
opmental stage of its participation in the Program,’’
and inserting ‘‘During its first 4 years of participa-
tion in Phase III of the Program,’’;
(2) in clause (ii), by striking ‘‘During the tran-
sitional stage of the Program’’ and inserting ‘‘Dur-
ing years 5 through 9 of its participation in Phase
III of the Program,’’;
(3) by amending clause (iii)(I) to read as fol-
lows:
‘‘(I) establish business activity targets ap-
plicable to Program Participants during the 5th
year and each succeeding year of the concern’s
participation in Phase III which reflect a rea-
sonably consistent increase in contracts award-
ed other than pursuant to section 8(a) and are
expressed as a percentage of total sales cor-
responding to the concern’s fiscal year;’’; and
(4) in clause (iii)(IV) by inserting ‘‘in Phase III
of the Program’’ after ‘‘performance’’.
SEC. 106. IMPROVED STATUS PROTEST SYSTEM.
Section 7(j)(10)(J) of the Small Business Act (15
U.S.C. 636(j)(10)(J)) is amended by striking clause (ii)
and inserting the following new clauses:
‘‘(ii) A protest may be brought regarding a self-
certification by a business concern regarding its sta-
tus as a small business concern owned and con-
trolled by socially and economically disadvantaged
individuals by—
‘‘(I) another person with a direct economic
interest in the award of the contract or sub-
contract under which such business has alleg-
edly made the false certification regarding its
status as a small business concern owned and
controlled by socially and economically dis-
advantaged individuals;
‘‘(II) a prime contractor receiving specific
and credible information that an actual or pro-
spective subcontractor or supplier has falsely
certified its status as a small business concern
owned and controlled by socially and economi-
cally disadvantaged individuals;
‘‘(III) a contracting officer receiving a self-
certification regarding an actual or prospective
contractor’s status, which such officer reason-
ably believes to be false; or
‘‘(IV) the Associate Administrator for Mi-
nority Enterprise Development.
‘‘(iii) The Office of Hearings and Appeals shall
hear appeals regarding the status of a concern as a
small business concern owned and controlled by so-
cially and economically disadvantaged individuals for
purposes of any program or activity conducted under
section 8(d) or any other Federal law that refers to
such section for a definition of program eligibility.
‘‘(iv) A decision issued pursuant to clause (iii)
shall—
‘‘(I) be made available to all parties to the
proceeding;
‘‘(II) be published in full text; and
‘‘(III) include findings of fact and conclu-
sions of law, with specific reasons supporting
such findings and conclusions, on each material
issue of fact and law of decisional significance
regarding the disposition of the protest.
‘‘(v) A decision issued pursuant to clause (iii)
shall be considered a final agency action, and shall
be subject to judicial review under section 553 of
title 5, United States Code.
‘‘(vi) If a firm engages in a pattern of misrepre-
sentations regarding the status of the firm in viola-
tion of section 16(d)(1), the Administration or the
aggrieved executive agency shall initiate an action to
impose an appropriate penalty under section
16(d)(2).’’.
SEC. 107. CONTINUED PROGRAM PARTICIPATION.
Section 7(j)(11)(D) of the Small Business Act (15
U.S.C. 636(j)(11)(D)) is amended to read as follows:
‘‘(D)(i) A Program Participant shall remain eligible
for participation in the Program after a transfer of an
ownership interest in the firm if ownership and control
(as required by section 8(a)(4)) is retained by the socially
and economically disadvantaged individuals upon whom
Program eligibility is based.
‘‘(ii) A Program Participant shall remain eligible for
participation in the Program after transfer of ownership
and control (as required by section 8(a)(4)) to individuals
who are determined to be socially and economically dis-
advantaged pursuant to section 8(a). Unless graduated or
terminated, the Program Participant shall be eligible for
a period of continued Program participation not to exceed
the period described in paragraph (15).
‘‘(iii) A Program Participant that is a tribally owned
corporation may remain eligible for participation in the
Program with other than a Native American as the firm’s
chief executive officer (or chief operating officer), if the
governing body of the Indian tribe certifies to the Admin-
istration that it was unable to hire a qualified Native
American after conducting a national recruitment for such
an individual.’’.
SEC. 108. PROGRAM ADMISSION.
Section 7(j)(11)(F) of the Small Business Act (15
U.S.C. 636(j)(11)(F)) is amended to read as follows:
‘‘(F) Subject to the provisions of section 8(a)(9), the
Division shall—
‘‘(i) make recommendations on requests for re-
consideration of denied applications for entry into
Phase III of the Program to the Associate Adminis-
trator for Minority Enterprise Development;
‘‘(ii) make requests for the initiation of suspen-
sion, termination, or graduation proceedings, as ap-
propriate, to the Associate Administrator for Minor-
ity Enterprise Development; and
‘‘(iii) implement such policy directives as may
be issued by the Associate Administrator for Minor-
ity Enterprise Development pursuant to subpara-
graph (I) regarding, among other things, the geo-
graphic distribution of concerns to be admitted into
the Program and the industrial makeup of such con-
cerns.’’.
SEC. 109. PROGRAM PHASES.
(a) ESTABLISHMENT.—Section 7(j)(12) of the Small
Business Act (15 U.S.C. 636(j)(12)) is amended to read
as follows:
‘‘(12)(A) The Administration shall segment the Pro-
gram into 3 phases: a startup phase, a developmental
phase, and a section 8(a) contracting phase, which shall
be known as Phase I, Phase II, and Phase III, respec-
tively.
‘‘(B) The startup phase of program participation
shall be designed to assist newly formed or forming con-
cerns in overcoming their economic disadvantage by pro-
viding such assistance as may be necessary and appro-
priate to achieve a business foundation adequate for fu-
ture growth.
‘‘(C) The developmental stage of program participa-
tion shall be designed to assist the concern in its effort
to overcome its economic disadvantage by providing such
assistance as may be necessary and appropriate to access
its markets and to strengthen its financial and managerial
skills.
‘‘(D) The section 8(a) contracting stage of program
participation shall be designed to overcome, insofar as
practicable, the remaining elements of economic disadvan-
tage, and to further develop the concern towards economic
viability.’’.
(b) MAXIMUM PERIOD OF PARTICIPATION IN EACH
PHASE.—Section 7(j)(15) of the Small Business Act (15
U.S.C. 636(j)(15)) is amended to read as follows:
‘‘(15) An eligible small business concern may receive
developmental assistance under the Program for the fol-
lowing periods as measured from the date of entry into
the applicable phase of the Program—
‘‘(A) not more than 2 years may be spent in
Phase I of program participation;
‘‘(B) not more than 3 years may be spent in
Phase II of program participation; and
‘‘(C) not more than 9 years may be spent in
Phase III of program participation.’’.
SEC. 110. DEVELOPMENTAL ASSISTANCE AUTHORIZED FOR
PROGRAM PARTICIPANTS.
Section 7(j)(13) of the Small Business Act (15
U.S.C. 636(j)) is amended—
(1) in the matter preceding subparagraph (A),
by striking ‘‘during the stages of program participa-
tion specified in paragraph 12’’ and inserting ‘‘dur-
ing its term of participation in the Program’’; and
(2) by striking subparagraph (J).
SEC. 111. TEST PROGRAM FOR USE OF SURETY BOND
WAIVERS.
Section 7(j)(13)(D) of the Small Business Act (15
U.S.C. 636(j)(13)(D)) is amended—
(1) by striking clauses (i) through (iii);
(2) by striking ‘‘(D) A maximum’’ and inserting
‘‘(D)(i) A maximum’’;
(3) by striking ‘‘, except that, such exemptions
may be granted under this subparagraph only if—
’’ and inserting a period; and
(4) by adding at the end the following new
clauses:
‘‘(ii) The agency with contracting authority
may, upon the request of the Program Partici-
pant, grant an exemption pursuant to clause
(i), if—
‘‘(I) the Program Participant provides
certification, in the form prescribed by the
Administration, that the firm was unable
to obtain the requisite bonding from cor-
porate surety bonding firms;
‘‘(II) the Program Participant has
provided for the protection of persons fur-
nishing materials or labor under the con-
tract by arranging for—
‘‘(aa) the direct disbursement of
funds owed to such persons by the
procuring agency or through an es-
crow account provided by any bank
the deposits of which are insured by
the United States Government; or
‘‘(bb) irrevocable letters of credit
(or other alternatives to surety bond-
ing acceptable to the procuring agen-
cy); and
‘‘(III) the award value of the contract
for which the exemption is being sought
does not exceed $1,000,000.
‘‘(iii) The authority to grant an exemption
under clause (ii) shall cease to be effective on
September 30, 1997.’’.
SEC. 112. STRATEGIC ALLIANCES.
Section 7(j)(14) of the Small Business Act (15
U.S.C. 636(j)) is amended to read as follows:
‘‘(14)(A) Small business concerns that have com-
pleted the 9-year Phase III program term specified in
paragraph (15) (in this paragraph referred to as a ‘‘Pro-
gram Graduate’’) shall be authorized to assist Phase III
Program Participants, determined by the Administration
to be eligible for such assistance, to develop within the
Program.
‘‘(B) A Program Graduate may provide assistance to
a Phase III Program Participant under this paragraph—
‘‘(i) by providing, among other things, manage-
rial assistance, technical assistance, and financial
support; and
‘‘(ii) by entering into subcontracts for the per-
formance of specific contracts awarded under section
8(a).
‘‘(C) In determining the eligibility of a small business
concern to receive assistance or contracts under this sub-
section or section 8(a), the Administration shall not take
into account any assistance received under this paragraph
from a Program Graduate.’’.
SEC. 113. BUSINESS LOANS.
Section 7(a)(20)(B)(ii) of the Small Business Act (15
U.S.C. 636(a)(20)(B)(ii)) is amended by striking ‘‘be not
less than 85 per centum’’ and inserting ‘‘not exceed 95
percent of the balance of the financing outstanding at the
time of disbursement where the purpose of the financing
is to finance government contracts, and shall not exceed
90 percent of the balance of the financing outstanding at
the time of disbursement where the purpose of the financ-
ing is for general working capital as a line of credit’’.
TITLE II—AMENDMENTS TO
CONTRACTING PROGRAM
SEC. 201. CONTRACT AWARD PROCEDURES.
Section 8(a)(1) of the Small Business Act (15 U.S.C.
637(a)(1)) is amended by striking ‘‘(a)(1) It shall be the
duty’’ and all that follows through subparagraph (D) and
inserting the following:
‘‘(a)(1)(A) The Administration shall seek the estab-
lishment of contract goals under section 15(g) which will
assure that contracts sufficient to satisfy the contract sup-
port levels identified by participants in the Minority En-
terprise Development Program established by section
7(j)(10) are designated by the various Federal agencies
for award pursuant to this subsection.
‘‘(B) Except as provided in subparagraph (D), the
Administration may enter into prime contracts with pro-
curing agencies and subcontract performance of such con-
tracts to qualified Phase III Program Participants on a
sole-source basis or may delegate to procuring agencies
under such conditions as the Administration considers ap-
propriate the authority to enter into sole-source contracts
with Phase III Program Participants. In any case in which
the Administration accepts a requirement for potential
award pursuant to this subsection and determines that a
particular Phase III Program Participant is eligible for
and responsible to perform such contract, the procuring
agency contracting officer shall be authorized in the offi-
cer’s discretion to let the procurement contract upon such
terms and conditions as may be agreed upon between the
procuring agency contracting officer and the Program
Participant.
‘‘(C)(i) The Administration shall determine the eligi-
bility of the Program Participant to receive the award in
accordance with the eligibility criteria listed in paragraph
(16).
‘‘(D) A contract opportunity offered for award pursu-
ant to this subsection may be awarded as a sole-source
contract if the anticipated award price of the contract (in-
cluding options) will not exceed $10,000,000 in the case
of a contract opportunity assigned a standard industrial
classification code for manufacturing and $7,000,000 (in-
cluding options) in the case of all other contract opportu-
nities.’’.
SEC. 202. COMPETITION REQUIREMENTS.
Section 8(a)(1)(D) of the Small Business Act (15
U.S.C. 637(a)(1)(D)) is amended—
(1) by redesignating clause (ii) as clause (iii);
and
(2) by inserting after clause (i) the following
new clause:
‘‘(ii) Whenever a requirements-type contract (includ-
ing a task order contract, indefinite quantity contract, or
indefinite delivery contract) is to be awarded, the thresh-
olds for competition required under clause (i)(II) shall be
calculated on the basis of the estimated total value of the
contract.’’.
SEC. 203. TIMELY DETERMINATION OF ELIGIBILITY FOR
CONTRACT AWARD.
(a) IN GENERAL.—Section 8(a)(16) of the Small
Business Act (15 U.S.C. 637(a)(16)) is amended—
(1) by redesignating subparagraph (B) as sub-
paragraph (E); and
(2) by striking subparagraph (A) and inserting
the following:
‘‘(A) Upon receipt of notification that a Federal
agency intends to consider a Program Participant for
award of a contract pursuant to this subsection (on a com-
petitive or noncompetitive basis), the Administration shall
promptly notify the agency regarding the eligibility of the
Program Participant for award of the contract, and shall
identify all matters that could reasonably be expected to
render the Program Participant ineligible at the time of
the contract award.
‘‘(B) A Program Participant may be found to be in-
eligible for award of the contract pursuant to this sub-
section, if—
‘‘(i) the Program Participant is not in compli-
ance with its competitive business activity targets es-
tablished pursuant to section 7(j)(10)(I); or
‘‘(ii) the Program Participant has failed to
make the submissions required under paragraph
(6)(B).
‘‘(C) A small business concern owned and controlled
by socially and economically disadvantaged individuals
that has completed its Program Participation term pursu-
ant to section 7(j)(15) shall be eligible for award if—
‘‘(i) a requirement has been offered to and ac-
cepted by the Administration for the Program; and
‘‘(ii)(I) in the case of a contract to be competi-
tively awarded, the prospective contract recipient
was a Program Participant eligible for award of the
contract on the date specified for receipt of offers,
and such firm had timely submitted an offer (includ-
ing price); or
‘‘(II) in the case of a contract to be non-
competitively awarded, the prospective contract re-
cipient was a Program Participant eligible for award
of the contract on the date specified by the agency
contracting officer for the submission of an offer (in-
cluding price).
‘‘(D) If the Administration determines that a Pro-
gram Participant is ineligible for consideration for award
of a contract under subparagraph (B) or (C), the deter-
mination shall be supported by specific findings. The de-
termination (and supporting findings) shall be furnished
to the Program Participant and to the contracting officer
for the agency providing the contracting opportunity.’’.
(b) CONFORMING AMENDMENTS.—Section 8(a) of
the Small Business Act (15 U.S.C. 637(a)) is amended—
(1) in paragraph (3)—
(A) by striking subparagraph (A) and in-
serting the following:
‘‘(A) [Reserved].’’; and
(B) by striking subparagraph (D) and in-
serting the following:
‘‘(D) Subsequent to the award of a contract under
this subsection, if requested by the recipient of the con-
tract, the Administration shall not publicly disclose the
agency’s estimate of the fair market price.’’;
(2) in paragraph (7), by striking subparagraph
(A) and inserting the following:
‘‘(A) [Reserved].’’;
(3) in paragraph (12)(A), by striking ‘‘eligible
to receive subcontracts’’ and inserting ‘‘eligible for
contract awards’’; and
(4) in paragraph (9)(B)—
(A) in clause (iii), by striking ‘‘and’’;
(B) by redesignating clause (iv) as clause
(v); and
(C) by inserting after clause (iii) the fol-
lowing new clause:
‘‘(iv) a determination of ineligibility for award
of a contract pursuant to paragraph (16)(B); and’’.
SEC. 204. CONTINUED CONTRACT PERFORMANCE.
Section 8(a)(21) of the Small Business Act (15
U.S.C. 637(a)(21)) is amended—
(1) in subparagraph (B), by striking ‘‘The Ad-
ministrator may, on a nondelegable basis, waive the
requirements of subparagraph (A) only if one of the
following conditions exist:’’ and inserting ‘‘The re-
quirements of subparagraph (A) may be waived
under any of the following circumstances:’’; and
(2) by striking subparagraph (C) and inserting
the following:
‘‘(C)(i) Except as provided in clause (ii), a request
for a waiver pursuant to subparagraph (B) shall be sub-
mitted prior to the actual relinquishment of ownership or
control.
‘‘(ii) Under the circumstances described in subpara-
graph (B)(iii), the waiver request shall be made as soon
as practicable after the incapacity or death occurs.’’.
SEC. 205. TRANSITION COMPETITIONS FOR PROGRAM
GRADUATES.
Section 8(a) of the Small Business Act (15 U.S.C.
637(a)) is amended by adding at the end the following
new paragraph:
‘‘(22)(A) A small business concern owned and con-
trolled by socially and economically disadvantaged individ-
uals, which has graduated from the Minority Enterprise
Development Program, may participate in the competition
for a contracting opportunity to be awarded pursuant to
this subsection if—
‘‘(i) the firm is currently performing satisfac-
torily a contract to furnish the same (or substan-
tially similar) products or services under a contract
competitively awarded pursuant to paragraph (1);
‘‘(ii) closing date for receipt of proposals for the
contracting opportunity is a date after the date on
which the firm will no longer be eligible for award
of contracts pursuant to paragraph (1);
‘‘(iii) the firm is otherwise eligible to compete
for the contract;
‘‘(iv) the Associate Administrator for Minority
Enterprise Development grants the firm’s request to
participate in the competition otherwise restricted to
Program Participants after making a determination
that denial of the firm’s request would deprive such
firm of 25 percent or more of its revenue; and
‘‘(v) the firm was a Program Participant on
January 3, 1995.
‘‘(B) A Program Graduate described in subparagraph
(A) shall be ineligible for award of a contract resulting
from a competition conducted pursuant to paragraph (1),
unless such firm furnishes (and the contracting officer ac-