I 
115TH CONGRESS 
2D SESSION 
H. R. 6565 
To amend the Small Business Act to provide for contracting preferences 
and other benefits for emerging business enterprises, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 26, 2018 
Mr. CARSON of Indiana introduced the following bill; which was referred to 
the Committee on Small Business 
A BILL 
To amend the Small Business Act to provide for contracting 
preferences and other benefits for emerging business en-
terprises, 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 ‘‘Emerging Business 
Encouragement Act of 2018’’. 
SEC. 2. EMERGING BUSINESS ENTERPRISES. 
(a) DESIGNATION.—Section 3 of the Small Business 
Act (15 U.S.C. 632) is amended by adding at the end the 
following: 
‘‘(dd) EMERGING BUSINESS ENTERPRISES.— 
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‘‘(1) IN
GENERAL.—Not later than the date 
that is one year after the date of enactment of this 
paragraph, for each industry category for which the 
Administrator established a size standard under this 
subsection, the Administrator shall by rule establish 
procedures for designating a small business concern 
in that industry category as an emerging business 
enterprise. Such procedures shall include the criteria 
under paragraph (2), and a process for appealing 
decisions of the Administrator on designations. Such 
a designation shall expire on the date that the small 
business concern is no longer in compliance with 
such criteria, except that— 
‘‘(A) in the case of an emerging business 
enterprise that receives a designation as such 
but which existed as a business entity prior to 
such designation, the designation shall not ex-
pire by reason of the emerging business enter-
prise being more than 5 years old; instead, the 
designation shall expire on the date that is 5 
years after the date of the designation; and 
‘‘(B) if the emerging business enterprise 
exceeds the size limitation described in the cri-
terion under paragraph (2)(A) following des-
ignation as an emerging business enterprise, 
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the designation shall expire only if the size is 
50 percent or more of the maximum size of a 
small business concern within that industry cat-
egory. 
The rulemaking under this paragraph shall include 
a procedure for self-certification as an emerging 
business enterprise, for annual submission of docu-
mentation establishing eligibility for designation as 
an emerging business enterprise, and for periodic 
audits by the Administrator, or by State or local en-
tities designated by the Administrator, of emerging 
business enterprises based on such documentation. 
‘‘(2) CRITERIA
FOR
DESIGNATION.—The Ad-
ministrator shall establish criteria for designation of 
an emerging business enterprise, which shall include 
the following: 
‘‘(A) NUMBER OF EMPLOYEES.—That the 
small business concern employs, in the Adminis-
trator’s determination a number of employees 
that is less than the larger of— 
‘‘(i) not more than 10 percent of the 
number of employees that a small business 
concern within that industry category may 
employ, if that small business concern is so 
classified by reason of a size standard 
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under section 3(a) pertaining to the num-
ber of employees of the concern; or 
‘‘(ii) 25 employees. 
‘‘(B) AGE OF BUSINESS.—That the small 
business concern is not more than 5 years old, 
beginning on the date on which the business 
was first registered. 
‘‘(C) SALARY
REQUIREMENTS.—That the 
small business concern does not, in the Admin-
istrator’s determination, pay to an individual 
who owns any part of the concern or who is in 
a management position a salary greater than 
200 percent of the mean annual salary for 
Managers of Companies and Enterprises or the 
equivalent from the most recent Employment 
and Wage Estimates developed by the Secretary 
of Labor. 
‘‘(3) PUBLIC
NOTIFICATION.—The Adminis-
trator shall take appropriate action to publicize the 
establishment of the procedures for designations 
under this paragraph, including by conducting out-
reach to eligible small business concerns. 
‘‘(4) CONTRACTOR
TRAINING.—The Adminis-
trator shall provide for training regarding Federal 
procurement on an Internet Web site of the Admin-
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istrator, which shall be available to the public at no 
charge.’’. 
(b) CONTRACTING PREFERENCE.—Section 15(g)(2) 
of the Small Business Act (15 U.S.C. (g)(2)) is amended 
by adding at the end the following: 
‘‘(G) 
EMERGING
BUSINESS
ENTER-
PRISES.— 
‘‘(i) IN GENERAL.—The head of each 
Federal agency shall, after consultation 
with the Administrator, establish goals for 
participation by emerging business enter-
prises designated under section 3(a)(6) in 
not less than 3 percent of all contracts, in-
cluding prime contracts and subcontracts, 
for each fiscal year. The head of the agen-
cy may give preference in making contract 
awards to such emerging business enter-
prises and shall make consistent efforts to 
annually expand participation by emerging 
business enterprises from each industry 
category in procurement contracts of the 
agency. 
‘‘(ii) REPORTS.— 
‘‘(I) 
REPORTS
FROM
AGEN-
CIES.—At the conclusion of each fiscal 
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year, the head of each Federal agency 
shall report to the Administrator on 
the extent of participation by emerg-
ing business enterprises in procure-
ment contracts of such agency. Such 
reports shall contain appropriate jus-
tifications for failure to meet the goals 
established under this subparagraph. 
‘‘(II) REPORTS TO CONGRESS.— 
The 
Administrator 
shall 
annually 
compile and analyze the reports sub-
mitted by the individual agencies pur-
suant to subclause (I) and shall sub-
mit to the President and the Com-
mittee on Small Business and Entre-
preneurship of the Senate and the 
Committee on Small Business of the 
House of Representatives the compila-
tion and analysis, which shall include 
the following: 
‘‘(aa) The goals in effect for 
each agency and the agency’s 
performance in attaining such 
goals. 
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‘‘(bb) An analysis of any 
failure to achieve individual agen-
cy goals and the actions planned 
by such agency (and approved by 
the Administrator) to achieve the 
goals in the succeeding fiscal 
year. 
‘‘(cc) The total number and 
dollar value of prime contracts 
and subcontracts awarded to 
emerging business enterprises. 
‘‘(III) ANNUAL
PRESIDENTIAL 
REPORT
ON
THE
STATE
OF
SMALL 
BUSINESS.—The President shall in-
clude the information required by sub-
clause (II) in each annual report to 
the Congress on the state of small 
business prepared pursuant to section 
303(a) of the Small Business Eco-
nomic Policy Act of 1980 (15 U.S.C. 
631b(a)).’’. 
(c) FEE WAIVERS.—Section 7(a) of the Small Busi-
ness Act (15 U.S.C. 636(a)) is amended by adding at the 
end the following: 
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