207
the Administrator shall notify the contracting officer 
of the Administrator’s determination not later than 3 
days after the date of such request. 
‘‘(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 con-
tracts by negotiating or otherwise letting subcontracts 
to program participants for such goods or services as 
may be necessary to enable the Administrator to per-
form 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 business 
concern owned by a socially and economically dis-
advantaged Indian tribe (or a wholly owned business 
entity of such tribe), each firm’s size shall be inde-
pendently determined without regard to its affiliation 
with the tribe, any entity of the tribal organization, 
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 competi-
tive advantage within an industry category.
208
‘‘(III) Any joint venture established under the 
authority of section 602(b) of the Business Oppor-
tunity Development Reform Act of 1988 (Public Law 
100–656) shall be eligible for award of a contract 
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 Admin-
istrator 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 Admin-
istrator shall, to the extent that the Administrator de-
termines it to be necessary or appropriate, make an
209
award to a small business concern which has com-
pleted its period of program participation as de-
scribed in paragraph (21)(F) if—
‘‘(i) the contract will be awarded as a result 
of an offer (including price) submitted in re-
sponse to a published solicitation relating to a 
competition conducted pursuant to subparagraph 
(H); and 
‘‘(ii) the prospective contract awardee was a 
program participant eligible for award of the 
contract on the date specified for receipt of offers 
contained in the contract solicitation. 
‘‘(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 opportunity 
assigned a North American Industrial Classifica-
tion System code for manufacturing and
210
$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 per-
formance 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 geographic 
distribution of sole source contracts awarded pursu-
ant to this subsection.
211
‘‘(3) SURETY
BONDS.—Notwithstanding sub-
sections (a) and (c) of the first section of the Act enti-
tled ‘An Act requiring contracts for the construction, 
alteration, and repair of any public building or pub-
lic work of the United States to be accompanied by 
a performance bond protecting the United States and 
by additional bond for the protection of persons fur-
nishing material and labor for the construction, alter-
ation, or repair of said public buildings or public 
work,’ approved August 24, 1935 (49 Stat. 793; 40 
U.S.C. 270a), no program participant shall be re-
quired to provide any amount of any bond as a con-
dition of receiving any subcontract under this sub-
section if—
‘‘(A) the Administrator determines that 
such amount is inappropriate for such program 
participant in performing such contract; 
‘‘(B) the Administrator takes such measures 
as the Administrator considers appropriate for 
the protection of persons furnishing materials 
and labor to a program participant receiving 
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
212
reasonable period of time, such financial and 
other capability as may be needed to obtain such 
bonds as the Administrator may subsequently re-
quire for the successful completion of any pro-
gram conducted under the authority of this sub-
section; 
‘‘(D) the Administrator finds that such pro-
gram 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 sub-
ject to the guarantee provisions of title IV of the 
Small Business Investment Act of 1958; and 
‘‘(E) the program participant is determined 
to be a startup concern and such concern has not 
been participating in any program conducted 
under the authority of this subsection for a pe-
riod 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. 
‘‘(B) CALCULATION OF FAIR MARKET PRICE.—(i) 
For purposes of paragraph (2)(C), a fair market price
213
shall be determined by the agency according to clauses 
(ii) and (iii) and submitted along with the procure-
ment requirement to the Administrator. The submis-
sion 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 new procurement requirement, or a requirement 
that does not have a satisfactory procurement history, 
shall be derived from a price or cost analysis taking 
into account prevailing market conditions, commer-
cial prices for similar goods or services, and data 
from other Federal agencies. Such analysis shall con-
sider such cost or pricing data as may be timely sub-
mitted by the Administrator. 
‘‘(iii) The estimate of a current fair market price 
for a procurement requirement that has a satisfactory 
procurement history shall be based on recent award 
prices adjusted to insure comparability. Such adjust-
ments shall take into account differences in quan-
tities, performance times, plans, specifications, trans-
portation costs, packaging and packing costs, labor 
and materials costs, overhead costs, and any other ad-
ditional costs which may be deemed appropriate. 
‘‘(iv) The agency’s estimate of the current fair 
market price (and any supporting data furnished to
214
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 be-
cause of their identity as a member of a group with-
out 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-
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
215
shall consider the assets and net worth of such socially 
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 pop-
ulation 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 Administrator 
to be economically disadvantaged at the time of pro-
gram entry shall be deemed to be economically dis-
advantaged for the term of the program, as computed 
under paragraph (21). 
‘‘(C) Whenever the Administrator computes per-
sonal net worth for the purpose of program entry, it 
shall exclude from such computation—
216
‘‘(i) the value of investments that disadvan-
taged owners have in their concerns, except 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 disadvantaged per-
sons; 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 sec-
tion, 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—
‘‘(I) one or more socially and, at 
the time of program entry, economi-
cally disadvantaged individuals,
217
‘‘(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—
‘‘(i) socially and, at the time of pro-
gram entry, economically disadvantaged in-
218
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 ‘Native 
Hawaiian Organization’ means any community 
service organization serving Native Hawaiians 
in the State of Hawaii which—
‘‘(i) is a nonprofit corporation that has 
filed articles of incorporation with the di-
rector (or the designee thereof) of the Ha-
waii Department of Commerce and Con-
sumer Affairs, or any successor agency, 
‘‘(ii) is controlled by Native Hawai-
ians, and 
‘‘(iii) whose business activities will 
principally benefit such Native Hawaiians. 
‘‘(D) ANNUAL CERTIFICATION.—Each pro-
gram participant shall certify to the District Di-
219
rector for the district in which its principal 
place of business is located, on an annual basis, 
that it meets the requirements of this paragraph 
regarding ownership and control by socially dis-
advantaged individuals. 
‘‘(E) 
CAPABILITY
DETERMINATION.—The 
term ‘program participant’ shall not include any 
concern unless the Administrator determines that 
with contract, financial, technical, and manage-
ment 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 disadvan-
tage with respect to any other concern 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 assert
220
such eligibility for only one small business con-
cern. 
‘‘(iii) A socially and economically dis-
advantaged Indian tribe may own more than 
one small business concern eligible for assistance 
pursuant to this subsection if—
‘‘(I) the Indian tribe does not own an-
other firm in the same industry which has 
been determined to be eligible to receive con-
tracts under this program, and 
‘‘(II) the individuals responsible for the 
management and daily operations of the 
concern do not manage more than two pro-
gram 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-
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 eligi-
221
bility of the program participant as determined 
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 de-
termine that the transfer of ownership and con-
trol 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 period 
of continued participation in the program not to 
exceed the time limitations prescribed in para-
graph (27). 
‘‘(8) MANAGEMENT RESTRICTIONS.—(A) The Ad-
ministrator shall not restrict the amount of money 
that may be removed from the program participants 
by its owners. 
‘‘(B) The Administrator shall not impose any re-
strictions on the management of the company except 
insofar as such management would violate other eligi-
bility provisions or Federal procurement law.
222
‘‘(C) Notwithstanding this provision, the Admin-
istrator may determine that a program participant is 
not capable of performing a specific contract and 
may choose not to award a contract to a program 
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 po-
tential for success. 
‘‘(10) OPPORTUNITY FOR HEARING.—(A) Subject 
to the provisions of subparagraph (E), the Adminis-
trator, prior to taking any action described in sub-
paragraph (B), shall provide the program participant 
that is the subject of such action, an opportunity for 
a hearing on the record after providing written notifi-
cation of an action set forth in paragraph (B), in ac-
cordance with chapter 5 of title 5, United States 
Code.
223
‘‘(B) The actions referred to in subparagraph (A) 
are—
‘‘(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 waiv-
er 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 pur-
poses 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;
224
‘‘(ii) is untimely filed; 
‘‘(iii) is not filed in accordance with the 
rules of procedure governing such proceedings; or 
‘‘(iv) has been decided by or is the subject 
of an adjudication before a court of competent 
jurisdiction over such matters. 
‘‘(F) Proceedings conducted pursuant to the au-
thority of this paragraph shall be completed and a de-
cision rendered, insofar as practicable, within 90 
days after a written notification of the Administrator 
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 max-
imum extent practicable, construction subcontracts 
awarded by the Administrator pursuant to this sub-
section 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 sub-
contracts pursuant to this subsection to annually 
prepare and submit to the Administrator a ca-
pability 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 business op-
portunity specialist in the district to which the 
program participant is assigned. 
‘‘(C) CLASSIFICATION.—The Administrator 
shall separate such statements by those program 
participants primarily dependent upon local 
contract support and those primarily requiring 
a national marketing effort.
226
‘‘(D) 
DISSEMINATION.—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 Busi-
ness Utilization for the appropriate agencies who 
shall further distribute such statements to buying 
activities within such agencies that may pur-
chase the types of items or services 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 relevant 
business opportunity specialist to indicate the 
number, type and approximate dollar value of 
contract opportunities that such activities may 
be awarding over the succeeding 12-month period 
and which may be appropriate to consider for 
contracting with the Administrator and subse-
quent subcontracting to those concerns for which 
it has received capability statements. 
‘‘(14) CONTRACT FORECAST.—(A) Each executive 
agency reporting to the Federal Procurement Data
227
System contract actions with an aggregate value in 
excess of $50,000,000 shall prepare a forecast of ex-
pected contract opportunities or classes of contract op-
portunities for the next and succeeding fiscal years 
that small business concerns, including those owned 
and controlled by socially and economically disadvan-
taged individuals, are capable of performing. Such 
forecast shall be periodically revised during such year. 
To the extent such information is available, the agen-
cy forecasts shall specify the following: 
‘‘(i) The approximate number of individual 
contract opportunities (and the number of oppor-
tunities 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. 
‘‘(B) FORECAST DISSEMINATION.—The head of 
each executive agency subject to the provisions of sub-
paragraph (A) shall within 10 days of completion 
furnish such forecasts to the Administrator and the
228
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 informa-
tion 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
OF
CONTRACT
PERFORM-
ANCE 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 in-
curred for personnel shall be expended for 
employees of the concern; and 
‘‘(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
229
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 Ad-
ministrator determines that such change is nec-
essary to reflect conventional industry practices 
among business concerns that are below the nu-
merical size standard established by the Admin-
istrator pursuant to section 3(a) of this Act for 
businesses in that industry category. A percent-
age established under the preceding sentence may 
not differ from a percentage 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 notice 
and comment, requirements similar to those 
specified in subparagraph (A) to be applicable to 
contracts for general and specialty construction 
and to contracts for any other industry category 
not otherwise subject to the requirements of such 
subparagraph.
230
‘‘(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 de-
nied the opportunity to submit and have considered 
its offer for any procurement contract for the supply 
of a product to be let pursuant to this subsection or 
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 partici-
pant shall—
‘‘(i) be primarily engaged in the wholesale 
or retail trade; 
‘‘(ii) be a small business concern under the 
size standard for the North American Industrial 
Classification System Code assigned to the con-
231
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 supplies 
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 of-
fered 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 section 
3 of this Act, unless a waiver of such require-
ment 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 meet-
ing the specifications (including period for 
performance) required of an offeror by the 
solicitation; or 
‘‘(II) by the Administrator for a prod-
uct (or class of products), after determining
232
that no small manufacturer is available to 
participate in the Federal procurement 
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 termi-
nated, 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 ac-
tivities and transactions prohibited by subpara-
graph (A) include—
‘‘(i) the buying, selling, or receiving 
(except by inheritance) of any legal or bene-
ficial ownership of stock or any other own-
233
ership 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 other-
wise obtain any right or interest described 
in clause (i); or 
‘‘(iii) the receipt of any other benefit or 
right that may be an incident of ownership. 
‘‘(C) EMPLOYEE CERTIFICATION AND PEN-
ALTIES.—(i) The employees designated in clause 
(ii) shall annually submit a written certification 
to the Administrator regarding compliance with 
the requirements of this paragraph. 
‘‘(ii) The employees referred to in clause (i) 
are— 
‘‘(I) regional administrators; 
‘‘(II) district directors; 
‘‘(III) the Assistant Administrator for 
Minority Small Business and Capital Own-
ership Development; 
‘‘(IV) employees whose principal duties 
relate to the award of contracts or the pro-
vision of other assistance pursuant to this 
subsection or section 8(b); and
234
‘‘(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 per-
cent of the maximum amount of gain such em-
ployee realized or could have realized as a result 
of engaging in those activities and transactions 
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.—
‘‘(A) IN
GENERAL.—Any employee of the 
Administration who has authority to take, direct 
others to take, recommend, or approve any ac-
tion 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 affiliation of
235
any party. Employees of the Administration 
shall expeditiously report to the Inspector Gen-
eral of the Administration any such action for 
which such employee’s participation has been so-
licited 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, reduction 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 political 
activity. 
‘‘(D) OTHER
LAWS
NOT
AFFECTED.—The 
prohibitions of subparagraph (A), and remedial 
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.—
236
‘‘(A) IN GENERAL.—Program participants 
shall semiannually report to their assigned busi-
ness opportunity specialist the following: 
‘‘(i) A listing of any agents, represent-
atives, attorneys, accountants, consultants, 
and other parties (other than employees) re-
ceiving compensation to assist in obtaining 
a Federal contract for such program partic-
ipant. 
‘‘(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 re-
turn for such compensation. 
‘‘(B) SUBMISSIONS TO PRINCIPAL OFFICE.—
The 
business 
opportunity 
specialist 
shall 
promptly review and forward such report to the 
Assistant Administrator for Minority Small 
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-
237
tions shall be considered good cause for the initi-
ation 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-
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 pro-
visions of this subparagraph.
312
‘‘(B) CONTRACT AWARDS.—Under the pro-
gram established pursuant to this subsection, the 
award of a procurement contract of a Federal 
agency identified by the Administrator pursuant 
to subparagraph (A) shall be made by the agency 
to a very small business concern selected, and de-
termined 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 contracting offi-
cer may rely in good faith on a written certifi-
cation that a small business concern is a very 
small business concern. 
‘‘(3) FINANCIAL ASSISTANCE.—In order to assist 
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 assistance 
under section 7(a). 
‘‘(4) VERY
SMALL
BUSINESS
CONCERN.—For 
purposes of this subsection, the term ‘very small busi-
ness concern’ means a small business concern that has 
not more than 15 employees and—