Business Opportunity Development Reform Act of 1988
PL 100-656 (H.R.1807), enacted 11/15/1988

PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3853 
Public Law 100-656 
100th Congress 
An Act 
To amend the Small Business Act to reform the Capital Ownership Development 
Nov. 15, 1988 
Program, and for other purposes. 
[H.R. 1807] 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
Business 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
DevelopmSt 
(a) SHORT TITLE.—This Act may be cited as the "Business Oppor- ^||o™ ^^t of 
tunity Development Reform Act of 1988". 
Disadvantaged 
(b) TABLE OF CONTENTS.— 
persons. 
Sec. 1. Short title; table of contents. 
15 USC 631 
Sec. 2. Definitions. 
note. 
TITLE I—CONGRESSIONAL FINDINGS AND PURPOSES 
Sec. 101. Findings and purposes. 
TITLE II—PROGRAM ORGANIZATION AND PARTICIPATION STANDARDS 
Sec. 201. Program admission. 
Sec. 202. Time limitations. 
Sec. 203. Grandfathering. 
Sec. 204. Business development objectives. 
Sec. 205. Business plans. 
Sec. 206. Eligibility reviews. 
Sec. 207. Eligibility of native Hawaiians. 
Sec. 208. Termination and graduation standards. 
Sec. 209. Elconomic disadvantage. 
TITLE III—BUSINESS DEVELOPMENT 
Sec. 301. Stag'is of program participation. 
Sec. 302. Loans. 
Sec. 303. Contractual assistance. 
Sec. 304. Subcontracting assistance. 
TITLE IV—IMPROVED MANAGEMENT AND PROGRAM INTEGRITY 
Sec. 401. Political appointees. 
Sec. 402. Prohibited actions and employee responsibilities. 
Sec. 403. Politically motivated activities. 
Sec. 404. Reports by program participants. 
Sec. 405. False representations. 
Sec. 406. Congressionally requested investigations. 
Sec. 407. Contract performance. 
Sec. 408. Data collection. 
Sec. 409. Due process rights. 
Sec. 410. Employee training and evaluation. 
TITLE V—CONTRACT PLANNING; GOAL SETTING AND REVIEWS 
Sec. 501. Planning 8(a) contract activity. 
Sec. 502. Annual contracting goals. 
Sec. 503. Presidential report on contracting goals. 
Sec. 504. General Accounting Office report. 
Sec. 505. Commission on minority business development. 
TITLE VI—ADMINISTRATIVE AND TECHNICAL AMENDMENTS 
Sec. 601. Relationship with other procurement programs. 
Sec. 602. Indian tribe exemption. 
Sec. 603. Directors of small and disadvantaged business utilization. 
102 STAT. 3854 
PUBLIC LAW 100-656—NOV. 15, 1988 
TITLE VII—SMALL BUSINESS COMPETITIVENESS DEMONSTRATION 
PROGRAM 
Sec. 70L Short title. 
Sec. 702. Findings. 
PART A—SHORT TITLE AND FINDINGS 
PART B—DEMONSTRATION PROGRAM 
Sec. 711. Small Business Competitiveness Demonstration Program. 
Sec. 712. Enhanced small business participation goals. 
Sec. 713. Procurements procedures. 
Sec. 714. Reporting. 
Sec. 715. Test plan and policy direction. 
Sec. 716. Report to Congress. 
Sec. 717. Designated industry groups. 
Sec. 718. Definitions. 
PART C—PROGRAMS RELATING TO SPECIFIC INDUSTRIES 
Sec. 721. Alternative program for clothing and textiles. 
Sec. 722. Expanding small business participating in dredging. 
PART D—AMENDMENTS TO THE SMALL BUSINESS ACT 
Sec. 731. Technical amendment. 
Sec. 732. Repealer. 
PART E—OTHER AMENDMENTS 
Sec. 741. Segmentation of industry category. 
Sec. 742. Definition of architectural and engineering services. 
TITLE VIII—AUTHORIZATIONS, EFFECTIVE DATES, AND MISCELLANEOUS 
MATTERS 
Sec. 801. Regulations. 
Sec. 802. Authorizations. 
Sec. 803. Effective dates. 
15 u s e 636 note. 
SEC. 2. DEFINITIONS. 
For the purposes of this Act— 
(1) the term "Administration" means the Small Business 
Administration; 
(2) the term "Administrator" means the Administrator of the 
Small Business Administration, unless otherwise indicated; 
(3) the term "disadvantaged owners" means those individuals 
upon whom eligibility is beised for participation in the Program 
and the award of subcontracts pursuant to section 8(a) of the 
Small Business Act (15 U.S.C. 637(a)); 
(4) the term "minority owned businesses" means business 
concerns that are at le£ist 51 percent owned and controlled by 
one or more individuals who belong to those groups described or 
identified pursuant to section 2(eXlXC) of the Small Business 
Act (15 U.S.C. 631(eXlXC)); 
(5) the term "Program" means the Small Business and Cap-
ital Ownership Development Program established by section 
7(jX10) of the Small Business Act (15 U.S.C. 636(jX10)); 
(6) the term "Program Participant" means a small business 
concern participating in the Program; and 
(7) the term "Program Participation Term" means the fixed 
period of time assigned to a Program Participant pursuant to 
section 7(jX10XAXi) of the Small Business Act (15 U.S.C. 
636(jX10XAXi)) prior to the date of enactment of this Act. 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3855 
TITLE I—CONGRESSIONAL FINDINGS 
AND PURPOSES 
SEC 101. FINDINGS AND PURPOSES. 
15 USC 636 note. 
(a) FINDINGS.—^The Congress finds that— 
(1) the Capital Ownership Development Program adminis-
tered by the Small Business Administration and the award of 
contracts pursuant to section 8(a) of the Small Business Act 
remain a primary tool for improving opportunities for small 
business concerns owned and controlled by socially and 
economically disadvantaged individuals in the Federal procure-
ment process and bringing such concerns into the nation's 
economic mainstream; 
(2) although some prepress has resulted from the Prc^ram, it 
has generally failed to meet its objectives, which remain as 
valid now as when the Pit^ram was initiated; 
(3) too few concerns that have exited the P n ^ a m have been 
prepared to compete successfully in the open marketplace on 
competitive procurements, and many concerns have developed 
an unhealthy dependency on sole-source contracts by the time 
they are required to leave the Program; 
(4) the application and certification process for admitting new 
participants to the Program is inordinately lengthy and burden-
some; 
(5) the Administration has often not efficiently and equitably 
administered and managed the Program in a manner that 
provided clear lines of responsibility for implementing and 
monitoring many of the administrative duties under the 
Program; 
(6) the Administration and some pr(^ram participants have 
given insufficient attention and support to the business develop-
ment goals of the Prc^ram and instead have focused almost 
entirely on the size of contract awards or the number of firms 
certified to participate in the Prc^ram; 
(7) many Federal procuring agencies have failed to identify 
and offer the necessary amount of contract support in order to 
allow for diversification and growth of disadvantaged businesses 
participating in the Pn^ram; 
(8) contract support as well as business development expenses 
have been misused both by the Administration and Pr(^am 
participants and have not been equitably distributed pursuant 
to objective criteria; 
(9) the widespread perception of undue political influence in 
the operation and administration of the Pn^ram has signifi-
cantly contributed to the Program's poor image and has de-
terred utilization of the Program by socially and economically 
disadvantaged concerns and by Federal procuring agencies; and 
(10) it is imperative that increased competition and other 
substantial reforms be accomplished in the Pn^am in order to 
promote the Congressionally mandated business development 
objectives and purposes. 
(b) PURPOSES.—^The purposes of this Act therefore are to— 
(1) affirm that the Capital Ownership Development Pn^ram 
and the section 8(a) authority shall be used exclusively for 
business development purposes to help small businesses owned 
and controlled by the socially and economically disadvantaged 
102 STAT. 3856 
PUBLIC LAW 100-656—NOV. 15, 1988 
to compete on an equal basis in the mainstream of the Amer-
ican economy; 
(2) affirm that the measure of success of the Capital Owner-
ship Development Program, and the section 8(a) authority, shall 
be the number of competitive firms that exit the Program 
without being unreasonably reliant on section 8(a) contracts and 
that are able to compete on an equal basis in the mainstream of 
the American economy; 
(3) ensure that program benefits accrue to individuals who are 
both socially and economically disadvantaged; 
(4) increase the number of small businesses owned and con-
trolled by such individuals from which the United States may 
purchase products and services (including construction work); 
and 
(5) ensure integrity, competence, and efficiency in the 
administration of business development services and the Fed-
eral contracting opportunities made available to eligible small 
businesses. 
TITLE II—PROGRAM ORGANIZATION AND 
PARTICIPATION STANDARDS 
Establishment. 
SEC. 201. PROGRAM ADMISSION. 
(a) EuGiBiUTY OF PARTICIPANTS.—Section 7(j)(ll) of the Small 
Business Act (15 U.S.C. 6360X11)) is amended by striking out "(11)" 
and inserting in lieu thereof "(IIKA)" and by adding the following 
new subparagraphs: 
"(B) Except as provided in section 602(d) of the Business Opportu-
nity Development Reform Act of 1988, any individual upon whom 
eligibility is based pursuant to section 8(aX4), shall be permitted to 
assert such eligibility for only one small business concern. Notwith-
standing the provisions of the preceding sentence, no individual who 
was determined pursuant to section 8(a) to be socially and economi-
cally disadvantaged before the effective date of this subparagraph 
shall be permitted to assert such disadvantage with respect to 
any other concern making application for certification after such 
effective date. 
"(C) No concern, previously eligible for the award of contracts 
pursuant to section 8(a), shall be subsequently recertified for pro-
gram participation if its prior participation in the program was 
concluded for any of the reasons described in paragraph (lOXE). 
"(D) A concern eligible for the award of contracts pursuant to this 
subsection shall remain eligible for such contracts if there is a 
transfer of ownership and control (£is defined pursuant to section 
8(aX4)) to individuals who are determined to be socially and 
economically disadvantaged pursuant to section 8(a). In the event of 
such a transfer, the concern, if not terminated or graduated, shall be 
eligible for a period of continued participation in the program not to 
exceed the time limitations prescribed in paragraph (15). 
"(E) There is established a Division of Program Certification and 
Eligibility (hereinafter referred to in this paragraph as the 
"Division") that shall be made part of the Office of the Associate 
Administrator for Minority Small Business and Capital Ownership 
Development. The Division shall be headed by a Director who shall 
report directly to such Associate Administrator. The Division shall 
establish field offices within such regional offices of the Administra-
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3857 
tion as may be necessary to perform efficiently its functions and 
responsibilities. 
"(F) Subject to the provisions of section 8(aX9), the functions and 
responsibility of the Division are to— 
"(i) receive, review and evaluate applications for certification 
pursuant to paragraphs (4), (5), (6) and (7) of section 8(a); 
"(ii) advise each program applicant within 15 days after the 
receipt of an application as to whether such application is 
complete and suitable for evaluation and, if not, what matters 
must be rectified; 
"(iii) render recommendations on such applications to the 
Associate Administrator for Minority Small Business and Cap-
ital Ownership Development; 
"(iv) review and evaluate financial statements and other 
submissions from concerns participating in the pr(^am estab-
lished by paragraph (10) to ascertain continued eligibility to 
receive subcontracts pursuant to section 8(a); 
"(v) make a request for the initiation of termination or 
graduation proceedings, as appropriate, with the Associate 
Administrator for Minority Smadl Business and Capital Owner-
ship Development; 
"(vi) decide protests from applicants that have been denied 
program admission; 
"(vii) decide protests regarding the status of a concern as a 
disadvantaged concern for purposes of any program or activity 
conducted under the authority of subsection (d) of section 8, or 
any other provision of Federal law that references such subsec-
tion for a definition of program eligibility; and 
"(viii) implement such policy directives as may be issued by 
the Associate Administrator for Minority Small Business and 
Capital Ownership Development pursuant to subparagraph (H) 
regarding, among other things, the geographic distribution of 
concerns to be admitted to the program and the industrial 
make-up of such concerns. 
"(G) An applicant shall not be denied admission into the program 
established by paragraph (10) due solely to a determination by the 
Division that specific contract opportunities are unavailable to 
assist in the development of such concern unless— 
"(i) the Government has not previously procured and is un-
likely to procure the t3Tpes of products or services offered by the 
concern; or 
"(ii) the purchases of such products or services by the Federal 
Grovemment will not be in quantities sufficient to support the 
developmental needs of the applicant and other P r o - a m 
participants providing the same or similar items or services. 
"(H) Thirty daj^ before the conclusion of each fiscal year, the 
Director of the Division shall review all concerns that have been 
admitted into the Program during the preceding 12-month period. 
The review shall ascertain the number of entrants, their geographic 
distribution and industrial classification. The Director shall also 
estimate the expected growth of the Program during the next fiscal 
year and the number of additional Business Opportunity Specialists, 
if any, that will be needed to meet the anticipated demand for the 
Program. The findings and conclusions of the Director shall be Reports. 
reported to the Associate Administrator for Minority Small Busi-
ness and Capital Ownership Development by September 30 of each 
year. Based on such report and such additional data as may be 
102 STAT. 3858 
PUBLIC LAW 100-656—NOV. 15, 1988 
relevant, the Associate Administrator shall, by October 31 of each 
year, issue policy and program directives applicable to such fiscal 
year that— 
"(i) establish priorities for the solicitation of program applica-
tions from underrepresented regions and industry cat^ories; 
"(ii) assign staffing levels and allocate other program re-
sources as necessary to meet program needs; and 
"(iii) establish priorities in the processing and admission of 
new Program Participants as may be necessary to achieve an 
equitable geographic distribution of concerns and a distribution 
of concerns across all industry categories in proportions needed 
to increase significantly contract awards to small business con-
cerns owned and controlled by socially and economically dis-
advantaged individuals. When considering such increase the 
Administration shall give due consideration to those industrial 
categories where Federal purchases have been substantial but 
where the participation rate of such concerns has been 
limited.". 
Employment 
(b) OuTREACH.—Section 8(aX10) of the Small Business Act (15 
and 
U.S.C. 637(aX10)) is amended by adding at the end thereof the 
unemployment, following: "Such program shall make a sustained and substantial 
effort to solicit applications for certification from small business 
concerns located in areas of concentrated unemployment or 
underemployment or within labor surplus areas and within States 
having relatively few Program Participants and from small dis-
advantaged business concerns in industry categories that have not 
substantially participated in the award of contracts let under the 
authority of this subsection.". 
SEC. 202. TIME LIMITATIONS. 
Section 7(j) of the Small Business Act (15 U.S.C. 636(j)) is further 
amended by adding the following new paragraph: 
"(15) Subject to the provisions of paragraph (lOKC), a small busi-
ness concern may receive developmental assistance under the Pro-
gram and contracts under section 8(a) for a total period of not longer 
than nine years, measured from the date of its certification under 
the authority of such section, of which— 
"(A) no more than four years may be spent in the devel-
opmental stage of Program Participation; and 
"(B) no more than five years may be spent in the transitional 
stage of Program Participation.". 
SEC. 203. GRANDFATHERING. 
Section 7(jX10) of the Small Business Act (15 U.S.C. 636(jX10)) is 
amended by adding the following new subparagraph: 
"(DXi) A small business concern participating in any program 
or activity conducted under-the authority of this paragraph or 
eligible for the award of contracts pursuant to section 8(a) on 
September 1, 1988, shall be permitted continued participation 
and eligibility in such program or activity for a period of time 
which is the greater o
f
— 
"(I) 9 years less the number of years since the award of its 
first contract pursuant to section 8(a); or 
"(II) its original fixed program participation term (plus 
any extension thereof) assigned prior to the effective date of 
this paragraph plus eighteen months. 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3859 
"(ii) Nothing contained in this subparagraph shall be deemed 
to prevent the Administration from instituting a termination or 
graduation pursuant to subparagraph (F) or (H) for issues unre-
lated to the expiration of any time period limitation.". 
SEC. 204. BUSINESS DEVELOPMENT OBJECTIVES. 
(a) PROGRAM PURPOSES.—(1) Section 2(cX2XB) of the Small Busi-
ness Act (15 U.S.C. 631(cX2XB)) is amended to read as follows: 
"(B) It is therefore the purpose of the programs authorized by 
section 7(j) of this Act to— 
"(i) foster business ownership and development by individuals 
in groups that own and control little productive capital; and 
' (ii) promote the competitive viability of such firms in the 
marketplace by creating a small business and capital ownership 
development program to provide such available financial, tech-
nical, and management assistance as may be necessary.". 
(2) Section 2(eX2) (15 U.S.C. 631(eX2)) of the Act is amended to read 
as follows: 
"(2) It is therefore the purpose of section 8(a) to— 
"(A) promote the business development of small business 
concerns owned and controlled by socially and economically 
disadvant£iged individuals so that such concerns can compete on 
an equal basis in the American economy; 
"(B) promote the competitive viability of such concerns in the 
marketplace by providing such available contract, financial, 
technical, and mangement assistance as may be necessary; and 
"(C) clarify and expand the program for the procurement by 
the United States of articles, supplies, services, materials, and 
construction work from small business concerns owned by so-
cially and economically disadvantaged individuals.". 
(b) TECHNICAL AMENDMENT.—Section 2(cX2XAXv) of the Act is 
amended by striking "sole source". 
SEC. 205. BUSINESS PLANS. 
(a) IN GENERAL.—Section 7(jX10XAXi) of the Small Business Act 
(15 U.S.C. 636(jX10XAXi)) is amended to read as follows: 
"(i) assist small business concerns participating in 
the Program (either through public or private organiza-
tions) to develop and maintain comprenensive business 
plans which sets forth the Program Participant's spe-
cific business targets, objectives, and goals developed 
and maintained in conformity with subparagraph (D).". 
(b) CONTENTS OF PLAN.—Section 7(jX10) of such Act is further 
amended— 
(1) by striking subparagraph (C), 
(2) by redesignating subparagraph (D) (as added by section 203 
of this Act) as subparagraph (C), and 
(3) by adding after subparagraph (C), as redesignated, the 
following new subparagraph: 
"(DXi) Promptly after certification under paragraph (11) a 
Program Participant shall submit a business plan (herein-
after referred to as the "plan") as described in clause (ii) of 
this subparagraph for review by the business opportunity 
specialist assigned to assist such Program Participant. The 
plan may be a revision of a preliminary business plan 
102 STAT. 3860 
PUBLIC LAW 100-656—NOV. 15, 1988 
submitted by the Program Participant or required by the 
Administration as a part of the application for certification 
under this section and shall be designed to result in the 
Program Participant eliminating the conditions or cir-
cumstances upon which the Administration determined 
eligibility pursuant to section 8(a)(6). Such plan, and subse-
quent modifications submitted under clause (iii) of this 
subparagraph, shall be approved by the business oppor-
tunity specialist prior to the Program Participant being 
eligible for award of a contract pursuant to section 8(a), 
"(ii) The plans submitted under this subparagraph shall 
include the following: 
"(I) An analysis of market potential, competitive 
environment, and other business analyses estimating 
the Program Participant's prospects for profitable oper-
ations during the term of program participation and 
after graduation. 
"(II) An analysis of the Program Participant's 
strengths and weaknesses with particular attention to 
correcting any financial, managerial, technical, or 
personnel conditions which are likely to impede small 
business concerns from receiving contracts other than 
those awarded under section 8(a). 
"(Ill) Specific targets, objectives, and goals, for the 
business development of the Program Participant 
during the next and succeeding years utilizing the 
resulte of the analyses conducted pursuant to 
subclauses (I) and (II). 
"(IV) A transition management plan outlining spe-
cific 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 sec-
tion 8(a) and from other sources, which the Program 
Participant will require to meet the specific targets, 
objectives, and goals for the years covered by its plan. 
The estimates established shall be consistent with the 
provisions of subparagraph (I) and section 8(a). 
"(iii) Each Program Participant shall annually review its 
currently approved plan with its Business Opportunity 
Specialist and modify such plan as may be appropriate. Any 
modified plan shall be submitted to the Administration for 
approval. The currently approved plan shall be considered 
valid until such time as a modified plan is approved by the 
Business Opportunity Specialist. Annual reviews pertaining 
to years in the transitional stage of program participation 
shall require, as appropriate, a written verification that 
such Program Participant has complied with the require-
ments of subparagraph (I). 
"(iv) Each Program Participant shall annually forecast 
its needs for contact awards under section 8(a) for the next 
program year and the succeeding program year during the 
review of its business plan, conducted pursuant to clause 
(iii). Such forecast shall be known as the section 8(a) con-
tract support level and shall be included in the Program 
Participant's business plan. Such forecast shall include— 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3861 
"(D the aggr^ate dollar value of contract support to 
be sought on a noncompetitive basis under section 8(a), 
reflecting 
compliance ¥dth the 
requirements of 
subparagraph (I), 
"(11) the types of contract opportunities being sought, 
identified by Standard Industrial Classiflcation (SIC) 
Code or otherwise, 
"(IQ) an estimate of the dollar value of contract 
support to be sought on a competitive basis, and 
(IV) such other information as may be requested by 
the Business Opportunity Specialist to provide effective 
business development assistance to the Prc^am 
Participant.". 
SEC 206. EUGIBIUTY REVIEWS. 
Section 7(jX10) of the Small Busmess Act (15 U.S.C. 636gX10)) is 
further amended by adding at the end thereof the following new 
subparagraph: 
"(JXi) The Administration shall conduct an evaluation of a 
Program Participant's eligibility for continued participation in 
the Program whenever it receives specific and credible informa-
tion all^ii^ that such Pn^ram Participant no longer meets the 
requirements for Program eligibility. Upon making a finding 
that a Program Participant is no longer eli^ble, the Adminis-
tration shall initiate a termination proceeding in accordance 
with subparagraph (F). A Program Participant's eligibility for 
award of any contract under the authority of section 8(a) may be 
suspended or terminated pursuant to subpart 9.4 of title 48, 
Code of Federal Regulations (or any successor r^ulation). 
"(ii) Except as provided under section 602 of the Business 
Opportunity Development Reform Act of 1988, no award shall 
be made pursuant to section 8(a) to other than a small business 
concern.'. 
SEC 207. ELIGIBILITY OF NATIVE HAWAIIANS. 
(a) IN GENERAL.—Section 8(a) of the Small Business Act (15 U.S.C. 
637(a)) is amended by adding the following new paragraph: 
"(15) For purposes of this subsection, the term 'Native Hawaiian 
organizations' means any community service organization serving 
Native Hawaiians in the State of Hawaii which— 
"(A) is a not-for-proflt organization chartered by the State of 
Hawaii, 
"(B) is controlled by Native Hawaiians, and 
"(C) whose business activities will principally benefit such 
Native Hawaiians.". 
(b) TECHNICAL AMENDBIENT.—Section 2(eXlXC) of such Act (15 
U.S.C. 631(eX2XC)) is amended by inserting "Native Hawaiian 
Organizations," after "Asian Pacific Americans,". 
(c) CLARIFICATION OF DEFINITION OF "SOCIALLY AND ECONOMICALLY 
DISADVANTAGED SMALL BUSINESS CONCERN".—Paragraph (4) of sec-
tion 8(a) of such Act (15 U.S.C. 637(aX4)) is amended to read as 
follows: 
"(4XA) For purposes of this section, the term 'socially and 
economically disadvantaged small business concern' means any 
small business concern which meets the requirements of subpara-
graph (B) and— 
"(i) which is at least 51 per centum owned by— 
102 STAT. 3862 
PUBLIC LAW 100-656—NOV. 15, 1988 
"(I) one or more socially and economically disadvantaged 
individuals, 
"(ID an economically disadvantaged Indian tribe, or 
"(III) an economically disadvantaged Native Hawaiian 
organization, or 
"(ii) in the case of any publicly owned business, at least 51 per 
centum of the stock of which is owned b y ^ 
"(I) one or more socially and economically disadvantaged 
individuals, 
"(II) an economically disadvantaged Indian tribe, or 
"(III) an economically disadvantaged Native Hawaiian 
organization. 
"(B) A small business concern meets the requirements of this 
subparagraph if the management and daily business operations of 
such small business concern are controlled by one or more— 
"(i) socially and economically disadvantaged individuals de-
scribed in subparagraph (A)(i)(I) or subparagraph (AXii)(I), 
"(ii) members of an economically disadvantaged Indian tribe 
described in subparagraph (AXiXII) or subparagraph (AXiiXII), 
or 
"(iii) Native Hawaiian organizations described in subpara-
graph (AXiXIII) or subparagraph (AXiiXIH).". 
SEC. 208. TERMINATION AND GRADUATION STANDARDS. 
Section 70X10) of the Small Business Act (15 U.S.C. 6360X10)), is 
further amended by adding at the end thereof the following new 
subparagraphs: 
"(E) A small business concern participating in the program 
conducted under the authority of this paragraph and eligible for 
the award of contracts pursuant to section 8(a) shall be denied 
all such assistance if such concern— 
"(i) voluntarily elects not to continue participation; 
"(ii) participates in the Program for a period in excess of 
the time limits prescribed by paragraph (15); 
"(iii) is terminated pursuant to a termination proceeding 
conducted in accordance with section 8(aX9); or 
"(iv) is graduated pursuant to a graduation proceeding 
conducted in accordance with section 8(aX9). 
"(F) For the purposes of sections 70) and 8(a), the terms 
'terminated' or 'termination' shall mean the total denial 
"(F) For the purposes of this Act, sections 70) and 8(a), the 
terms 'terminated' or 'termination' shall mean the total denial 
or suspension of assistance provided pursuant to this paragraph 
or section 8(a) prior to the graduation of the participating small 
business concern pursuant to subparagraph (H) or the expira-
tion of the maximum program participation in terms prescribed 
by paragraph (15). An action for termination shall be based 
upon good cause, including— 
"(i) the failure by such concern to maintain its eligibility 
for Program participation; 
"(ii) the failure of the concern to engage in business 
practices that will promote its competitiveness within a 
reasonable period of time as evidenced by, among other 
•='t>. 
indicators, a pattern of unjustified delinquent performance 
or terminations for default with respect to contracts 
awarded under the authority of section 8(a); 
' ^ ^ w ? * * * - - ' • - ' • 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3863 
"(iii) a demonstrated pattern of failing to make required 
submissions or responses to the Administration in a timely 
manner; 
"(iv) the willful violation of any rule or regulation of the 
Administration pertaining to material issues; 
"(v) the debarment of the concern or its disadvantaged 
owners by any agency pursuant to subpart 9.4 of title 48, 
Code of Federal Regulations (or any successor regulation); 
or 
"(vi) the conviction of the disadvantaged owner or an 
officer of the concern for any offense indicating a lack of 
business integrity including any conviction for embezzle-
ment, theft, forgery, bribery, falsification or violation of 
section 16. For purposes of this clause, no termination 
action shall be taken with respect to a disadvantaged owner 
solely because of the conviction of an officer of the concern 
(who is other than a disadvantaged owner) unless such 
owner conspired with, abetted, or otherwise knowingly ac-
quiesced in the activity or omission that was the basis of 
such officer's conviction. 
"(G) The Director of the Division may initiate a termination 
proceeding by recommending such action to the Associate 
Administrator for Minority Small Business and Capital Owner-
ship Development. Whenever the Associate Administrator, or a 
designee of such officer, determines such termination is appro-
priate, within 15 days after making such a determination the 
Program Participant shall be provided a written notice of intent 
to terminate, specifying the reasons for such action. No 
Program Participant shall be terminated from the Program 
pursuant to subparagraph (F) without first being afforded an 
opportunity for a hearing in accordance with section 8(a)(9). 
"(H) For the purposes of sections 7(j) and 8(a) the term 
'graduated' or 'graduation' means that the Program Participant 
is recognized as successfully completing the program by 
substantially achieving the targets, objectives, and goals con-
tained in the concern's business plan thereby demonstrating its 
ability to compete in the marketplace without assistance under 
this section or section 8(a).". 
SEC. 209. ECONOMIC DISADVANTAGE 
(a) ECONOMIC DISADVANTAGE.—Section 8(a)(6) of the Small Busi-
ness Act (15 U.S.C. 637(a)(6)) is amended— 
(1) by striking out "(6)" and inserting in lieu thereof "(6)(A)", 
and 
(2) by adding at the end the following new subparagraphs: 
"(B) Each Program Participant shall annually submit to the 
Administration— 
"(i) a personal financial statement for each disadvantaged 
owner; 
"(ii) a record of all payments made by the Program Partici-
pant to each of its disadvantaged owners or to any person or 
entity affiliated with such owners; and 
"(iii) such other information as the Administration may deem 
necessary to make the determinations required by this 
paragraph. 
"(C)(i) Whenever, on the basis of information provided by a Pro-
gram Participant pursuant to subparagraph (B) or otherwise, the 
Fraud. 
Law 
enforcement 
and crime. 
Records. 
102 STAT. 3864 
PUBLIC LAW 100-656—NOV. 15, 1988 
Administration has reason to believe that the standards to establish 
economic disadvantage pursuant to (A) have not been met, the 
Administration shall conduct a review to determine whether such 
Program Participant and its disadvantaged owners continue to be 
impaired in their ability to compete in the free enterprise system 
due to diminished capital and credit opportunities when compared 
to other concerns in the same business area, which are not socially 
disadvantaged. 
"(ii) If the Administration determines, pursuant to such review, 
that a Program Participant and its disadvantaged owners are no 
longer economically disadvantaged for the purpose of receiving 
assistance under this subsection, the Program Participant shall be 
graduated pursuant to section 7(jX10XH) subject to the right to a 
hearing as provided for under paragraph (9). 
"(DXi) Whenever, on the b a ^ of information provided by a Pro-
gram Participant pursuant to subparagraph (B) or otherwise, the 
Administration has reason to believe that the amount of funds or 
other assets withdrawn from a Program Participant for the personal 
benefit of its disadvantaged owners or any person or entity affiliated 
with such owners may have been unduly excessive, the Administra-
tion shall conduct a review to determine whether such withdrawal 
of funds or other assets was detrimental to the achievement of the 
targets, objectives, and goals contained in such Program Partici-
pant's business plan. 
"(ii) If the Administration determines, pursuant to such review, 
that funds or other assets have been withdrawn to the detriment of 
the Program Participant's business, the Administration shall— 
"(I) initiate a proceeding to terminate the Program Partici-
pant pursuant to section 7(jX10XF)» subject to the right to a 
hearing under paragraph (9); or 
"(ID require an appropriate reinvestment of funds or other 
assets and such other steps as the Administration may deem 
necessary to ensure the protection of the concern. 
"(E) Whenever the Administration computes personal net worth 
for any purpose under this paragraph, it shall exclude from such 
computation— 
"(i) the value of investments that disadvantaged owners have 
in their concerns, except that such value sha^ 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 persons; 
"(ii) the equity that disadvantaged owners have in their pri-
mary personal residences, except that any portion of such 
equity that is attributable to unduly excessive withdrawals from 
a Program Participant or a concern applying for pn^am 
participation shall be taken into account.", 
(b) (CERTIFICATION.—Section 8(aX4) of the Small Business Act (15 
U.S.C. 637(aX4XA)) is further amended by adding the following new 
subparagraph: 
'XQ Each Program Participant shall certify, on an annual basis, 
that it meets the requirements of this paragraph r^arding owner-
ship and control." 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3865 
TITLE III—BUSINESS DEVELOPMENT 
SEC 301. STAGES OF PROGRAM PARTICIPATION. 
(a) IN GENERAL.—Section 7(j) of the Small Business Act (15 U.S.C. 
636(j)) is amended by adding at the end thereof the following new 
paragraph: 
"(12XA) The Administration shall s^ment the Capital Ownership 
Development Program into two stages: a development stage; and a 
transitional stage. 
"(B) The developmental stage of pn^ram participation shall be 
designed to assist the concern to overcome its economic disadvan-
tage by providing such assistance as may be necessary and appro-
priate to access its markets and to strengthen its financial and 
managerial skills. 
"(O The transitional stage of program participation shall be 
designed to overcome, insofar as pre^icable, the remaining ele-
ments of economic disadvantage and to prepare such concern for 
graduation from the program.". 
(b) DEVELOPMENTAL SFAGE OF PROGRAM PARTICIPATION.—Such 
section is further amended by adding at the end thereof the following 
new paragraph: 
"(13) A Program Participant, if otherwise eligible, shall be quali-
fied to receive the following assistance during the stages of program 
participation specified in paragraph 12: 
(A) (Contract support pursuant to section 8(a). 
"(B) Financial assistance pursuant to section 7(aX20). 
"(C) A maximum of two exemptions from the requirements of 
section 1(a) of the Act entitled 'An Act providing conditions for 
the purchase of supplies and the making of contracts by the 
United States, and for other purposes', approved June 30, 1936 
(49 Stat. 2036), which exemptions shall apply only to contracts 
awarded pursuant to section (8Xa) and shall only be used to 
allow for contingent agreements by a small business concern to 
acquire the machinery, equipment, faciUties, or labor needed to 
perform such contracts. No exemption shall be made pursuant 
to this subparagraph if the contract to which it pertains has an 
anticipated value in excess of $10,000,000. This subparagraph Termination 
shall cease to be effective on October 1,1992. 
^
^
*
^ 
"(D) A maximum of five exemptions from the requirements of 
the Act entitled 'An Act requiring contracts for the construc-
tion, alteration and repair of any public building or public work 
of the United States to be accompanied by a performance bond 
protecting tiie United States and by an additional bond for the 
protection of persons furnishing material and labor for the 
construction, alteration, or repair of said public buildings or 
public works', approved August 24, 1935 (49 Stat. 793), which 
exemptions shall apply only to contracts awarded pursuant to 
section 8(a), except that, such exemptions may be granted under 
this subparagraph only if— 
"(i) the Administration finds that such concern is unable 
to obtain the requisite bond or bonds from a surety and that 
no surety is willing to issue a bond subject to the guarantee 
provision of title IV of the Small Business Investment Act 
of 1958 (15 U.S.C. 692 et seq.); 
"(ii) the Administration and the agency providing the 
contracting opportunity have provided for the protection of 
102 STAT. 3866 
PUBLIC LAW 100-656—NOV. 15, 1988 
Termination 
date. 
Regulations. 
persons furnishing materials or labor to the Program 
Participant by arranging for the direct disbursement of 
funds due to such persons by the procuring agency or 
through any bank the deposits of which are insured by the 
Federal Deposit Insurance Corporation; and 
"(iii) the contract to which it pertains does not exceed 
$3,000,000 in amount. This subparagraph shall cease to be 
effective on October 1,1992. 
"(E) Fincmcial assistance whereby the Administration may 
purchase in whole or in part, and on behalf of such concerns, 
skills training or upgrading for employees or potential em-
ployees of such concerns. Such financial assistance may be made 
without regard to section 18(a), shall be made by way of 
reimbursement to the training provider, and shall have such 
adjustments as may be necessary to provide for overpayments 
or underpajmnients. For purposes of this subparagraph the term 
'training provider' shall mean an institution of higher edu-
cation, a community or vocational college, or an institution 
eligible to provide skills training or upgrading under the Job 
Training Partnership Act (29 U.S.C. 1501 et seq.). The Adminis-
tration shall, in consultation with the Secretary of Labor, 
promulgate rules and regulations to implement this subpara-
graph that establish acceptable training and upgrading 
performance standards and provide for such monitoring or 
audit requirements as may be necessary to ensure the integrity 
of the training effort. No financial assistance shall be granted 
under the subparagraph unless the Administrator determines 
that— 
"(i) such concern has documented that it has Hrst ex-
plored the use of existing cost-free or cost-subsidized train-
ing programs offered by public and private sector agencies 
working with progreuns of employment and training and 
economic development; 
"(ii) no more than five employees or potential employees 
of such concern are recipients of any benefits under this 
subparagraph at any one time; 
"(iii) no more than $2,500 shall be made available for any 
one employee or potential employee; 
"(iv) the length of training or upgrading financed by this 
subparagraph shall be no less than one month nor more 
than six months; 
"(v) such concern has given adequate assurance it will 
employ the trainee or upgraded employee for at least six 
months after the training or upgrading financed by this 
subparagraph has been completed and each trainee or up-
graded employee has provided a similar assurance to 
remain within the employ of such concern for such period; 
if such concern, trainee, or upgraded employee breaches 
this agreement, the Administration shall be entitled to and 
shall make diligent efforts to obtain from the violating 
party the repa3rment of all funds expended on behalf of the 
violating party, such repa}rment shall be made to the 
Administration together with such interest and costs of 
collection as may te reasonable; the violating party shall be 
barred from receiving any further assistance under this 
subparagraph; 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3867 
"(vi) the training to be financed may take place either at 
such concern's facilities or at those of the training provider; 
and 
"(vii) such concern will maintain such records as the 
Administration deems appropriate to ensure that the provi-
sions of this paragraph and any other applicable law have 
not been violated. 
"(F) The transfer of technology or surplus property owned by 
the United States to such a concern. Activities designed to effect 
such transfer shall be developed in cooperation with the heads 
of Federed agencies and shsdl include the transfer by grant, 
Ucense, or sale of such technology or property to such a concern. 
Such property may be transferreid to Program Participants on a 
priority basis. Technolc^y or property transferred under this 
subparagraph shall be i^ed by the concern during the normal 
conduct of its business operation and shall not be sold or 
transferred to any other party (other than the Government) 
during such concern's term of participation in the Program and 
for one year thereafter. 
"(G) Training assistance whereby the Administration shall 
conduct training sessions to assist individuals and enterprises 
eligible to receive contracts under section 8(a) in the develop-
ment of business principles and strat^es to enhance their 
abiUty to successfully compete for contracts in the marketplace. 
"(H) Joint ventures, leader-follower arrangements, and 
teaming agreements between the Program Participant and 
other Program Participants and other business concerns with 
respect to contracting opportunities for the research, develop-
ment, full-scale engineering or production of major systems. 
Such activities shall be undertaken on the basis of pn^ams 
developed by the agency responsible for the procurement of the 
major system, with the assistance of the Administration. 
"(I) Transitional management business planning training and 
technical assistance. 
"(J) Pn^am Participants in the developmental stage of Pro-
gram participation shall be eligible for the assistance provided 
by subparagraphs (A), (B), (C), (D), (E), (F), and (G). 
(c) TRANsmoNAL STAGE OF P
R
O
G
R
A
M PARTICIPATION.—Such Sec-
tion is further amended by adding at the end the following new 
paragraph: 
"(14) Program Participants in the transitional stage of Program 
participation shall be eligible for the assistance provided by sub-
paragraphs (A), (B), (F), (G), (H), and (I) of paragraph (13). 
SEC. 302. LOANS. 
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended by adding at the end thereof the following new paragraph: 
"(20XA) The Administration is empowered to make loans either 
directly or in cooperation with banks or other financial institutions 
through agreements to participate on an immediate or deferred 
(guaranteed) basis to smsdl business concerns eligible for assistance 
under subsection (jXlO) and section 8(a). Such assistance may be 
provided only if the Administration determines that— 
"(i) the type and amount of such assistance requested by such 
concern is not otherwise available on reasonable terms from 
other sources; 
Records. 
Science and 
technology. 
Real property. 
Banks and 
banking. 
1Q-1Q4 n 
Q1 
Do..* . 
102 STAT. 3868 
PUBLIC LAW 100-656—NOV. 15, 1988 
"(ii) with such assistance such concern has a reasonable 
prospect for operating soundly and profitably within a reason-
able period of time; 
"(iii) the proceeds of such assistance will be used within a 
reasonable time for plant construction, conversion, or ex-
pansion, including the acquisition of equipment, facilities, 
machinery, supplies, or material or to supply such concern with 
working capital to be used in the manufacture of articles, 
equipment, supplies, or material for defense or civilian produc-
tion or as may be necessary to insure a well-balanced national 
economy; and 
"(iv) such assistance is of such sound value as reasonably to 
assure that the terms under which it is provided will not be 
breached by the small business concern. 
"(BXi) No loan shall be made under this paragraph if the total 
amount outstanding and committed O^y participation or otherwise) 
to the borrower would exceed $750,000. 
"(ii) Subject to the provisions of clause (i), in agreements to partici-
pate in loans on a deferred (guaranteed) basis, participation by the 
Administration shall be not less than 85 per centum of the balance 
of the financing outstanding at the time of disbursement. 
"(iii) The rate of interest on financings made on a deferred 
(guaranteed) basis shall be legal and reasonable. 
"(iv) Financing made pursuant to this paragraph shall be subject 
to the following limitations: 
"(I) No immediate participation may be purchased unless it is 
shown that a deferred participation is not available. 
"(II) No direct financing may be made unless it is shown that 
a participation is unavailable. 
"(C) A direct loan or the Administration's share of an immediate 
participation loan made pursuant to this paragraph shall be any 
secured debt instrument— 
"(i) that is subordinated by its terms to all other borrowings of 
the issuer; 
"(ii) the rate of interest on which shall not exceed the current 
average market jrield on outstanding marketable obligations of 
the United States with remaining periods to maturity com-
parable to the average maturities of such loan and adjusted to 
the nearest one-eighth of 1 per centum; 
"(iii) the term of which is not more than twenty-five years; 
and 
"(iv) the principal on which amortized at such rate as may be 
deemed appropriate by the Administration, and the interest on 
which is payable not less often than annually.". 
SEC. 303. CONTRACTUAL ASSISTANCE. 
(a) COMPETITIVE BUSINESS MIX.—Section 7(jX10) of the Small Busi-
15 use 636. 
ness Act (15 U.S.C. 363(jX10)), is further amended by adding at the 
end thereof the following new subparagraph: 
"(i) During the developmental st^e of its participation in 
the Program, a Program Participant shall take all reasonable 
efforts within its control to attain the targets contained in its 
business plan for contracts awarded other than pursuant to 
section 8(a) (hereinafter referred to as 'business activity tar-
Marketing, 
gets.'). Such efforts shall be made a part of the business plan 
and shall be suf^cient in scope and duration to satisfy the 
Administration that the Program Participant will engage a 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3869 
reasonable marketing strategy that will maximize its potential 
to achieve its business activity targets. 
"(ii) During the transitional stage of the Program a Program Regulations. 
Participant shall be subject to regulations regarding business 
activity targets that are promulgated by the Administration 
pursuant to clause (iii). 
"(iii) The regulations referred to in clause (ii) shall: 
"(I) establish business activity targets applicable to Pro-
gram Participants during the fifth year and each succeed-
ing year of Program Participation; such targets, for such 
period of time, shall reflect a reasonably consistent increase 
in contracts awarded other than pursuant to section 8(a), 
expressed as a percentage of total sales; when promulgating 
business activity targets the Administration may establish 
modified targets for Program Participants that have 
participated in the Program for a period of longer than four 
years on the effective date of this subparagraph; 
"(II) require a Program Participant to attain its business 
activity targets; 
"(III) provide that, before the receipt of any contract to be 
awarded pursuant to section 8(a), the Program Participant 
(if it is in the transitional stage) must certify that it has 
complied with the regulations promulgated pursuant to 
subclause (II), or that it is in compliance with such remedial 
measures as may have been ordered pursuant to regula-
tions issued under subclause (V); 
"(IV) require the Administration to review each Program 
Participant's performance regarding attainment of business 
activity targets during periodic reviews of such Partici-
pant's business plan; and 
"(V) authorize the Administration to take appropriate 
remedial measures with respect to a Program Participant 
that has failed to attain a required business activity target 
for the purpose of reducing such Participant's dependence 
on contracts awarded pursuant to section 8(a); such re-
medial actions may include, but are not limited to assisting 
the Program Participant to expand the dollar volume of ite 
competitive business activity or limiting the dollar volume 
of contracts awarded to the Program Participant pursuant 
to section 8(a); except for actions that would constitute a 
termination, remedial measures taken pursuant to this 
subclause shall not be reviewable pursuant to section 
8(aX9).". 
(b) COMPETITIVE THRESHOLDS.—Section 8(aXl) of the Act (15 U.S.C. 
637(aXl)) is amended by adding at the end thereof the following new 
subparagraph: 
"(DXi) A contract opportunity offered for award pursuant to 
this subsection shall be awarded on the basis of competition 
restricted to eligible program participants i
f
— 
"(I) there is a reasonable expectation that at least two 
eligible Program Participants will submit offers and that 
award can be made at a fair market price, and 
"(II) the anticipated award price of the contract (includ-
ing options) will exceed $5,000,000 in the case of a contract 
opportunity assigned a standard industrial classification 
code for manufacturing and $3,000,000 (including options) 
in the case of all other contract opportunities. 
102 STAT. 3870 
PUBLIC LAW 100-656—NOV. 15, 1988 
"(ii) The Associate Administrator for Minority Small Business 
and Capital Ownership Development, on a nondelegable basis, 
is authorized to approve a request from an agency to award a 
contract opportunity under this subsection on the basis of a 
competition restricted to eligible Program Participants even if 
the anticipated award price is not expected to exceed the dollar 
amounts specified in clause (i)(II). Such approvals shall be 
granted only on a limited basis.". 
(c) CONTRACT MATCHING.—Section 8(a) of the Act (15 U.S.C. 
637(a)), is further amended by adding at the end thereof the follow-
ing new paragraph: 
"(16)(A) The Administration shall award sole source contracts 
under this section to any small business concern recommended by 
the procuring agency offering the contract opportunity i
f
— 
"(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 business plan; and 
"(iii) the award of the contract would not result in the Pro-
gram Participant exceeding the requirements established by 
section 70')(10)(I). 
"(B) To the maximum extent practicable, the Administration shall 
promote the equitable geographic distribution of sole source con-
tracts awarded pursuant to this subsection.". 
(d) CONTRACT SELECTION APPEALS AND DOCUMENTATION.—Section 
- 8(a)(1)(A) of the Small Business Act (15 U.S.C. 637(a)(1)(A)) is 
amended by inserting after the sentence ending "the Administrator." 
the following: "Not later than 5 days from the date the Administration 
is notified of a procurement officer's adverse decision, the Administra-
tion may notify the contracting officer of the intent to appeal 
such adverse decision, and within 15 days of such date the Adminis-
trator shall file a written request for a reconsideration of the 
adverse decision with the Secretary of the department or agency 
head. For the putposes of this subparagraph, a procurement officer's 
adverse decision includes a decision not to make available for award 
pursuant to this subsection a particular procurement requirement 
or the failure to agree on the terms and conditions of a contract to 
be awarded noncompetitively under the authority of this subsection. 
Upon receipt of the notice of intent to appeal, the Secretary of the 
department or the agency head shall suspend further action regard-
ing the procurement until a written decision on the Administrator's 
request for reconsideration has been issued by such Secretary or 
agency head, unless such officer makes a written determination that 
urgent and compelling circumstances which significantly affect in-
terests of the United States will not permit waiting for a reconsider-
ation of the adverse decision. If the Administrator's request for 
reconsideration is denied, the Secretary of the department or agency 
head shall specify the reasons why the selected firm was determined 
to be incapable to perform the procurement requirement, and the 
findings supporting such determination, which shall be made a part 
of the contract file for the requirement.". 
(e) FAIR MARKET PRICE.—Section 8(a)(3) of the Act (15 U.S.C. 
637(a)(3)) is amended to read as follows: 
"(3)(A) Any Program Participant selected by the Administration 
to perform a contract to be let noncompetitively pursuant to this 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3871 
subsection shall, when practicable, participate in any negotiation of 
the terms and conditions of such contract. 
"(BXi) For purposes of paragraph (1) a 'fair market price' shall be 
determined by the agency offering the procurement requirement to 
the Administration, in accordance with clauses (ii) and (iii). 
"(ii) The estimate of a current fair market price for a new 
procurement requirement, or a requirement that does not have a 
satisfactory procurement history, shall be derived from a price or 
cost analysis. Such analysis may take into account prevailing 
market conditions, commercial prices for similar products or serv-
ices, or data obtained from any other agency. Such analysis shall 
consider such cost or pricing data as may be timely submitted by the 
Administration. 
"(iii) The estimate of a current fair market price for a procure-
ment requirement that has a satisfactory procurement history shall 
be based on recent award prices adjusted to insure comparability. 
Such adjustments shall take into account differences in quantities, 
performance times, plans, specifications, transportation costs, pack-
aging and packing costs, labor and materials costs, overhead costs, 
and any other additional costs which may be deemed appropriate. 
"(C) An agency offering a procurement requirement for potential 
award pursuant to this subsection shall, upon the request of the 
Administration, promptly submit to the Administration a written 
statement detailing the method used by the agency to estimate the 
current fair market price for such contract, identif3dng the informa-
tion, studies, analjrses, and other data used by such agency. The 
agency's estimate of the current fair market price (and any support-
ing data furnished to the Administration) shall not be disclosed to 
any potential offeror (other than the Administration). 
"(D) A small business concern selected by the Administration to 
perform or negotiate a contract to be let pursuant to this subsection 
may request the Administration to protest the agency's estimate of 
the fair market price for such contract pursuant to paragraph 
(IXA).". 
(f) OPTIONS.—(1) The Small Business Administration shall make 
15 USC 637 note. 
substantial and sustained efforts to achieve a maximum ten-day 
period as the average processing time for approving options and 
modifications to contracts awarded pursuant to section 8(a) of the 
Small Business Act (15 U.S.C. 637(a)) and submitted to such 
Administration for approval. 
(2) Within sixty days after the date of enactment of this Act, the 
Small Business Administration, and the appropriate Federal 
agency, shall make substantial and sustained efforts to negotiate 
contract modifications for fair market price for any and all unpriced 
options contained in contracts previously awarded pursuant to sec-
tion 8(a) of the SmaU Business Act (15 U.S.C. 637(a)) with the 
contractor that was initially awarded such contract. 
(3) During the period of time described in paragraph (2), such 
agencies shall refrain from procuring such requirements from alter-
native sources except that, no delay may be incurred pursuant to 
this paragraph that would cause substantial harm to a public 
interest. 
(4) The Small Business Administration shall take appropriate 
Federal 
actions, including publication in the Federal Register, to advise Register, 
small business concerns and Federal agencies of the requirements of Publication. 
this subsection. 
102 STAT. 3872 
PUBLIC LAW 100-656—NOV. 15, 1988 
(5) The Administration shall, to the maximum extent practicable, 
minimize delay, eliminate excess regulation, and require only such 
paperwork as may be necessary to effect the orderly and efficient 
management of the Program established by section 7(jX10) of the 
Small Business Act (15 U.S.C. 636(jX10)) and the award of contracts 
pursuant to section 8(a) of such Act (15 U.S.C. 637(a)). 
(g) STANDARD INDUSTRIAL CLASSIFICATION CODE LIMITATIONS.—Sec-
tion 8(a)(7) of the Act (15 U.S.C. 637(a)(7)) is amended by— 
(1) inserting "(A)" after "(7)"; and 
(2) adding the following new subparagraph: 
"(B) Limitations established by the Administration in its regula-
tions and procedures restricting the award of contracts pursuant to 
this subsection to a limited number of standard industrial classifica-
tion codes in an approved business plan shall not be applied in a 
manner that inhibits the logical business progression by a partici-
pating small business concern into areas of industrial endeavor 
where such concern has the potential for success.". 
(h) NON-MANUFACTURER RULE.—Section 8(a) of the Act (15 U.S.C. 
637(a)) is further amended by adding the following new paragraph: 
"(17)(A) An otherwise responsible business concern that is in 
compliance with the requirements of subparagraph (B) shall not be 
denied the opportunity to submit and have considered its offer for 
any procurement contract for the supply of a product to be let 
pursuant to this subsection or subsection (a) of section 15 solely 
because such concern is other than the actual manufacturer or 
processor of the product to be supplied under the contract. 
"(B) To be in compliance with the requirements referred to in 
subparagraph (A), such a business concern shall— 
"(i) be primarily engaged in the wholesale or retail trade; 
"(ii) be a regular dealer, as defined pursuant to section 35(a) of 
title 41, United States Code (popularly referred to as the Walsh-
Healey Public Contracts Act), in the product to be offered the 
Government or be specifically exempted from such section by 
section 7(j)(13)(C); and 
"(iii) represent that it will supply the product of a domestic 
small business manufacturer or processor, except that, the 
Administrator may waive the application of the clause, as it 
pertains to the furnishing of a product manufactured or proc-
essed by a small business, for any class of products for which 
there are no small business manufacturers or processors in the 
Federal market." 
SEC. 304. SUBCONTRACTING ASSISTANCE. 
(a) ENCOURAGING COMPUANCE.—Section 8(d)(4) of the Small Busi-
ness Act (15 U.S.C. 637(d)(4)) is amended by adding at the end 
thereof the following new subparagraph: 
"(F)(i) Each contract subject to the requirements of this paragraph 
or paragraph (5) shall contain a clause for the payment of liquidated 
damages upon a finding that a prime contractor has failed to make a 
good faith effort to comply with the requirements imposed on such 
contractor by this subsection. 
"(ii) The contractor shall be afforded an opportunity to dem-
onstrate a good faith effort regarding compliance prior to the 
contracting officer's final decision regarding the impositon of dam-
ages and the amount thereof. The final decision of a contracting 
officer regarding the contractor's obligation to pay such damages, or 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3873 
the amounts thereof, shall be subject to the Contract Disputes Act of 
1978 (41 U.S.C. 601-613). 
"(iii) Each agency shall ensure that the goals offered by the 
apparent succe^M bidder or offeror are attainable in relation to— 
"(I) the subcontracting opportunities available to the contrac-
tor, commensurate with the efficient and economical perform-
ance of the contract; 
"
O
O
D the pool of eligible subcontractors available to fulfill the 
subcontracting opportunities; and 
"(m) the actual performance of such contractor in fulfilling 
the subcontracting goals specified in prior plans.", 
(b) LIQUIDATED DAMAGES CLAUSE.^The contract clause required 
15 use 637 note. 
by section 8(dX4XF) of the Small Business Act (as added by subsec-
tion (a)) shall be made part of the Federal Acquisition Regulation 
and promulgated pursuant to section 22 of the Office of Federal 
Procurement PoUcy Act (41 U.S.C. 418b). 
TITLE IV—IMPROVED MANAGEMENT AND 
PROGRAM INTEGRITY 
SEC 401- STATUS OF THE ASSOCIATE ADMINISTRATOR FOR MINORITY 
SMALL BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT. 
(a) IN GENERAL.—In Section 4(bXl) of the Small Business Act (15 
U.S.C. 633(bXl)) is amended by inserting immediately after "Associ-
ate Adminisb-ator for Minori^ Small Business and Capital Oyvner-
ship Development" the following: "who shall be an employee in the 
competitive service or in the Senior Executive Service and a career 
appointee". 
(b) CAREER PosmoN.—^The position of Associate Administrator for 
15 use 633 note. 
Minority Small Business and Capital Ownership Development re-
ferred to in paragraph (1) of section 4(b) of the Act shall be a career 
reserved position. 
SEC 402. PROHIBITED ACTIONS AND EMPLOYEE RESPONSIBILITIES. 
Section 8(a) of the SmaU Business Act (15 U.S.C. 637(a)) is further 
amended by adding at the end thereof the following new paragraph: 
"(18XA) 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 terminated, enge^e in any activity 
or transaction specified in subparagraph (B) with respect to any 
Program Participant certified during such person's term of employ-
ment, if such person participated personally (either directly or 
indirectly) in decision-making responsibilities relating to such Pro-
gram Participant or with respect to the administration of any 
assistance provided to Pn^ram Participants generally under this 
subsection, section 7(|X10), or section 7(aX20). 
"(B) The activities and transactions prohibited by subparagraph 
(A) include— 
"(i) the buying, selling, or receiving (except by inheritance) of 
any l^al or beneficial ownership of stock or any other owner-
ship interest or the right to acquire any such interest; 
* (ii) the entering into or execution of any written or oral 
agreement (whether or not l^ally enforceable) to purchase or 
otherwise obtain any right or interest described in clause (i); or 
"(iii) the receipt of any other benefit or right that may be an 
incident of ownership. 
crime. 
102 STAT. 3874 
PUBLIC LAW 100-656—NOV. 15, 1988 
"(CXi) The employees designated in clause (ii) shall annually 
submit a written certification to the Administration 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 Associate Administrator for Minority Small Business 
and Capital Ownership Development; 
"(IV) employees whose principal duties relate to the award of 
contracts or the provision of other assistance pursuant to this 
subsection or section 7(jX10); and 
"(V) such other employees as the Administrator may deem 
appropriate. 
Law 
"(iii) Any present or former employee of the Administration who 
f"^^'^®™®"* ^^^ 
violates this pareigraph shall be subject to a civil penalty, assessed 
by the Attorney General, that shall not exceed 300 per centum of 
the maximum amount of gain such employee resilized 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)." 
SEC. 403. POLITICALLY MOTIVATED ACTIVITIES. 
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is 
amended by adding at the end the following: 
"(19XA) Any employee of the Administration who has authority to 
take, direct others to take, recommend, or approve any action with 
respect to any program or activity conducted pursuant to this 
subsection or section 7(j), shall not, with respect to any such action, 
exercise or threaten to exercise such authority on the basis of the 
political activity or affiliation of any party. Employees of the 
Administration shall expeditiously report to the Inspector General 
of the Administration any such action for which such employee's 
participation has been solicitated or directed. 
"(B) Any employee who willfully and knowingly violates subpara-
graph (A) shall be subject to disciplinary action, imposed by the 
Administrator, which may consist of separation from service, reduc-
tion in grade, suspension, or reprimand. 
"(C) 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) 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.". 
SEC. 404. REPORTS BY PROGRAM PARTICIPANTS. 
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is further 
amended by adding at the end thereof the following new paragraph: 
"(20XA) Small business concerns participating in the Program 
under section 7(jX10) and eligible to receive contracts pursuant to 
this section shall semiannually report to their assigned business 
opportunity specialist the following: 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3875 
"(i) A listing of any agents, representatives, attorneys, 
accountants, consultants, and other parties (other than employ-
ees) receiving compensation to assist in obtaining a Federal 
contract for such Program Participant. 
"(ii) The amount of compensation received 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) The Business Opportunity Specialist shall promptly review 
and forward such report to the Associate Administrator for Minority 
Small Business and dlapital Ownership Development. Any report 
that raises a suspicion of improper activity shall be reported imme-
diately to the Inspector General of the Administration. 
"(C) The failure to submit a report pursuant to the requirements 
of this subsection and applicable r^ulations shall be considered 
'good cause' for the initiation of a termination proceeding pursuant 
to section 7(jX10XF).". 
SEC. 405. FALSE REPRESENTATIONS. 
(a) PENALTY FOR MISREPRESENTATION.—Section 16(d) of the Small 
Business Act (15 U.S.C. 645(d)) is amended to read as follows: 
"(dXD Whoever misrepresents the status of any concern or person 
as a 'small business concern' or 'small business concern owned and 
controlled by socially and economically disadvantaged individuals', 
in order to obtain for oneself or another any— 
"(A) prime contract to be awarded pursuant to section 9 or 15; 
"(B) subcontract to be awarded pursuant to section 8(a); 
"(C) subcontract that is to be included as part or all of a goal 
contained in a subcontracting plan required pursuant to section 
8(d); or 
"(D) prime or subcontract to be awarded as a result, or in 
furtherance, of any other provision of Federal law that specifi-
cally references section 8(d) for a definition of prc^ram eligi-
bility, shall be subject to the penalties and remedies described 
in paragraph (2). 
"(2) Any person who violates paragraph (1) shall— 
"(A) be punished by a fine of not more than $500,000 or by 
imprisonment for not more than 10 years, or both; 
"(B) be subject to the administrative remedies prescribed 
by the Program Fraud Qvil Remedies Act of 1986 (31 U.S.C. 
3801-3812); 
"(C) be subject to suspension and debarment as specified in 
subpart 9.4 of title 48, Code of Federal Emulations (or any 
successor r^ulation) on the basis that such misrepresentation 
indicates a lack of business int^rity that seriously and directly 
affects the present responsibOity to perform any contract 
awarded by the Federal Grovemment or a subcontract under 
such a contract; and 
"(D) be ineligible for participation in any program or activity 
conducted under the authority of this Act or the Small Business 
Investment Act of 1958 (15 U.S.C. 661 et seq.) for a period not to 
exceed 3 years.". 
Qa) MISREPRESENTATION OF SECTION 7 COMPLIANCE.—Section 16 of 
the Small Business Act (15 U.S.C. 645) is amended by adding at the 
end thereof the following new subsection: 
102 STAT. 3876 
PUBLIC LAW 100-656—NOV. 15, 1988 
"(f) Whoever falsely certifies past compliance Math the require-
ments of section 70'XIOXI) of this Act shall be subject to the penalties 
prescribed in subsection (d).". 
SEC. 406. CONGRESSIONALLY REQUESTED INVESTIGATIONS. 
(e) INSPECTOR GENERAL INVESTIGATIONS.—Section 10(e) of 
the 
Small Business Act (15 U.S.C. 639(e)) is amended by— 
(1) inserting "and the Inspector General of the Administra-
tion" immediately after "Administration", and 
(2) adding the following new paragraph: 
"(2) The Clommittee on Small Business of either the Senate or the 
House of Representatives may request that the Office of the Inspec-
tor General of the Administration conduct an investigation of any 
program or activity conducted under the authority of section 7(j) or 
8(a). Not later than thirty days after the receipt of such a request, 
the Inspector General shall inform the committee, in writing of the 
disposition of the matter by such office.". 
SEC. 407. CONTRACT PERFORMANCE. 
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is further 
amended by adding the following new paragraph: 
"(21XA) Subject to the provisions of subparagraph (B), a contract 
(including options) awarded pursuant to this subsection shall be 
performed by the concern that initially received such contract. 
Notwithstanding the provisions of the preceding sentence, if the 
owner or owners upon whom eligibility was based relinquish owner-
ship or control of such concern, or enter into any agreement to 
relinquish such ownership or control, such contract or option shall 
be terminated for the convenience of the Government, except that 
no repurchase costs or other damages may be assessed against such 
concerns due solely to the provisions of this subparagraph. 
"(B) The Administrator may, as a matter of discretion and on a 
nondelegable basis, waive the requirements of subparagraph (A) if 
requested to do so prior to the actual relinquishment of ownership 
or control. In addition to the requirement of the preceding sentence, 
a waiver may be given only if any of the following conditions exist: 
"(i) WTien it is necessary for the owners of the concern to 
surrender partial control of such concern on a temporary basis 
in order to obtain equity financing. 
"(ii) The head of the contracting agency for which the con-
tract is being performed certifies that termination of the con-
tract would severely impair attainment of the agency's program 
objectives or missions; 
(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 eligible to receive the award directly pursuant to 
subsection (a); 
"(iv) The individuals upon whom eligibility was based are no 
longer able to exercise control of the concern due to incapacity 
or death; or 
Securities. 
"(v) When, in order to raise equity capital, it is necessary for 
the disadvantaged owners of the concern to relinquish owner-
ship of a majority of the voting stock of such concern, but only 
i
f
— 
"(I) such concern has exited the Capital Ownership Devel-
opment Program; 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3877 
"(II) the disadvantaged owners will maintain ownership 
of the largest single outstanding block of voting stock 
(including stock held by affiliated parties); and 
"(III) the disadvantaged owners will maintain control of 
daily business operations. 
"(C) Concerns performing contracts awarded pursuant to this 
subsection shall be required to notify the Administration imme-
diately 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. 
"(D) Notwithstanding 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 
companies licensed under the Small Business Investment Act of 
1958 shall be treated in the same manner as interests held by the 
individuals upon whom eligibility is based.". 
SEC. 408. DATA COLLECTION. 
Section 7(j) of the Small Business Act (15 U.S.C. 636(j)) is further 
amended by adding the following new paragraph: 
"(16XA) The Administrator shall develop and implement a process 
for the systematic collection of data on the operations of the Pro-
gram established pursuant to paragraph (10). 
"(B) Not later than April 30 of each year, the Administrator shall Reports. 
submit a report to the Congress on the Program that shall include 
the following: 
"(i) The average personal net worth of individuals who own 
and control concerns that were initially certified for participa-
tion in the Program during the immediately preceding fiscal 
year. The Administrator shall also indicate the dollar distribu-
tion of net worths, at $50,000 increments, of all such individuals 
found to be socially and economically disadvantaged. For the 
first report required pursuant to this paragraph the Adminis-
trator shall also provide the data specified in the preceding 
sentence for all eligible individuals in the Program as of the 
effective date of this paragraph. 
"(ii) A description and estimate of the benefits and costs that 
have accrued to the economy and the Government in the imme-
diately preceding fiscal year due to the operations of those 
business concerns that were performing contracts awarded 
pursuant to section 8(a). 
"(iii) A compilation and evaluation of those business concerns 
that have exited the Program during the immediately preceding 
three fiscal years. Such compilation and evaluation shall detail 
the number of concerns actively engaged in business operations, 
those that have ceased or substaiitially curtailed such oper-
ations, including the reasons for such actions, and those con-
cerns that have been acquired by other firms or organizations 
owned and controlled by other than socially and economically 
disadvantaged individuals. For those businesses that have 
continued operations after they exited 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 
102 STAT. 3878 
PUBLIC LAW 100-656—NOV. 15, 1988 
gender of the disadvantaged owners, the dollar value of all 
contracts received in the preceding year, the dollar amount of 
advance payments received by each concern pursuant to con-
tracts awarded under section 8(a), and a description including (if 
appropriate) an estimate of the dollar value of all benefits 
received pursuant to paragraphs (13) and (14) and section 
7(aX20) during such year. 
"(v) The total dollar value of contracts and options awarded 
during the preceding fiscal year pursuant to section 8(a) and 
such amount expressed as a percentage of total sales of (I) all 
firms participating in the Program during such year; and (II) of 
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 two-year period to service the expected 
portfolio of firms certified pursuant to section 8(a). 
"(vii) The total dollar v^ue of contracts and options awarded 
pursuant to section 8(a), at such dollar increments as the 
Administrator deems appropriate, for each four digit standard 
industrial classification code under which such contracts and 
options were classified. 
"(C) The first report required by subparagraph (B) sh£dl pertain to 
fiscal year 1990.". 
SEC. 409. DUE PROCESS RIGHTS. 
Paragraph (9) of section 8(a) of the Small Business Act (15 U.S.C. 
637(aX9)) is amended to read as follows: 
"(9XA) Subject to the provisions of subparagraph (E), the Adminis-
trator, prior to taking any action described in subparagraph (B), 
shall provide the small business concern that is the subject of such 
action, an opportunity for a hearing on the record, in accordance 
with chapter 5 of title 5, United States Code. 
"(B) The actions referred to in subparagraph (A) are— 
"(i) denial of program admission based upon a negative deter-
mination pursuant to paragraph (4), (5), or (6); 
"(ii) a termination pursuant to section 70'X10XF); 
"(iii) a graduation pursuant to section 7(jX10XH); and 
"(iv) the denial of a request to issue a waiver pursuant to 
paragraph (21XB). 
"(C) The Administrator's proposed action, in any proceeding con-
ducted under the authority of this paragraph, shall be sustained 
unless it is found to be arbitrary, capricious, or contrary to law. 
"(D) A decision rendered pursuant to this paragraph shall be the 
final decision of the Administration and shall be binding upon the 
Administration and those within its employ. 
"(E) The adjudicator selected to preside over a proceeding con-
ducted under the authority of this paragraph shall decline to accept 
jurisdiction over any matter that— 
"(i) does not, on its face, allege facts that, if proven to be true, 
would warrant reversal or modification of the Administration's 
position; 
"(ii) is untimely filed; 
"(iii) is not filed in accordance with the rules of procedure 
governing such proceedings; or 
"(iv) has been decided by or is the subject of an adjudication 
before a court of competent jurisdiction over such matters. 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3879 
"(F) Proceedings conducted pursuant to the authority of this 
paragraph shall be completed and a decision rendered, insofar as 
practicable, within ninety days after a petition for a hearing is filed 
with the adjudicating office.". 
SEC. 410. EMPLOYEE TRAINING AND EVALUATION. 
15 USC 636 note. 
(a) TRAINING REQUIREMENTS FOR BUSINESS SPECIAUSTS.—(1) In 
each Small Business Administration field office responsible for 
assisting one or more Program Participants there shall be a position 
designated as a Business Opportunity Specialist. To the maximum 
extent practicable the Administration shall assure that an adequate 
number of Business Opportunity Specialists are assigned to each 
district office to carry out the responsibilities of sections 7(j) and 8(a) 
of the Small Business Act (15 U.S.C. 636(j), 637(a)) and to assist 
Program Participants. 
(2) The Administration shall take such actions as may be appro-
priate to ensure that any person employed as a Business Oppor-
tunity Specialist receives adequate periodic training to assure such 
employee is capable of assisting Program Participants to fully utilize 
the Program and to meet the requirements of the Small Business 
Act, as amended by this Act. 
(b) PILOT PROGRAM.—(1) Within 180 days after the effective date of 
this subsection the Administrator shall designate three regions of 
the Administration to conduct a pilot program pursuant to the 
provisions of this subsection. The designated regions shall contain 
approximately 30 per centum of the total number of Program 
Participants as of the time of designation. 
(2) A Business Opportunity Specialist employed in a Region des-
ignated pursuant to paragraph (1), in addition to other assigned 
duties and responsibilities, shall— 
(A) conduct contract negotiations on behalf of the Administra-
tion for contracts awarded pursuant to section 8(a) of the Small 
Business Act (15 U.S.C. 637(a)) when performance will be ren-
dered by one or more firms in such Specialist's assigned 
portfolio; 
(B) facilitate and otherwise assist such firms in negotiating 
for the receipt of contracts to be let pursuant to such section. 
(3) The Administration shall take such actions as may be appro-
priate to train and qualify such Specialists to perform the negotia-
tions required pursuant to paragraph (2). 
(4) To the extent practicable, the Administrator shall ensure that 
the performance appraisal system applicable to a Business Oppor-
tunity Specialist employed in a region designated pursuant to 
paragraph (1) affords substantial recognition to how well such 
Specialist's assigned portfolio of concerns participating in the pro-
gram established by section 7(jX10) of the Small Business Act (15 
U.S.C. 636(j)(10)) are achieving competitiveness and furthering the 
business development purposes of the program. 
(5) The Administration shall establish personnel positions for 
Business Opportunity Specialists employed in the regions des-
ignated pursuant to paragraph (1) that are classified at a grade level 
of the General Schedule that are sufficient, in the opinion of the 
Administrator, to attract and retain highly qualified personnel. 
(c) REPORT AND PILOT PROGRAM TERMINATION.—(1) Within 120 
days after the termination of the pilot program conducted pursuant 
to subsection (b), the Administration shall issue a report to the 
Committees on Small Business of the Senate and of the House of 
102 STAT. 3880 
PUBLIC LAW 100-656—NOV. 15, 1988 
Representatives on the effectiveness of the pilot. Such report shall 
contain such recommendations for administrative or l^islative 
change as may be appropriate. 
(2) The pilot prc^ram conducted pursuant to subsection (a) shall be 
terminated three years after the date on which the Committees on 
Small Business of the Senate and of the House of Representatives 
receive written notification from the Administrator that the pilot is 
in full operation in each of the three designated pilot r^ons. 
TITLE V—CONTRACT PLANNING; GOAL 
SETTING AND REVIEWS 
SEC. 501. PLANNING SECTION 8(a) CONTRACT ACTIVITY. 
Section 8(aX12) of the Small Business Act (15 U.S.C. 637(aX12)) is 
amended to read as follows: 
"(12XA) The Administration shall require each concern eligible to 
receive subcontracts pursuant to this subsection to annually prepare 
and submit to the Administration a capability statement. Such 
statement shall briefly describe such concern's various contract 
performance capabihties and shall contain the name and telephone 
number of the Business Opportunity Specialist assigned such con-
cern. The Administration shall separate such statements by those 
primarily dependent upon local contract support and those pri-
marily requiring a national marketing effort. Statements primarily 
dependent upon local contract support shall be disseminated to 
appropriate buying activities in the marketing area of the concern. 
The remaining statements shall be disseminated to the Directors of 
Small and Disadvantaged Business Utilization for the appropriate 
agencies who shall further distribute such statements to buying 
activities with such agencies that may purchase the types of items 
or services described on the capability statements. 
"(B) Contracting activities receiving capability statements shall, 
within 60 days after receipt, contact the relevant Business Oppor-
tunity Specialist to indicate the number, type, and approximate 
dollar v£due of contract opportunities that such activities may be 
awarding over the succeeding 12-month period and which may be 
appropriate to consider for award to those concerns for which it has 
received capabihty statements. 
"(C) Each executive agency reporting to the Federal Procurement 
Data System contract actions with an aggregate value in excess of 
$50,000,000 in fiscal year 1988, or in any succeeding fiscal year, shall 
prepare a forecast of expected contract opportunities or classes of 
contract opportunities for the next and succeeding flscal years that 
small business concerns, including those owned and controlled by 
socially and economically disadvantaged individuals, are capable of 
performing. Such forecast shall be periodically revised during such 
year. To the extent such information is available, the agency fore-
casts shall specify: 
"(i) The approximate 
number of individual 
contract 
opportunities (and the number of opportunities within a class) 
"(ii) The approximate dollar value, or range of dollar values, 
for each contract opportunity or class of contract opportunities. 
"(iii) The anticipated time (by fiscal year quarter) for the 
issuance of a procurement request. 
"(iv) The activity responsible for the award and administra-
tion of the contract. 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3881 
"(D) The head of each executive agency subject to the provisions of 
subparagraph (C) shall within 10 days of completion furnish such 
forecasts to— 
"(i) the Director of the Office of Small and Disadvantaged 
Business Utilization established pursuant to section 15(k) for 
such agency; and 
"(ii) the Administrator. 
"(E) The information reported pursuant to (D) may be limited to 
classes of items and services for which there are substantial annual 
purchases. 
"(F) Such forecasts shall be available to small business concerns.". 
SEC. 
5
0
2
. 
ANNUAL 
CONTRACTING 
GOALS. 
Section 15(g) of the Small Business Act (15 U.S.C. 644(g)) is 
amended— 
(1) by striking out "The head" and inserting in lieu thereof 
"(2) The head"; 
(2) by redesignating paragraphs (1) and (2) as subparagraphs 
(A) and (B), respectively, and 
(3) by adding at the beginning the following new paragraph: 
"(1) The President shall annually establish Government-wide goals President of U.S. 
for procurement contracts awarded to small business concerns and 
small business concerns owned and controlled by socially and 
economically disadvantaged individuals. The Government-wide goal 
for participation by small business concerns shall be established at 
not less than 20 percent of the total value of all prime contract 
awards for each fiscal year. The Government-wide goal for participa-
tion by small business concerns owned and controlled by socially 
and economically disadvantaged individuals shall be established at 
not less than 5 percent of the total value of all prime contract and 
subcontract awards for each fiscal year. Notwithstanding the 
Grovernment-wide goal, each agency shall have an annual goal that 
presents, for that agency, the maximum practicable opportunity for 
small business concerns and small business concerns owned and 
controlled by socially and economically disadvantaged individuals to 
participate in the performance of contracts let by such agency. The 
Administration and the Administrator of the Office of Federal 
Procurement Policy shall, when exercising their authority pursuant 
to paragraph (2), insure that the cumulative annual prime contract 
goals for all agencies meet or exceed the annual Government-wide 
prime contract goal established by the President pursuant to this 
paragraph.". 
SEC. 503. PRESIDENTIAL REPORT ON CONTRACTING GOALS. 
Section 15(h) of the Small Business Act (15 U.S.C. 644(h)) is 
amended— 
(1) by striking out "(h)" and inserting in lieu thereof "(hXD", 
(2) by striking out the last sentence of subsection (hXD, and 
(3) by adding at the end thereof the following new paragraph: 
"(2) The Administration shall annually compile and analyze the 
reports submitted by the individual agencies pursuant to paragraph 
(1) and shall submit them to the President. The Administration's 
submission to the President shall include the following: 
"(A) The Government-wide goals for participation by small 
business concerns and small business concerns owned and con-
trolled by socially and economically disadvantaged and the 
performance in attaining such goals. 
102 STAT. 3882 
PUBLIC LAW 100-656-NOV. 15, 1988 
"(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 Administration) 
to achieve the goals in the succeeding fiscal year. 
"(D) The number and dollar value of contracts awarded to 
small business concerns and small business concerns owned and 
controlled by socially and economically disadvantaged individ-
uals through— 
"(i) noncomi)etitive negotiation, 
"(ii) competition restricted to small business concerns 
owned and controlled by socially and economically dis-
advantaged individuals, 
"(iii) competition restricted to small business concerns, 
and 
"(iv) unrestricted competitions, 
for each agency and on a Government-wide basis. 
"(E) The number and dollar value of subcontracts awarded to 
small business concerns and small business concerns owned and 
controlled 
by socially and 
economically 
disadvantaged 
individuals. 
"(F) The number and dollar value of prime contracts and 
subcontracts 
awarded 
to women-owned 
small 
business 
enterprises. 
"(3) The President shall include the information required by 
paragraph (2) in each annual report to the Congress on the state of 
small business prepared pursuant to section 303(a) of the Small 
Business Economic Policy Act of 1980 (15 U.S.C. 631b(a)).*'. 
15 use 636 note. 
SEC. 504. GENERAL ACCOUNTING OFFICE REPORT. 
(a) IN GENERAL.—(1) The Comptroller General of the United 
States shall conduct a review of the operation of the Minority Small 
Business and Capital Ownership Development Program authorized 
by section 70X10) (15 U.S.C. 636(jX10)) and the contract assistance 
provided pursuant to section 8(a) (15 U.S.C. 637(a)) of the Small 
Business Act commencing within 180 days of the enactment of this 
Act and concluding on September 30,1991. 
(2) The review shall report on the implementation of the provi-
sions of this Act by the Small Business Administration and the 
various executive departments and ^encies providing contracting 
opportunities to the Program. In addition to such other matters as 
the Comptroller (Jeneral may choose to include, the review shall 
report on the implementation of the Act's provisions relating to— 
(A) the certification of Program Participants by the Adminis-
tration; 
(B) the development and maintenance of business develop-
ment plans required by this Act; 
(C) the amount and types of business management and tech-
nical assistance provided to Program Participants, including 
transition management assistance, and the criteria by which 
the effectiveness of such assistance is measured by the 
Administration; 
(D) the type and amount of financial assistance provided 
through the programs authorized by the Small Business Act 
and the Small Business Investment Act of 1958; 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3883 
(E) Program Participants' dependence on contracts awarded 
noncompetitively under the authority of section 8(a) of the 
Small Business Act (15 U.S.C. 637(a)) and the rate of increase in 
the percentage of competitively awarded contracts in the firms' 
business mix as Program Participants approach graduation; 
(F) the competitive award of contracts within the Program, 
determining the number, dollar value, and source selection 
method u s ^ for the various contract opportunities required to 
be awarded competitively and those for which competition was 
discretionary; 
(G) the noncompetitive award of contracts to Program Partici- 
^ 
pants; the effect on the distribution of Program awards among 
individual Program Participants; and Program Participants lo-
cated in each of the several States; and the Administration's use 
of the authority to direct contracts to Program Participants in 
the interest of maintaining equitable contract distributions; 
(H) delay in the award of contracts flowing from protests, 
either of a prospective awardee's continued Program eligibility 
or the conduct of a competition restricted to Program 
Participants; 
(I) limitations on the transfer of contracts to a Program 
Participant incident to transferring ownership and control 
of the business; 
(J) reporting by Program Participants concerning the use of 
consultants and other non-employees to assist in obtaining 
Federal contracts; and 
(K) data collection and data management by the Administra-
tion relating to the Program. 
(3) The Comptroller General shall prepare a report summarizing 
the findings of the review described in paragraph (2), and make such 
recommendations for the improved implementation of this Act as 
may be appropriate. The report shall be transmitted to the Commit-
tees on Small Business of the Senate and House of Representatives 
by February 1,1992. 
SEC. 505. COMMISSION ON MINORITY BUSINESS DEVELOPMENT. 
15 USC 636 note. 
(a) EsTABUSHMENT.—There is established a Commission to be 
known as the "Commission on Minority Business Development" 
(hereinafter in this title referred to as the "Commission"). 
(b) DUTIES.—(1) The Commission shall— 
(A) review and conduct an assessment of the operations of all 
Federal programs intended to promote and foster the develop-
ment of minority owned businesses to ascertain whether the 
purposes and objectives of such program are being realized. 
Such review and assessment shall include, among other things, 
an evaluation of the issues described in this subsection; 
(B) review and assess the overall effectiveness of the Small 
Business and Capital Ownership Development Program estab-
lished pursuant to 7(jX10) of the Small Business Act (15 U.S.C. 
636(jX10)) including— 
(i) the procedure whereby the Administration certifies 
concerns pursuant to section 8(a) of the Small Business Act 
(15 U.S.C. 637(a)), including, the average time for the 
processing of applications, the criteria for program admis-
sion, and the geographic and industrial distribution of new 
program entrants; 
102 STAT. 3884 
PUBLIC LAW 100-656—NOV. 15, 1988 
(ii) the developmental assistance provided under the 
Small Business Act to such concerns and whether such 
assistance has been of benefit to program participants and 
whether modifications, additions, or deletions to such assist-
ance should be provided to further the purposes of the 
program; such evaluation shall also include an analysis of 
whether program benefits, including contract awards, have 
been equitably distributed among all program participants 
and whether all regions of the Nation have benefitted from 
the program in proportion to their respective numbers of 
minority OMOied businesses; 
(iii) the system established by this Act for competing 
contracts pursuant to section 8(a) of the Small Business Act 
(15 U.S.C. 637(a)) and whether improved methods could be 
used, consistent with the purposes of the program, to better 
impart competitive skills, prevent program abuse, and pro-
mote the equitable distribution of awards; 
(iv) the appropriate maximum term for program partici-
pation; such evaluation shall take into account relevant 
industry data, the developmental cycles of particular indus-
tries, and the fmancial, managerial and technological needs 
of such concerns to become competitive; a study shall be 
conducted relating to the fixed program term allowed under 
statute and the advisability of adopting alternative terms 
based on Standard Industrial Classification (Dodes or other 
economic indices; 
' 
(v) the data collection system maintained by the Adminis-
tration to gather information relative to the program and 
whether such system is producing reliable data needed for 
effective management and control of the program; 
I 
(vi) various techniques that may be used to increase the 
participation rate of Federal agencies (as defined pursuant 
to section 224 of Public Law 95-507) in the program, to 
further the compliance of contractors with section 8(d) of 
the Small Business Act (15 U.S.C. 637(d)), and to properly 
coordinate the program with the operations of other Fed-
eral programs and activities designed to assist small busi-
ness concerns owned and controlled by the socially and 
economically disadvantaged; and 
(vii) the laws and regulatory procedures designed to pro-
tect against prc^am abuse and if additional safeguards are 
necessary to protect the integrity of the program; 
(C) review and assess the programs described in subparagraph 
(B) and whether the congressional purposes for such programs 
are being achieved in a manner that is consistent with the 
intent of other programs established under Federal law to 
promote the development of small business concerns; and 
(D) review and assess— 
(i) the policies and procedures of major procurement 
agencies with respect to setting goals l^ contractors (and 
subcontractors) under section 8(d) of the Small Business Act 
(15 U.S.C. 637(d)) to encourage subcontracting opportunities 
for small business concerns and small business concerns 
owned and controlled by socially and economically dis-
advantaged individuals; 
(ii) the performance of a sample of contractors (and 
subcontractors) in attaining the goals established in their 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3885 
subcontracting plans and in making greater use of small 
business concerns and small business concerns owned and 
controlled by socially and economically disadvantaged 
individuals; 
(iii) the extent to which liquidated damages have been 
assessed under subcontracting plans and whether the inclu-
sion of a liquidated damage clause furthers the purposes of 
the subcontracting program; and 
(iv) the special circumstances of contractors providing 
commercial products. 
(2)(A) Based upon its review, the Commission shall issue an in- Reports. 
terim report and a final report to the Congress and to the President. 
(B) The interim report shall be issued by December 31, 1990, and 
shall detail the methodology pursued to evaluate each issue de-
scribed in subparagraphs (A) and (B) of paragraph (1). The Commis-
sion shall also indicate those changes in law or regulation, if any, 
that should be considered immediately in order to protect the 
integrity of the Program and further the legitimate interests of 
Program Participants. 
(C) The final report shall be issued within 1 year after the interim 
report and shall contain detailed findings, conclusions, and recom-
mendations for such changes in law or regulation as niay be 
necessary to further the growth and development of minority 
businesses. Such findings, conclusions, and recommendations shall 
be stated for each issue described under each such subparagraph. 
(c) MEMBERSHIP.—(1) The Commission shall be composed of four-
teen members to be selected as follows: 
(A)(i) The Administrator of the Small Business Administra-
tion, or a designee of the Administrator. 
(ii) The Under Secretary of Defense for Acquisition. 
(iii) The Secretary of Commerce (or such Secretary's Deputy), 
(iv) The Secretary of Transportation (or such Secretary's 
Deputy). 
(B) Two members shall be representatives of trade or business 
associations whose membership are primarily small business 
concerns owned and controlled by socially and economically 
disadvantaged individuals. 
(C) Four members shall be chief executive officers, or individ-
uals of similar position, from major domestic corporations two 
of which shall be minority businesses. 
(D) Four members shall be from leading educational institu-
tions in business administration and management, two of which 
shall be from historically Black colleges or universities and 
minority institutions {as defined by the Secretary of Education 
pursuant to the General Education Provisions Act (20 U.S.C. 
1221 et seq.). 
(2) Appointments under subparagraphs (B), (C), and (D) of para- President of U.S. 
graph (1) shall be made by the President. No more than one-half of 
the members appointed under each such subparagraph shall be of 
the same political party. No appointed member shall be an officer or 
employee of the Federal Government nor of the Congress. 
(3) Members appointed under such subparagraphs shall be ap-
pointed for the term of the Commission except if any such appointee 
becomes an officer or employee of the Federal Government or of the 
Congress, such individual may continue as a member of the Commis-
sion for not longer than the thirty-day period beginning on the date 
such individual becomes such an officer or employee. 
102 STAT. 3886 
PUBLIC LAW 100-656—NOV. 15, 1988 
(4) A vacancy on the Commission shall be filled in the manner in 
which the original appointment weis made. 
(5) Members of the Commission shall serve without pay for such 
membership, except members of the Commission shall be entitled to 
reimbursement for travel, subsistence, and other necessary expenses 
incurred by them in carrying out the functions of the Commission, 
in the same manner as persons employed intermittently in the 
Federal Government are allowed expenses under section 5703 of 
title 5, United States Code. 
(6)(A) Four members of the Commission shall constitute a quorum 
for the receipt of testimony and other evidence. 
(B) A majority of the Commission shall constitute a quorum for 
the approval of a report submitted pursuant to paragraph 2. 
(C) The Commission shall meet not less than four times a year. 
Meetings shall be at the call of the Chairperson. 
(7) The Chairperson and Vice Chairperson of the Commission 
shall be designated by the President and term of office for such 
Chairperson and Vice Chairperson shall be at the discretion of the 
President. 
(d) DIRECTOR AND STAFF.—(1)(A) The Commission shall have a 
Director who shall be appointed by the Chairperson. Upon rec-
ommendation by the Director, the Chairperson may appoint and fix 
the pay of four additional personnel. 
(B) The Director and staff of the Commission may be appointed 
without regard to section 531(b) of title 5, United States Code, and 
without regard to the provisions of such title governing appoint-
ments in the competitive service, and may be paid without regard to 
the provisions of chapter 51 and subchapter III of chapter 53 of such 
title relating to classification and General Schedule pay rates, 
except that no individual so appointed may receive pay in excess of 
the annual rate of basic pay payable for GS-18 of the General 
Schedule. 
(2) The Commission may procure temporary and intermittent 
services under section 31090?) of title 5 of the United States Code, 
but at rates for individuals not to exceed the daily equivalent of the 
maximum annual rate of basic pay payable for GS-18 of the General 
Schedule. 
(3) Upon request of the Chairperson, the head of any Federal 
department or agency may detail, on a reimbursable basis, any of 
the personnel of such agency to the Commission to assist the 
Commission in carrying out its duties under this title without 
regard to section 3341 of title 5 of the United States Code. 
(e) POWERS.—(1) The Commission may, for the purpose of carrying 
out this title sit and act at such times and places, hold such 
hearings, take such testimony, receive such evidence, and consider 
such information, as the Commission considers appropriate.. The 
Commission may administer oaths or affirmations for the receipt of 
such testimony. 
(2) Any member or person within the employ of the Commission 
may, if so authorized by the Commission, take any action which the 
Commission is authorized to take by this section. 
(3) Except as otherwise prohibited by law, the Commission may 
secure directly from any department or agency of the United States 
information necessary to enable it to carry out its duties under this 
Act. Upon the request of the Chairperson of the Commission, the 
head of such department or agency shall promptly furnish such 
information to the Commission. 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3887 
(4) The Commission may use the United States mails in the same Mall. 
manner and under the same conditions as departments and agencies 
of the United States. 
(5) The Administrator of the General Services Administration 
shall provide to the Commission, on a reimbursable basis, such 
administrative support services as the Commission may request. In 
addition, the Administrator shall, as appropriate, provide to the 
Commission, upon request, access to and use of such Federal facili-
ties as may be necessary for the conduct of its business. 
(f) TERBONATION.—^The Commission shall cease to exist on the date 
that it transmits its final report to the Congress and to the 
President. 
(g) AUTHORIZATION.—^There are authorized to be appropriated 
such sums as may be necessary to carry out this title and they may 
remain available until the Commission is terminated. New spending 
authority or authority to enter contracts as authorized in the section 
shall be effective only to such extent and in such amounts as are 
provided in advance in appropriation Acts. 
(h) REPEALER.—Subparagraph (A) of section 7(jX3) of the Small 
Business Act (15 U.S.C. 636gK3XA)) is repealed. 
TITLE VI—ADMINISTRATIVE AND TECHNICAL 
AMENDMENTS 
SEC 601. RELATIONSHIP WITH OTHER PROCUREMENT PROGRAMS. 
Section 15(m) of the Small Busmess Act (15 U.S.C. 644(m)) is 
amended to read as follows: 
"(mXD Blach agency subject to the requirements of section 1207 of 
the National Defense Authorization Act for Fiscal Year 1987 (10 
U.S.C. 2301 note) shall, when implementing such requirements— 
"(A) establish policies and procedure that insure that there 
will be no reduction in the number of dollar value of contracts 
awarded pursuant to this section and section 8(a) in order to 
achieve any goal or other p n ^ a m objective; and 
"(B) assure that such requirements will not alter or change 
the procurement process used to implement this section or 
section 8(a). 
"(2) All procurement center representatives (including those re-
ferred to in subsection (kX6)), in addition to such other duties as may 
be assigned by the Administrator, shall— 
"(A) monitor the performance of the procurement activities to 
which they are assigned to ascertain the degree of compliance 
with the requirements of paragraph (1); 
"(B) report to their immediate supervisors all instances of 
noncompliance with such requirement; and 
"(C) increase, insofar as possible, the number and dollar value 
of procurements that may be used for the programs established 
under this section, section 8(a), and section 1207 of the National 
Defense Authorization Act for Fiscal Year 1987 (10 U.S.C. 2301 
note).". 
SEC. 602. INDIAN TRIBE EXEMPTIONS. 
15 USC 637 note. 
(a) Ck)MPETrnvE THRESHOLDS.—Section 8(aX16) of the Small Busi-
ness Act as added by section 303 of this Act, shall not apply to 
Program Participants that are owned and controlled by economi-
cally disadvantaged Indian tribes, as defined pursuant to para-
102 STAT. 3888 
PUBLIC LAW 100-656—NOV. 15, 1988 
graphs (4) and (13) of section 8(a) of the Small Business Act (15 
U.S.C. 637(a) (4) and (13)). 
(b) JOINT VENTURES.—The Administration is authorized to award 
a contract pursuant to section 8(a) of the Small Business Act (15 
U.S.C. 637(a)) to a joint venture notwithstanding the size status of 
such joint venture if— 
(1) a party to the joint venture is a Program Participant that 
is owned and controlled by an economically disadvantaged 
Indian tribe (as defined pursuant to paragraphs (4) and (13) of 
section 8(a) of the Small Business Act (15 U.S.C. 637(a) (4) and 
(13)); and 
(2) such Program Participant: 
(A) owns 51 per centum or more of such joint venture; 
(B) is located on the reservation of such tribe; 
(C) performs most of its activities on such reservation; 
and 
(D) employs members of such tribe for at least 50 per 
centum of its total workforce. 
(c) LIMITATIONS.—A Program Participant, as a party to a joint 
venture shall receive no more than two contracts due solely to the 
provisions of subsection (b). 
(d) ELIGIBIUTY OF MORE THAN ONE CONCERN.—The Administra-
tion may permit more than one small business concern owned by a 
socially and economically disadvantaged Indian tribe to be eligible 
for assistance pursuant to this section 7(j)(10) and section 8(a) of the 
Small Business Act (15 U.S.C. 6360')(10) and 637(a)) i
f
— 
(1) the Indian tribe does not own another firm in the same 
industry which has been determined to be eligible to receive 
contracts under this program, and 
(2) the individuals responsible for the management and daily 
operations of the concern do not manage more than two Pro-
gram Participants. 
(e) SUNSET.—Subsection (b) shall cease to be effective after 
September 30,1991. 
SEC. 603. DIRECTORS OF SMALL AND DISADVANTAGED BUSINESS UTILI-
ZATION. 
15 use 644. 
Section 15(k) of the Small Business Act is amended by— 
(1) amending paragraph (3) to read as follows: 
"(3) be responsible only to, and report directly to, the head of 
such agency or to the deputy of such head, except that the 
director for the Office of the Secretary of Defense shall be 
responsible only to, and report directly to, such Secretary or the 
Secretary's designee;"; 
(2) striking "and" at the end of paragraph (7); 
(3) striking the period at the end of paragraph (8) and insert-
ing in lieu thereof ", and"; and 
(4) adding at the end thereof the following new paragraph: 
"(9) make recommendations to contracting officers as to 
whether a particular contract requirement should be awarded 
pursuant to subsection (a), or section 8(a) of this Act or section 
1207 of Public Law 99-661. Such recommendations shall be 
made with due regard to the requirements of subsection (m), 
and the failure of the contracting officer to accept any such 
recommendations shall be documented and included within the 
appropriate contract file.". 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3889 
TITLE VII—SMALL BUSINESS COMPETITIVE-
NESS DEMONSTRATION PROGRAM 
PART A—SHORT TITLE AND FINDINGS 
Small Business 
Competitiveness 
Demonstration 
Program Act of 
1988. 
15 u s e 644 note. 
SEC. 701. SHORT TITLE. 
This title may be cited as the "Small Business Competitiveness 
Demonstration Program Act of 1988". 
SEC. 702. FINDINGS. 
The Congress finds that— 
(1) many small business concerns have repeatedly dem-
onstrated their ability to fulfill a broad range of Government 
requirements for products, services (including research, develop-
ment, technical, and professional services), and construction, 
through the Federal procurement process; 
(2) various Congressional mandated reforms to the Federal 
procurement process, including the Competition in Contracting 
Act of 1984, the Defense Procurement Reform Act of 1984, and 
the Small Business and Federal Procurement Competition 
Enhancement Act of 1984, were designed to eliminate obstacles 
to competition and thereby to broaden small business participa-
tion; and 
(3) traditional agency efforts to implement the mandate for 
small business participation in a fair proportion of Federal 
procurements as required by section 15(a) of the Small Business 
Act have resulted in— 
(A) a concentration of procurement contract awards in a 
limited number of industry categories, often dominated by 
small business concerns, through the use of set-asides, for 
the purpose of assuring the attainment of the agency's 
overall smgQl business contracting goals; and 
(B) inadequate efforts to expand small business participa-
tion in agency procurements of products or services which 
have historically demonstrated low rates of small business 
participation despite substantial potential for expanded 
small business participation. 
PART B-—DEMONSTRATION PROGRAM 
SEC. 711. SMALL 
BUSINESS 
COMPETITIVENESS 
DEMONSTRATION 
PROGRAM. 
(a) EsTABUSHMENT.—There is established a Small Business 
Competitiveness Demonstration Program (hereafter referred to as 
"the Program") pursuant to section 15 of the Office of Federal 
Procurement Policy Act (41 U.S.C. 413) to provide for the testing of 
innovative procurement methods and procedures. The Adminis-
trator of Federal Procurement Policy shall designate the Adminis-
trator of the Small Business Administration as the executive agent 
responsible for conducting the test. 
(b) PURPOSES.—The purposes of the Program are to demonstrate 
whether— 
(1) the competitive capabilities of small business firms in 
certain industry categories will enable them to successfully 
compete on an unrestricted basis for Federal contracting 
opportunities, 
15 u s e 644 note. 
102 STAT. 3890 
PUBLIC LAW 100-656—NOV. 15, 1988 
(2) the use of targeted goaling and management techniques by 
procuring agencies, in conjunction with the Small Business 
Administration, can expand small business participation in Fed-
eral contracting opportunities which have been historically low, 
despite adequate numbers of qualified small business contrac-
tors in the economy, and 
(3) expanded use of full and open competition, as specified by 
the Competition in Contracting Act of 1984 (10 U.S.C. 2302(3) 
and 41 U.S.C. 403(7)), adversely affects small business participa-
tion in certain industry categories, taking into consideration the 
numerical dominance of small firms, the size and scope of most 
contracting opportunities, and the competitive capabilities of 
small firms. 
(c) PROGRAM TERM.—The Program shall be conducted over a 
period of 4 years, beginning on January 1, 1989, and ending on 
December 31,1992. 
(d) APPUCATION.—The Program shall apply to contract solicita-
tions for the procurement of services in industry groups designated 
in section 717. 
SEC. 712. ENHANCED SMALL BUSINESS PARTICIPATION GOALS. 
(a) ENHANCED GOALS FOR DESIGNATED INDUSTRY GROUPS.—Each 
participating agency shall establish an annual small business 
participation goal that is 40 percent of the dollar value of the 
contract awards for each of the designated industry groups. In 
attaining its small business participation goal for contract awards 
for each of the designated industry groups, each participating 
agency shall make a good faith effort to assure that emerging small 
business concerns are awarded not less than 15 percent of the dollar 
value of the contract awards for each of the designated industry 
groups. 
(b) SPECIAL ASSISTANCE FOR EMERGING SMALL BUSINESS CON-
CERNS.— 
(1) SMALL BUSINESS RESERVE.—During the term of the Pro-
gram, all contract opportunities in the industry groups 
designated in section 718 shall be reserved for exclusive com-
petition among emerging small business concerns in accordance 
with the competition standard specified in section 15(j) of the 
Small Business Act (15 U.S.C. 6440*)), if the estimated award 
value of the contract is equal to or less than the greater of: 
(A) $25,000, or 
(B) such larger dollar amount established pursuant to 
paragraph (2). 
(2) ADJUSTMENTS TO THE SMALL BUSINESS RESERVE.—If the goal 
of awarding emerging small business concerns 15 percent of the 
total dollar vsdue of contracts in a designated industry category 
is determined not to have been attained, upon the review of 
award data conducted in accordance with subsection (dXl) of 
this section, the Administrator for Federal Procurement Policy, 
to ensure attainment of such goal, shall prescribe, on a semi-
annual basis, appropriate adjustments to the dollar threshold 
for contract opportunities in such designated industry category 
below which competition shall be conducted exclusively among 
emerging small business concerns. 
(3) SMALL BUSINESS SMALL PURCHASE RESERVE.—The require-
ments of this subsection dealing with the reserve amount shall 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3891 
apply notwithstanding the amount specified in section 15(j) of 
the Small Business Act (15 U.S.C. 644(j)). 
(4) EXCLUSION OF MODIFICATIONS TO EXISTING CONTRACTS ABOVE 
THE SMALL PURCHASE THRESHOLD.—Any modification or follow-
on award to a contract having an initial award value in excess 
of $25,000 shall not be subject to the limitations on competition 
required by this subsection. 
(c) TARGETING INDUSTRY CATEGORIES WITH LIMITED SMALL BUSI-
NESS PARTICIPATION.—(1) Concurrent with the term of the Small 
Business Competitiveness Demonstration Program, the head of each 
participating agency shall implement a program to expand small 
business participation in the agency's acquisition of selected prod-
ucts and services in 10 industry categories which have historically 
demonstrated low rates of small business participation. The prod-
ucts and services to be targeted for the small business participation 
expansion program and the special goals for such program, shall be 
developed in conjunction with the Administrator of the Small Busi-
ness Administration, and shall be subject to the requirements of 
section 15(g) of the Small Business Act (15 U.S.C. 644(g)). 
(2) The products or services selected for the small business partici-
pation expansion program shall be drawn from industry categories 
that: 
(A) are the recipients of substantial purchases by the Federal 
Government; 
(B) have less than 10 percent of such annual purchases made 
from small business concerns; and 
(C) have significant amounts of small business productive 
capacity that have not been utilized by the Government. 
(3) In developing its small business participation expansion pro-
gram, each participating agency shall: 
(A) prepare, and furnish to the Administration, a detailed, 
time-phased strategy (with incremental numerical goals); and 
(B) encourage and promote joint ventures, teaming agree-
ments and other similar arrangements, which permit small 
business concerns to effectively compete for contract solicita-
tions for which an individual small business concern would lack 
the requisite capacity or capability needed to establish respon-
sibility for the award of a contract. 
(d) MONITORING AGENCY PERFORMANCE.— 
(1) Participating agencies shall monitor the attainment of 
their small business participation goals on a quarterly basis. 
The initial review by each participating agency shall be com-
pleted not later than June 30, 1989, based on the data for the 
period January 1 through March 31, 1989. Thereafter, each 
review shall be based on the aggregate of contract award data 
from the 4 quarters preceding the date of the review for which 
data is available. 
(2) All awards to small business concerns (including small 
business concerns owned and controlled by socially and 
economically disadvantaged individuals) shall be counted 
toward attainment of the goals specified in subsection (a) of this 
section. 
(3) Modifications to a participating agency's solicitation prac-
tices, pursuant to section 713(b), shall be made at the beginning 
of the quarter following each review, if the rate of small busi-
ness participation is less than 40 percent of the contract awards. 
102 STAT. 3892 
PUBLIC LAW 100-656—NOV. 15, 1988 
SEC. 
7
1
3
. 
PROCUREMENT 
PROCEDURES. 
(a) FULL AND OPEN COMPETITION.—Except as provided in subsec-
tions (b) and (c), each contract opportunity with an anticipated value 
of $25,000 or more for the procurement of services from firms in the 
designated industry groups (unless set aside pursuant to section 8(a) 
of the Small Business Act (15 U.S.C. 637(a)) or section 1207 of the 
National Defense Authorization Act for Fiscal Year 1987) shall be 
solicited on an unrestricted basis during the term of the Program, if 
the participating agency has attained its small business participa-
tion goal pursuant to section 712(a). Any regulatory requirements 
which are inconsistent with this provision shall be waived. 
(b) RESTRICTED COMPETITION.—If a participating agency has failed 
to attain its small business participation goal under section 712(a), 
subsequent contracting opportunities, which are in excess of the 
reserve thresholds specified pursuant to section 712(b) shall be 
solicited through a competition restricted to eligible small business 
concerns pursuant to section 15(a) of the Small Business Act (15 
U.S.C. 644(a)) to the extent necessary for such agency to attain its 
goal. Such modifications in the participating agency's solicitation 
practices shall be made as soon as practicable, but not later than the 
beginning of the quarter following completion of the review made 
pursuant to section 712(d) indicating that changes to solicitation 
practices are required. Such participating agency shall comply with 
the requirements of subsection (a) upon determining that its con-
tract awards to small business concerns meet the required goals. 
(c) RELATIONSHIP WITH THE COMPETITION IN CONTRACTING ACT OF 
1984.—Subsections (a) and (b) shall not be construed to supersede 
the application of the Competition in Contracting Act of 1984 (98 
Stat. 1175). 
SEC. 714. REPORTING. 
(a) AWARDS OF $25,000 OR LESS.—During the term of the Small 
Business Competitiveness Demonstration Program, each award of 
$25,000 or less made by a participating agency for the procurement 
of a service in any of the designated industry categories shall be 
reported to the Federal Procurement Data Center in the same 
manner as if the purchase were in excess of $25,000. 
(b) SUBCONTRACTING ACTIVITY.—The Administrator for Federal 
Procurement Policy shall devise and implement, during the term of 
the Program, a simplified system to test the collection, reporting, 
and monitoring of data on subcontract awards to small business 
concerns and small business concerns owned and controlled by 
socially and economically disadvantaged individuals for— 
(1) services in each of the designated industry groups; and 
(2) products or services from industry categories selected for 
participation in the small business participation expansion pro-
gram, pursuant to section 712(c). 
(c) SIZE OF SMALL BUSINESS CONCERNS.—During the term of the 
Program, each participating agency shall collect data pertaining to 
the size of the small business concern receiving any award for the 
procurement of— 
(1) services in each of the designated industry groups; and 
(2) products or services from industry categories selected for 
participation in the small business participation expansion pro-
gram, pursuant to section 712(d). 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3893 
SEC. 715. TEST PLAN AND POLICY DIRECTION. 
(a) TEST PLAN.—The Administrator for Federal Procurement 
Policy may further specify the manner and conduct of the test activ-
ities required by this title through a test plan issued pursuant to 
section 15 of the Office of Federal Procurement Policy Act (41 U.S.C. 
413). 
(b) PoucY DIRECTION.—The Administrator for Federal Procure-
ment Policy, in cooperation with the Administrator of the Small 
Business Administration, shall issue a policy directive (which shall 
be binding on all participating agencies) to ensure consistent Govern-
ment-wide implementation of this title in the Federal Acquisition 
Regulation, title 48 of the Code of Federal Regulations, issued 
pursuant to the Office of Federal Procurement Policy Act. 
SEC. 716. REPORT TO CONGRESS. 
(a) IN GENERAL,—Within 180 days after fiscal year 1991 data is 
available from the Federal Procurement Data Center, the Adminis-
trator for Federal Procurement Policy shall report the results of the 
Small Business Competitiveness Demonstration Program to the 
Committees on Small Business of the Senate and House of Rep-
resentatives, to the Committee on Governmental Affairs of the 
Senate, and to the Committee on Government Operations of the 
House of Representatives. The views of the Administrator of the 
Small Business Administration shall be included in the report. 
O
t
>
) ANALYSIS OF PROGRAM.—The report shall include a section 
prepared by the Administrator of the Small Business Administra-
tion specifying the results of the intensive goaling and management 
program conducted to expand small business participation in agency 
acquisitions of selected products and services. 
(c) RECOMMENDATIONS.—To the extent the results of the Program 
demonstrate sufficiently high small business participation based on 
unrestricted contract competition in the designated industry groups, 
the report shall include recommendations (if appropriate) for 
changes in legislation or modifications of procurement regulations 
aimed at increasing reliance on unrestricted competition if high 
rates of small business participation in the Federal procurement 
market can be maintained. 
SEC. 717. DESIGNATED INDUSTRY GROUPS. 
(a) IN GENERAL.—For the purposes of participation in this Pro-
gram, the designated industry groups are— 
(1) construction (excluding dredging); 
(2) refuse systems and related services; 
(3) architectural and engineering services (including survey-
ing and mapping); and 
(4) non-nuclear ship repair. 
(b) CONSTRUCTION.—Construction shall include contract awards 
assigned one of the standard industrial classification codes that 
comprise— 
(1) Major Group 15 (Building Construction—General Contrac-
tors and Operative Builders), 
(2) Major Group 16 (Construction Other Than Building 
Construction—General Contractors and Dredging), and 
(3) Major Group 17 (Construction—Special Trade Contractors). 
102 STAT. 3894 
PUBLIC LAW 100-656—NOV. 15, 1988 
(c) REFUSE.—Refuse systems and related services shall include 
contract awards assigned to standard industrial classification code 
4212 or 4953. 
(d) 
ARCHITECTURAL 
AND 
ENGINEERING.—Architectural 
and 
engineering services (including surve3dng and mapping) shall in-
clude contract awards assigned to standard industrial classification 
code 7389 (if identified as pertaining to mapping services), 8711, 
8712, or 8713. 
(e) ALTERNATIVE DATA.—In the event that standard industrial 
classification codes are not assigned to individual contract awards 
reported to the Federal Procurement Data Center by January 1, 
1989, the Program may be conducted on the basis of the product and 
service codes used to report data pertaining to such contract awards, 
related to the maximum practicable extent to the standard indus-
trial classification code for the service being provided by the 
contractor, 
SEC. 718. DEFINITIONS. 
(a) DESIGNATED INDUSTRY GROUPS.—"Designated industry groups" 
means the groups specified in section 717 for participation in the 
Small Business Competitiveness Demonstration Program. 
(b) EMERGING SMALL BUSINESS CONCERN.—"Emerging small busi-
ness concern" means a small business concern whose size is no 
greater than 50 percent of the numerical size standard applicable to 
the standard industrial classification code assigned to a contracting 
opportunity. 
(c) PARTICIPATING AGENCY.—"Participating agency" shall have 
the same meaning as the term "executive agency" in section (4X1) of 
the Office of Federal Procurement Policy Act (41 U.S.C. 403(1)). The 
Administrator for Federal Procurement Policy is authorized to 
specify as part of the Progrsun test plan the list of executive agencies 
designated to participate in the Program, which shall include: 
(1) the Department of Agriculture, 
(2) the Department of Defense (with the Department of the 
Army, the Etepartment of the Navy, the Department of the Air 
Force, and the defense agencies reporting separately), 
(3) the Department of Energy, 
(4) the Department of Health and Human Services, 
(5) the Department of Transportation, 
(6) the Environmental Protection Agency, 
(7) the General Services Administration (the Public Building 
Service reporting separately), 
(8) the National Aeronautics and Space Administration, and 
(9) the Veterans Administration. 
The Administrator for Federal Procurement Policy is authorized to 
require any participating agencies to report separately in any 
manner deemed appropriate to enh£uice the attainment of the test 
activities authorized by this title. 
(d) SMALL BUSINESS PARTICIPATION.—"Small business participa-
tion" shall include the aggregate dollar value of every procurement 
contract award made to a small business concern, without regard to 
whether such award was based on restricted or unrestricted com-
petition, or was made on a sole source basis. 
(e) STANDARD INDUSTRIAL CLASSIFICATION CODE.—"Standard indus-
trial classification code" means a four digit code assigned to an 
industry category in the Standard Industrial Classification Manual 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3895 
published by the Office of Management and Budget in effect on the 
date of enactment of this Act. 
PART C—ALTERNATIVE PROGRAM FOR CLOTHING AND TEXTILES 
15 USC 644 note. 
SEC. 721. ALTERNATIVE PROGRAM FOR CLOTHING AND TEXTILES. 
(a) ESTABLISHMENT.—Subject to the requirements of subsection (b), 
of the total dollar amount of contracts for each standard industrial 
classification code for clothing and textiles awarded by the Defense 
Logistics Agency for each of the fiscal years 1989, 1990, and 1991: 
(1) To the maximum extent practicable, 50 percent shall not 
be restricted by the size status of the competing business 
concerns. 
(2) To the maximum extent practicable, 50 percent shall be 
made available for award pursuant to— 
(A) section 8(a) of the Small Business Act (15 U.S.C. 637(a)); 
(B) section 1207 of the National Defense Authorization Act for 
Fiscal Year 1987; and 
(C) section 15(a) of the Small Business Act (15 U.S.C. 644(a)), if 
the criteria for such awards are met pursuant to part 19.5 (Set-
Asides for Small Business) of title 48, Code of Federal 
Regulations, as in effect on September 1,1988. 
(b) COMPUTATION.—In order to calculate the percent limitation 
established pursuant to subsection (a), the Department may estab-
lish, after consultation with the Small Business Administration, 
major groupings of standard industrial classification codes that are 
closely related and apply such limitations to such groupings. 
SEC. 722. EXPANDING SMALL BUSINESS PARTICIPATION IN DREDGING. 
(a) EsTABUSHMENT.—During fiscal years 1989, 1990, 1991, and 
1992, the Secretary of the Army (hereafter in this section referred to 
as the "Secretary ) shall conduct a program to expand the participa-
tion of small business concerns and emerging small business con-
cerns in contracting opportunities for dredging. 
(b) ENHANCED GOALS.—Of the total dollar value of contracts for 
dredging, the Department of the Army (hereafter in this section 
referred to as the "Department") shall make every reasonable effort 
to award to small business concerns: 
(1) 20 percent during fiscal year 1989, including 5 percent of 
the total dollar value of contracts which is reserved for emerg-
ing small business concerns; 
(2) 25 percent during fiscal year 1990, including 7.5 percent of 
the total dollar vahie of contracts which is reserved for emerg-
ing small business concerns; 
(3) 30 percent during fiscal year 1991, including 10 percent of 
the total dollar value of contracts which is reserved for emerg-
ing small business concerns; and 
(4) 30 percent during fiscal year 1992, including 10 percent of 
the total dollar value of contracts which is reserved for emerg-
ing small business concerns. 
Subcontract awards may be counted towards the attainment of such 
goals, provided that there is available a system for the collection of 
data relating to the award of subcontracts under dredging contracts 
awarded by the Department. 
102 STAT. 3896 
PUBLIC LAW 100-656—NOV. 15, 1988 
(c) CONTRACT AWARD PROCEDURES.—(1) Except as provided in 
paragraphs (2) and (3), the Department shall solicit and award 
contracts for dredging through full and open competition in conform-
ity with section 2304 of title 10, United States Code, section 15 of the 
Small Business Act (15 U.S.C. 644), and the implementing procure-
ment regulations promulgated in conformity with section 6 of the 
Office of Federal Procurement Policy Act (41 U.S.C. 405). Nothing 
herein shall impair the award of contracts pursuant to section 8(a) of 
the Small Business Act (15 U.S.C. 637(a)) or section 1207 of the 
National Defense Authorization Act for Fiscal Year 1987. 
(2) (Contracting opportunities for dredging shall be reserved for 
competition among emerging small business concerns if their esti-
mated award value is below an amount to be specified by the 
Administrator for Federal Procurement Policy (hereafter in this 
section referred to as the "Administrator"), upon the recommenda-
tion of the Secretary. Such reserve amount shall be established by 
the Administrator at the start of the program at a level which can 
reasonably be expected to result in the Department attaining the 
applicable participation goal for emerging small business concerns. 
Such reserve threshold shall be reviewed by the Secretary and 
adjusted by the Administrator to the extent necessary on a semi-
annual basis beginning after the end of the second quarter of fiscal 
year 1989 on the basis of the aggregate of contract awards for the 
four fiscal year quarters preceding the date of the review. 
(3) The Secretary shall restrict for competition among all eligible 
small business concerns such additional contracting opportunities 
for dredging in such numbers and at such estimated award values as 
can reasonably be expected to result in the Department attaining 
the applicable participation goal for small business concerns 
generally. 
(d) ACQUISITION STRATEGIES TO FOSTER SMALL BUSINESS PARTICIPA-
TION.—(1) In attaining the goals for participation by small business 
concerns and emerging small business concerns, the Secretary is 
encouraged to: 
(A) specify contract requirements and contractual terms and 
conditions that are conducive to competition by small business 
concerns and emerging small business concerns, consistent with 
the mission or program requirements of the Department; 
(B) joint ventures, teaming agreements, and other similar 
arrangements, which permit small business concerns to effec-
tively compete for contract opportunities for which an individ-
ual firm would lack the requisite capacity or capability needed 
to establish responsibility for the award of a contract; and 
(C) subcontracting through plans negotiated and enforced 
pursuant to section 8(d) of the Small Business Act (15 U.S.C. 
637(d)) or solicitation 
requirements 
specifying 
minimum 
percentages of subcontracting for the purpose of determining 
the responsiveness of an offer. 
(2) During the term of the program, data shall be collected 
pertaining to the actual size of the firm receiving an award as a 
small business concern or an emerging small business concern. 
(e) SIZE STANDARD.—For the purposes of the program established 
by subsection (a), the size standard pertaining to standard industrial 
classification code 1629 (Dredging and Surface Cleanup Activities) in 
effect on October 1, 1988 shall remain in effect until September 30, 
1990. 
(f) REPORTS.— 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3897 
(1) The Secretary shall furnish a report to the CJommittees on 
Small Business of the Senate and House of Representatives, the 
Administrator of the Small Business Administration, and the 
Administrator for Federal Procurement Policy within 120 days 
after September 30,1992. 
(2) Interim reports shall be submitted annually within 90 days 
after the close of each of the fiscal years 1989, 1990, and 1991. 
The Secretary may include recommendations r^arding adjust-
ments to the Depiartment's participation goals for small busi-
ness concerns and emei^^ing small business concerns and to the 
applicable size standard, if the Secretary determines that such 
goals cannot reasonably be attained from the pool of firms 
meeting the current size standard. 
(3) The Secretary of Defense shall issue reports to the Con-
gress on the operations of the pn^ram established pursuant to 
this section. Such reports shall detail the effects of the program 
on the mobilization base and on small business concerns and 
small business concerns owned and controlled by socially and 
economically disadvantaged individuals. Interim reports shall 
be submitted every six months during the term of the program 
to the Conmiittees on Armed Services and Small Business of the 
House of Representatives and the Senate. 
I 
PART D—AMENDMENTS TO THE SBIALL BUSINESS ACT 
SEC 731. TECHNICAL AMENDMENT. 
Section 809(aX2) of title VHI, division A of Public Law 100-180 
(101 Stat. 1130, December 4, 1987) is amended by striking out 15 use 6
4
4 note. 
"October 1,1988" and inserting in Ueu thereof "October 1,1989". 
SEC. 732. REPEALER. 
Paragraphs (2) through (5) of subsection 3(a) of the Small Business 
Act (15 U.S.C. 632(a) (2)-(5)) are repealed. Any numerical size stand- 15 use 632 note. 
aid that pertains to any of the designated industry groups, and that 
is in effect on September 30, 1988, shall remain in effect for the 
duration of the Program. 
PART E—OTHER AMENDMENTS 
SEC. 741. SEGMENTATION OF INDUSTRY CATEGORY. 
15 USC 644 note. 
The Small Business Administration, pursuant to the authority of Maritime affairs. 
section 15(a) of the Small Business Act (15 U.S.C. 644(a)), shall 
s^ment the industry category of shipbuilding and ship repair, as 
follows: 
(1) nuclear shipbuilding and repair; 
(2) non-nuclear shipbuildii^ and 
(3) non-nuclear ship repair, which shall be further segmented 
by, at least. East Coast and West Coast facilities. 
SEC. 742. DEFINITION OF ARCHITECTUltAL AND ENGINEERING SERVICES. 
Section 901 of the Federal Property and Administrative Services 
Act (40 U.S.C. 541) is amended by striking out paragraph (3) and 
inserting the foUoMdng: 
"(3) The term 'architectural and engineering services' 
means— 
102 STAT. 3898 
PUBLIC LAW 100-656—NOV. 15, 1988 
"(A) professional services of an architectural or engineer-
ing nature, as defined by State law, if applicable, which are 
required to be performed or approved by a person licensed, 
roistered, or certified to provide such services as described 
in this paragraph; 
"(B) professional services of an architectural or engineer-
ing nature performed by contract that are associated with 
research, planning, development, design, construction, 
alteration, or repair of real property; and 
"(C) such other professional services of an architectural 
or engineering nature, or incidental services, which mem-
bers of the architectural and engineering professions (and 
individuals in their employ) may logically or justifiably 
perform, including studies, investigations, surve3dng and 
mapping, tests, evaluations, consultations, comprehensive 
planning, pn^ram management, conceptual design, plans 
and specifications, value engineering, construction phase 
services, soils engineering, drawing reviews, preparation of 
operating and maintenance manuals, and other related 
services.". 
TITLE 
VIII—AUTHORIZATIONS, EFFEC-
TIVE DATES, AND MISCELLANEOUS 
MATTERS 
15 use 636 note. 
SEC 801. REGULATIONS. 
Federal 
Register, 
publication. 
The Small Business Administration shall— 
(1) within 60 days after the date of enactment of this Act 
conduct meetings of present and potential participants in the 
program established by section T^XIO) of the Small Business 
Act, as amended by this Act, to ascertain and consider public 
comment on the nature and extent of r^ulations needed to 
implement this Act; 
(2) within one hundred and twenty days after the date of 
enactment of this Act, publish in the Federal Roister proposed 
rules and r^ulations implementing this Act; and 
(3) within two hundred and ten days after the date of enact-
ment of this Act, publish in the Federal Register final rules and 
regulations implementing this Act. 
SEC 802. AUTHORIZATIONS. 
(a) BUSINESS OppoRTUNmr SPECIAUSTS.—^There is hereby au-
thorized to be appropriated for each of fiscal years 1989 and 1990 the 
sum of $3,500,000 to provide for the employment, salaries and 
expenses of 70 additional Business Opportunity Specialists to carry 
out the duties described in sections 201 and 410 of this Act. 
(b) TRAINING OF BUSINESS OppoRTUNrrY SPECIALISTS.—There is 
hereby authorized to be appropriated for each of Hscal years 1989 
and 1990 the sum of $500,()()0 to conduct the training and obtain the 
qualifications for Business Opportunity Specialists described in sec-
tion 410. 
(c) TRADITIONAL PROCUREMENT CJENTER REPRESENTATIVES.—There 
is hereby authorized to be appropriated for each of fiscal years 1989 
and 1990 the sum of $735,000 to employ 15 additional Procurement 
Center Representatives. 
(d) BUSINESS LOANS.—There is hereby authorized to be appro-
priated to the Business Loan and Investment Fund, established 
under section 4(cXl) of the Small Business Act (15 U.S.C. 633(aXl)). 
l-'W^fgf" 
PUBLIC LAW 100-656—NOV. 15, 1988 
102 STAT. 3899 
the sum of $10,000,000 each year for fiscal years 1989 and 1990 for 
both direct and guaranteed loans made pursuant to section 7(aX20) 
of the Small Business Act, as added by section 302 of this Act. 
(e) JOB TRAINING.—There is hereby authorized to be appropriated 
the sum of $2,000,000 for fiscal year 1990 for the job training 
program established by section 7(jX13XE) of the Small Business Act 
(15 U.S.C. 636(jX13XE)), as added by section 301(b) of this Act. 
(f) LIMITATION.—<1) Any new credit authority or authority to enter 
i5 USC 636 note, 
into contracts provided for in this Act is to be effective for any fiscal 
year only to such extent or in such amounts as are provided in 
appropriation Acts. 
(2) No funds are authorized to be appropriated in subsequent 
appropriation Acts to the Administration for the purpose of making 
grants of financial assistance under the so called "Business Develop-
ment Expense" program to any firm participating in the programs 
authorized by section 7(jX10) or section 8(a) of the Small Business 
Act (15 U.S.C. 636(jX10) and 637(a)). 
SEC. 803 EFFECTIVE DATES. 
15 USC 631 note. 
(a) IN GENERAL.—Except as otherwise provided, the following 
provisions (and the amendments made by such provisions) shall take 
effect on the date of the enactment of this Act: 
(1) Sections 1 and 2. 
(2) Section 101. 
(3) Sections 202,203,204,206, and 207. 
(4) Sections 301(a) and 303 (d), (e), and (f). 
(5) Sections 405,406,408, and 410. 
(6) Sections 504 and 505. 
(7) Sections 601 and 603. 
(8) Titles VII and VIII. 
(9) Sections 7(jX13XG) and 7(jX13XI) of the Small Business Act 
(as added by section 301(b)). 
(b) SPECIAL RULES.—(1) Except as otherwise provided, the follow-
ing sections (and the amendments made by such sections) shall take 
effect on June 1,1989: 
(A) Sections 201,205, and 208. 
(B) Sections 301(b), 301(c), 303(a), 303(c), 303(g), 303(h), and 304. 
(C) Sections 401,402,403,404, and 409. 
(D) Section 602. 
(2) Section 407 shall take effect with respect to contracts entered 
into on or after June 1,1989. 
(3) The following sections (and the amendments made by such 
sections) shall take effect on October 1,1989: 
(A) Section 209. 
(B) Sections 302 and 303(b). 
(C) Sections 501, 502, and 503. 
(D) Section 7(jX13XE) of the Small Business Act (as added by 
section 301(b) of this Act). 
Approved November 15, 1988. 
LEGISLATIVE HISTORY—H.R. 1807 (S. 1993): 
HOUSE REPORTS: No. 100-460 (Comm. on Small Business) and No. 100-1070 (Coram. 
of Conference). 
SENATE REPORTS: No. 100-394 accompanying S. 1993 (Comm. on Small Business). 
CONGRESSIONAL RECORD: 
Vol. 133 (1987): Dec. 1, considered and passed House. 
Vol. 134 (1988): July 7, H.R. 1807 considered and passed Senate, amended, in 
lieu of S. 1993. 
Oct. 12, House agreed to conference report. 
Oct. 18, Senate agreed to conference report. 
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