Text: S.3458 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in Senate (06/07/2010)


111th CONGRESS
2d Session
S. 3458


To improve the program under section 8(a) of the Small Business Act and to establish a surety bond pilot program.


IN THE SENATE OF THE UNITED STATES

June 7, 2010

Ms. Landrieu (for herself and Mr. Cardin) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship


A BILL

To improve the program under section 8(a) of the Small Business Act and to establish a surety bond pilot program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

This Act may be cited as the “Section 8(a) Improvements Act of 2010”.

SEC. 2. Findings.

Congress finds the following:

(1) Despite the significant progress businesses owned by socially and economically disadvantaged individuals have made as a result of the business development program under section 8(a) of the Small Business Act (15 U.S.C. 637(a)), such businesses remain subject to discrimination that creates substantial barriers to success in the marketplace. The business development program under section 8(a) of the Small Business Act reflects the commitment of the Nation to eradicating discriminatory barriers to the formation and development of viable businesses by socially and economically disadvantaged individuals.

(2) Recent evidence presented in Congressional hearings, roundtables, and academic studies demonstrates, among other things, the following:

(A) Significant disparities still exist between the number, size, and income of businesses owned by socially and economically disadvantaged individuals and other businesses. These disparities remain even after controlling for factors such as industry, geography, education, age, and labor market status.

(B) Discrimination still limits the ability of socially and economically disadvantaged individuals to access capital. Socially and economically disadvantaged individuals are more often denied loans than individuals who are not minorities, and often pay higher rates of interest on small business loans.

(C) Socially and economically disadvantaged individuals who own businesses often experience—

(i) discrimination from prime contractors and exclusion from critical business networks; and

(ii) discrimination by bonding companies and suppliers that impedes the ability of the businesses to compete equally for Government contracts.

SEC. 3. Definitions.

In this Act, the terms “Administration” and “Administrator” means the Small Business Administration and the Administrator thereof, respectively.

SEC. 4. Programs for socially and economically disadvantaged small business concerns.

(a) Net worth threshold.—

(1) IN GENERAL.—Section 8(a)(6)(A) of the Small Business Act (15 U.S.C. 637(a)(6)(A)) is amended—

(A) by inserting “(i)” after “(6)(A)”;

(B) by striking “In determining the degree of diminished credit” and inserting the following:

“(ii)(I) In determining the degree of diminished credit”;

(C) by striking “In determining the economic disadvantage” and inserting the following:

“(iii) In determining the economic disadvantage”; and

(D) by inserting after clause (ii)(I), as so designated by this section, the following:

“(II)(aa) Not later than 1 year after the date of enactment of the Section 8(a) Improvements Act of 2010, the Administrator shall—

“(AA) assign each North American Industry Classification System industry code to a category described in item (cc); and

“(BB) for each category described in item (cc), establish a maximum net worth for the socially disadvantaged individuals who own or control small business concerns in the category that participate in the program under this subsection.

“(bb) The maximum net worth for a category described in item (cc) shall be not less than the modified net worth limitations established by the Administrator under section 4(a)(2) of the Section 8(a) Improvements Act of 2010.

“(cc) The categories described in this item are—

“(AA) manufacturing;

“(BB) construction;

“(CC) professional services; and

“(DD) general services.

“(III) The Administrator shall establish procedures that—

“(aa) account for inflationary adjustments to, and include a reasonable assumption of, the average income and net worth of the owners of business concerns that are dominant in the field of operation of the business concern; and

“(bb) require an annual inflationary adjustment to the average income and maximum net worth requirements under this clause.

“(IV) In determining the assets and net worth of a socially disadvantaged individual under this subparagraph, the Administrator shall not consider any assets of the individual that are held in a qualified retirement plan, as that term is defined in section 4974(c) of the Internal Revenue Code of 1986.”.

(2) TEMPORARY INFLATIONARY ADJUSTMENT.—

(A) IN GENERAL.—Not later than 30 days after the date of enactment of this Act, the Administrator shall modify the net worth limitations established by the Administrator for purposes of the program under section 8(a) of the Small Business Act (15 U.S.C. 637(a)) by adjusting the amount of the net worth limitations for inflation during the period beginning on the date on which the Administrator established the net worth limitations and the date of enactment of this Act.

(B) TERMINATION.—The Administrator shall apply the net worth limitations established under subparagraph (A) until the effective date of the net worth limitations established by the Administrator under clause (ii)(II) of section 8(a)(6)(A) of the Small Business Act (15 U.S.C. 637(a)(6)(A)), as added by this subsection.

(b) Transition period.—Section 7(j)(15) of the Small Business Act (15 U.S.C. 636(j)(15)) is amended—

(1) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;

(2) by striking “Subject to” and inserting “(A) Except as provided in subparagraph (B), and subject to”; and

(3) by adding at the end the following:

“(B)(i) A small business concern may receive developmental assistance under the Program and contracts under section 8(a) during the 3-year period beginning on the date on which the small business concern graduates—

“(I) because the small business concern has participated in the Program for the total period authorized under subparagraph (A); or

“(II) under section 8(a)(6)(C)(ii), because the socially disadvantaged individuals who own or control the small business concern have a net worth that is more than the maximum net worth established by the Administrator.

“(ii) After the end of the 3-year period described in clause (i), a small business concern described in clause (i)—

“(I) may not receive developmental assistance under the Program or contracts under section 8(a); and

“(II) may continue to perform and receive payment under a contract received by the small business concern under section 8(a) before the end of the period, under the terms of the contract.”.

(c) GAO study.—Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is amended by adding at the end the following:

“(22) Review of effectiveness.—

“(A) GAO STUDY.—Not later than 5 years after the date of enactment of this paragraph, and every 5 years thereafter, the Comptroller General of the United States shall—

“(i) conduct an evaluation of the effectiveness of the program under this subsection, including an examination of—

“(I) the number and size of contracts applied for, as compared to the number received by, small business concerns after successfully completing the program;

“(II) the percentage of small business concerns that continue to operate during the 3-year period beginning on the date on which the small business concerns successfully complete the program;

“(III) whether the business of small business concerns increases during the 3-year period beginning on the date on which the small business concerns successfully complete the program; and

“(IV) the number of training sessions offered under the program; and

“(ii) submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report regarding each evaluation under clause (i).

“(B) SBA REPORT.—Not later than 1 year after the date of enactment of this paragraph, and every year thereafter, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report evaluating the program under this section, including an assessment of—

“(i) the regulations promulgated to carry out the program;

“(ii) online training under the program; and

“(iii) whether the structure of the program is conducive to business development.”.

SEC. 5. Surety bond pilot program.

(a) Definitions.—In this section—

(1) the terms “bid bond”, “payment bond”, “performance bond”, and “surety” have the meanings given those terms in section 410 of the Small Business Investment Act of 1958 (15 U.S.C. 694a);

(2) the term “Board” means the pilot program advisory board established under subsection (d)(1);

(3) the term “eligible small business concern” means a socially and economically disadvantaged small business concern that is participating in the program under section 8(a) of the Small Business Act (15 U.S.C. 637(a));

(4) the term “Fund” means the Small Business Surety Bond Pilot Program Fund established under subsection (e)(1);

(5) the term “graduated” has the meaning given that term in section 7(j)(10)(H) of the Small Business Act (15 U.S.C. 636(j)(10)(H));

(6) the term “pilot program” means the surety bond pilot program established under subsection (b)(1); and

(7) the term “socially and economically disadvantaged small business concern” has the meaning given that term in section 8(a) of the Small Business Act (15 U.S.C. 637(a)).

(b) Program.—

(1) IN GENERAL.—The Administrator shall establish a surety bond pilot program under which the Administrator may guarantee any surety against loss resulting from a breach of the terms of a bid bond, payment bond, performance bond, or bonds ancillary thereto, by an eligible small business concern.

(2) GUARANTEE PERCENTAGE.—A guarantee under the pilot program shall obligate the Administration to pay to a surety 90 percent of the loss incurred and paid by the surety.

(3) APPLICATION.—An eligible small business concern desiring a guarantee under the pilot program shall submit an application at such time, in such manner, and accompanied by such information as the Administrator may require.

(4) REVIEW.—A surety desiring a guarantee under the pilot program against loss resulting from a breach of the terms of a bid bond, payment bond, performance bond, or bonds ancillary thereto by an eligible small business concern shall—

(A) submit to the Administrator a report evaluating whether the eligible small business concern meets such criteria as the Administrator may establish relating to whether a bond should be issued to the eligible small business concern; and

(B) if the Administrator does not guarantee the surety against loss, submit an update of the report described in subparagraph (A) every 6 months.

(c) Technical assistance and educational training.—

(1) IN GENERAL.—The Administrator shall provide technical assistance and educational training to an eligible small business concern participating in the pilot program or desiring to participate in the pilot program for a period of not less than 3 years, to promote the growth of the eligible small business concern and assist the eligible small business concern in promoting job development.

(2) TOPICS.—

(A) TECHNICAL ASSISTANCE.—The technical assistance under paragraph (1) shall include assistance relating to—

(i) scheduling of employees;

(ii) cash flow analysis;

(iii) change orders;

(iv) requisition preparation;

(v) submitting proposals;

(vi) dispute resolution; and

(vii) contract management.

(B) EDUCATIONAL TRAINING.—The educational training under paragraph (1) shall include training regarding—

(i) accounting;

(ii) legal issues;

(iii) infrastructure;

(iv) human resources;

(v) estimating costs;

(vi) scheduling; and

(vii) any other area the Administrator determines is a key area for which training is needed for eligible small business concerns.

(d) Panel.—

(1) ESTABLISHMENT.—The Administrator shall establish a pilot program advisory board to evaluate and make recommendations regarding the pilot program.

(2) MEMBERSHIP.—The Board shall be composed of 5 members—

(A) who shall be appointed by the Administrator;

(B) not less than 2 of whom shall have graduated from the program under section 8(a) of the Small Business Act (15 U.S.C. 637(a)); and

(C) not more than 1 of whom may be an officer or employee of the Administration.

(3) DUTIES.—The Board shall—

(A) evaluate and make recommendations to the Administrator regarding the effectiveness of the pilot program;

(B) make recommendations to the Administrator regarding performance measures to evaluate eligible small business concerns applying for a guarantee under the pilot program; and

(C) not later than 90 days after the date on which all members of the Board are appointed, and every year thereafter until the authority to carry out the pilot program terminates under subsection (f), submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report regarding the activities of the Board.

(e) Fund.—

(1) ESTABLISHMENT OF FUND.—There is established in the Treasury of the United States a revolving fund to be known as the “Small Business Surety Bond Pilot Program Fund”, to be administered by the Administrator.

(2) AVAILABILITY.—Amounts in the Fund shall be available without fiscal year limitation or further appropriation by Congress.

(3) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated to the Fund $20,000,000.

(4) RESCISSION.—Effective on the day after the date on which the term of all guarantees made under the pilot program have ended, all amounts in the Fund are rescinded.

(f) Termination.—The Administrator may not guarantee a surety against loss under the pilot program on or after the date that is 7 years after the date the date on which the Administrator makes the first guarantee under the pilot program.