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109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    109-207

======================================================================
 
   VOCATIONAL AND TECHNICAL ENTREPRENEURSHIP DEVELOPMENT ACT OF 2005

                                _______
                                

 July 28, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Manzullo, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 527]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 527) to amend the Small Business Act to direct the 
Administrator of the Small Business Administration to establish 
a vocational and technical entrepreneurship development 
program, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Vocational and Technical 
Entrepreneurship Development Act of 2005''.

SEC. 2. VOCATIONAL AND TECHNICAL ENTREPRENEURSHIP DEVELOPMENT PROGRAM.

  (a) In General.--The Small Business Act (15 U.S.C. 631 et seq.) is 
amended--
          (1) by redesignating section 37 as section 38; and
          (2) by inserting after section 36 the following new section:

``SEC. 37. VOCATIONAL AND TECHNICAL ENTREPRENEURSHIP DEVELOPMENT 
                    PROGRAM.

  ``(a) Definitions.--In this section, the following definitions apply:
          ``(1) Association.--The term `Association' means the 
        association of small business development centers recognized 
        under section 21(a)(3)(A).
          ``(2) Program.--The term `program' means the program 
        established under subsection (b).
          ``(3) Small business development center.--The term `small 
        business development center' means a small business development 
        center described in section 21.
          ``(4) State small business development center.--The term 
        `State small business development center' means a small 
        business development center from each State selected by the 
        Administrator, in consultation with the Association and giving 
        substantial weight to the Association's recommendations, to 
        carry out the program on a statewide basis in such State.
  ``(b) Establishment.--In accordance with this section, the 
Administrator shall establish a program under which the Administrator 
shall make grants to State small business development centers to enable 
such centers to provide, on a statewide basis, technical assistance to 
secondary schools, postsecondary vocational schools, or technical 
schools, for the development and implementation of curricula designed 
to promote vocational and technical entrepreneurship.
  ``(c) Grant Amount.--
          ``(1) Minimum grant.--Each grant awarded by the Administrator 
        under the program shall be in an amount not less than $200,000.
          ``(2) No matching requirement.--The Administrator shall not 
        require, as a condition of receiving a grant under this 
        section, that the applicant provide a matching amount, either 
        in cash or as in-kind contributions.
  ``(d) Application.--Each State small business development center 
seeking a grant under the program shall submit to the Administrator an 
application in such form as the Administrator may require. The 
application shall include information regarding the applicant's goals 
and objectives for the educational programs to be assisted.
  ``(e) Report to Administrator.--As a condition of each grant awarded 
under the program, the Administrator shall require the recipient to 
transmit to the Administrator, not later than 18 months after the date 
of receipt of the grant, a report describing how the grant funds were 
used.
  ``(f) Cooperative Agreements and Contracts.--The Administrator may 
enter into a cooperative agreement or contract with any State small 
business development center receiving a grant under this section to 
provide additional assistance that furthers the purposes of this 
section.
  ``(g) Evaluation of Program.--Not later than March 31, 2008, the 
Administrator shall transmit to Congress a report containing an 
evaluation of the program.
  ``(h) Clearinghouse.--The Association shall act as a clearinghouse of 
information and expertise regarding vocational and technical 
entrepreneurship education programs. In each fiscal year in which 
grants are made under the program, the Administrator shall provide 
additional assistance to the Association to carry out the functions 
described in this subsection.
  ``(i) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $7,000,000 for each of fiscal 
years 2006, 2007, and 2008. Such sums shall remain available until 
expended.
  ``(j) Funding Limitations.--
          ``(1) Nonapplicability of certain limitations.--Amounts made 
        available under this section are in addition to any amounts 
        available under section 21(a)(4).
          ``(2) Limitation on use of funds.--The Administrator shall 
        carry out this section using only amounts appropriated in 
        advance specifically for the purpose of carrying out this 
        section.''.

                                Purpose

    The purpose of H.R. 527, the Vocational and Technical 
Entrepreneurship Act of 2005, is to utilize the existing Small 
Business Administration infrastructure to assist persons with 
vocational and technical skills in establishing their own 
businesses. Ideally, these new business owners will hire 
similarly skilled workers as they expand their businesses. 
Specifically, H.R. 527 aims to utilize the existing network of 
small business development centers (SBDCs) to create 
partnerships with career training centers or vocational 
education institutions to develop entrepreneurial skills in 
their students and graduates. The Committee's expectation is 
that these programs will provide both technical and 
entrepreneurial knowledge so the technically-educated will have 
alternative opportunities and not limit them to the status of 
an employee for others. H.R. 527 creates a program among 
selected SBDC grantees to establish the appropriate educational 
curriculum. The Committee expects that other SBDCs will utilize 
the best practices from the program.

                          Need for Legislation

    Many persons within the United States have technical and 
vocational skills and have the capability to sell their skills 
as business owners. However, these same individuals may not 
have the experience or training needed to start and operate a 
small business. As a result, these skilled individuals often 
work for other businesses, including many small businesses. 
While a certain amount of knowledge on business operations may 
be absorbed by luck, osmosis, or some combination thereof, 
fortuity should never be the basis of education. To ensure 
skilled craftspeople receive appropriate training for 
entrepreneurship, a more organized system is necessary.
    Historically, SBDCs provide services to any person seeking 
assistance. That resulted, quite logically, in entrepreneurs 
ready to start businesses or extant owners of small businesses. 
Seeking out and educating individuals that have the capacity to 
utilize their skills in starting a small business but who 
currently work for others, fell outside the remit of the 
typical SBDC. Certain centers, however, started to share their 
services and information to vocational students and ``future 
entrepreneurs'' while the students continued to learn and hone 
their skills. Instead of working for another business, these 
``graduates'' have the foundation to start their own 
businesses.
    The Committee believes that SBDCs can provide an effective 
mechanism for dispensing information and advice on providing 
entrepreneurial education and curricula. Therefore, the 
Committee believes that a program of additional grants for 
selected SBDCs to provide entrepreneurial training and 
educational materials is appropriate. The Committee believes 
that a partnership model with secondary schools that provide 
vocational training, and postsecondary institutions, including 
vocational and technical schools (whether public or private), 
is the best mechanism for providing entrepreneurial education 
to future skilled craftsmen and women. The Committee expects 
that the best practices from the participants will be adopted 
by other SBDCs.

                            Committee Action

    On Thursday, July 19, 2001, the Subcommittee on Workforce, 
Empowerment and Government Programs of the Committee on Small 
Business held a hearing to consider a predecessor, but nearly 
identical bill, to H.R. 527. That hearing demonstrated the need 
for expansion of entrepreneurial education to vocational 
students.
    The Committee on Small Business held a hearing on July 13, 
2005 on H.R. 527. Mr. Brady, the sponsor of the legislation, 
testified about need to ensure that skilled tradesmen and women 
have access to the knowledge that would allow them to start 
small businesses. While he noted that some SBDCs are performing 
this task, entrepreneurship education should be available on a 
wider basis. The sentiment was seconded by Mr. Christian 
Conroy, the Associate State Director of the Pennsylvania Small 
Business Development Center. Mr. Conroy also testified about 
the efforts made by the Pennsylvania Small Business Development 
Center to provide entrepreneurial education to individuals with 
vocational and technical skills. The hearing evidenced a need 
for expansion of the services to other locations.

                       Consideration of H.R. 527

    At 9:36 a.m. on July 14, 2005, the Committee on Small 
Business met to consider and report H.R. 527. Following a brief 
opening statement by the Chairman, he declared the bill open 
for amendment.
    Mr. Manzullo introduced an amendment in the nature of a 
substitute. No further amendments were offered. Chairman 
Manzullo then moved the bill be reported, and at 9:58 a.m. by 
unanimous voice vote, a quorum being present, the Committee 
passed H.R. 527 as amended and ordered it reported.

                      Section-by-Section Analysis


Section 1. Short title

    The section establishes the short title as the ``Vocational 
and Technical Entrepreneurship Development Act of 2005.''

Section 2. Vocational and technical entrepreneurship development 
        program

    This section amends the Small Business Act by adding a new 
Sec. 37 creating the vocational and technical entrepreneurship 
program.
    Subsection (a)(1) defines the term ``Association'' to mean 
the Association of Small Business Development Centers 
recognized under Sec. 21 (a)(3)(A) of the Small Business Act, 
15 U.S.C. Sec. 648(a)(3)(A). The Association is the 
organization authorized by the Small Business Act to represent 
the collective interests of SBDCs. The Association also 
provides critical input and assistance to the Small Business 
Administration's statutory role as manager of the Small 
Business Development Center program.
    Subsection (a)(2) defines the term ``program'' to mean the 
program established pursuant to Sec. 37.
    Subsection (a)(3) defines the term ``small business 
development center'' as the centers established pursuant to 
Sec. 21 of the Small Business Act.
    Subsecton (a)(4) defines the term ``State small business 
development center.'' These are the SBDCs selected from each 
state to carry out the program on a statewide basis. In 
selecting the winning grantees, the Administrator must consult 
with the Association and give substantial weight to the 
recommendations of that organization in selecting the winners. 
Despite the consultation process, the Committee reiterates that 
the ultimate responsibility is to that of the Administrator 
based on the applications filed pursuant to subsection (d). 
Finally, the Committee finds that the consultation process set 
forth in this subsection does not create a federal advisory 
committee under the Federal Advisory Committee Act, 5 U.S.C. 
App. 2.
    Subsection (b) requires the Administrator to make grants to 
State SBDCs in order for them to provide educational materials 
and curriculum development to providers of vocational and 
technical education. While H.R. 527 authorizes the provision of 
educational materials to any provider of vocational and 
technical education, the Committee expects that winning 
grantees will focus their attention on secondary schools and 
postsecondary technical institutions rather than community 
colleges and universities that can provide entrepreneurial 
education through existing courses and programs.
    To achieve the objectives of the program and recognizing 
that the development and delivery of educational material is 
costly, subsection (c) provides that each grant will be at 
least $200,000. Although the Committee does not specify a 
maximum and recognizes that the provision of educational 
materials may be more costly in some states, the Committee 
intends that the maximum number of qualified State SBDC 
grantees should be able to utilize the additional funds 
provided in H.R. 527. To ensure that the winning applicants can 
commence the program without delay, subsection (c)(2) 
eliminates any requirement (normally mandated under the Small 
Business Development program) for matching funds.
    Subsection (d) requires the Administrator to design a grant 
application for State SBDCs seeking additional grant funds 
(beyond the allocations provided in Sec. 21 of the Small 
Business Act). The Committee would expect that the 
Administrator consult with the Association and seek notice and 
comment as required by its own regulations. 13 C.F.R. 
Sec. 101.108. The application form must contain information on 
the applicant's goals and objectives for providing educational 
assistance to secondary and postsecondary providers of 
vocational and technical assistance. The Committee expects that 
the Administrator will select the applicants with the best 
proposals for offering entrepreneurial education assistance to 
providers of vocational and technical education.
    To ensure that the Administrator and the Associate 
Administrator for Small Business Development Centers can manage 
the program, subsection (e) requires the recipients of funds to 
report on their usage. The requirement is in addition to any 
reports that are required by Sec. 21 of the Small Business Act 
or reports mandated by the Office of Management and Budget for 
federal grantees. The Committee intends that the report provide 
detailed information on the curriculum materials developed, 
their delivery to providers of vocational and technical 
education, and any recommendations on best practices developed 
with the grant funds.
    Section 21 of the Small Business Act authorizes the Small 
Business Administration to enter into grant and cooperative 
agreements with SBDCs. Subsection (f) simply extends that 
authority to the program established under H.R. 527. The 
Administrator has the authority to attach codicils to the 
existing agreements or enter into separate agreements under 
this subsection.
    Subsection (g) requires the Administrator to transmit a 
report to Congress, no later than March 31, 2008, that 
evaluates the program. The Committee took the approach of 
requiring the Administrator to submit a report rather than the 
Comptroller General, due to the Administrator's expertise in 
providing entrepreneurial assistance to small business owners. 
The Committee believes that the Administrator is better 
positioned to evaluate the adequacy of the materials and their 
utility better than the Comptroller General.
    The Association recognized by Sec. 21 of the Small Business 
Act provides a number of services to SBDCs. It frequently acts 
as a conduit to provide information to the Administrator and 
from the Administrator to the SBDCs. Given this role, the 
Committee determined that the Association should act as a 
clearinghouse and conduit of information to SBDCs. This role is 
particularly vital in disseminating best practices developed 
under the program established by H.R. 527 for offering 
entrepreneurial education materials to providers of vocational 
and technical education.
    Subsection (i) authorizes $7,000,000 be appropriated for 
each of the fiscal years 2006, 2007, and 2008. The funds to 
remain available until expended.
    The Committee was concerned that the establishment of this 
directed program, even with a separate authorization, might 
result in the Administrator diverting existing funds for the 
Small Business Development Center program to the program 
established in H.R. 527. To avoid this problem, the Committee 
provides in subsection (j) that no funds already committed 
elsewhere pursuant to the funding formula for the Small 
Business Development Center program in paragraph (4) of 
Sec. 21(a) of the Small Business Act shall be used to fund this 
program. In simple terms, if no dedicated appropriation is 
obtained for this program, the Administrator is prohibited from 
operating the program. Nothing in this prohibition is intended 
to interfere with any services that SBDC grantees provide to 
the populations described in this paragraph under their current 
grant agreements.

                               Congressional Budget Office,
                                     U.S. Congress,
                                     Washington, DC, July 20, 2005.
Hon. Donald Manzullo,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 527, the 
Vocational and Technical Entrepreneurship Development Act of 
2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Melissa E. 
Zimmerman.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 527--Vocational and Technical Entrepreneurship Development Act of 
        2005

    Summary: H.R. 527 would authorize the appropriation of $2l 
million for fiscal years 2006 through 2008 for promoting 
vocational and technical entrepreneurship. Under the bill, the 
Small Business Administration would make grants to eligible 
Small Business Development Centers to provide technical 
assistance to schools to develop curricula in this subject 
area. Assuming appropriation of the specified amounts, CBO 
estimates that implementing H.R. 527 would cost about $18 
million over the 2006-2010 period. Enacting the bill would not 
affect direct spending or revenues.
    H.R. 527 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would benefit state, local, and tribal governments 
receiving grants under this bill, and any costs would be 
incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 527 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit). CBO assumes that the bill will 
be enacted by the end of 2005, that the specified amounts will 
be appropriated for each fiscal year, and that outlays will 
follow historical trends. CBO estimates that implementing the 
bill would increase spending subject to appropriation by less 
than $500,000 in 2006 and by about $18 million over the 2006-
2010 period for grants for promoting vocational and technical 
entrepreneurship in schools.

------------------------------------------------------------------------
                                      By fiscal year, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2006    2007    2008    2009    2010
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level.............       7       7       7       0       0
Estimated Outlays...............       *       3       5       6       4
------------------------------------------------------------------------
Note.--* = Less than $500,000.

    Intergovernmental and private-sector impact: H.R. 527 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit state, local, and 
tribal governments receiving grants under this bill, and any 
costs would be incurred voluntarily.
    Estimate prepared by: Federal Costs: Melissa E. Zimmerman. 
Impact on State, Local, and Tribal Governments: Sarah Puro. 
Impact on the Private Sector: Craig Cammarata.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Committee Estimate of Costs

    Pursuant to the Congressional Budget Act of 1974, the 
Committee estimates that the amendments to the Small Business 
Act contained in H.R. 527 will increase appropriations by no 
more than $7 million annually over the next three fiscal years, 
i.e., 2006 through 2008. Furthermore, pursuant to clause 
3(d)(2)(A) of rule XIII of the Rules of the House of 
Representatives, the Committee estimates that implementation of 
H.R. 527 will not significantly increase the administrative 
costs. This concurs with the estimate of the Congressional 
Budget Office.

                           Oversight Findings

    In accordance with clause 4(c)(2) of rule X of the Rules of 
the House of Representatives, the Committee states that no 
oversight findings or recommendations have been made by the 
Committee on Government Reform with respect to the subject 
matter contained in H.R. 527.
    In accordance with clause 2(b)(1) of rule X of the Rules of 
the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 527 are contained in 
the descriptive portions of this report.

                 Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, Clause 18 of the 
Constitution of the United States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

THE SMALL BUSINESS ACT

           *       *       *       *       *       *       *



SEC. 37. VOCATIONAL AND TECHNICAL ENTREPRENEURSHIP DEVELOPMENT PROGRAM.

  (a) Definitions.--In this section, the following definitions 
apply:
          (1) Association.--The term ``Association'' means the 
        association of small business development centers 
        recognized under section 21(a)(3)(A).
          (2) Program.--The term ``program'' means the program 
        established under subsection (b).
          (3) Small business development center.--The term 
        ``small business development center'' means a small 
        business development center described in section 21.
          (4) State small business development center.--The 
        term ``State small business development center'' means 
        a small business development center from each State 
        selected by the Administrator, in consultation with the 
        Association and giving substantial weight to the 
        Association's recommendations, to carry out the program 
        on a statewide basis in such State.
  (b) Establishment.--In accordance with this section, the 
Administrator shall establish a program under which the 
Administrator shall make grants to State small business 
development centers to enable such centers to provide, on a 
statewide basis, technical assistance to secondary schools, 
postsecondary vocational schools, or technical schools, for the 
development and implementation of curricula designed to promote 
vocational and technical entrepreneurship.
  (c) Grant Amount.--
          (1) Minimum grant.--Each grant awarded by the 
        Administrator under the program shall be in an amount 
        not less than $200,000.
          (2) No matching requirement.--The Administrator shall 
        not require, as a condition of receiving a grant under 
        this section, that the applicant provide a matching 
        amount, either in cash or as in-kind contributions.
  (d) Application.--Each State small business development 
center seeking a grant under the program shall submit to the 
Administrator an application in such form as the Administrator 
may require. The application shall include information 
regarding the applicant's goals and objectives for the 
educational programs to be assisted.
  (e) Report to Administrator.--As a condition of each grant 
awarded under the program, the Administrator shall require the 
recipient to transmit to the Administrator, not later than 18 
months after the date of receipt of the grant, a report 
describing how the grant funds were used.
  (f) Cooperative Agreements and Contracts.--The Administrator 
may enter into a cooperative agreement or contract with any 
State small business development center receiving a grant under 
this section to provide additional assistance that furthers the 
purposes of this section.
  (g) Evaluation of Program.--Not later than March 31, 2008, 
the Administrator shall transmit to Congress a report 
containing an evaluation of the program.
  (h) Clearinghouse.--The Association shall act as a 
clearinghouse of information and expertise regarding vocational 
and technical entrepreneurship education programs. In each 
fiscal year in which grants are made under the program, the 
Administrator shall provide additional assistance to the 
Association to carry out the functions described in this 
subsection.
  (i) Authorization of Appropriations.--There is authorized to 
be appropriated to carry out this section $7,000,000 for each 
of fiscal years 2006, 2007, and 2008. Such sums shall remain 
available until expended.
  (j) Funding Limitations.--
          (1) Nonapplicability of certain limitations.--Amounts 
        made available under this section are in addition to 
        any amounts available under section 21(a)(4).
          (2) Limitation on use of funds.--The Administrator 
        shall carry out this section using only amounts 
        appropriated in advance specifically for the purpose of 
        carrying out this section.
  Sec. [37] 38. All laws and parts of laws inconsistent with 
this Act are hereby repealed to the extent of such 
inconsistency.