< Back to H.R. 5271 (103rd Congress, 1993–1994)

Text of the Minority Enterprise Development Act of 1994

This bill was introduced on October 7, 1994, in a previous session of Congress, but was not enacted. The text of the bill below is as of Oct 7, 1994 (Introduced).

Source: GPO

HR 5271 IH

103d CONGRESS

2d Session

H. R. 5271

To amend the Small Business Act to make modifications to the small business and capital ownership development program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

October 7, 1994

Mr. MFUME (for himself, Mr. CONYERS, Mr. FLAKE, Ms. ROYBAL-ALLARD, Ms. VELAZQUEZ, and Mr. TUCKER) introduced the following bill; which was referred to the Committee on Small Business


A BILL

To amend the Small Business Act to make modifications to the small business and capital ownership development program, and for other purposes.

    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 ‘Minority Enterprise Development Act of 1994’.

TITLE I--AMENDMENTS TO MINORITY SMALL BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT PROGRAM

SEC. 101. MINORITY ENTERPRISE DEVELOPMENT PROGRAM.

    (a) ESTABLISHMENT- Section 7(j)(10) of the Small Business Act (15 U.S.C. 636(j)(10)) is amended--

      (1) by striking ‘(10) There is established’ and all that follows before subparagraph (A) and inserting the following:

    ‘(10)(A) There is established within the Administration a Minority Enterprise Development Program (hereinafter in this subsection referred to as the ‘Program’), which shall be administered by the Associate Administrator for Minority Enterprise Development in accordance with this paragraph and section 8(a).’;

      (2) by striking subparagraph (B); and

      (3) by striking ‘(A) The Program’ and inserting ‘(B) The Program’.

    (b) ASSISTANCE UNDER THE PROGRAM- Section 7(j)(10)(B)(i) of the Small Business Act, as redesignated by subsection (a) of this section, is amended by inserting ‘Phase III of’ after ‘small business concerns participating in’.

    (c) CONFORMING AMENDMENTS- The Small Business Act (15 U.S.C. 601 et seq.) is amended by striking ‘Minority Small Business and Capital Ownership Development’ and inserting ‘Minority Enterprise Development’ each place it appears in sections 7(j)(10)(G), 7(j)(11)(A), 7(j)(11)(E), 7(j)(11)(H), 7(j)(11)(I), 8(a)(18)(C)(ii)(III), and 8(a)(20)(B).

SEC. 102. GRANDFATHERING PROVISION.

    Section 7(j)(10(C) of the Small Business Act (15 U.S.C. 636(j)(10)(C)) is amended to read as follows:

      ‘(C) 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 the date of the enactment of the Minority Enterprise Development Act of 1994 shall be permitted continued participation in Phase III of the Program for the remaining period of its original program term. Any such firm that has not been awarded a contract pursuant to section 8(a) may elect to suspend its participation in Phase III in order to participate in Phase II. Upon the award of a contract pursuant to section 8(a) or the completion of a development agreement, the suspension of time for participation in Phase III shall cease.’.

SEC. 103. BUSINESS PLAN.

    Section 7(j)(10)(D) of the Small Business Act (15 U.S.C. 636(j)(10)(D)) is amended--

      (1) in clause (i), by inserting ‘Phase III’ after ‘Promptly after’;

      (2) in clause (ii), by striking ‘The plans’ in the matter preceding subclause (I) and inserting ‘The business plans’;

      (3) by amending clause (iii)(IV) to read as follows:

          ‘(IV) A transition management plan outlining specific steps to enhance the prospect of profitable business operations after the expiration of the 9-year Phase III program term specified in paragraph (15).’;

      (4) in clause (iii)--

        (A) in the first sentence by striking ‘Each Program Participant’ and inserting ‘Each Phase III Program Participant’; and

        (B) in the forth sentence by striking ‘the transitional stage’ and inserting ‘Phase III’; and

      (5) in clause (iv), by striking ‘Each Program Participant’ and inserting ‘Each Phase III Program Participant’.

SEC. 104. USE OF CONTRACT SUPPORT LEVELS.

    Section 7(j)(10)(D) of the Small Business Act (15 U.S.C. 636(j)(10)(D)) is further amended by adding at the end the following new clause:

    ‘(v) The forecasts of overall business activity contained in the business plan of a Program Participant or the estimate contained in the section 8(a) contract support level of such firm shall not be used by the Administration to make a determination that such firm is ineligible for the award of a contract to be awarded pursuant to section 8(a).’.

SEC. 105. PHASE III REQUIREMENTS.

    Section 7(j)(10)(I) of the Small Business Act (15 U.S.C. 636(j)(10)(I)) is amended--

      (1) in clause (i), by striking ‘During the developmental stage of its participation in the Program,’ and inserting ‘During its first 4 years of participation in Phase III of the Program,’;

      (2) in clause (ii), by striking ‘During the transitional stage of the Program’ and inserting ‘During years 5 through 9 of its participation in Phase III of the Program,’;

      (3) by amending clause (iii)(I) to read as follows:

        ‘(I) establish business activity targets applicable to Program Participants during the 5th year and each succeeding year of the concern’s participation in Phase III which reflect a reasonably consistent increase in contracts awarded other than pursuant to section 8(a) and are expressed as a percentage of total sales corresponding to the concern’s fiscal year;’; and

      (4) in clause (iii)(IV) by inserting ‘in Phase III of the Program’ after ‘performance’.

SEC. 106. IMPROVED STATUS PROTEST SYSTEM.

    Section 7(j)(10)(J) of the Small Business Act (15 U.S.C. 636(j)(10)(J)) is amended by striking clause (ii) and inserting the following new clauses:

      ‘(ii) A protest may be brought regarding a self-certification by a business concern regarding its status as a small business concern owned and controlled by socially and economically disadvantaged individuals by--

        ‘(I) another person with a direct economic interest in the award of the contract or subcontract under which such business has allegedly made the false certification regarding its status as a small business concern owned and controlled by socially and economically disadvantaged individuals;

        ‘(II) a prime contractor receiving specific and credible information that an actual or prospective subcontractor or supplier has falsely certified its status as a small business concern owned and controlled by socially and economically disadvantaged individuals;

        ‘(III) a contracting officer receiving a self-certification regarding an actual or prospective contractor’s status, which such officer reasonably believes to be false; or

        ‘(IV) the Associate Administrator for Minority Enterprise Development.

      ‘(iii) The Office of Hearings and Appeals shall hear appeals regarding the status of a concern as a small business concern owned and controlled by socially and economically disadvantaged individuals for purposes of any program or activity conducted under section 8(d) or any other Federal law that refers to such section for a definition of program eligibility.

      ‘(iv) A decision issued pursuant to clause (iii) shall--

        ‘(I) be made available to all parties to the proceeding;

        ‘(II) be published in full text; and

        ‘(III) include findings of fact and conclusions of law, with specific reasons supporting such findings and conclusions, on each material issue of fact and law of decisional significance regarding the disposition of the protest.

      ‘(v) A decision issued pursuant to clause (iii) shall be considered a final agency action, and shall be subject to judicial review under section 553 of title 5, United States Code.

      ‘(vi) If a firm engages in a pattern of misrepresentations regarding the status of the firm in violation of section 16(d)(1), the Administration or the aggrieved executive agency shall initiate an action to impose an appropriate penalty under section 16(d)(2).’.

SEC. 107. CONTINUED PROGRAM PARTICIPATION.

    Section 7(j)(11)(D) of the Small Business Act (15 U.S.C. 636(j)(11)(D)) is amended to read as follows:

    ‘(D)(i) A Program Participant shall remain eligible for participation in the Program after a transfer of an ownership interest in the firm if ownership and control (as required by section 8(a)(4)) is retained by the socially and economically disadvantaged individuals upon whom Program eligibility is based.

    ‘(ii) A Program Participant shall remain eligible for participation in the Program after transfer of ownership and control (as required by section 8(a)(4)) to individuals who are determined to be socially and economically disadvantaged pursuant to section 8(a). Unless graduated or terminated, the Program Participant shall be eligible for a period of continued Program participation not to exceed the period described in paragraph (15).

    ‘(iii) A Program Participant that is a tribally owned corporation may remain eligible for participation in the Program with other than a Native American as the firm’s chief executive officer (or chief operating officer), if the governing body of the Indian tribe certifies to the Administration that it was unable to hire a qualified Native American after conducting a national recruitment for such an individual.’.

SEC. 108. PROGRAM ADMISSION.

    Section 7(j)(11)(F) of the Small Business Act (15 U.S.C. 636(j)(11)(F)) is amended to read as follows:

    ‘(F) Subject to the provisions of section 8(a)(9), the Division shall--

      ‘(i) make recommendations on requests for reconsideration of denied applications for entry into Phase III of the Program to the Associate Administrator for Minority Enterprise Development;

      ‘(ii) make requests for the initiation of suspension, termination, or graduation proceedings, as appropriate, to the Associate Administrator for Minority Enterprise Development; and

      ‘(iii) implement such policy directives as may be issued by the Associate Administrator for Minority Enterprise Development pursuant to subparagraph (I) regarding, among other things, the geographic distribution of concerns to be admitted into the Program and the industrial makeup of such concerns.’.

SEC. 109. PROGRAM PHASES.

    (a) ESTABLISHMENT- Section 7(j)(12) of the Small Business Act (15 U.S.C. 636(j)(12)) is amended to read as follows:

    ‘(12)(A) The Administration shall segment the Program into 3 phases: a startup phase, a developmental phase, and a section 8(a) contracting phase, which shall be known as Phase I, Phase II, and Phase III, respectively.

    ‘(B) The startup phase of program participation shall be designed to assist newly formed or forming concerns in overcoming their economic disadvantage by providing such assistance as may be necessary and appropriate to achieve a business foundation adequate for future growth.

    ‘(C) The developmental stage of program participation shall be designed to assist the concern in its effort to overcome its economic disadvantage by providing such assistance as may be necessary and appropriate to access its markets and to strengthen its financial and managerial skills.

    ‘(D) The section 8(a) contracting stage of program participation shall be designed to overcome, insofar as practicable, the remaining elements of economic disadvantage, and to further develop the concern towards economic viability.’.

    (b) MAXIMUM PERIOD OF PARTICIPATION IN EACH PHASE- Section 7(j)(15) of the Small Business Act (15 U.S.C. 636(j)(15)) is amended to read as follows:

    ‘(15) An eligible small business concern may receive developmental assistance under the Program for the following periods as measured from the date of entry into the applicable phase of the Program--

      ‘(A) not more than 2 years may be spent in Phase I of program participation;

      ‘(B) not more than 3 years may be spent in Phase II of program participation; and

      ‘(C) not more than 9 years may be spent in Phase III of program participation.’.

SEC. 110. DEVELOPMENTAL ASSISTANCE AUTHORIZED FOR PROGRAM PARTICIPANTS.

    Section 7(j)(13) of the Small Business Act (15 U.S.C. 636(j)) is amended--

      (1) in the matter preceding subparagraph (A), by striking ‘during the stages of program participation specified in paragraph 12’ and inserting ‘during its term of participation in the Program’; and

      (2) by striking subparagraph (J).

SEC. 111. TEST PROGRAM FOR USE OF SURETY BOND WAIVERS.

    Section 7(j)(13)(D) of the Small Business Act (15 U.S.C. 636(j)(13)(D)) is amended--

      (1) by striking clauses (i) through (iii);

      (2) by striking ‘(D) A maximum’ and inserting ‘(D)(i) A maximum’;

      (3) by striking ‘, except that, such exemptions may be granted under this subparagraph only if--’ and inserting a period; and

      (4) by adding at the end the following new clauses:

        ‘(ii) The agency with contracting authority may, upon the request of the Program Participant, grant an exemption pursuant to clause (i), if--

          ‘(I) the Program Participant provides certification, in the form prescribed by the Administration, that the firm was unable to obtain the requisite bonding from corporate surety bonding firms;

          ‘(II) the Program Participant has provided for the protection of persons furnishing materials or labor under the contract by arranging for--

            ‘(aa) the direct disbursement of funds owed to such persons by the procuring agency or through an escrow account provided by any bank the deposits of which are insured by the United States Government; or

            ‘(bb) irrevocable letters of credit (or other alternatives to surety bonding acceptable to the procuring agency); and

          ‘(III) the award value of the contract for which the exemption is being sought does not exceed $1,000,000.

        ‘(iii) The authority to grant an exemption under clause (ii) shall cease to be effective on September 30, 1997.’.

SEC. 112. STRATEGIC ALLIANCES.

    Section 7(j)(14) of the Small Business Act (15 U.S.C. 636(j)) is amended to read as follows:

    ‘(14)(A) Small business concerns that have completed the 9-year Phase III program term specified in paragraph (15) (in this paragraph referred to as a ‘Program Graduate’) shall be authorized to assist Phase III Program Participants, determined by the Administration to be eligible for such assistance, to develop within the Program.

    ‘(B) A Program Graduate may provide assistance to a Phase III Program Participant under this paragraph--

      ‘(i) by providing, among other things, managerial assistance, technical assistance, and financial support; and

      ‘(ii) by entering into subcontracts for the performance of specific contracts awarded under section 8(a).

    ‘(C) In determining the eligibility of a small business concern to receive assistance or contracts under this subsection or section 8(a), the Administration shall not take into account any assistance received under this paragraph from a Program Graduate.’.

SEC. 113. BUSINESS LOANS.

    Section 7(a)(20)(B)(ii) of the Small Business Act (15 U.S.C. 636(a)(20)(B)(ii)) is amended by striking ‘be not less than 85 per centum’ and inserting ‘not exceed 95 percent of the balance of the financing outstanding at the time of disbursement where the purpose of the financing is to finance government contracts, and shall not exceed 90 percent of the balance of the financing outstanding at the time of disbursement where the purpose of the financing is for general working capital as a line of credit’.

TITLE II--AMENDMENTS TO CONTRACTING PROGRAM

SEC. 201. CONTRACT AWARD PROCEDURES.

    Section 8(a)(1) of the Small Business Act (15 U.S.C. 637(a)(1)) is amended by striking ‘(a)(1) It shall be the duty’ and all that follows through subparagraph (D) and inserting the following:

    ‘(a)(1)(A) The Administration shall seek the establishment of contract goals under section 15(g) which will assure that contracts sufficient to satisfy the contract support levels identified by participants in the Minority Enterprise Development Program established by section 7(j)(10) are designated by the various Federal agencies for award pursuant to this subsection.

    ‘(B) Except as provided in subparagraph (D), the Administration may enter into prime contracts with procuring agencies and subcontract performance of such contracts to qualified Phase III Program Participants on a sole-source basis or may delegate to procuring agencies under such conditions as the Administration considers appropriate the authority to enter into sole-source contracts with Phase III Program Participants. In any case in which the Administration accepts a requirement for potential award pursuant to this subsection and determines that a particular Phase III Program Participant is eligible for and responsible to perform such contract, the procuring agency contracting officer shall be authorized in the officer’s discretion to let the procurement contract upon such terms and conditions as may be agreed upon between the procuring agency contracting officer and the Program Participant.

    ‘(C)(i) The Administration shall determine the eligibility of the Program Participant to receive the award in accordance with the eligibility criteria listed in paragraph (16).

    ‘(ii) With respect to an individual contracting opportunity, the Administration may provide, upon a request by the Program Participant, assistance with respect to--

      ‘(I) the negotiation of the terms and conditions of the award; and

      ‘(II) the resolution of controversies arising from the performance of the contract prior to such contract performance controversies becoming formal contract disputes within the meaning of the Contract Disputes Act of 1978.

    ‘(iii) In the event of an adverse decision by an agency regarding a contracting opportunity, the Administrator may--

      ‘(I) not later than 5 days after receiving notice of such adverse decision, file a notice of intent to appeal with the head of the agency; and

      ‘(II) not later than 15 days after receiving such notice, file an appeal with the head of the agency requesting reconsideration of the adverse decision.

    ‘(iv) Upon receipt of the notice of intent to file an appeal under clause (iii)(I), further action regarding award of the contract shall be suspended, unless the head of the agency makes a written determination, supported by specific findings, that urgent and compelling circumstances that significantly affect the interests of the United States will not permit reconsideration of the adverse decision.

    ‘(v) If the head of the agency sustains the adverse decision upon reconsideration, the decision by the head of the agency shall be in writing and shall be supported by specific findings.

    ‘(vi) An adverse decision regarding the responsibility of a Program Participant in competitive awards under this subsection shall be decided pursuant to subsection (b)(7).

    ‘(vii) For the purposes of this subparagraph, an adverse decision by a contracting officer includes--

      ‘(I) failing to respond, within 15 days or such additional time as may be agreed to by the Administration, to a request from the Administration to make a specific contracting opportunity available for award pursuant to this subsection;

      ‘(II) declining to make available for award under this subsection a contracting opportunity (or class of contracting opportunities) or failing to support such a determination with specific findings; and

      ‘(III) failing to reach agreement with the Program Participant with respect to the terms and conditions of a contract selected for award under this subsection.

    ‘(D) A contract opportunity offered for award pursuant to this subsection may be awarded as a sole-source contract if the anticipated award price of the contract (including options) will not exceed $10,000,000 in the case of a contract opportunity assigned a standard industrial classification code for manufacturing and $7,000,000 (including options) in the case of all other contract opportunities.’.

SEC. 202. COMPETITION REQUIREMENTS.

    Section 8(a)(1)(D) of the Small Business Act (15 U.S.C. 637(a)(1)(D)) is amended--

      (1) by redesignating clause (ii) as clause (iii); and

      (2) by inserting after clause (i) the following new clause:

    ‘(ii) Whenever a requirements-type contract (including a task order contract, indefinite quantity contract, or indefinite delivery contract) is to be awarded, the thresholds for competition required under clause (i)(II) shall be calculated on the basis of the estimated total value of the contract.’.

SEC. 203. TIMELY DETERMINATION OF ELIGIBILITY FOR CONTRACT AWARD.

    (a) IN GENERAL- Section 8(a)(16) of the Small Business Act (15 U.S.C. 637(a)(16)) is amended--

      (1) by redesignating subparagraph (B) as subparagraph (E); and

      (2) by striking subparagraph (A) and inserting the following:

    ‘(A) Upon receipt of notification that a Federal agency intends to consider a Program Participant for award of a contract pursuant to this subsection (on a competitive or noncompetitive basis), the Administration shall promptly notify the agency regarding the eligibility of the Program Participant for award of the contract, and shall identify all matters that could reasonably be expected to render the Program Participant ineligible at the time of the contract award.

    ‘(B) A Program Participant may be found to be ineligible for award of the contract pursuant to this subsection, if--

      ‘(i) the Program Participant is not in compliance with its competitive business activity targets established pursuant to section 7(j)(10)(I); or

      ‘(ii) the Program Participant has failed to make the submissions required under paragraph (6)(B).

    ‘(C) A small business concern owned and controlled by socially and economically disadvantaged individuals that has completed its Program Participation term pursuant to section 7(j)(15) shall be eligible for award if--

      ‘(i) a requirement has been offered to and accepted by the Administration for the Program; and

      ‘(ii)(I) in the case of a contract to be competitively awarded, the prospective contract recipient was a Program Participant eligible for award of the contract on the date specified for receipt of offers, and such firm had timely submitted an offer (including price); or

      ‘(II) in the case of a contract to be noncompetitively awarded, the prospective contract recipient was a Program Participant eligible for award of the contract on the date specified by the agency contracting officer for the submission of an offer (including price).

    ‘(D) If the Administration determines that a Program Participant is ineligible for consideration for award of a contract under subparagraph (B) or (C), the determination shall be supported by specific findings. The determination (and supporting findings) shall be furnished to the Program Participant and to the contracting officer for the agency providing the contracting opportunity.’.

    (b) CONFORMING AMENDMENTS- Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is amended--

      (1) in paragraph (3)--

        (A) by striking subparagraph (A) and inserting the following:

    ‘(A) [Reserved].’; and

        (B) by striking subparagraph (D) and inserting the following:

    ‘(D) Subsequent to the award of a contract under this subsection, if requested by the recipient of the contract, the Administration shall not publicly disclose the agency’s estimate of the fair market price.’;

      (2) in paragraph (7), by striking subparagraph (A) and inserting the following:

    ‘(A) [Reserved].’;

      (3) in paragraph (12)(A), by striking ‘eligible to receive subcontracts’ and inserting ‘eligible for contract awards’; and

      (4) in paragraph (9)(B)--

        (A) in clause (iii), by striking ‘and’;

        (B) by redesignating clause (iv) as clause (v); and

        (C) by inserting after clause (iii) the following new clause:

      ‘(iv) a determination of ineligibility for award of a contract pursuant to paragraph (16)(B); and’.

SEC. 204. CONTINUED CONTRACT PERFORMANCE.

    Section 8(a)(21) of the Small Business Act (15 U.S.C. 637(a)(21)) is amended--

      (1) in subparagraph (B), by striking ‘The Administrator may, on a nondelegable basis, waive the requirements of subparagraph (A) only if one of the following conditions exist:’ and inserting ‘The requirements of subparagraph (A) may be waived under any of the following circumstances:’; and

      (2) by striking subparagraph (C) and inserting the following:

    ‘(C)(i) Except as provided in clause (ii), a request for a waiver pursuant to subparagraph (B) shall be submitted prior to the actual relinquishment of ownership or control.

    ‘(ii) Under the circumstances described in subparagraph (B)(iii), the waiver request shall be made as soon as practicable after the incapacity or death occurs.’.

SEC. 205. TRANSITION COMPETITIONS FOR PROGRAM GRADUATES.

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

    ‘(22)(A) A small business concern owned and controlled by socially and economically disadvantaged individuals, which has graduated from the Minority Enterprise Development Program, may participate in the competition for a contracting opportunity to be awarded pursuant to this subsection if--

      ‘(i) the firm is currently performing satisfactorily a contract to furnish the same (or substantially similar) products or services under a contract competitively awarded pursuant to paragraph (1);

      ‘(ii) closing date for receipt of proposals for the contracting opportunity is a date after the date on which the firm will no longer be eligible for award of contracts pursuant to paragraph (1);

      ‘(iii) the firm is otherwise eligible to compete for the contract;

      ‘(iv) the Associate Administrator for Minority Enterprise Development grants the firm’s request to participate in the competition otherwise restricted to Program Participants after making a determination that denial of the firm’s request would deprive such firm of 25 percent or more of its revenue; and

      ‘(v) the firm was a Program Participant on September 30, 1994.

    ‘(B) A Program Graduate described in subparagraph (A) shall be ineligible for award of a contract resulting from a competition conducted pursuant to paragraph (1), unless such firm furnishes (and the contracting officer accepts) a plan to subcontract not less than 40 percent of the award value of the contract to one or more Program Participants (of which 20 percent shall be awarded to one or more Program Participants who are emerging small business concerns, unless such awards are impracticable after consultation with the Associate Administrator for the Minority Enterprise Development Program).

    ‘(C) This subparagraph shall take effect on October 1, 1994, and shall remain in effect until September 30, 1997.’.

SEC. 206. PROCUREMENT PROCEDURES.

    Section 8(c) of the Small Business Act (15 U.S.C. 637(c)) is amended to read as follows:

    ‘(c) PROCUREMENT PROCEDURES-

      ‘(1) IN GENERAL- For the purpose of attaining an agency’s goal for the participation of small business concerns owned and controlled by socially and economically disadvantaged individuals pursuant to section 15(g)(1), the head of a participating executive agency may enter into contracts using--

        ‘(A) less than full and open competition, by restricting the competition for such awards to small business concerns owned and controlled by socially and economically disadvantaged individuals as defined in subsection (d)(3)(C); and

        ‘(B) a price evaluation preference, of not to exceed 10 percent, when evaluating an offer received from such a small business concern as the result of an unrestricted solicitation.

      ‘(2) DEFINITION- For the purposes of this subsection, the term ‘participating executive agency’ means a Federal agency, as defined in section 3(b), in the executive branch of the Federal Government, other than the Department of Defense.’.