Legislation that would create a new federal set-aside program for “early stage” small businesses would cost taxpayers about $20 million over five years, according to a report from the Congressional Budget Office.

The House Small Business Committee approved H.R. 4121 in March. If it becomes law, the Small Business Administration would have to establish set-asides for early stage small businesses on federal contracts valued between $3,000 and $75,000.

The early stage firms are defined as firms with fewer than 16 employees and annual receipts of

$1 million or less. SBA would certify the status of the companies.

Implementation would cost about $20 million from 2013 to 2017, the CBO said in a June 1 report. The costs include about $3 million a year for the SBA to administer the program and provide technical assistance.

Another $5 million would be needed for start-up costs, primarily training of contracting officers at federal agencies to help them identify opportunities for the early stage companies.

Rep. Kurt Schrader, D-OR, the sponsor of H.R. 4121, said the goal of the legislation is to help new and developing businesses reach their potential. Such businesses face difficulties in securing government contracts because they lack experience with working with the government and complexities in the procurement process, Schrader said in a news release about the bill.

At the same time, the newer and smaller businesses have the ability to expand rapidly and create new jobs quickly, he added.

“As a former small business owner I know the most critical phase for any company’s long-term success is their earliest stage of development,” Schrader said. “Right now many startups and smaller businesses, in Oregon especially, are struggling to secure the funding they need to reach their full potential. This bill would increase their access to federal contracts and help them mature into larger companies with more job opportunities for our local communities.”

If the new program is enacted, contracts would be awarded either as a sole-source contract to an eligible business or on the basis of competition restricted to eligible businesses.