House Committee Boosts 8(a) Firms The House Small Business Committee has approved a sweeping overhaul of SBA programs, including new restrictions on contract bundling, an increase in net-worth limits for owners of 8(a) and small disadvantaged businesses and a redefinition of the HUBZone program. The House reauthorization bill is radically different from the one approved by the Senate Small Business Committee. (SAA, 7/25) The final bill will be shaped in a conference committee this fall. The Small Business Reauthorization and Manufacturing Revitalization Act, H.R. 2802, would give the Office of Management and Budget authority to break up a bundled contract if an agency refused to do so. It would require agencies to justify bundling of new contracts, as well as existing ones, and to justify bundled orders through GSA schedules and other multiple award contracts, as the Bush administration has proposed in a pending regulation. The Senate Small Business Committee also set new rules on bundling in its reauthorization bill, S. 1375, but committee Chair Olympia Snowe (R-ME) said she expects members of the Armed Services Committee to oppose restrictions on Defense Department contracting. The House bill would require companies to recertify their eligibility as small businesses every five years, overruling the administration’s proposal to require annual recertification. 8(a) Program The legislation would increase the net-worth limit for 8(a) and small disadvantaged business owners to at least $750,000, from $250,000. The ceiling could be higher for some industries. The bill would direct SBA to set net-worth limits based on two factors: the disadvantaged business owner’s net worth in comparison to the net worth of business owners who are not disadvantaged; and the capital needs of the industry in which the business operates. The bill would restore 8(a) companies’ top priority in set-aside contracts. SBA told contracting officers last year that 8(a) and HUBZone companies should be given equal priority in determining set-asides. HUBZone Program The bill would fundamentally change the nature of the HUBZone program by requiring that a business must be owned by a socially or economically disadvantaged person to be eligible for HUBZone status. That would disqualify 5,000 of the approximately 8,000 certified HUBZone firms, according to Ron Newlan, chairman of the HUBZone Contractors National Council. The staunchest HUBZone advocates are in the Senate; they are likely to fight the changes. Woman-Owned Businesses The bill would permit agencies to begin setting aside contracts for woman-owned businesses without waiting for SBA to determine eligibility requirements for the program. SBA has not yet implemented the women’s set-aside program, nearly three years after Congress passed it. SBA’s women’s business centers would focus on low-income and minority entrepreneurs. Centers serving those communities would get priority in funding after their first five years in operation. The Bush administration had proposed cutting off funding for the women’s centers after five years. Procurement Center Representatives SBA would be required to assign a procurement center representative to each major government contracting office. There are currently just 47 procurement center representatives, who are supposed to identify contracts suitable for set-aside and stop unnecessary bundling. The administration says they cover 255 contracting centers accounting for about 60% of government purchases. “To date, we don’t even have one PCR per state and many of the large contract centers are operating with no one on the ground to guarantee that small businesses get a fair shake,” said Rep. Nydia Velazquez (D-NY), the committee’s ranking minority member. She said the number of PCRs would increase to 200 over the next two years. The administration has declined to ask for money for additional PCRs, so the bill would order SBA to transfer the deputy directors of its district offices to serve as PCRs or commercial marketing representatives. Other Provisions To increase the accountability of SBA executives, the bill would require the administrator to replace any district director who does not meet goals for small business procurement and for the number of businesses counseled. Committee Chairman Donald Manzullo (R-IL) said the bill is aimed at “refocusing the agency’s efforts on small manufacturers.” His district has been hard hit by manufacturing layoffs and the shifting of jobs overseas. To be eligible for SBA programs, the bill says a small manufacturer must have its production facilities in the United States. The legislation would direct all agencies to set goals for contracting with small manufacturers, although it establishes no mandatory goal. “The primary emphasis of the amendments made in the bill are to increase the available capital to small manufacturers,” a staff summary says. “The bill accomplishes this by increasing levels of debt and equity that the SBA will guarantee under the (Small Business Investment Company) and 504 loan programs.” Section 504 loans are commonly used for equipment and real estate purchases. The bill would double the maximum loan to $4 million for manufacturers and $2 million for all other businesses. The committee unanimously approved the reauthorization bill July 23. Manzullo said, “This is truly a bipartisan product, paragraph by paragraph, period by period, along with working with the administration.” The bipartisan agreement was so total that the committee’s Democratic members did not file a separate minority report, as is customary.