SBA Reauthorization Is Approved, Without Procurement Sweeteners A stripped-down version of the SBA Reauthorization bill – minus several procurement provisions – has been added to the 2005 Omnibus Appropriations bill now awaiting final congressional approval. Final passage is expected soon after Congress returns from its recess Dec. 6. The bill sets SBA’s 2005 budget at $580 million, a cut of almost one-third from the 2001 level. This is “the largest decrease of any agency funded with discretionary spending,” said Senate Small Business Committee Chair Olympia Snowe (R-ME). Part of the budget cut comes from eliminating the federal subsidy for SBA’s flagship 7(a) loan program, making it self-supporting. That means higher lending and borrowing fees that went into effect Oct. 1 will continue. Rep. Manzullo said the change will save taxpayers at least $70 million. The change to a self-supporting program “makes it even harder for small businesses to borrow money in America. That is simply wrong,” said Sen. John Kerry (MA), ranking Democrat on the Senate Small Business Committee. The legislation raises the maximum 7(a) loan guarantee to $1.5 million from the present $1 million and raises the maximum amount for SBA Express loans to $350,000, from $250,000. The bill authorizes up to $16 billion in 7(a) loans in fiscal 2005, compared to $12 billion last year. The bill continues so-called “sustainability grants” for women’s business centers that have been open more than five years. It reserves 48% of the $12 million appropriation for those sustainability grants. Only about one-third of the budget went to the older centers last year. The Bush administration had proposed ending sustainability grants and using the funds to open new centers. The bill allows HUBZone companies to remain in the program until the 2010 census, even if Census Bureau estimates show that unemployment in their areas has dropped below the HUBZone limit. It designates areas around any closed military base as HUBZones to encourage economic development of those areas. The bill would strip Federal Prison Industries of its mandatory source status. Language in the omnibus bill gives civilian-agency contracting officers the authority to decide whether to buy from FPI or from the private sector. A similar provision for the Defense Department was enacted last year. SBA programs have been operating under extensions granted by Congress since the agency’s authorization expired on Sept. 30, 2003. The Senate passed a reauthorization bill last year, but the House version never came up to a vote because of disputes over its procurement provisions. The ranking Democrat on the House Small Business Committee, New York Rep. Nydia Velazquez, charged that the White House and the Republican leadership had blocked it. The procurement provisions were dropped from the final bill. Among the items that were eliminated: Making small businesses the primary source for all contracts under $1 million, up from the current $100,000. Giving the Office of Management and Budget authority to break up bundled contracts. Opponents of the provision argued that it would slow procurement by adding an additional level of review. Under current law, the SBA administrator may appeal a contract that he believes is improperly bundled, but the contracting agency has the final word. Giving small businesses at least 60 days to respond to any RFP for a bundled contract, instead of the usual 30 days. Supporters said that provision would give small firms time to form teams to bid on the larger contracts. Giving 8(a) companies priority status in set-asides. SBA has proposed a rule giving 8(a) and HUBZone companies equal priority. Setting a deadline for implementation of the set-aside program for woman-owned businesses. Congress created the set-aside nearly four years ago, but SBA has never implemented it because of legal questions. Increasing the net-worth limit for owners of 8(a) and small disadvantaged businesses to $750,000, from the current $250,000. Requiring owners of HUBZone companies to meet those same net-worth qualifications, in effect turning the HUBZone program into another small disadvantaged business program. HUBZone supporters said the vast majority of certified companies would not qualify under that provision.