Defense Authorization Bill Passes Without Updates to Small Business Programs

Two controversial small business issues attached to the Defense authorization measure passed by the Senate Wednesday night were poised to pass the chamber, but fell by the wayside when lawmakers agreed not to vote on the 100-plus amendments that were tacked onto the bill.

Sen. John Kerry included language updating two programs providing federal support for new technologies that emerge from small firms and a key procurement rule regarding federal contracts for women-owned small businesses.

The language was included in broader defense-related amendments submitted by the Massachusetts Democrat who chairs the Small Business and Entrepreneurship Committee.

It would raise the grant caps for the Small Business Innovation Research and Small Business Technology Transfer programs and address concerns that the programs had strayed from their intended missions and instead aided large corporations posing as small firms.

The amendment to the Defense bill (S. 3001) said that the head of the Small Business Administration should establish requirements regarding the affiliation of a small business with a venture capital firm. A small firm that qualifies for an SBIR/STTR grant could not be more than 49 percent owned by a single venture capital firm.

Additionally, the SBA would have to report data and compliance of each federal agency participating in the grant programs.

The administration does not favor the Kerry SBIR bill and the Senate small business panel told the Small Business blog on Thursday that it was willing to "continue negotiations in order to pass the bill freestanding."

The small business committee passed a similar SBIR bill earlier this year, and Sen. Kerry expressed frustration with the administration's objections.

"We have a bipartisan bill, approved 19 to zero in Committee. It's a compromise that balances all sides on small business research, but the administration objects," Kerry said. "We tried to find common ground with the administration, but in typical fashion, they've refused to even meet us half way."

The other hot-button issue that almost made it into the Defense authorization bill is the women's procurement program. It's an issue close to Kerry and the ranking Republican on his panel, Olympia Snowe of Maine. It's also a topic their peer in the House, Rep. Nydia Velazquez (D-N.Y), who chairs that chamber's Small Business Committee, has been extremely vocal about.

According to the Federal Procurement Data System, the portion of federal contracts awarded to women-owned business has never exceeded 3.41 percent although there has been a mandated federal contracting goal for women of 5 percent since 1994.

The Small Business Administration recently outlined a new plan intended to improve contracting procedures for women-owned businesses but was greeted with a tsunami of protests from lawmakers and women advocacy groups. The plan was created through a complicated research process that whittled down the thousands of women-owned businesses that would be eligible for federal contracting dollars to four categories: national security and international affairs; coating, engraving, heat treating and allied activities; household and institutional furniture and kitchen cabinet manufacturing; and certain motor vehicle dealers.

Sen. Kerry's language would modify that rule, which is scheduled to take effect in October, by keeping the list of eligible business categories much larger. It would not be limited to those four as suggested by the SBA, but would include businesses in fields such as forestry, retail trade, technical services, manufacturing as well as arts and entertainment to name a few.

The new language would also mandate that the head of the SBA establish a mentor program for small, women-owned firms and says that any funds authorized to be appropriated for the program shall supplement and not supplant, funds available for mentor-protege programs that are in operation before the law goes into effect.

"If the Bush administration implements its limited and unconstitutional rule, the Woman's Procurement Program will be undermined and our efforts to level the playing field for women-owned businesses will be blocked," Kerry said. "We should not be limiting, but expanding, opportunities for women entrepreneurs so they can help us get our economy back on track."

By Sharon McLoone |  September 19, 2008; 11:49 AM ET Policymakers
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