Business Opportunity Development Reform Act of 1988

(Conference report filed in House, H. Rept. 100-1070)

Business Opportunity Development Reform Act of 1988 - Title I: Congressional Findings and Purposes - Sets forth congressional findings with respect to the Capital Ownership Development Program (Program) administered by the Small Business Administration (SBA) and the ways in which this Act proposes to improve it.

Title II: Program Organization and Participation Standards - Amends Small Business Act provisions governing admission to the Capital Ownership Development Program.

Establishes a Division of Program Certification and Eligibility in the Office of the Associate Administrator for Minority Small Business and Capital Ownership Development to, among other things, analyze and process applications, review and evaluate financial statements, and decide protests regarding eligibility. Instructs the Director of this Division, 30 days before the end of each fiscal year, to: (1) review Program entrants to determine their number, geographic distribution, and industrial classification; (2) estimate Program growth and resultant anticipated needs; and (3) by September 30 annually report findings to the Associate Administrator, who must, by October 31, issue policy and program directives for the following year.

Directs the Program to make a sustained and substantial effort to solicit applications for certification from small business concerns located in areas of concentrated unemployment or underemployment, in labor surplus areas, and in States having relatively few Program participants.

Prohibits a concern from receiving assistance under the Program for more than nine years. Limits the development stage to four years and the transitional stage to five years. Establishes special rules to govern concerns currently participating in the Program.

States that the purpose of the disadvantaged small business concern program is to promote the development of concerns owned and controlled by disadvantaged individuals so that they can compete on an equal basis in the American economy.

Removes "sole source" from the description of Federal procurement contracts for socially and economically disadvantaged small business concerns that can be effective in developing business ownership.

Requires a Program participant to submit a business plan for review by its assigned Business Opportunity Specialist. Requires that the plan be approved by the SBA prior to the participant's being awarded a contract under the Program.

Specifies provisions to be included in the business plan. Requires: (1) annual plan review and modifications as appropriate; and (2) annual forecasting of the participant's needs for contract awards.

Requires the SBA to evaluate a Program participant's eligibility for continued participation whenever it receives specific and credible information alleging ineligibility. Directs the SBA to initiate a termination proceeding if ineligibility is determined. Permits suspension of contract awards in accordance with specified debarment and suspension regulations.

Makes Native Hawaiian community service organizations eligible for the minority small business procurement program.

Provides that a business that has qualified as a disadvantaged small business concern or for the Program shall be denied all such assistance if it: (1) voluntarily elects not to participate; (2) has been a participant in the Program for the prescribed time limit; (3) is terminated by a specified termination proceeding; or (4) is graduated by a specified graduation proceeding.

Requires that an action for termination be based on good cause. Describes procedures governing termination proceedings.

Limits the Program to small business concerns that are socially and economically disadvantaged. Mandates that each disadvantaged owner of a Program participant annually certify continuing eligibility. Calls for annual submission of financial statements and related information with respect to participants. Describes procedures to be followed if the SBA determines that economic disadvantage criteria are no longer met or that excessive assets have been withdrawn from the participant firm.

Title III: Business Development - Requires the SBA to divide the Program into two stages: (1) a developmental stage; and (2) a transitional stage.

Provides that a concern in the developmental stage shall be qualified to receive assistance in the following ways: (1) the award of contracts to disadvantaged small business concerns; (2) financial assistance under a new loan program; (3) a maximum of two exemptions for disadvantaged small businesses from the requirement that the contractor be a manufacturer of or a regular dealer in the materials, supplies, or equipment to be manufactured in performance of the contract; (4) a maximum of five exemptions from the requirement that a contract for repair of a public building be accompanied by a performance bond if the SBA protects persons furnishing materials and labor to such concern and finds the concern is unable to obtain the required bond from a surety; (5) financial assistance in which the SBA purchases skills training or upgrading for employees; (6) the transfer of technology or surplus property owned by the United States to such a concern; and (7) training assistance.

Makes Program participants in the transitional stage of participation eligible for the following types of assistance: (1) the award of contracts to disadvantaged small business concerns; (2) financial assistance under a new loan program; (3) the transfer of technology or surplus property owned by the United States to such a concern; (4) training assistance; (5) joint ventures and teaming agreements between Program participants and between participants and other businesses with respect to certain types of contracting opportunities; and (6) transitional management business planning training and technical assistance.

Authorizes the SBA to make loans to disadvantaged small businesses. Permits either direct loans or guaranteed loans through financial institutions. Sets forth loan eligibility criteria. Sets the maximum guarantee percentage at 85 percent. Prohibits a loan if the total amount committed to the particular borrower would exceed $750,000. Sets forth the requirements for a direct loan or the SBA's share of an immediate participation loan.

Requires each Program participant in the developmental stage of participation to make all reasonable efforts to attain targets stated in its business plan for obtaining business outside the Program in competitive contract situations. Directs the SBA to promulgate business activity targets applicable to transitional stage Program participants, to be met during the fifth and succeeding years of Program participation.

Requires competition among concerns in the program for set-aside contracts if there is a reasonable expectation that at least two concerns will submit offers and the proposed award will exceed a specified amount. Authorizes the Associate Administrator for Minority Small Business and Capital Ownership Development to approve an agency request with respect to contracts worth less than the threshold amount.

Requires the SBA to award sole source contracts to the minority business concern recommended by the procuring agency offering the contract opportunity if: (1) it is determined that the Program participant is a responsible contractor; (2) the award of the contract would be consistent with the participant's business plan; and (3) the award would not result in the participant's exceeding its business activity targets. Directs the SBA to promote equitable geographic distribution of these contracts. Sets forth conditions to govern the competition for awards, as well as administrative provisions and limitations, including protest procedures.

Sets forth procedures for determining "fair market price" with respect to the awarding of a Government procurement contract under the set-aside program. Entitles a small business selected by the SBA to perform or negotiate such a contract to receive a written statement describing the method used to estimate the current fair market price and to protest the use of such method to the SBA Administrator.

Directs the SBA: (1) to make substantial and sustained efforts to achieve an average processing time of ten days in connection with approving options and contract modifications; and (2) to the maximum extent practicable, to minimize delay, eliminate excess regulation, and reduce paperwork.

Prohibits the SBA from restricing the award of set-aside contracts to a limited number of standard industrial classification codes in an approved business plan in a manner that excludes a concern from industrial activities where it has the potential for success.

Allows a concern that is not the actual manufacturer or processor of a product to submit an offer for any procurement contract under the set-aside program if such concern: (1) is primarily engaged in the wholesale or retail trade; (2) is a regular dealer in the product to be offered; and (3) represents that it will supply the product of a domestic small business manufacturer, unless the Administrator waives this clause because of the absence of small business manufacturers participating in the Federal market.

Requires Federal prime contracts that contain subcontracting goals for small business and disadvantaged small businesses to provide for liquidated damages if the prime contractor fails to make a good faith effort to comply with the goals.

Title IV: Improved Management and Program Integrity - Amends the Small Business Act to declare that the Associate Administrator for Minority Small Business and Capital Ownership Development shall be a career appointee and an employee in either the competitive service or the Senior Executive Service. Makes the position a career reserved position.

Sets forth conflict of interest provisions for former SBA employees engaged in activities with respect to Program participants for two years after the end of such employment. Imposes civil penalties for violations of prohibited activities associated with these conflicts.

Requires a Program participant to report semiannually to the assigned Business Opportunity Specialist: (1) a listing of parties receiving compensation to assist in obtaining a Federal contract for the participant; and (2) the amount of compensation received by such persons during the relevant reporting period and a description of the activities performed for such compensation.

Increases both criminal and civil monetary penalties for misrepresentation as a small business or minority concern. Adds other sanctions for such misrepresentation, including administrative remedies, suspension and debarment procedures, and ineligibility for SBA procurement programs.

Authorizes the Committee on Small Business of either the Senate or the House of Representatives to request that the SBA's inspector general conduct an investigation of any activity under the business development program or the set-aside program.

Requires that set-aside contracts be performed by the concern that receives them, unless the SBA Administrator grants a waiver. Describes conditions justifying waivers. Requires relevant small businesses to notify the SBA immediately upon entering an agreement to transfer ownership interests to any other party.

Requires the SBA Administrator, by April 30 each year, to submit a report to the Congress on the program. Enumerates required report contents.

Requires the Administrator to give a concern an opportunity for a hearing before: (1) denial of Program admission; (2) the total denial or suspension of assistance under the Program; (3) removal from the Program; or (4) the denial of a request for a waiver of specified restrictions on ownership. Sets forth procedures for reviewing the Administrator's proposed action.

Designates in each SBA field office a position of Business Opportunity Specialist to assist Program participants and carry out various responsibilities in connection with small business procurement. Sets forth conditions to govern their training and performance evaluation. Calls for the establishment of three pilot programs in connection with such Specialists, with required reporting to the Small Business Committees on the programs' effectiveness.

Title V: Contract Planning; Goal Setting and Reviews - Directs the SBA to require each Program participant to prepare an annual statement describing its various contract capabilities. Requires executive agencies that report to the Federal Procurement Data System contract activity with a value exceeding $50,000,000 in any fiscal year, to prepare and submit to the SBA Administrator and to the Director of the Office of Small and Disadvantaged Business Utilization a forecast of anticipated contract opportunities. Lists required forecast contents and requires that they be available to small business concerns.

Requires the President annually to establish specified Government-wide goals for procurement contracts awarded to small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals. Prescribes minimum participation goals.

Requires the SBA to report to the President annually on the attainment of goals for participation by small business concerns. Directs the President to include the information in the annual report to the Congress on the State of Small Business.

Directs the Comptroller General to report to the Small Business Committees by February 1, 1992, on the operation of the Minority Small Business and Capital Ownership Development Program and related contract assistance with respect to a specified period ending on September 30, 1991. Prescribes required report contents.

Establishes a Commission on Minority Business Development to review and assess: (1) all Federal programs intended to promote the development of minority-owned businesses; (2) the effectiveness of the Small Business and Capital Ownership Development Program and the activities that comprise it; and (3) various policies and procedures of major procurement agencies and other topics related to Government contracting and subcontracting. Requires both an interim and final report to the Congress and to the President. Terminates the Commission on the date it submits its final report.

Title VI: Administrative and Technical Amendments - Requires agencies to ensure that the implementation of contract goals for minority small business concerns does not alter the process used to implement other procurement programs.

Exempts economically disadvantaged Indian tribes from specified requirements for competition for set-aside contracts. Authorizes the SBA to award such contracts to joint ventures between eligible tribally-owned businesses and larger firms. Sunsets this authority after FY 1991.

Requires the Director of the Office of Small and Disadvantaged Business Utilization for each agency to make recommendations to contracting officers on whether a particular contract should be awarded under: (1) the program giving priority to areas of high unemployment; (2) the set-aside program; or (3) the defense procurement policy.

Title VII: Small Business Competitiveness Demonstration Program - Part A: Short Title and Findings - Small Business Competitiveness Demonstration Program Act of 1988 - Sets forth congressional findings relating to small business participation in the Federal procurement process.

Part B: Demonstration Program - Establishes a Small Business Competitiveness Demonstration Program for 1989 through 1992, to provide for the testing of innovative procurement methods and procedures in connection with the following industry groups: (1) construction; (2) refuse systems and related services; (3) architectural and engineering services; and (4) non-nuclear ship repair. Requires participating agencies to establish annual small business participation goals of 40 percent of the dollar value of the contract awards for each designated industry. Directs each participating agency to make a good faith effort to assure that emerging small businesses are awarded at least 15 percent of the dollar value of these contracts.

Calls for the reservation for exclusive competition among emerging small businesses of all contract opportunities valued at $25,000 or less in these industry groups. Mandates semiannual adjustments to the dollar threshold if goals are not reached.

Directs participating agency heads to implement a concurrent program to increase small business participation in agency acquisition of selected products and services in industry categories historically low in participation. Directs the agencies to prepare a detailed, time-phased strategy and to encourage joint ventures and other arrangements that permit small businesses to compete effectively.

Requires quarterly monitoring of agency small business participation goals. Mandates modifications of agency solicitation practices if goals are not reached.

Provides for competitive awarding of procurement contracts, but authorizes restricted competition if small business participation goals are not met.

Requires that each award of $25,000 or less for the procurement of a service in any of the designated industry categories be reported to the Federal Procurement Data Center in the same way as if the value exceeded $25,000. Restricts this requirement to the term of the Small Business Competitiveness Demonstration Program.

Instructs the Administrator for Federal Procurement Policy to develop and implement a system for testing the collection, reporting, and monitoring of data on subcontract awards to small businesses owned and controlled by socially and economically disadvantaged individuals.

Requires Program agencies, during the term of the Demonstration Program, to collect data on the size of small businesses receiving specified types of procurement awards.

Directs the Administrator for Federal Procurement Policy to issue a policy directive to ensure consistent Government-wide implementation of this title. Makes the policy binding on all participating agencies.

Requires the Administrator for Federal Procurement Policy to report to specified congressional committees on the results of the Small Business Competitiveness Demonstration Program, including a section prepared by the SBA Administrator on the effects of the intensive goaling and management program to expand small business participation in certain procurement activities.

Part C: Programs Relating to Specific Industries - Establishes a program requiring, to the maximum extent practicable, 50 percent of the dollar amount of contracts for each standard industrial classification code for clothing and textiles awarded by the Defense Logistics Agency to be rewarded without regard to the size of competing businesses. Makes the other half available under small business programs.

Directs the Secretary of Defense to report to the Congress on this program. Requires interim reports to specified congressional committees.

Directs the Secretary of the Army to conduct a program during FY 1989 through 1992 to expand the participation of small business concerns in contracting opportunities for dredging. Sets: (1) goals for each fiscal year; and (2) procedures for contract awards, permitting restricted competitions under specified circumstances. Requires both interim and final reporting to specified congressional committees.

Part D: Amendments to the Small Business Act - Amends the Small Business Act to disregard, effective October 1, 1989, procurements of $25,000 or less as a discrete category in the establishment of participation goals for small businesses and disadvantaged small businesses.

Eliminates the SBA program for the review of size standards for eligibility for special procurement programs of business concerns in the following categories: (1) construction; (2) architectural and engineering services; (3)shipbuilding and ship repair; and (4) refuse systems and related services.

Part E: Other Amendments - Directs the SBA to segment the industry category of shipbuilding and ship repair into the following: (1) nuclear shipbuilding and repair; (2) non-nuclear shipbuilding; and (3) non-nuclear ship repair, including subdivisions into East and West coast facilities.

Revises the Federal Property and Administrative Services Act definition of "architectural and engineering services."

Title VIII: Authorizations, Effective Dates, and Miscellaneous Matters - Establishes a timetable for the promulgation of the SBA's final rules and regulations implementing this Act.

Authorizes FY 1989 and 1990 appropriations for: (1) salaries, expenses, and training of Business Opportunity Specialists; (2) the hiring of additional Procurement Center Representatives; (3) the Business Loan and Investment Fund, for both direct and guaranteed loans; and (4) job training.