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HR 2261 -- 09/23/97

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Office of Management and Budget


September 23, 1997

H.R. 2261 Small Business Reauthorization Act of 1997
(Talent (R) Missouri and LaFalce (D) New York)

The Administration strongly supports reauthorization of the programs of the Small Business Administration and supports House passage of H.R. 2261, with the changes described below. The bill reauthorizes small business loan programs which assist tens of thousands of small businesses each year and contribute to the overall vitality of the Nation's economy.

The Administration strongly opposes, however, proposed amendments to current law on "contract bundling," loan liquidation and litigation under the Section 504 program, and the extension of the Small Business Competitiveness Demonstration Program. The Administration will seek amendments to address these concerns as the bill proceeds through the legislative process.

Contract Bundling. The Administration understands that the House will consider an amended version of H.R. 2261 that will include a provision addressing "contract bundling." The Administration is committed to maintaining a strong role for small businesses in Federal contracting, but is concerned that the proposed changes to the current contract bundling law could deny taxpayers the cost savings and improved quality achievable by appropriate consolidation of Federal contract requirements. Therefore, the Administration urges the House to maintain current law, which provides sufficient authority and flexibility for the Administration to protect the important interests of small businesses.

The Senate-passed SBA reauthorization bill (S. 1139) also contains a provision on contract bundling. Although opposing this provision, the Administration notes that the Senate-passed provision would impose less additional burden on Federal agencies than other bundling language that has been considered by this Congress.

Section 504 Litigation. The Administration strongly opposes authorizing premier certified lenders to judicially foreclose and liquidate loans. Such broad authority to litigate raises significant problems regarding SBA's oversight responsibilities.

Small Business Competitiveness Demonstration Program. The Administration strongly opposes any extension of the Small Business Competitiveness Demonstration Program. Small businesses will substantially benefit from discontinuing this program and lifting the unnecessary paperwork and reporting burdens it imposes.

Other Administration Concerns

The Administration will also seek amendments to:

  • Maintain the ability of Small Business Development Centers (SBDCs) to charge appropriate fees for counseling services provided under the program; and

  • Remove the existing statutory prohibition against Federal Financing Bank (FFB) financing of section 504 and Small Business Investment Company (SBIC) guaranteed loans.
Finally, the Administration fully supports increasing the participation of disabled veterans in SBA loans and Federal procurement, but has concerns about a provision which may be included in the managers amendment. The Administration looks forward to working with Congress to develop approaches to expand the participation of disabled veterans in these programs.

Pay-As-You-Go Scoring

H.R. 2261 as reported would increase direct spending; therefore it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. Therefore, if the bill as reported were enacted and these costs are not offset during the remainder of the session, a pay-as-you-go sequester would be triggered at the end of the session. OMB's preliminary scoring estimates of this bill are presented in the table below. Final scoring of this legislation may differ from these estimates. (We understand that a managers amendment may include language that eliminates this effect. If not, the Administration will work with Congress to identify appropriate offsets.)

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