EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

September 29, 2000
(Senate)

However, the Administration would strongly oppose any amendment to H.R. 2392 that would modify the current order of preference in Federal contracting between the "8(a)" program for socially and economically disadvantaged businesses and the HUBZone program for historically underutilized business zones. If H.R. 2392 were presented to the President with such a provision, the SBA Administrator would recommend that he veto it. The Administration supported the HUBZone Program with the understanding that it would not adversely affect the 8(a) Program. Failure to adhere to that understanding would pose a serious risk to the 8(a) Program.

The Administration appreciates the improvements in the "7(a)" guaranteed loan program included in H.R. 2392. The Administration urges Congress to maximize the effect of these improvements by adopting the Administration's proposal to raise the guarantee for loans of less than $150,000 to 90 percent. These changes would ensure that the 7(a) program continues to serve as the gap lender for small businesses most in need of financial assistance.

The Administration will also work with Congress to make the following changes to the bill:

• The Administration supports the inclusion of language that specifically authorizes the establishment of Native American Small Business Development Centers (SBDCs). In order to enable the creation of Native American centers given their financial circumstances, the Administrator should also have the authority, if in the best interests of the program, to waive the matching funds requirements for such center. Appropriate language was included in Section 314 of the Administration's proposal.

• Consistent with the previous point, modify Section 605 (a) to assure that the Small Business Development Center (SBDC) program retains the flexibility to provide targeted assistance and to respond to needs as they are identified. The Administration believes that the current language of Section 605 (a) would constrain the ability of the SBDC program to address emerging or changing technical assistance needs of small businesses such as programs to provide targeted technical assistance to Native Americans.

• Delete language in Title I which could permit participants in the Small Business Innovation Research (SBIR) program to rely solely on Federal funding, rather than being required to develop non-Federal interest and applications for their projects, as is currently the case.

• Clarify that the Federal portion of the Federal and State Technology Partnership (FAST) program referred to in Title I will be funded only by appropriations to the Small Business Administration.

• Delete language in Title I that would inappropriately blend two programs with distinctly different missions (the SBIR program and the Experimental Program to Stimulate Competitive Research (EPSCoR) programs).

The Administration understands that H.R. 2392 may be amended to incorporate Title IV, "Office of Advocacy of the Small Business Administration;" from H.R. 3843 as ordered reported by the Senate Small Business Committee. If H.R. 2392 is amended to include this provision, the Administration will work with Congress to:

• Eliminate constitutional issues involving the separation of powers and presidential authority to appoint and remove officers of the Executive Branch in provisions related to the Office of Advocacy as outlined by the Department of Justice in its April 13th letter to the Chairman of the Senate Small Business Committee.

• Ensure that provisions related to the Office of Advocacy retain without change the Chief Counsel's statutory authority to employ and terminate staff positions so that similarly situated excepted service employees across the Federal Government continue to be treated equitably.

• Authorize the establishment of Native American Small Business Development Centers (SBDCs), and provide the Administrator the authority, with a showing of good cause, to waive the matching funds requirements for such center.

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