Statement of Administration Policy: S. 1993 - Minority Business Development Program Reform Act of 1988

(Revision)

(Senate)(Bumpers (D) Arkansas and nine others)

The Administration would have no objection to Senate passage of S. 1993 if it were amended as described below.

— The section that would authorize SBA to pay costs incurred by 8(a) program participants in preparing bids and proposals should be deleted. These costs are properly borne by the participating parties. The appropriation authorization of $5 million for this purpose should also be deleted.

— The section that would authorize a new direct loan program for 8(a) firms at subsidized interest rates should be deleted as duplicative of existing SBA credit assistance programs. The appropriation authorization of $10 million for this purpose should also be deleted.

— The section that would require competition among eligible 8(a) program participants if the expected award price of a contract (including all options) exceeds $5 million should be amended to require competition if the expected award price of the contract (including all options) exceeds $1 million. Such an amendment would provide for a more meaningful level of competition among 8(a) firms.

— The section that would require that a small business procurement contract be terminated for the convenience of the Government if an 8(a) firm transfers the contract to another firm during the first year of performance should be amended to require the 8(a) contractor (and its successor, if any) to defray the Government's reprocurement costs. As currently drafted, these costs would be imposed on the wrong party — the Government — instead of the party responsible for them.

— The section that would establish mandatory goals for contract awards to small businesses and minority small businesses should be deleted. Implementation of such a requirement would be impracticable, at best, and could lead to further program abuses.

— The section that would permit the Federal Government to assess liquidated damages against 8(a) contractors when subcontracting goals are not met should be deleted. This provision could act as an incentive for contractors to negotiate pessimistic subcontracting goals.

In addition, the Department of Justice has serious constitutional concerns about a section which would exempt businesses owned by Indian tribes from a restriction that precludes eligibility for participation in the 8(a) program more than once. Justice believes that such an amendment may be construed as favoring a particular racial group, contrary to due process requirements. This provision -should also be deleted.