President opposes new small-biz legislation

President Bush opposes new legislation that would update contracting programs for small-business contractors because some provisions raise constitutional concerns.

The Small Business Contracting Program Improvements Act, introduced by Rep. Nydia Velazquez (D-N.Y.), chairwoman of the Small Business Committee, would strengthen and modernize the Small Business Administration's programs and set standards for programs that help firms with contract applications.

But the White House says some provisions in the bill are "constitutionally suspect."

For example, the bill would allow agencies to confine competition for some contracts to women business owners in male-dominated industries. It also would allow agencies to decide to set aside their contracts for women-owned business in those industries.

The administration said a tightly controlled basis is needed to build the case for attempting to determine that women are underrepresented in a particular field. Moreover, allowing agencies to decide to set aside a contract based on gender will intensify constitutional concerns, according to its Statement of Administration Policy.

"It is unlikely that such determinations will be based upon the kind of thorough statistical analysis required by the courts to justify such set-asides," the administration said.

The administration also opposes the committee's attempt to more than double the net worth business owners can have and still be eligible for SBA's 8(a) program. The program offers some small businesses access to set-aside contracts.

The bill would raise the net worth from $250,000 to $550,000.

"Opening the program to small-business owners with higher net worth will divert 8(a) contracting opportunities well beyond the original intent of the program," the administration said.

The committee said it's an inflationary adjustment.

"It will also encourage growth among these businesses," according to a committee report on the bill.

The White House agrees with other provisions in the bill, however. It supports language punishing small-business owners who scam SBA's programs and boosting the dollar thresholds for setting aside noncompetitive contracts.

"These changes will enhance the quality of participants and weed out any bad actors in SBA's contracting programs," Velazquez said.

The committee approved the bill Oct. 18 despite Republican opposition.

Matthew Weigelt writes for Federal Computer Week, an 1105 Government Information Group publication.