Title I Integrity Act of 2003

Mr. President, today, as Ranking Democrat on the Committee on Small Business and Entrepreneurship, I join the Committee's Chair, Senator Olympia Snowe in introducing a three-year reauthorization bill for the Small Business Administration's programs. These programs help small businesses, often called the engine of the American economy, with access to capital, business advice and training and Federal procurement opportunities. But before I speak more specifically about the provisions of the bill, I would like to thank Chair Snowe for working hand-in-hand with me on this, my third, reauthorization of the Small Business Administration. Having worked closely on two previous reauthorizations, and as a member of the Small Business and Entrepreneurship Committee for over 18 years, I can tell you that the SBA reauthorization process takes diligence and a strong attention to detail. I want to commend Senator Snowe for taking the initiative to draft legislation that makes such important and necessary changes to the SBA during this reauthorization process and for showing great leadership in her first seven months as Chair of the Committee on Small Business and Entrepreneurship.

Our bill will strengthen the SBA and dramatically improve the agency's ability to deliver services to small businesses in every state. It is based on a sound Committee record. In addition to holding two hearings and three roundtables to specifically address SBA's programs and related reauthorization issues, our Committee met and spoke with numerous constituents, program directors and small business advocates. It is through this correspondence, research and input that our Committee has been able to prepare a comprehensive piece of legislation that will likely serve the Small Business Administration and the entire small-business community well past even the next reauthorization period.

Over the past three years, as Chairman and Ranking Member of this Committee, I have seen this administration reduce government funding and transfer that money to the wealthy with tax cut after tax cut, resulting in a significant loss of revenue for essential programs aimed at fostering small businesses and the economic activity they bring about. While many of us like to note that small businesses are the engine of economic growth and should be bolstered by our government, this administration has given small businesses more words than action.

The need for small business programs--for access to capital, for training and counseling, for assistance in gaining access to the Federal marketplace--runs counter cyclical to the economy. When the economy is slumping, as it now is, small businesses and entrepreneurs need the SBA even more. Our Committee has heard from the small-business community that demand for training and assistance and access to capital is up, yet this administration has proposed freezing funding for virtually all SBA programs for six years. Their proposal includes no adjustment for inflation or demand, despite SBA's own numbers that show demand is up for its programs.

It is carrying out our legislative and oversight responsibilities that Chair Snowe and I raised a number of concerns regarding the SBA's reauthorization proposal and the overall management and direction of many of the agency's programs through hearings, and roundtables and in letters and phone calls to the administration. And after hearing from the community and working with small business experts in the field, Senator Snowe and I came to the conclusion that many of the proposals put forth by the Small Business Administration would not help the agency's programs but ultimately hinder them.

This administration and small businesses across this Nation will find, however, that our prescription for small businesses in a flailing economy

is quite different. Our reauthorization legislation embraces the programs that have worked for years, redirects those that have struggled and sets the SBA and up for continued success.

Although banks have plenty of cash to lend, small businesses are still having a problem getting access to credit. For the past few years as the economy has fizzled, the Federal Reserve has reported that banks have cut back on lending to small businesses, making it harder and more expensive to get loans. And who has been there to pick up the slack? The Small Business Administration and its lending partners.

Lending is up in SBA's largest lending program for working capital. Lending is up in SBA's microloan program, which serves those with the least access to capital through the private sector. And SBA's venture capital programs account for a significant role--more than 50 percent-- in this country's investment in our fastest-growing small businesses. Last year these loans pumped about $20 billion into the economy, leveraged millions more from the private sector, fed the local tax base as the Federal government cut back, and created at least 400,000 jobs.

As the Committee reviewed SBA's programs for reauthorization, these facts figured largely into establishing the program levels. I thank our Chair, Senator Snowe, for working with me to set the levels for SBA's lending and venture capital programs at increasing levels for the next three years. I am particularly pleased with the increased funding levels for the microloan programs.

I disagree with the administration's proposals over the past few years to cut back its investment in microloans and training assistance to micro-entrepreneurs. And I disagree with the Adminstration's contention that these borrowers are being served through the 7(a) loan program. The small borrower in the microloan program is different than the small borrower being served through the 7(a) loan program. Both are important, but they are different, and one is not a substitute for the other.

And who are these borrowers being served through the microloan program? Thirty percent are African American. Eleven percent are Hispanic. Thirty-seven percent are women. And anywhere from 30 to 40 percent go to small businesses in rural areas. Banks turn these borrowers away, and yet the administration proposed cutting the microloan program by 36 percent in its most recent budget. SBA needs to fully fund these programs and put more resources into the office that manages the program. Four people is not enough to manage 1,400 loans and 180 grants.

Aside from setting the levels for each small business financial assistance program, we made important program changes and started new initiatives. In the 7(a) loan program, SBA's largest loan program, which provides working capital to small businesses with long terms of up to 25 years, we made permanent the reduction in the fees borrowers and lenders pay. We are testing a proposal that allows the most proficient 7(a) lenders in good standing to lend in every state. Lenders have complained that applying for lending autonomy in each of the 70 district office and branches is administratively burdensome, both for them and for the Agency staff, and that some district offices have taken advantage of the power to approve or disapprove lenders when they apply for this special lending status.

I want to make clear while I want to avoid unnecessary paperwork and eliminate reported abuses, I do not want the lenders to take this as authority to quit working with the district directors. It is important to have a local connection and for the SBA and the lenders to work together to maximize service to the small businesses. For this purpose I have included a provision which directs the SBA to consider the recommendations and comments of any district directors and regional administrators when reviewing a lender for national lending authority.

To increase the value of 7(a) loans sold in the secondary market, the Committee has included a provision to allow SBA to pool and sell the guaranteed portion of loans with varied rates. Currently SBA has the authority to only sell those loans with identical rates. This should create efficiencies in market and bring down borrowing costs for the small business borrower. At Senator Snowe's request, in order to reach more under-served small businesses, we have enhanced the Low-Doc program, allowing lenders to use the simplified application form for loans up to $250,000 from $100,000, making it the same as the SBA Express program. We have also expanded the incentives for lenders to provide financing to export small businesses, and proposed letting 7(a) borrowers use a simplified size standard when determining if an applicant is a small business.

To improve the 504 loan program, which makes long-term loans of up to 20 years to small, growing businesses to buy equipment and buildings, we have also raised the debenture size to keep pace with the rising cost of commercial real estate and equipment. We have brought the job requirement standard up from $35,000 to $50,000 after ten or twelve years. We have directed SBA to simplify the application and documentation process of applying for and closing 504 loans, long a goal of this Committee and made a priority based on the testimony of one of our witnesses during the reauthorization process. We have created two alternatives for 504 lenders to use when establishing a loan loss reserve to cover potential losses.

I am particularly pleased that we have included S. 822, the Child Care Lending Pilot Act in the reauthorization bill. It allows small, non-profit childcare businesses access to 504 loans. I thank Senator Snowe and my colleagues for agreeing to try this for three years, similar to what we have done with the microloan program. And I thank the trade association of 504 lenders, the National Association of Certified Development Companies, and other 504 lenders for their endorsement of an input on the pilot.

The more research I've done, the more I've come to realize how vitally important it is that we give non-profit day care providers the same opportunities as for-profits to expand their businesses. Non- profit day care centers are often the only child care suppliers available in needy areas, from the most urban to the most rural. Giving these businesses access to 504 loans for three years will allow us to gauge whether this valuable loan program is the best way to aid these valuable providers of care to our Nation's children. I have taken note of states like Oregon, where 79 percent of day care providers are non- profit, Michigan, where that number jumps to 86 percent, Iowa with 77 percent, my own State of Massachusetts with 90 percent, Ohio with 62 percent, and the list goes on and on. I've learned that in State after State families are waiting for affordable day care; from more than one thousand families on the waiting list in Nevada and Maine to more than thirty thousand on the list in Texas. These parents are waiting for quality day care they can afford, and making available affordable loans to all licensed child care providers may increase access to care and cut down those waiting lists.

I understand the concerns of those who are concerned about the precedent of SBA lending to non-profits. And I agree it should not be expanded to all industries. However, this is a very unique industry that in many States is delivered mostly through non-profits, and the only way to penetrate the market is to reach both for-profit and non- profit. Further, non-profits are usually the providers that care for the neediest kids. I have added provisions to ensure the underwriting standards are just as tough, if not more so, as those applied to for- profit centers. The loans must be personally guaranteed, the collateral must be owned outright by the child care provider, and it must be able to make its loan payments and cover normal operating expenses from the revenue generated from its clients. With these protections, the loans to non-profits should perform just as well as those made to for- profits, and if there is a problem, the loans should be collateralized sufficiently to cover the losses.

The bill defines a small, non-profit child care business to mean an entity organized as a 501(c)(3), but not just any organization. It must be a licensed child care provider; it must meet the size standard for a small business; and it must provide care to infants, toddlers and pre- kindergarten and older children after school. At Senator Snowe's request, the pilot is limited to

7 percent allowed for pilots under SBA's 7(a) guaranteed business loan program. I feel that the agreed upon cap should allow for sufficient lending under the pilot to adequately test whether lending to non- profit childcare providers is effective in increasing access to affordable childcare, and whether it protects the general 504 program, which is vital to the financing of small businesses in this country.

The bill also includes a comprehensive study by the GAO to track and monitor the impact of this program both on the industry and the program. Last, I want to remind my colleagues that the 504 program is funded entirely through fees and does not require appropriations.

Also included in this bill is S. 318, the Small Business Drought Relief Act. This simply reinforces in legislation something which SBA should already be doing. You see, the SBA doesn't treat all drought victims the same. The Agency only helps those small businesses whose income is tied to farming and agriculture. However, farmers and ranchers are not the only small business owners whose livelihoods are at risk when drought hits their communities. The impact can be just as devastating to the owners of rafting businesses, marinas, and bait and tackle shops. Sadly, at present these small businesses cannot get help through the SBA's disaster loan program because of something taxpayers hate about government--bureaucracy.

The SBA denies these businesses access to disaster loans because its lawyers say drought is not a sudden event and therefore it is not a disaster by definition. However, contrary to the Agency's position that drought is not a disaster, as of July 16, 2002, the day this legislation was introduced last year, the SBA had in effect drought disaster declarations in 36 states. That number had grown to 48 the beginning of this year, demonstrating that problem had gotten worse and even more small businesses were in need.

As I have said time and again, the SBA has the authority to help all small businesses hurt by drought in declared disaster areas, but the Agency won't do it. For years the Agency has been applying the law unfairly, helping some and not others, and it is out of compliance with the law. The Small Business Drought Relief Act of 2003 would force SBA to comply with existing law, restoring fairness to an unfair system, and get help to small business drought victims that need it. I thank Senator Bond for working with me on this when he was the Ranking Member of the Committee on Small Business & Entrepreneurship, and I thank Senator Snowe and her staff for all their help and support. While we might have had a lot of rain recently in the Northeast, there are areas like Lake Mead in Arizona where it is so dry that the water level is down and small businesses are losing business and making expensive changes to extend docks to reach the water.

In this bill are also provisions to shore up SBA's venture capital programs--the Small Business Investment Company Debenture and Participating Securities programs, and the New Markets Venture Capital Program. We have balanced investment incentives with soundness issues and allowed small businesses to receive more SBIC financing than currently permissible if they also have a 504 or 7(a) loan. We have improved the arrangement for distributing payments from successful SBICs so that SBA and the investors are treated more fairly and the taxpayers has more protection for realizing repayment on the investments. We have put in place conforming amendments to make the New Markets Venture Capital program work with the New Markets Tax Credit, as Congress intended. We have clarified that new markets venture capital companies have two years to raise their matching capital, as Congress intended. The Committee has been troubled by the Agency's interpretation of the NMVC statute which they viewed as permitting SBA to choose how much time it can give conditionally approved NMVCs to raise the private-sector matching money. The chosen time frames were unreasonable and not what Congress intended.

We have also included many measures to strengthen SBA's oversight of lenders, responding to findings by the General Accounting Office and the Office of Inspector General. And we have reauthorized and clarified the law for surety bond guarantees to help small businesses get government contracts.

While no one would deny the importance access to capital plays in the success of small businesses, as SBA Administration Hector Barreto and past SBA Administrators have acknowledged time and again, debt is not always the answer. In the SBA's FY 2004 budget request, there is reference to information from the Ewing Marion Kauffman Foundation and Dun & Bradstreet that indicates ``80 percent of new businesses discontinue operation within five years because of lack of `knowledge' of key business skills.'' Despite the recognized importance of such assistance, the SBA's funding request for FY 2004 and its legislative proposal to implement that request would freeze funding levels for virtually all Agency programs, without even accounting for inflation, for a six-year period. If enacted, that would severely hamstring this nation's small businesses and their ability to effectively compete and prosper in the national economy.

Cuts to or inadequate funding of the SBA's entrepreneurial development programs are often attributed to vague and unfounded claims of duplication. Such claims mistake a common mission of training and counseling for duplication, ignoring the reality that small businesses vary greatly, are often at very different stages of development, and have many different needs. Just as it would be ineffective to only have one type of loan or venture capital financing structure for the 25 million small businesses in this country, it would be futile to water down specialized management and training programs to impose a one-size- fits-all approach.

I want to commend Chair Snowe for giving women entrepreneurs such a prominent place in the reauthoziation process. Rarely do women entrepreneurs get the recognition and attention they deserve for their contributions to our economy: 18 million Americans would be without jobs today if it weren't for these entrepreneurs who had the courage and the vision to strike out of their own. During my tenure as a member, Chair, and lead Democrat of the Senate Committee on Small Business and Entrepreneurship, I have worked to increase and improve the opportunities for enterprising entrepreneurial women in a variety of ways, leading to greater earning power, financial independence and asset accumulation--and I am glad that Senator Snowe is joining me in this endeavor.

As Chair Snowe expressed when she introduced the Women's Small Business Programs Improvement Act--and when Senator Snowe and I passed the Women's Business Center's Preservation Act--protecting the extremely effective and well-established Women's Business Center network was a high priority in this reauthorization. For that reason, we make permanent the Women's Business Center Sustainability Pilot Program by creating three-year ``renewal'' grants for those centers with sustainability grants and four-year ``initial'' grants for new centers; increase the program's authorization levels; and direct the Office of Women's Business Ownership, OWBO, to make all Women's Business Center grants at $150K and to consult with the associations of Women's Business Centers when making improvements to the program. Other changes to the Women's Business Center Program include streamlining the data collection and the grant application and selection criteria, protecting the privacy of Women's Business Council, WBC, clients, and providing for a smooth transition from sustainability to the newly established WBC program. Our legislation will not only secure the future of the Women's Business Center Program, but it will connect all SBA-related women's initiatives with a unified mission, similar guidance and training. These changes were coupled with minor, yet significant, changes to the National Women's Business Council, NWBC, and the Interagency Committee on Women's Business Enterprise. Senator Snowe and I included provisions to give the NWBC cosponsorship authority, to allow more flexibility in the way the Council uses funds, and to direct the Council to serve as a clearinghouse for historical data. Each of these things will enable the Council to become a better resource for the Administration, Congress and the entire small-business

community. To bolster the representation of women business owners in the federal government, our bill re-establishes the Interagency Committee on Women's Business Enterprise, directs the Deputy Administrator of the SBA to serve as acting chairperson of the Interagency Committee until a chairperson is appointed, establishes a Policy Advisory Group to assist the Committee's chairperson in developing policies and programs under this Act and creates three subcommittees similar to those created under the National Women Business Council.

This bill also supports and protects the Small Business Development Center network, which has served 9 million small-business owners since its inception more than 20 years ago. It should also be noted that in 2001, SBDCs helped small businesses create or retain over 80,000 jobs, generate $3.9 billion in sales and obtain $2.7 billion in financing. For every dollar spent on an SBDC, $2.09 in tax revenue was returned to the Federal Government. Numbers aside, the nationwide network of SBDCs provide important counseling services to small-business owners that are unable to afford private consulting, many of whom are women and minority clients. The SBDC program has grown to serve 1.25 million small-business owners and entrepreneurs each year, and there are nearly 1,000 centers serving every State in Nation.

While this bill rejects the potentially detrimental changes proposed by the SBA to the SBDC network, it does address concerns expressed by the centers and small businesses. Included in our bill are increased authorization levels to keep up with increased demand and a provision to protect the privacy of the program's clients and a provision to help SBDCs that have been adversely affected by poor economic conditions or government downsizing.

Also, included in the entrepreneurial development section of our bill is a provision to increase to $7 million annually the authorization level for the Service Corps of Retired Executives, SCORE, which has nearly 11,000 volunteers, and a technical change to allow SCORE to keep its modest staff of fourteen employees.

I want to thank Senator Snowe for working with me to include, as introduced, the Native American Small Business Development Act, which I reintroduced earlier this year together with Senator Johnson and Senator Smith to address the SBA's growing lack of commitment to the Native American community. According to a report released by the U.S. Census Bureau, the ``three year average poverty rate for American Indians and Alaska Natives [from 1998-2000] was 25.9 percent; higher than for any other race groups.'' With an unemployment rate well above the national average and household income at just three-quarters of the national average, Native American communities need a commitment from the Federal government that we will help them, particularly during these difficult economic times. To reaffirm this commitment, the Johnson-Kerry-Smith bill provides Native Americans the resources they need to take advantage of the opportunities of entrepreneurship.

The Native American Small Business Development Act, as included in our reauthorization bill, will ensure that the SBA's programs to assist Native American communities cannot be dissolved by making the SBA's Office of Native American Affairs, ONAA, and its Assistant Administrator permanent. Our legislation would also create a statutory grant program, known as the Native American Development grant program, to assist Native Americans. It would also establish two pilot programs to try new means of assisting Native American communities and require Native American communities to be consulted regarding the future of SBA programs designed to assist them. In short, this legislation will ensure that our Native American communities receive the adequate assistance they need to help start and grow small businesses.

To address the growing business development needs of veterans, Senator Snowe and I reauthorized the Advisory Committee on Veterans Affairs, expanded veterans outreach grants from just service-disable veterans, to veterans, reservists and service-disable veterans. Further, we increase the funding for the Office of Veterans Business Development to enable that office to better deal with the demand by veterans for outreach and development services.

We continue to receive reports of the detrimental effects of the Administration's policy of reduced staffing and resources for essential programs aimed at allowing small businesses to thrive. Week after week, the Federal Times reports on the decline in contracts being allocated to small businesses, small businesses losing ground in the federal marketplace, and most recently, on the awarding of more big contracts with less oversight from Federal agencies. With agencies awarding larger, more complex and more costly contracts with less staff performing oversight, this nation's small businesses and its tax payers are the ones shouldering the burden when small business goals continue to be unmet. In addition to helping small businesses obtain access to procurement opportunities, these goals are meant to help the government benefit from the cost-savings and innovations small business contractors can often provide.

Significant improvements to the on-going problem of contract bundling, also called contract consolidation, are included in this bill. The first provision creates a two-tiered approach to preventing unnecessary contract consolidation. Civilian agencies will be required to meet specific standards if they attempt to consolidate contracts above $2 million and additional requirements for those contracts above $5 million. The Department of Defense is required to meet two types of similar requirements for contracts above $5 million and $7 million. The bill also eliminates the use of the term ``contract bundling'' and expands the definition of ``contract consolidation,'' closing a loophole that has been widely used and has detrimentally affected small businesses.

The second provision increases in the number of Procurement Center Representatives (PCRs) stationed throughout the country. These representatives advocate on behalf of small businesses in cases directly affecting contracting, such as the bundling or consolidation of contracts. In the bill, we have increased the number of PCRs to ensure that every state and every major procurement center is allocated at least one PCR. Meanwhile, we have also ensured that these PCRs are not burdened with responsibilities that were previously the duties of Breakout PCRs and Commercial Marketing Representatives. These two improvements will dramatically increase the efficacy and efficiency of all three positions and allow proper review of the approximately 40 percent of Federal contracts, nearly $90 billion, that are currently not being reviewed by PCRs. This should increase small business's access to Federal contract opportunities.

The bill would also create a reporting requirement for the BusinessLINC program, which has been showing promise in creating real teaming opportunities for small businesses in the private sector. Although the Administration recommended elimination of the program, the reports this Committee received regarding the overwhelming success of the existing nine programs made it clear that the SBA did not have sufficient information about BusinessLINC to make an informed decision on its effectiveness. The Committee's bill would ensure that the SBA offers the proper level of oversight and would foster the continued success of the program. I would like to thank Senator Snowe for working with me to find a compromise to preserve this successful program.

At each of this Committee's three Roundtables on Reauthorization and the hearing on contract bundling, the small business community reiterated the need for accountability for small business contracting at the agency level. I applaud Senator Snowe on her efforts to ensure that Federal agencies be held accountable for fully utilizing small businesses and to allow a greater amount of Congressional oversight of the implementation of agency procurement strategies. Provisions within this bill will ensure that the heads of Federal agencies identify a specific portion of their budget request that will be awarded to small businesses in their strategic plan and their annual budget

submission to Congress; will hold senior executives and senior program managers accountable in their annual performance evaluations for small business utilization in Federal contract awards.

In addition to increasing opportunities for prime contracts, this bill addresses another serious problem: small businesses have been severely hamstrung by dishonest practices by some businesses that have prime contracts with the Federal Government and receive preference over other prime contractors due to their superior subcontracting plans. Senator Snowe and I have worked closely to address the concerns of small businesses regarding delays in payment, false reporting and the use of ``bait and switch'' tactics by prime contractors.

This bill holds prime contractors responsible for the validity of subcontracting data, requiring the CEO to certify to the accuracy of the subcontracting report under penalty of law. It also expands the penalties for falsifying data included in subcontracting reports to match the $500,000 penalty for businesses that falsify their status as a small and disadvantaged business. If one intentionally falsifies data as a part of a subcontracting report to a Federal agency, he is defrauding the United States government and will be punished to the full extent of the law. I commend Senator Snowe for her diligence in creating these strict penalties and her efforts to create a bipartisan response to protect small businesses.

I want to thank Chairwoman Snowe and her able staff for all of their hard work over the past several months. I also want to express my gratitude to all members of the Committee and urge them and my other Senate colleagues to support the Small Business Administration 50th Anniversary Reauthorization Act of 2003.

Mr. President, I rise today to introduce the ``Small Business Administration 50th Anniversary Reauthorization Act of 2003,'' a bill to reauthorize the U.S. Small Business Administration, SBA, and its programs for the next three years. While reauthorization legislation is a significant event, this year it is particularly auspicious since we are celebrating the 50th anniversary of the agency--a full half century of helping to create, assist, and guide small businesses.

As the Chair of the Committee on Small Business and Entrepreneurship, I began developing this legislation just after assuming the leadership of the Committee in January. The bill I introduce today is the product of considerable effort and vetting, and I am very pleased to be joined by the Committee's Ranking Member, Senator Kerry, in this process. Through his contributions and those of other Members of my Committee, this is truly bipartisan bill.

Over the past several months, we have held a series of hearings and roundtables to examine virtually every aspect of the SBA and the wide array of programs and services it provides to the country's small enterprises. As we started that process, we looked back on the SBA's history to learn from its past in order to set a path for its future.

More than 50 years ago, congressional efforts began to focus on the specific needs of small businesses--to create a ``level playing field''--and to develop Federal small business assistance programs. One of the objectives was to

ensure that small businesses could develop management and marketing skills to compete with big business for their share of government contracts.

In May of 1953, the Small Business Act was introduced, and it became law on July 30 of that year with President Eisenhower's signature. Since 1953, Congress and the various administrations have responded to the needs of small businesses by creating a fair but competitive environment for those who choose entrepreneurship. The SBA has evolved from a direct lender and provider of management assistance to a nationwide delivery system of resources offering a complete menu of small business tools, professional counseling assistance, business education and training programs, Federal procurement opportunities, and loan guaranty programs.

Today, the agency faces enormous challenges. Each year, there are 3 to 4 million new businesses start-ups--one in 25 adult Americans is taking steps to start a business. One quarter of existing small business owners intend to form another business. And, small businesses account for approximately two-thirds of the net new jobs in our country. So while the SBA has had a tremendous impact on the success of small businesses over the past 50 years, it is critical that we ensure the agency is well positioned to produce even better results in the next 50 years.

My goal in developing this bill has been to ascertain what works among SBA programs, why it works, and apply that approach to other programs so there is more consistent success within the SBA portfolio of products and services. In the end, I hope this bill will lead to a renewed SBA, rededicated to improving the environment or leveling the playing field for small business ownership in America.

While the particulars of this bill are extensive, I want to highlight three of its most critical, key areas--

In terms of financing programs for small businesses, during this reauthorization process, I have focused extensively on improving the credit and venture capital resources that the SBA provides for small enterprises. These programs--including the 7(a), 504, and Microloan programs as well as the SBIC, New Markets Venture Capital, and Surety Bond programs provide vital capital for America's small businesses. In addition, looking just at the lending programs, they alone are responsible for helping small businesses create and retain more than 1.3 million jobs in just the past 3 years!

That is why I held two Committee roundtables on these financing programs so I could hear firsthand from small business, lenders, and the SBA about ways these programs can increase access to capital for small businesses. To start, we are proposing to continue the growth of the financing programs through reasonable increases in their authorization levels. The bill also increases the amount that small businesses can borrow subject to the SBA's guarantee, so that the SBA's loan sizes will keep pace with what it actually costs to start and operate a small business in today's economy. And we make improvements to the SBA's loan programs that will benefit fast-growing contributors and vital elements of our economy including women-owned and veteran- owned businesses and small business exporters.

Moreover, the bill addresses access to capital by helping SBA's lending partners. A new initiative that holds great promise will allow for the pooling of small business loans not guaranteed by the SBA. This pilot program was recommended by participants at our roundtable on April 30, 2003, and has been under consideration by the SBA. By pooling these non-guaranteed loans together and offering them as securities on the secondary market with a partial SBA guarantee on the pool, banks will be able to free-up capital for additional small business lending. As a result, they will be able to provide even greater resources for small businesses struggling to secure the necessary capital to start up, operate, and grow.

Similarly, the new National Preferred Lenders Pilot Program will allow qualified SBA lenders to be licensed on a nationwide basis. Currently, Preferred Lenders must qualify in every region where they do business, which is both cumbersome and costly. This initiative will streamline that process for the premier lenders who qualify for a nationwide license and enable them to provide capital more efficiently and effectively to small businesses across the nation.

In addition, the bill includes a proposal by Senator Kerry to permit non-profit child-care centers to qualify for 504 loans. I believe the growing need for child care in this country warrants testing this idea as a pilot program, even as I continue to have reservations about this initiative's effect on the availability of loans under the 504 program for other for-profit borrowers and the expansion of this loan program to non-profit entities. Accordingly, we have limited the loan volume under the pilot to 7 percent of the overall 504 loans to ensure that this initiative does not bar qualifying for-profit businesses from obtaining necessary financing.

Finally in the area of financing programs, we have also focused on improving the SBA's procedures for overseeing lenders participating in the credit programs. By improving this oversight, we can protect against improper lending practices, produce a more consistent system for lenders, and provide taxpayers with better protection of their tax dollars.

In the area of entrepreneurial development, we set out to ensure that the SBA's programs continue to provide the products and services essential to small businesses, which in turn create a return on our investment in these programs through successful business ownership and job creation. Recognizing the tremendous accomplishments by women entrepreneurs, I introduced the Women's Small Business Improvement Act of 2003 (S. 1154) earlier this year to improve the SBA's Office of Women's Business Ownership, the Women's Business Centers Program, the National Women's Business Council, and the Interagency Committee on Women's Business Enterprise. I have incorporated those provisions into the bill before us in order to provide a universal approach to all of SBA's sponsored programs and services for women.

A cornerstone of this effort involves making the Women's Business Center Program a permanent program that will offer opportunities for new centers and renewal grants for existing centers on a competitive basis. By replacing the pilot Sustainability Program, which expires at the end of the current fiscal year, with a fair and balanced grant program, the bill will correct the funding constraints that have plagued the program in 2003. The bill will also provide for the creation of new centers and the continuation of current operating centers through renewal grants. This structure will reward successful centers with continuation funding and weed out failing centers to make room for new ones with greater potential for serving the needs of women-owned businesses.

The National Women's Business Council will also be given greater control of its mission, and I am proposing the full funding of $1 million for each Fiscal Year for this program. The Interagency Committee on Women's Business Enterprise will be reenergized by providing interim leadership and a shared focus with the National Women's Business Council, the Women's Business Centers, and the Office of Women's Business Ownership. These programs hold great potential for women-owned businesses, but they must be coordinated so that their limited resources are dedicated to a focused goal.

In addition, the SBA's entrepreneurial development partners--the Small Business Development Centers and the Service Corps of Retired Executives--continue to provide quality training and free counseling through almost 2,000 locations and are limited only by funding and their geographic locations. Therefore, in addition to minor technical changes in these programs, I propose that we increase the authorization level for these programs to support the increased demand for their services.

And we have included the Native American Small Business Development Program in the bill. This initiative will provide entrepreneurial assistance to Tribal Governments and Colleges, Small Business Development Centers in Native American communities, and small businesses located on or near Tribal Lands. Complementing the SBA's Office of Native American Affairs, this initiative will strengthen the

SBA's efforts to help Native Americans start, operate and grow small businesses.

Finally, one of the most serious problems facing small business is their inability to participate fully in Federal contracts, on either a prime or subcontract basis. In the last 10 years, contract bundling has forced more than 50 percent of small businesses out of the Federal marketplace. Steps clearly must be taken to ensure that small businesses have the opportunity to compete for the business of the nation's largest consumer--the Federal government.

President Bush recognizes the inequity that contract bundling represents. He also understands the damage it does to both small businesses and the Federal procurement process by denying the government the benefits of more robust competition, small business efficiencies, and small business innovations. He has spoken out against this practice, and I applaud his commitment to addressing this problem.

To achieve that objective, the SBA reauthorization bill addresses the practice of Federal contract bundling by limiting its use and giving small businesses access to Federal contracts and a fair opportunity to compete for them. By requiring studies to be done for all consolidations worth more than $5 million for the Department of Defense and $2 million for all other agencies, the bill also holds agencies to a higher level of accountability than exists under current law.

Those who support the practice of bundling allege that denying small businesses access to prime contracts can be offset by ensuring that such firms receive more subcontracts from the large firms that are awarded prime contracts. However, small businesses continue to experience difficulties at the subcontract level as well. This bill contains strong language that strengthens oversight and enforcement of small business subcontracting plans to ensure small business subcontractors are not neglected.

Furthermore, we have included provisions to encourage contracting opportunities for women-owned businesses--one of the fastest growing segments of the small business sector of our economy. Despite their success, women-owned small businesses have testified before the Small Business Committee about how difficult it is to do business with the Federal Government. Three years ago Congress created a Procurement Program for Women-Owned Small Business Concerns. That legislation required the promulgation of regulations to help implement new small business procurement set-asides for women-owned businesses.

The legislation, however, conditioned the regulations by first requiring a study to be conducted to justify the disparate treatment of women in various procurement instances. At the Small Business Committee's roundtable on April 9, 2003, women-owned small businesses expressed their frustration that it has taken so long to conduct the study and implement the program. This bill directs the GAO to complete that study by December 31, 2003 to ensure that the women's procurement program is finally implemented.

Finally, the bill contains improvements to the HUBZone program, which are intended, in part, to address the serious consequences that military base closings pose for our local communities. Closing a military base adversely affects the towns and communities surrounding the installation due to loss of tax revenue, defense income, base transition costs and clean-up costs.

Successful recovery from a base closing has been tied to public and private reinvestment in these communities. While Congress has taken action in the past to ease the transition for individuals and spur reinvestment, this bill supports faster redevelopment by expanding the HUBZone Program to include communities affected by base closures. It provides an incentive, through Federal government contracts, for small businesses to operate in these communities and to provide employment to these military and civilian personnel.

This year's SBA reauthorization bill paves the way to a stronger SBA able to meet the needs and concerns of the country's entrepreneurs. The future of our country is inextricably tied to the future of small business--and by enhancing the conditions that support small business, we will ensure a more prosperous future for all. I urge all my colleagues to support this important legislation on behalf of the nation's small businesses and entrepreneurs.

(At the request of Mr. Daschle, the following statement was ordered to be printed in the Record.)

Mr. President, I rise today to introduce a bill with Senator Ensign to ensure that Title I funds are directed towards instructional services to teach low-income students.

Title I provides assistance to virtually every school district in the country to serve children attending schools with high concentrations of low-income students, from preschool through high school.

It has been the ``anchor'' of Federal assistance to schools, since its origin in 1965. And while it has always been Congresses intent for Title I funds to be used for instruction and instructional services, the Federal Government has never provided a clear definition of what instructional services should entail.

This lack of Federal guidance has become especially clear now, as States scramble to comply with the new and expanded Title I accountability standards established in ``No Child Left Behind.''

While State Administrators of Title I are directed by law to meet these specific requirements, they have been given little guidance as to how to ensure that they are in compliance with the law.

I believe that the Federal Government is responsible for making this process as clear to States, as possible. In my own view, as it relates to Title I, we haven't lived up to our end of the bargain.

During consideration of ``No Child Left Behind,'' I worked hard to get my bill defining appropriate Title I uses included in the Senate version of the bill.

Unfortunately, during conference consideration, my bill was stripped out and in its place language directing the General Accounting Office, GAO, to report on how States use their Title I funds was inserted.

In April, GAO released the report that Congress directed them to submit on Title I Administrative Expenditures.

What GAO found is that while districts spent a relatively small amount--no more than 13 percent--of Title I funds on administration that ``because there is no common definition on what constitutes administrative, or indirect, expenditures'' the accounting office couldn't precisely measure how much of their Title I funds were used for administration.

Because Title I funds are not defined consistently throughout the States, the accounting office created their own definition by compiling aspects of State priorities to complete the report.

You see, the very reason I worked to define how Title I funds should be used--to create consistency and distribution priority nationwide-- became the definitive aspect preventing GAO from effectively drawing conclusions in their report.

My bill takes some strong steps by balancing the needs for States to retain Title I flexibility and providing them with the guidance needed to administer the program uniformly throughout the country.

My bill does two things: It defines Title I direct and indirect instructional services and sets a standard for the amount of Title I funds that can be used to achieve the academic and administrative objectives of this program.

It ensures that the majority of Title I funds are used to improve academic achievement by stipulating that ``a local educational agency may not use more than 10 percent of [Title I] funds received. . . . for indirect instructional services .''

By limiting the amount of funds that schools can spend on administrative or indirect services, school districts are restricted from shuffling the majority of Title I to pay for non-academic services, but it also gives the districts flexibility to use the remaining funds for the indirect costs of administering Title I distribution.

The second component of my bill defines direct and indirect services so that all States apply the same standards for Title I use nationwide.

Examples of permissible Direct Services are: Employing teachers and other instructional personnel (including employee benefits); intervening and taking corrective actions to improve student achievement; extending academic instruction beyond the normal school day and year, including summer school; providing instructional services to pre-kindergarten children for the transition to kindergarten; purchasing instructional resources such as books, materials, computers, and other instructional equipment and wiring to support instructional equipment; professional development; developing and administering curriculum, educational materials and assessments; transporting students to assist them in improving academic achievement.

Examples of indirect services limited to no more than 10 percent of Title I expenditures are: business services relating to administering the program; purchasing or providing facilities maintenance, janitorial, gardening, or landscaping services or the payment of utility costs; and paying for travel to and attendance at conferences or meetings, except for travel and attendance necessary for professional development.

Current law on Title I is much too vague.

It says, ``A State or local educational agency shall use funds received under this part only to supplement the amount of funds that would, in the absence of such Federal funds, be made available from non-Federal sources for the education of pupils participating in programs assisted under this part, and not to supplant such funds.''

Basically, it says that Title I funds are to be used for the ``education of pupils.'' That is just too nebulous.

The U.S. Department of Education has given States a guidance document that explains how Title I funds can be used.

Under this guidance document, only two uses are specifically prohibited: 1. Construction or acquisition of real property; and 2. payment to parents to attend a meeting or training session or to reimburse a parent for salary lost due to attendance at ``parental involvement'' meeting.

I believe we should give the Department, States and districts clearer guidance in law.

My reasons for introducing this bill are two-fold: First, I believe that States must use their limited Federal dollars for the fundamental purpose of providing academic instruction to help students learn.

Secondly, I believe that it is nearly impossible to do so without providing a clear definition of what is considered an instructional service.

I am not suggesting that it is the fault of the school districts for not focusing their Title I funds on academic instruction. They are simply exercising the flexibility that Congress has given them.

What I am saying is that if Congress also intended for those funds to educate our neediest children, Federal guidance must be given to ensure that it happens.

It is my view that Title I cannot do everything. Federal funding accounts for a small percentage of total funding for elementary and secondary education and Title I is even a smaller percentage of total support for public schools.

That is why I am trying to better focus Title I funds on academic instruction, teaching the fundamentals and helping disadvantaged children achieve success.

Schools must focus their general education budget to pay for expenses that fall outside of the realm of direct educational services and retain the majority of Federal funds to improve academic achievement for poor children.

It is time to better direct Title I funds to the true goal of education: to help students learn. This is one step toward that goal.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce a bill with Senator Ensign to ensure that Title I funds are directed towards instructional services to teach low-income students.

Title I provides assistance to virtually every school district in the country to serve children attending schools with high concentrations of low-income students, from preschool through high school.

It has been the ``anchor'' of Federal assistance to schools, since its origin in 1965. And while it has always been Congresses intent for Title I funds to be used for instruction and instructional services, the Federal Government has never provided a clear definition of what instructional services should entail.

This lack of Federal guidance has become especially clear now, as States scramble to comply with the new and expanded Title I accountability standards established in ``No Child Left Behind.''

While State Administrators of Title I are directed by law to meet these specific requirements, they have been given little guidance as to how to ensure that they are in compliance with the law.

I believe that the Federal Government is responsible for making this process as clear to States, as possible. In my own view, as it relates to Title I, we haven't lived up to our end of the bargain.

During consideration of ``No Child Left Behind,'' I worked hard to get my bill defining appropriate Title I uses included in the Senate version of the bill.

Unfortunately, during conference consideration, my bill was stripped out and in its place language directing the General Accounting Office, GAO, to report on how States use their Title I funds was inserted.

In April, GAO released the report that Congress directed them to submit on Title I Administrative Expenditures.

What GAO found is that while districts spent a relatively small amount--no more than 13 percent--of Title I funds on administration that ``because there is no common definition on what constitutes administrative, or indirect, expenditures'' the accounting office couldn't precisely measure how much of their Title I funds were used for administration.

Because Title I funds are not defined consistently throughout the States, the accounting office created their own definition by compiling aspects of State priorities to complete the report.

You see, the very reason I worked to define how Title I funds should be used--to create consistency and distribution priority nationwide-- became the definitive aspect preventing GAO from effectively drawing conclusions in their report.

My bill takes some strong steps by balancing the needs for States to retain Title I flexibility and providing them with the guidance needed to administer the program uniformly throughout the country.

My bill does two things: It defines Title I direct and indirect instructional services and sets a standard for the amount of Title I funds that can be used to achieve the academic and administrative objectives of this program.

It ensures that the majority of Title I funds are used to improve academic achievement by stipulating that ``a local educational agency may not use more than 10 percent of [Title I] funds received. . . . for indirect instructional services .''

By limiting the amount of funds that schools can spend on administrative or indirect services, school districts are restricted from shuffling the majority of Title I to pay for non-academic services, but it also gives the districts flexibility to use the remaining funds for the indirect costs of administering Title I distribution.

The second component of my bill defines direct and indirect services so that all States apply the same standards for Title I use nationwide.

Examples of permissible Direct Services are: Employing teachers and other instructional personnel (including employee benefits); intervening and taking corrective actions to improve student achievement; extending academic instruction beyond the normal school day and year, including summer school; providing instructional services to pre-kindergarten children for the transition to kindergarten; purchasing instructional resources such as books, materials, computers, and other instructional equipment and wiring to support instructional equipment; professional development; developing and administering curriculum, educational materials and assessments; transporting students to assist them in improving academic achievement.

Examples of indirect services limited to no more than 10 percent of Title I expenditures are: business services relating to administering the program; purchasing or providing facilities maintenance, janitorial, gardening, or landscaping services or the payment of utility costs; and paying for travel to and attendance at conferences or meetings, except for travel and attendance necessary for professional development.

Current law on Title I is much too vague.

It says, ``A State or local educational agency shall use funds received under this part only to supplement the amount of funds that would, in the absence of such Federal funds, be made available from non-Federal sources for the education of pupils participating in programs assisted under this part, and not to supplant such funds.''

Basically, it says that Title I funds are to be used for the ``education of pupils.'' That is just too nebulous.

The U.S. Department of Education has given States a guidance document that explains how Title I funds can be used.

Under this guidance document, only two uses are specifically prohibited: 1. Construction or acquisition of real property; and 2. payment to parents to attend a meeting or training session or to reimburse a parent for salary lost due to attendance at ``parental involvement'' meeting.

I believe we should give the Department, States and districts clearer guidance in law.

My reasons for introducing this bill are two-fold: First, I believe that States must use their limited Federal dollars for the fundamental purpose of providing academic instruction to help students learn.

Secondly, I believe that it is nearly impossible to do so without providing a clear definition of what is considered an instructional service.

I am not suggesting that it is the fault of the school districts for not focusing their Title I funds on academic instruction. They are simply exercising the flexibility that Congress has given them.

What I am saying is that if Congress also intended for those funds to educate our neediest children, Federal guidance must be given to ensure that it happens.

It is my view that Title I cannot do everything. Federal funding accounts for a small percentage of total funding for elementary and secondary education and Title I is even a smaller percentage of total support for public schools.

That is why I am trying to better focus Title I funds on academic instruction, teaching the fundamentals and helping disadvantaged children achieve success.

Schools must focus their general education budget to pay for expenses that fall outside of the realm of direct educational services and retain the majority of Federal funds to improve academic achievement for poor children.

It is time to better direct Title I funds to the true goal of education: to help students learn. This is one step toward that goal.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce legislation providing greater protection for workers dealing with nuclear materials and nuclear power. I am pleased to introduce this legislation today with my colleague from Nevada, Senator Ensign.

Several weeks ago, I chaired a hearing of the Energy and Water Development Subcommittee on problems facing the Yucca Mountain project. I was extremely disappointed that two of the witnesses--both current employees of the Department of Energy and one of its contractors-- failed to testify at the hearing.

It was clear to me that these people failed to appear before the committee because they were concerned that their appearance could have negative repercussions on their jobs. That is completely unacceptable.

So today, Senator Ensign and I are introducing legislation to expand the whistleblower protections. The bill we are introducing does two things.

First, the bill would expand whistleblower protection to all Department of Energy and Nuclear Regulatory Commission employees and their contractors' and subcontractors' employees.

Second, the bill would provide a process for whistleblowers to utilize Federal courts if their cases are not addressed quickly by the Department of Labor.

Our Democracy depends on the ability of citizens and their elected representatives to make informed decisions. That means we need to know the truth about the issues.

These changes are simple fixes that help ensure that Federal employees and other people working for the Federal Government never have to fear they will lose their jobs for simply telling the truth.

I hope the Senate will act quickly on this important legislation.