Office of Small and Disadvantaged Business Utilization (OSDBU) is
governed by and administers a number of laws, regulations and policy
directives. A brief summary and of these and their application to
Law 95-507, The Small Business Act
On October 24, 1978, President Carter signed Public Law 95-507
amending the Small Business Act and the Small Business Investment
Act of 1958, making federal procurement contracting more readily
accessible to all small businesses. PL 95-507 stipulates that
it is the policy of the Government to provide maximum practicable
opportunities in its acquisitions to small businesses, small
disadvantaged businesses and women-owned businesses. This stipulation
also extends to having the maximum practicable opportunity to
participate as subcontractors in contracts awarded by any executive
The head of each agency is responsible for effectively implementing
the small business programs within his agency, including setting
and achieving yearly procurement opportunity program (POP) goals
for small and small disadvantaged business contracting.
of Federal Procurement Policy (OFPP) Letter No. 79-1, dated
March 7, 1979 on the implementation of Section 15(k) of the
SBA Act requires each agency with contracting authority to establish
an OSDBU, and appoint a director, who reports to the agency
head (or deputy), and who will have responsibility for carrying
out the purposes of the Act. Specifically the OFPP directs that
the position of OSDBU director include the following:
for the implementation and execution of the functions and
duties of Section 8 and 15 of the SBA Act. [Section 15 states
that a fair proportion of the total purchases and contracts
for property and services for the Government are to be placed
with small business concerns. Because the law requires the
Government to buy at competitive prices, contracts are set-aside
only when at least two qualified small businesses are expected
to bid. Section 8(a) of the SBA Act authorizes the SBA to
enter into contracts with other Federal agencies to supply
needed goods and services. SBA then subcontracts the actual
performance of the work to small businesses owned and controlled
by socially and economically disadvantaged individuals. The
objective of the 8(a) program is to assist eligible small
firms to become independently competitive.]
a small business technical advisor who shall be a full time
employee of the procuring activity and whose principal duty
shall be to assist the SBA procurement representative in his
duties related to Section 8 and 15.
and consult on a regular basis with SBA with respect to carrying
out the functions and duties of Sections 8 and 15.
systematic procedures for insuring the effective execution
of the SBA Act, as amended.
and education of agency staff whose duties and functions relate
to Sections 8 and 15.
outreach, liaison, source listings and seminars for small
and disadvantaged business.
required information brochures and documents.
liaison of program procurement activities relating to small
and disadvantaged businesses.
of the implementation of Section 223(a) of P.L. 95-507. [This
section requires that for any contract being let by a Federal
agency, the agency will provide to any small business upon
request a copy of the bid specifications; the name and telephone
number of a employee to answer questions with respect to the
contract and adequate citations to each major Federal law
or agency rule to which the business must comply in performing
addition to these duties, Section 211 of P.L. 95-507 requires
the OSDBU to review all subcontractor plans submitted by prime
contractors to ensure compliance. This Section directs that
the successful offeror or bidder on contracts valued at $500,000
or more must submit, before an award is made, a subcontracting
plan setting percentage and dollar goals for the award of subcontracts
to small and disadvantaged businesses.
Law 100-656, The Business Opportunity Development Reform Act of
Public Law 100-656 amends the SBA Act for the purpose of reforming
the Capital Ownership Development (Section 8(a) Program). This
legislation basically tightened the requirements of the 8(a)
program to among other things, reduce the time it took to enter
the program, established time frames for staying in the program
and established requirements for GAO program reviews and periodic
SBA reviews of 8(a) certified firms. The law established civil
penalties in response to documented cases of kickbacks, misrepresentation
of minority status and manipulation of the program by majority
controlled firms participating in the 8(a) program. , P.L. 100-656
refocused the intent of the program as one of making small and
disadvantaged firms more competitive in the marketplace as opposed
to merely one of facilitating the award of contracts. The law
also set $5 million and $3 million as thresholds for competitive
8(a) grants, established a requirement that agencies publicize
to the small business community their annual contracting forecasts
and set government wide contracting goals of 20% for small business
(increased to 23% by the SBA Reauthorization Act of 1999) and
5% for small disadvantaged business.
Acquisition Streamlining Act (FASA)
FASA repeals or substantially modifies more than 225 provisions
of law to reduce paperwork burdens, facilitate the acquisition
of commercial products, enhances the use of simplified procedures
for small purchases and introduces an initiative for doing procurement
through electronic data interchange. Specific references to
small businesses include:
increased thresholds for small business set-asides. All Federal
purchases greater than $2,500 but not greater than $100,000
will be reserved for small businesses, unless the contracting
officer is unable to obtain offers from two or more capable
new 5% government wide procurement goal is established for
authorization to create a government-wide initiative to give
civilian agencies authority to set-aside certain contracts
for small disadvantaged businesses (SDB) or to apply a 10%
price evaluation for SDBs in unrestricted procurement.
of a "Small Business Advisory Council", composed of representatives
from Federal agencies to give high level attention and focus
to small business procurement issues.
President Nixon issued Executive Order 11625 on October 13,
1971 authorizing the Secretary of Commerce to coordinate plans,
programs and operations of the Federal government which would
affect Minority Business Enterprises (MBE). Heads of Federal
agencies are to furnish information, assistance and reports
on MBE activity as requested by the Secretary of Commerce as
well as develop and implement systematic data collection processes
which will provide the Office of Minority Business Enterprise
Information Center current data helpful to evaluating and promoting
Executive Order 12138 (WBE)
On May 18, 1979, President Carter issued Executive Order 1238
creating a National Womens Business Enterprise Policy
and prescribing arrangements for developing, coordinating and
implementing a national program for Women's Business Enterprise.
The Order directs each Federal agency to take appropriate action
to facilitate, preserve and strengthen women's business enterprise
by ensuring their participation in all business related activities
including procurement. The head of each agency is to designate
a high level official to have responsibility for the participation
and cooperation of that agency in carrying out the Order.
In addition, the Order established the Interagency Committee
on Women's Business Enterprise, with a Chairperson to be appointed
by the President and members to include a representative of
a number of listed Federal agencies, one of which is HUD. The
Committee is to meet quarterly to promote, coordinate and monitor
the plans, programs and operations of the departments and establish
policies and procedures for implementation, interpretation and
application of the Order.
In regard to grants making and cooperative agreements, this
Executive Order 12138 directs Federal agencies to issue regulations
requiring the recipient of such assistance to take appropriate
affirmative action in support of Women's Business Enterprise
and to prohibit actions or policies which discriminate against
women's business enterprise on the basis of sex.
President Reagan signed Executive Order 12432 on July 14, 1983
directing each Federal agency having substantial procurement
or grant making authority to:
a minority business development plan and establish programs
concerning provision of direct assistance, procurement assistance
and management and technical assistance to MBEs.
MBE programs consistent with Section 211 of P.L. 95-507 to
develop and implement incentive techniques to encourage greater
minority business subcontracting by Federal prime contractors.
recipients of Federal grants and cooperative agreements to
achieve reasonable minority business participation in contracts
let as a result of its grants and agreements.
an annual report regarding the implementation of their program
to the Secretary of Commerce.
President Clinton signed Executive Order 12928 on September
16, 1994 promoting procurement with small businesses owned and
controlled by socially and economically disadvantaged individuals,
Historically Black Colleges and Universities (HBCU) and Minority
Institutions (MI). Federal agencies are to assist these entities
to develop viable, self sustaining businesses capable of competing
on an equal basis in the mainstream of the economy. The Executive
Order establishes a contracting goal of 5% for these entities
but mainly reaffirms existing laws, Executive Orders and regulations
relevant to minority participation while chastising some Federal
agencies for not aggressively supporting them. The Order devotes
an entire Section to OSDBU, reaffirming the legal requirement
that it report to the Secretary or Deputy and that agencies
comply with OFPP letter No. 79-1 which provides guidance on
Sec 15k of the SBA Act and the organizational placement and
functions of the OSDBU.
Underutilized Business Zone (HUBZone) Program
HUBZone Act of 1997, Title VI of Public Law 105135, created
the HUBZone Program. This program provides Federal contracting
opportunities for qualified small business concerns located
in economically distressed communities. The goal of the HUBZone
Program is to provide federal contracting assistance for qualified
small business concerns located in HUBZone areas in order to
increase employment opportunities, stimulate capital investments
in those areas, and empower communities through economic leveraging.
HUDZone areas, which roughly correspond with the census tracts
for which there are low income housing tax credits, are determined
by census track data including income levels, unemployment rates
and Native American reservation boundaries. In order to qualify
as a HUBZone business, the business must be small; owned by
a US citizen; the principal office must be located in a HUBZone;
and at least 35% of the employees must reside in a HUBZone.
The SBA formally certifies firms as HUBZone businesses. HUBZone
businesses can receive sole-source or set-aside federal contracts
or receive a price preference up to 10% when competing for full
and open competition procurements. A HUBZone firms must have
its principal office in the HUBZone. The principal office must
be the location where the greatest number of the companys
employees works. The HUBZone program is race, ethnicity and
gender neutral. The federal goal for HUBZone contracts was 1%
for Fiscal Year 1999, rising by one half percent per year to
a maximum of 3% in 2003.
Law 106.50, the Veterans Entrepreneurship and Small Business
Development Act of 1999, amended the Small Business Act by adding
Small Businesses owned and controlled by service-disabled veterans
to the categories of small businesses for which the federal
agencies develop prime contract goals. Federal agencies also
establish goals and collect data regarding subcontracts awarded
by prime contractors to veteran-owned small businesses. Small
businesses owned by service-disabled veterans are small businesses
that are at least 51 percent owned and controlled by one or
more service-disabled veterans or in the case of a veteran with
permanent or severe disability, the spouse or permanent caregiver
of such veteran. P.L. 106.50 established a 3% goal for government
contracting with businesses owned by service disabled veterans.
No specific goal is identified for sub contracting with businesses
owned by veterans.
Acquisition Regulation (FAR)
FAR establishes uniform policies and procedures for acquisition
(procurement). FAR Part 19 establishes policy regarding small
businesses and small disadvantaged businesses including subcontracting
requirements for contracts valued at $500,000 or more and actions
necessary to strengthen WBEs. While the FAR elaborates on P.L.
95-507, it cites one significant additional role in discussing
OSDBU responsibilities. Specifically, OSBDU is to make recommendations
as to whether a particular acquisition should be awarded as
a set-aside or 8(a) award. Furthermore, the contracting officers
shall consider recommendations of the OSDBU and will document
the contract file whenever the OSDBU Director's recommendations
are not accepted.
Acquisition Regulations (HUDAR)
dated January 21 2000, Parts 2419 and 2426 describe HUD's procurement
policy regarding small and small and disadvantaged businesses,
set-asides for small businesses, subcontracting with small businesses
and small disadvantaged businesses and contracting opportunities
for women-owned businesses. In regard to MBE participation in
its procurement programs, the HUDAR describes HUD policy toward
voluntary certification by contractors, bidders, or offerors
as to their MBE status and the role of the OSDBU.
CFR, Part 85 Section 36(e), dated May 1996
This portion of the CFR provides the required affirmative steps
HUD grantees and subgrantees shall take to assure that minority
firms are used when possible.
(e)"Contracting with small and minority firms, womens
business enterprise and labor surplus area firms. (1)The grantee
and subgrantee will take all necessary affirmative steps to
assure that minority firms, womens business enterprises,
and labor surplus area firms are used when possible. (2) Affirmative
steps shall include:
(i)Placing qualified small and minority business enterprises
on solicitation lists;
(ii)Assuring that small and minority businesses are solicited
whenever they are potential sources;
(iii) Dividing total requirements, when economically feasible
to permit maximum participation by small and minority business
and womens business enterprises;
(iv) Establishing delivery schedules, where the requirement
permits, which encourage participation by small and minority
business, and womens business enterprises.
(v) Using the services of the Small Business Administration,
and the Minority Business Development Agency of the Department
of Commerce; and
(vi) Requiring the prime contractor, if subcontracts are to
be let, to take the affirmative steps listed in paragraphs (e)
(2)(i) through (v) of this section.
Handbook 2210.3 Revision 3, "Procurement Policies and Procedures"
Chapter 3 of the Handbook contains implementing policies and
procedures regarding socioeconomic procurement programs.
Department buys advertising for Fair Housing billboard displays,
the Property Disposition Program, Section 202 Housing for the
Elderly and other program activities. The total expenditures
for advertising under these activities and the portion of total
dollars spent with the minority media is reported semi-annually
Flexibility Act, Public Law 96-354
passed P.L. 96-354 on September 19, 1980. Its purpose is to
encourage Federal agencies to utilize innovative administrative
procedures in dealing with individuals, small businesses, small
organizations and small governmental bodies that would otherwise
be unnecessarily adversely affected by Federal regulations.
The Act defines "small business" as having the same meaning
as is found in the Small Business Act; "small organization"
as any not for profit enterprise which is independently owned
and not dominant in its field and; "small governmental jurisdiction"
as the government of cities, counties, towns, townships, villages,
school districts or special districts with a population of less
than fifty thousand.
the agency head certifies that the proposed rule will not have
a significant impact on any small business or organization or
that uniform requirements are mandated by statute, the Act requires
Federal agencies to add the following information to that currently
required when an agency publishes in the Federal Register general
Notice of Proposed Rulemaking:
description of an estimate of the number of individuals, businesses,
organizations and governmental jurisdictions to which the
proposed rule would apply;
statement that the agency will seek and consider alternatives
to the proposed rule which would substantially reduce the
economic impact on individuals, small businesses, small organizations
and small governmental jurisdictions;
agency prepared analysis of the proposed rule which constitutes
a preliminary agency assessment of the impact of the proposed
rule on individuals, small businesses, small organizations
and small governmental jurisdictions. The analysis must contain
a description of alternatives to the proposed rule which accomplish
the stated objectives of applicable statutes and which minimize
the significant economic effect of the rule on such individuals,
businesses, organizations and governments. [The final rule
requires "a description of any alternative proposals to the
proposed rule which were considered and a statement of the
reasons for adopting the final rule rather than any of the
alternative proposals which would have had a lesser adverse
statement as to the record keeping requirements the agency
anticipates requiring, including their purpose, form, length,
proposed use, the skills necessary to prepare the information
and an estimate of the time required to comply.
passed P.L. 96-354 because it felt Executive Order 12044, issued
in March 1978 on the subject of "Improving Government Regulations"
didn't go far enough to reduce the burden of regulation on small
entities since the Order did not improve public participation
in the process or provide for an assessment of alternative regulatory
strategies in light of their impact on small concerns. regulations.
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)
On March 29, 1996 President Clinton signed Public Law 104-121,
the SBREFA. The Act reinforces the requirements of the Regulatory
Flexibility Act (RFA) with the significant addition of the provision
that permits judicial review of agencies' compliance with the
RFA. Since the RFA's passage, small business advocates have
told Congress that many agencies neglected to comply with the
law because there were no provisions in the original legislation
for enforcement. The SBREFA now provides that if an agency fails
to comply with the RFA in its Rulemaking, a small business that
is adversely affected or aggrieved may seek review by the courts.
The court can invalidate rules with inappropriate regulatory
flexibility analyses or rules that have been improperly certified
as having no significant effect on small businesses.
bolster a small business' access to information, agencies are
required to establish a program for responding to small business
requests for informal guidance on specific rules, and to develop
"small entity compliance guides". As the name implies, the guides
are intended to explain the actions a small entity is required
to take to comply with a rule. The program for informal guidance
is to be established by March 29, 1997 with a progress report
due to Congress by March 29, 1998. Both the informal guidance
and the compliance guides may be considered as evidence of the
reasonableness of any proposed fines or penalties in any civil
or administrative action challenged by a small entity.
223 of the SBREFA requires each agency regulating the activities
of small entities to establish a policy or program by March
29, 1997, to reduce or, where appropriate, waive civil penalties
against small entities for violations of a statutory or regulatory
requirement. It also requires a progress report to Congress
by March 29, 1998 on the scope of the policy or program, the
number of enforcement actions that qualified or failed to qualify
for the policy or program and the total amount of penalty reductions
and waivers. In practice, the programs mostly likely to have
a regulatory impact on small business are Manufactured Housing,
RESPA, Interstate land sales, Lead Based Paint Abatement and
Clinton signed Executive Order 12866, "Regulatory Planning and
Review" on September 30, 1993 with the intent of making the
regulatory process more efficient. In addressing the Principles
of Regulations, Section 1 (11) states that each agency shall
tailor its regulations to impose the least burden on society
including individuals, businesses of differing sizes and other
entities (including small communities and governmental entities),
consistent with obtaining the regulatory objectives, taking
into account, among other things, the cost of cumulative regulations.
3 of the Housing and Community Development Act of 1992.
3 requires that when HUD Federal assistance generates the need
for the recipient of HUD funding to increase internal employment
or let contracts, the recipient must give preference in hiring
to low and very low income persons and must give preference
in contracting to businesses owned by these persons or that
substantially employ low and very low income persons.