Kerry criticizes SBA over decade-old policies

Editor's note: This story was updated at 11:30 a.m. May 25, 2007. Please go to Corrections & Clarifications to see what has changed.

The Small Business Administration seems asleep when it comes to issues related to minority-owned small businesses, Sen. John Kerry (D-Mass.) said today.

For example, in a decade, SBA has not updated its net worth threshold for its small-business program that assists businesses with government contract set-asides, said Kerry, chairman of the Senate Small Business and Entrepreneurship Committee, at a committee hearing.

Things have changed considerably since 1997, he said, and SBA needs to review the dollar amounts.

“Frankly, it seems like it’s almost asleep,” Kerry said about the agency.

The threshold determines when a business is eligible to enter the small-business program and sets a ceiling for when the company outgrows it. An individual’s net worth must be less than $250,000 to enter the program, and once it hits $750,000, he or she becomes ineligible, according to testimony from SBA officials.

The key is the individual’s net worth, not the business’ net worth, said Calvin Jenkins, SBA’s deputy associate administrator for government contracting and business development, in his testimony. Things have not changed that much, which makes the levels still appropriate, he said.

Most individuals’ net worth is well below the program’s threshold, Jenkins said.

Kerry said those dollar figures are squeezing downward and narrowing the field of who can join the program. It takes companies up to four years before getting a contract, and then “boom! they’re out of the program” because of their growth, he said.

Sen. Olympia Snowe (R-Maine), the committee’s ranking Republican, said there is no aggressive effort from SBA to address major flaws, such as large companies posing as small businesses to get access to set-aside contracts.

Jenkins defended the agency, saying SBA is working on new regulations to increase oversight and improve programs. In a statement released today, SBA said it will implement a new recertification rule next month to ensure that small businesses receiving government contracts are actually small. Jenkins said the agency plans to get proposed regulations to the Office of Management and Budget well before the end of the fiscal year, and to have them in place by October.

The lack of details Jenkins offered about the regulations apparently frustrated some senators. Kerry said he plans to write to SBA Administrator Steven Preston to find out more.

Kerry also promised to introduce legislation this summer to improve the federal contracting process for small firms and increase oversight of federal agencies.

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