Business Opportunity Development Reform Act of 1988

(Conference report filed in House, H. Rept. 100-1070) Business Opportunity Development Reform Act of 1988 - Title I: Congressional Findings and Purposes - Sets forth congressional findings with respect to the Capital Ownership Development Program (Program) administered by the Small Business Administration (SBA) and the ways in which this Act proposes to improve it. Title II: Program Organization and Participation Standards - Amends Small Business Act provisions governing admission to the Capital Ownership Development Program. Establishes a Division of Program Certification and Eligibility in the Office of the Associate Administrator for Minority Small Business and Capital Ownership Development to, among other things, analyze and process applications, review and evaluate financial statements, and decide protests regarding eligibility. Instructs the Director of this Division, 30 days before the end of each fiscal year, to: (1) review Program entrants to determine their number, geographic distribution, and industrial classification; (2) estimate Program growth and resultant anticipated needs; and (3) by September 30 annually report findings to the Associate Administrator, who must, by October 31, issue policy and program directives for the following year. Directs the Program to make a sustained and substantial effort to solicit applications for certification from small business concerns located in areas of concentrated unemployment or underemployment, in labor surplus areas, and in States having relatively few Program participants. Prohibits a concern from receiving assistance under the Program for more than nine years. Limits the development stage to four years and the transitional stage to five years. Establishes special rules to govern concerns currently participating in the Program. States that the purpose of the disadvantaged small business concern program is to promote the development of concerns owned and controlled by disadvantaged individuals so that they can compete on an equal basis in the American economy. Removes "sole source" from the description of Federal procurement contracts for socially and economically disadvantaged small business concerns that can be effective in developing business ownership. Requires a Program participant to submit a business plan for review by its assigned Business Opportunity Specialist. Requires that the plan be approved by the SBA prior to the participant's being awarded a contract under the Program. Specifies provisions to be included in the business plan. Requires: (1) annual plan review and modifications as appropriate; and (2) annual forecasting of the participant's needs for contract awards. Requires the SBA to evaluate a Program participant's eligibility for continued participation whenever it receives specific and credible information alleging ineligibility. Directs the SBA to initiate a termination proceeding if ineligibility is determined. Permits suspension of contract awards in accordance with specified debarment and suspension regulations. Makes Native Hawaiian community service organizations eligible for the minority small business procurement program. Provides that a business that has qualified as a disadvantaged small business concern or for the Program shall be denied all such assistance if it: (1) voluntarily elects not to participate; (2) has been a participant in the Program for the prescribed time limit; (3) is terminated by a specified termination proceeding; or (4) is graduated by a specified graduation proceeding. Requires that an action for termination be based on good cause. Describes procedures governing termination proceedings. Limits the Program to small business concerns that are socially and economically disadvantaged. Mandates that each disadvantaged owner of a Program participant annually certify continuing eligibility. Calls for annual submission of financial statements and related information with respect to participants. Describes procedures to be followed if the SBA determines that economic disadvantage criteria are no longer met or that excessive assets have been withdrawn from the participant firm. Title III: Business Development - Requires the SBA to divide the Program into two stages: (1) a developmental stage; and (2) a transitional stage. Provides that a concern in the developmental stage shall be qualified to receive assistance in the following ways: (1) the award of contracts to disadvantaged small business concerns; (2) financial assistance under a new loan program; (3) a maximum of two exemptions for disadvantaged small businesses from the requirement that the contractor be a manufacturer of or a regular dealer in the materials, supplies, or equipment to be manufactured in performance of the contract; (4) a maximum of five exemptions from the requirement that a contract for repair of a public building be accompanied by a performance bond if the SBA protects persons furnishing materials and labor to such concern and finds the concern is unable to obtain the required bond from a surety; (5) financial assistance in which the SBA purchases skills training or upgrading for employees; (6) the transfer of technology or surplus property owned by the United States to such a concern; and (7) training assistance. Makes Program participants in the transitional stage of participation eligible for the following types of assistance: (1) the award of contracts to disadvantaged small business concerns; (2) financial assistance under a new loan program; (3) the transfer of technology or surplus property owned by the United States to such a concern; (4) training assistance; (5) joint ventures and teaming agreements between Program participants and between participants and other businesses with respect to certain types of contracting opportunities; and (6) transitional management business planning training and technical assistance. Authorizes the SBA to make loans to disadvantaged small businesses. Permits either direct loans or guaranteed loans through financial institutions. Sets forth loan eligibility criteria. Sets the maximum guarantee percentage at 85 percent. Prohibits a loan if the total amount committed to the particular borrower would exceed $750,000. Sets forth the requirements for a direct loan or the SBA's share of an immediate participation loan. Requires each Program participant in the developmental stage of participation to make all reasonable efforts to attain targets stated in its business plan for obtaining business outside the Program in competitive contract situations. Directs the SBA to promulgate business activity targets applicable to transitional stage Program participants, to be met during the fifth and succeeding years of Program participation. Requires competition among concerns in the program for set-aside contracts if there is a reasonable expectation that at least two concerns will submit offers and the proposed award will exceed a specified amount. Authorizes the Associate Administrator for Minority Small Business and Capital Ownership Development to approve an agency request with respect to contracts worth less than the threshold amount. Requires the SBA to award sole source contracts to the minority business concern recommended by the procuring agency offering the contract opportunity if: (1) it is determined that the Program participant is a responsible contractor; (2) the award of the contract would be consistent with the participant's business plan; and (3) the award would not result in the participant's exceeding its business activity targets. Directs the SBA to promote equitable geographic distribution of these contracts. Sets forth conditions to govern the competition for awards, as well as administrative provisions and limitations, including protest procedures. Sets forth procedures for determining "fair market price" with respect to the awarding of a Government procurement contract under the set-aside program. Entitles a small business selected by the SBA to perform or negotiate such a contract to receive a written statement describing the method used to estimate the current fair market price and to protest the use of such method to the SBA Administrator. Directs the SBA: (1) to make substantial and sustained efforts to achieve an average processing time of ten days in connection with approving options and contract modifications; and (2) to the maximum extent practicable, to minimize delay, eliminate excess regulation, and reduce paperwork. Prohibits the SBA from restricing the award of set-aside contracts to a limited number of standard industrial classification codes in an approved business plan in a manner that excludes a concern from industrial activities where it has the potential for success. Allows a concern that is not the actual manufacturer or processor of a product to submit an offer for any procurement contract under the set-aside program if such concern: (1) is primarily engaged in the wholesale or retail trade; (2) is a regular dealer in the product to be offered; and (3) represents that it will supply the product of a domestic small business manufacturer, unless the Administrator waives this clause because of the absence of small business manufacturers participating in the Federal market. Requires Federal prime contracts that contain subcontracting goals for small business and disadvantaged small businesses to provide for liquidated damages if the prime contractor fails to make a good faith effort to comply with the goals. Title IV: Improved Management and Program Integrity - Amends the Small Business Act to declare that the Associate Administrator for Minority Small Business and Capital Ownership Development shall be a career appointee and an employee in either the competitive service or the Senior Executive Service. Makes the position a career reserved position. Sets forth conflict of interest provisions for former SBA employees engaged in activities with respect to Program participants for two years after the end of such employment. Imposes civil penalties for violations of prohibited activities associated with these conflicts. Requires a Program participant to report semiannually to the assigned Business Opportunity Specialist: (1) a listing of parties receiving compensation to assist in obtaining a Federal contract for the participant; and (2) the amount of compensation received by such persons during the relevant reporting period and a description of the activities performed for such compensation. Increases both criminal and civil monetary penalties for misrepresentation as a small business or minority concern. Adds other sanctions for such misrepresentation, including administrative remedies, suspension and debarment procedures, and ineligibility for SBA procurement programs. Authorizes the Committee on Small Business of either the Senate or the House of Representatives to request that the SBA's inspector general conduct an investigation of any activity under the business development program or the set-aside program. Requires that set-aside contracts be performed by the concern that receives them, unless the SBA Administrator grants a waiver. Describes conditions justifying waivers. Requires relevant small businesses to notify the SBA immediately upon entering an agreement to transfer ownership interests to any other party. Requires the SBA Administrator, by April 30 each year, to submit a report to the Congress on the program. Enumerates required report contents. Requires the Administrator to give a concern an opportunity for a hearing before: (1) denial of Program admission; (2) the total denial or suspension of assistance under the Program; (3) removal from the Program; or (4) the denial of a request for a waiver of specified restrictions on ownership. Sets forth procedures for reviewing the Administrator's proposed action. Designates in each SBA field office a position of Business Opportunity Specialist to assist Program participants and carry out various responsibilities in connection with small business procurement. Sets forth conditions to govern their training and performance evaluation. Calls for the establishment of three pilot programs in connection with such Specialists, with required reporting to the Small Business Committees on the programs' effectiveness. Title V: Contract Planning; Goal Setting and Reviews - Directs the SBA to require each Program participant to prepare an annual statement describing its various contract capabilities. Requires executive agencies that report to the Federal Procurement Data System contract activity with a value exceeding $50,000,000 in any fiscal year, to prepare and submit to the SBA Administrator and to the Director of the Office of Small and Disadvantaged Business Utilization a forecast of anticipated contract opportunities. Lists required forecast contents and requires that they be available to small business concerns. Requires the President annually to establish specified Government-wide goals for procurement contracts awarded to small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals. Prescribes minimum participation goals. Requires the SBA to report to the President annually on the attainment of goals for participation by small business concerns. Directs the President to include the information in the annual report to the Congress on the State of Small Business. Directs the Comptroller General to report to the Small Business Committees by February 1, 1992, on the operation of the Minority Small Business and Capital Ownership Development Program and related contract assistance with respect to a specified period ending on September 30, 1991. Prescribes required report contents. Establishes a Commission on Minority Business Development to review and assess: (1) all Federal programs intended to promote the development of minority-owned businesses; (2) the effectiveness of the Small Business and Capital Ownership Development Program and the activities that comprise it; and (3) various policies and procedures of major procurement agencies and other topics related to Government contracting and subcontracting. Requires both an interim and final report to the Congress and to the President. Terminates the Commission on the date it submits its final report. Title VI: Administrative and Technical Amendments - Requires agencies to ensure that the implementation of contract goals for minority small business concerns does not alter the process used to implement other procurement programs. Exempts economically disadvantaged Indian tribes from specified requirements for competition for set-aside contracts. Authorizes the SBA to award such contracts to joint ventures between eligible tribally-owned businesses and larger firms. Sunsets this authority after FY 1991. Requires the Director of the Office of Small and Disadvantaged Business Utilization for each agency to make recommendations to contracting officers on whether a particular contract should be awarded under: (1) the program giving priority to areas of high unemployment; (2) the set-aside program; or (3) the defense procurement policy. Title VII: Small Business Competitiveness Demonstration Program - Part A: Short Title and Findings - Small Business Competitiveness Demonstration Program Act of 1988 - Sets forth congressional findings relating to small business participation in the Federal procurement process. Part B: Demonstration Program - Establishes a Small Business Competitiveness Demonstration Program for 1989 through 1992, to provide for the testing of innovative procurement methods and procedures in connection with the following industry groups: (1) construction; (2) refuse systems and related services; (3) architectural and engineering services; and (4) non-nuclear ship repair. Requires participating agencies to establish annual small business participation goals of 40 percent of the dollar value of the contract awards for each designated industry. Directs each participating agency to make a good faith effort to assure that emerging small businesses are awarded at least 15 percent of the dollar value of these contracts. Calls for the reservation for exclusive competition among emerging small businesses of all contract opportunities valued at $25,000 or less in these industry groups. Mandates semiannual adjustments to the dollar threshold if goals are not reached. Directs participating agency heads to implement a concurrent program to increase small business participation in agency acquisition of selected products and services in industry categories historically low in participation. Directs the agencies to prepare a detailed, time-phased strategy and to encourage joint ventures and other arrangements that permit small businesses to compete effectively. Requires quarterly monitoring of agency small business participation goals. Mandates modifications of agency solicitation practices if goals are not reached. Provides for competitive awarding of procurement contracts, but authorizes restricted competition if small business participation goals are not met. Requires that each award of $25,000 or less for the procurement of a service in any of the designated industry categories be reported to the Federal Procurement Data Center in the same way as if the value exceeded $25,000. Restricts this requirement to the term of the Small Business Competitiveness Demonstration Program. Instructs the Administrator for Federal Procurement Policy to develop and implement a system for testing the collection, reporting, and monitoring of data on subcontract awards to small businesses owned and controlled by socially and economically disadvantaged individuals. Requires Program agencies, during the term of the Demonstration Program, to collect data on the size of small businesses receiving specified types of procurement awards. Directs the Administrator for Federal Procurement Policy to issue a policy directive to ensure consistent Government-wide implementation of this title. Makes the policy binding on all participating agencies. Requires the Administrator for Federal Procurement Policy to report to specified congressional committees on the results of the Small Business Competitiveness Demonstration Program, including a section prepared by the SBA Administrator on the effects of the intensive goaling and management program to expand small business participation in certain procurement activities. Part C: Programs Relating to Specific Industries - Establishes a program requiring, to the maximum extent practicable, 50 percent of the dollar amount of contracts for each standard industrial classification code for clothing and textiles awarded by the Defense Logistics Agency to be rewarded without regard to the size of competing businesses. Makes the other half available under small business programs. Directs the Secretary of Defense to report to the Congress on this program. Requires interim reports to specified congressional committees. Directs the Secretary of the Army to conduct a program during FY 1989 through 1992 to expand the participation of small business concerns in contracting opportunities for dredging. Sets: (1) goals for each fiscal year; and (2) procedures for contract awards, permitting restricted competitions under specified circumstances. Requires both interim and final reporting to specified congressional committees. Part D: Amendments to the Small Business Act - Amends the Small Business Act to disregard, effective October 1, 1989, procurements of $25,000 or less as a discrete category in the establishment of participation goals for small businesses and disadvantaged small businesses. Eliminates the SBA program for the review of size standards for eligibility for special procurement programs of business concerns in the following categories: (1) construction; (2) architectural and engineering services; (3)shipbuilding and ship repair; and (4) refuse systems and related services. Part E: Other Amendments - Directs the SBA to segment the industry category of shipbuilding and ship repair into the following: (1) nuclear shipbuilding and repair; (2) non-nuclear shipbuilding; and (3) non-nuclear ship repair, including subdivisions into East and West coast facilities. Revises the Federal Property and Administrative Services Act definition of "architectural and engineering services." Title VIII: Authorizations, Effective Dates, and Miscellaneous Matters - Establishes a timetable for the promulgation of the SBA's final rules and regulations implementing this Act. Authorizes FY 1989 and 1990 appropriations for: (1) salaries, expenses, and training of Business Opportunity Specialists; (2) the hiring of additional Procurement Center Representatives; (3) the Business Loan and Investment Fund, for both direct and guaranteed loans; and (4) job training.

(Measure passed Senate, amended, in lieu of S. 1993, roll call #227 (92-0)) Minority Business Development Program Reform Act of 1988 - Title I: Congressional Findings and Program Purposes - Expresses congressional findings and purposes with respect to improving the Small Business Administration's minority small business and capital ownership development program (Program). Title II: Program Organization, Eligibility, and Participation - Amends the Small Business Act to establish within the Office of Minority Small Business and Capital Ownership Development a Division of Minority Small Business Certification to analyze and process applications and make on-site visits to determine eligibility. Authorizes the Associate Administrator for Minority Small Business and Capital Ownership Development to issue a certificate as a Program participant to eligible small business concerns owned and controlled by socially and economically disadvantaged individuals. Provides that a certified Program participant shall not be eligible to participate in the Program for more than eight years. Sets forth eligibility and certification requirements, including ownership and personal net worth tests to determine whether a small business concern is socially and economically disadvantaged. Mandates that each Program participant annually certify its continuing eligibility. States that a Program participant shall be graduated: (1) upon successful completion of the Program; (2) upon exceeding the applicable size standard established by the Small Business Administration (SBA); (3) if it is no longer owned by socially and economically disadvantaged individuals; or (4) if it elects to graduate prior to the expiration of its Program participation term. Sets forth circumstances under which a participant is terminated from the Program and provisions for challenging a participant's eligibility. Provides a special rule permitting procurement assistance to more than one small business concern owned by a socially and economically disadvantaged Indian tribe if certain conditions are met. Title III: Enhancing the Program's Business Development Aspects - Requires a Program participant to submit a business plan for review by its assigned Business Opportunity Specialist. Requires that the plan be approved by the SBA prior to the participant's being awarded a contract under the Program. Specifies provisions to be included in the business plan. Requires annual plan review and modifications as appropriate. Authorizes the SBA Administrator to make available to Program participants financial assistance to help defray the costs incurred in the preparation of offers necessary to compete for the award of Government and commercial contracts. Requires the Program to: (1) establish a training program to be delivered at the regional level to instruct participants in preparing effective proposals to competitive solicitations issued by Federal agencies; and (2) provide assistance to public or private entities to conduct seminars to help participants to develop business plans that will enhance their potential for operating profitably upon graduation. Authorizes the SBA to make loans directly to small business concerns under the Program or the minority small business program for the purchase of equipment, facilities, materials, supplies, or other necessary production or technical assets and for working capital. Sets forth limitations in connection with such assistance. Title IV: Business Development Through Federal Contracting Opportunities - Prohibits the SBA from awarding a contract under the minority small business concern provisions to a Program participant unless the participant certifies that the aggregate dollar amount of all contracts awarded to it by the SBA does not exceed a specified schedule of its new sales. Directs the Administrator to take measures to assure that not more than 25 percent of a participant's new sales are from noncompetitively awarded contracts in the final year of Program participation. Sets forth the circumstances under which the SBA may award such contract notwithstanding such schedule. Requires certain Federal agencies to prepare a forecast of expected contracting opportunities or classes of contracting opportunities for the next and succeeding fiscal years considered to be suitable for award to minority small business concerns. Mandates that the forecasts be available to small business concerns. Requires each Program participant annually to forecast its needs for contract awards for the next Program year and the succeeding Program year during the review of its business plan. Requires the SBA to award contracts to the minority business concern recommended by the procuring agency offering the contract opportunity if: (1) the Program participant is determined to be a responsible contractor; (2) the award of such contract would be consistent with the participant's business plan; and (3) the award of the contract would not result in the participant's exceeding the requirements of the schedule of new sales. Requires that awards be made to participants selected through a competition restricted to eligible candidates. Authorizes the Administrator to consider the geographical distribution of contracts and to direct the award of any contract to achieve an equitable distribution among the various regions and among Program participants. Sets forth conditions to govern the competition for awards, as well as administrative provisions and limitations, including protest procedures. Describes conditions under which an agency is authorized to conduct a competition conforming to methods used prior to the effective date of this Act. Requires a small business concern that is awarded a contract under the Program to complete performance of the contract, even if the period of contract performance may extend beyond the firm's graduation from the Program. Requires the Government contracting officer to limit contract modifications to those necessary to attain contract performance when the contract is being performed by a contractor who either has been terminated for cause from the Program or is unable to meet Program requirements. Permits the SBA to approve a contract modification within 30 days after a participant's graduation if the modification was recommended for approval by the procuring agency prior to the graduation date. Sets forth the circumstances under which a socially and economically disadvantaged small business concern may transfer a contract to another business concern. Provides for appeals of agency decisions regarding minority small business contract opportunities. Directs the SBA to study and report to the House and Senate Small Business Committees on the geographic distribution of contract awards under the minority small business program, including recommendations for effecting a more equitable distribution of contracting opportunities in States with significant minority business populations. Instructs the SBA to make sustained and substantial efforts to solicit applications for Program certification from concerns in areas of high unemployment or underemployment or in labor surplus areas and States having few participants. Title V: Improved Program Management and Congressional Oversight - Declares that the Associate Administrator for Minority Small Business and Capital Ownership Development shall be a career appointee in the competitive service or in the Senior Executive Service. Designates in each SBA field office a position of Business Opportunity Specialist to assist Program participants and carry out various responsibilities in connection with small business procurement. Sets forth conflict of interest provisions for former SBA employees engaged in activities with respect to Program participants for one year after the end of such employment. Increases monetary penalties for misrepresentation as a small business or minority concern. Adds other sanctions for such misrepresentation, including administrative remedies, suspension and debarment procedures, and ineligibility for SBA procurement programs. Requires a Program participant to report annually to the assigned Business Opportunity Specialist: (1) a listing of parties receiving compensation to assist in obtaining a Federal contract for the participant; and (2) the amount of compensation received by such persons during the relevant reporting period and a description of the activities performed for such compensation. Directs the Administrator to appoint a Task Force on Small Business Development to assess the developmental cycles and financing problems of various industries and recommend solutions. Requires the Task Force to file a written report with the Administrator no later than April 15, 1990, and directs the SBA to make the report available immediately to the House and Senate Small Business Committees. Directs the Administrator to develop and implement a process for the systematic collection of data on the benefits derived by the U.S. economy and by socially and economically disadvantaged individuals as a result of the operations of the Program. Requires the Administrator to report annually to the congressional Small Business Committees, beginning on April 30, 1989, on the Minority Small Business and Capital Ownership Development Program. Prescribes report contents. Revises definitions relating to the minority small business procurement program to include as Indian tribes, Native Hawaiian community service organizations. Title VI: Annual Contract Participation Goals; Report; Authorizations - Amends the Small Business Act to require the President annually to establish specified goals for procurement contracts awarded to small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals. Prescribes minimum participation goals. Requires the SBA to report to the President annually on the attainment of goals for participation by small business concerns. Directs the President to include the information in the annual report to the Congress on the State of Small Business. Requires Federal prime contracts that contain subcontracting goals for small business and disadvantaged small businesses provide for liquidated damages if the prime contractor fails to make a good faith effort to comply with the goals. Requires agencies to ensure that the implementation of contract goals for minority small business concerns does not change the procurement process used to implement other procurement programs. Authorizes approprations. Title VII: Small Business Competitiveness Demonstration Program - Part A: Short Title and Findings - Small Business Competitiveness Demonstration Program Act of 1988 - Sets forth congressional findings relating to small business participation in the Federal procurement process. Part B: Demonstration Program - Establishes a Small Business Competitiveness Demonstration Program for 1989 through 1992, to provide for the testing of innovative procurement methods and procedures in connection with the following industry groups: (1) construction; (2) refuse systems and related services; and (3) architectural and engineering services. Requires participating agencies to establish annual small business participation goals of 30 percent of the dollar value of the contract awards worth $25,000 or more for each designated industry. Requires semi-annual monitoring of goal attainment. Mandates modifications of agency solicitation practices if goals are not reached. Directs participating agency heads to implement a program to increase small business participation in specified categories of Government procurement historically low in such participation. Provides for competitive awarding of procurement contracts, but authorizes restricted competition if small business participation goals are not met. Directs the Administrator for Federal Procurement Policy to: (1) implement a data collection, reporting, and reviewing system in connection with subcontract awards to small businesses in general and disadvantaged small businesses in particular; and (2) report results to specified congressional committees, including a section prepared by the SBA Administrator on the effects of the intensive goaling and management program to expand small business participation in certain procurement activities. Part C: Amendments to the Small Business Act - Amends the Small Business Act to include procurements of $25,000 or less as a discrete category in establishing goals for small business and disadvantaged small business participation. (Such a provision is current law but is effective only until September 30, 1988.) Eliminates the SBA program for the review of size standards for eligibility for special procurement programs of business concerns in the following categories: (1) construction; (2) architectural and engineering services; (3) shipbuilding and ship repair; and (4) refuse systems and related services. Part D: Other Amendments - Revises the Federal Property and Administrative Services Act definition of "architectural and engineering services." Title VIII: Preferred Surety Bond Guarantee Program - Preferred Surety Bond Guarantee Program Act of 1988 - Amends the Small Business Investment Act of 1958 to empower the Small Business Administration to: (1) enter into surety bond guarantee commitments under terms that vary on the basis of SBA experience with the particular surety; and (2) engage in a pilot program under which it may authorize any surety meeting specified standards to issue, monitor, and service guarantee bonds (including making indemnification payments against losses in avoiding breach) without further SBA approval. (Current law requires prior SBA approval of bond underwriting and administration decisions.) Revises SBA guarantee liability limits to equal not more than: (1) 70 percent of any loss paid by a surety authorized to issue bonds without further SBA approval; and (2) 90 percent of both losses paid by sureties needing SBA approval for bond issuance and losses associated either with bonds issued to small businesses owned and controlled by socially and economically disadvantaged individuals or with contracts valued at $150,000 or less. Disclaims SBA indemnification liability if a surety breaches material provisions of the guarantee agreement or substantially violates relevant SBA regulations. Sets forth reporting, recordkeeping, and annual audit requirements with respect to sureties participating in the expanded surety guarantee program. Directs the Comptroller General to submit to specified congressional committees a report evaluating the effects during the program's first two fiscal years on both participation by standard surety firms and access to bonds by small business concerns, especially those owned and controlled by the economically disadvantaged. Terminates on September 30 of either 1991 or the third fiscal year following this title's enactment the program permitting sureties to issue bonds without prior SBA approval. Declares that appropriations to the revolving fund for surety bond guarantees shall be without fiscal year limitation. Authorizes FY 1989 guarantees to a $1,600,000,000 limit. Sets small business size standards with respect to pilot program participation. Title IX: Effective Dates - Sets forth effective dates in connection with various provisions of this Act.

(Measure passed House, amended) Capital Ownership Development Reform Act of 1987 - Amends the Small Business Act to remove "sole source" from the description of Federal procurement contracts for socially and economically disadvantaged small business concerns that can be effective in developing business ownership. States that the purpose of the disadvantaged small business concern program is to promote the development of concerns owned and controlled by disadvantaged individuals so that such concerns can compete on an equal basis in the American economy. Requires the small business and capital ownership development program (program) to assist disadvantaged businesses in developing plans that are within the capability of the program and the participating concern. Requires the program to conduct training sessions to assist individuals and enterprises eligible to receive contracts as disadvantaged business concerns in the development of strategies for competing for contracts in the marketplace. Permits a business eligible for the award of contracts as a disadvantaged small business concern or participating in the program to continue such participation and eligibility for the greater of: (1) nine years less the number of years since the award of its first contract as a disadvantaged small business concern; or (2) its original fixed program participation term. Authorizes the Small Business Administration (SBA) to institute a graduation or termination program for issues unrelated to the expiration of time period limitations. Provides that a business that has qualified as a disadvantaged small business concern or for the program shall be denied all such assistance if it: (1) voluntarily elects not to participate; (2) has been a participant in the program for the prescribed time limit; (3) is terminated by a specified termination proceeding; or (4) is graduated by a specified graduation proceeding. Requires the SBA to divide the program into three stages: (1) a developmental stage; (2) a transitional stage; and (3) a mainstreaming stage. Provides that a concern in the developmental stage shall be qualified to receive assistance in the following ways: (1) the award of contracts to disadvantaged small business concerns; (2) a maximum of two exemptions for disadvantaged small businesses from the requirement that the contractor is a manufacturer of or a regular dealer in the materials, supplies, or equipment to be manufactured in performance of the contract; (3) a maximum of two exemptions from the requirement that a contract for repair of a public building be accompanied by a performance bond if the SBA protects persons furnishing materials and labor to such concern and finds the concern is unable to obtain the required bond from a surety; (4) the transfer of technology or surplus property owned by the United States to such a concern; and (5) financial assistance in which the SBA purchases skills training or upgrading for employees. Provides that a concern in the transitional stage shall be qualified to receive contracts under the set-aside program for: (1) the transfer of technology or surplus property owned by the United States; and (2) loans which may be provided if a concern meets specified conditions about such assistance being unavailable from other sources and the assistance is used within a reasonable time period. Prohibits a loan if the total amount committed to a borrower would exceed $500,000. Sets forth the requirements for a direct loan or the SBA's share of an immediate participation loan. Establishes within the Treasury a revolving fund to be used by the SBA to purchase developmental investments. Authorizes appropriations for such fund. Allows the Administrator to approve joint venture agreements between program participants and other businesses if such a venture will enhance the participant's progress toward competitive viability and strengthen the free enterprise system. Authorizes the Administrator or the Attorney General to withdraw approval of such agreement. Provides mainstreaming assistance to incorporate a small business concern into the mainstream economy for business concerns which have graduated from the program. Prohibits a concern from receiving assistance under the program for more than nine years. Limits the developmental stage to four years, the transitional stage to three years and the mainstreaming stage to two years. Requires the Administrator to develop a process for the systematic collection of data on the benefits derived by the economy and by disadvantaged individuals as a result of the operation of the program. Requires the Administrator, by April 30 each year, to submit a report to the Congress on the program. Enumerates required report contents. Provides that a dispute between the SBA and a procurement officer shall be submitted for determination to the Secretary or the head of the appropriate department if they fail to agree on either the terms and conditions of such contracts or on the selection of a particular procurement requirement. Requires the contracting officer for agencies participating in the set-aside program to document the appropriate contract file with specific reasons when: (1) the agency fails to award a contract to a disadvantaged small business concern after negotiations had commenced; or (2) the SBA's request that a particular contract requirement be awarded under the set-aside program is denied. Requires competition among concerns in the program for set-aside contracts if there is a reasonable expectation that at least two such concerns will submit offers and the proposed award will exceed a specified amount. Requires the SBA to ensure a fair distribution of available sole source contracts among concerns participating in the program. Sets forth procedures for determining "fair market price" with respect to the awarding of a Government procurement contract under the set-aside program. Entitles a small business selected by the SBA to perform or negotiate such a contract to receive a written statement describing the method used to estimate the current fair market price and to protest the use of such method to the Administrator. Prohibits any individual whose eligibility for the set-aside program is based on being a disadvantaged small business from asserting such eligibility for more than one concern. Prohibits a concern previously eligible for the award of set-aside contracts from being recertified if its prior participation ended because it voluntarily elected not to participate, had reached the nine-year time limit, or was terminated or graduated from the small business development program. Allows eligibility for set-aside contracts to continue if a change in ownership of a concern occurs and the owners would otherwise be disadvantaged. Removes the authority of the Associate Administrator for Minority Small Business and Capital Ownership Development to make determinations of whether a concern is disadvantaged, the degree of diminished credit and capital opportunities of disadvantaged individuals, and whether a concern will be able to perform set-aside contracts. Requires that applications by business concerns for certification as being disadvantaged be processed within a 90-day period after they were accepted. Requires the set-aside program to make a sustained and substantial effort to solicit applications for certification from concerns in areas of concentrated unemployment or within labor surplus areas. Requires the Administrator to give a concern an opportunity for a hearing before: (1) the total denial or suspension of assistance under the program; (2) removal from the program; or (3) the denial of a request for a waiver of specified restrictions on ownership. Sets forth procedures for reviewing the Administrator's proposed action. Requires the Associate Administrator to submit a yearly estimate of the dollar amounts and types of sole source and competitive contracts (currently, contracts) required for the efficient use of a set-aside program. Sets forth requirements for the business plan required by the program. Requires the business plan under such program to contain: (1) an estimated dollar support level of all contracts awarded under the set-aside program; and (2) the anticipated total sales of the concern without counting awards under the set-aside program. Sets forth goals for sales from outside the set-aside program. Prohibits the awarding of a contract: (1) to a concern which is not a small business; and (2) if such contract would cause the concern to exceed its approved set-aside contract support level. Sets forth criteria for the SBA to review: (1) concerns nominated for the set-aside program by agencies offering a contract; or (2) contracts which a concern has caused the agency to offer for the set-aside program. Prohibits the award of a set-aside contract to a firm unless it agrees that at least 50 percent of the cost of the contract performance incurred for personnel shall be expended for employees of the concern (currently, perform 50 percent of the cost of the contract with its own employees). Requires the SBA, for the set-aside program, to make a sustained effort to complete within ten days the processing for approving options and modifications to existing contracts. Prohibits any SBA employee during his or her term of employment and for a period of two years after such employment from owning stock in a firm that was certified to receive set-aside contracts during such person's term of employment. Imposes a fine of up to 300 percent of the maximum amount of gain that such SBA employee realized or could have realized as a result of acquiring an ownership interest in a firm that was certified to receive set-aside contracts during his term of employment. Prohibits SBA employees from exercising their authority over business development contracts on the basis of political party or affiliation. Requires concerns participating in the business development program, at least once every three months, to submit to the Associate Administrator for Minority Small Business and Capital Ownership Development information on: (1) a listing of agents, representatives and other parties the concern has paid for assistance in obtaining Federal contracts; and (2) the amount of compensation received by such parties. Requires the Associate Administrator to report to the House and Senate Small Business Committees the names of concerns the have failed to submit such a report. Requires that set-aside contracts be performed by the concern that received them unless the Administrator grants a waiver. Increases to $500,000 (currently $50,000) the fine and to ten years (currently, five years) the term of imprisonment for misrepresenting the small business or disadvantaged status of any concern or person. Extends the requirement for retaining records of investigations to the Inspector General of the SBA (currently, the Administration). Authorizes the Committee on Small Business of either the Senate or the House to request that the SBA's inspector general conduct an investigation of any activity under the business development program or the set-aside program. Provides that the Associate Administrator for Minority Small Business and Capital Ownership Development shall be an employee in the competitive service or in the Senior Executive Service and a career appointee. Allows a concern that is not the actual manufacturer or processor of a product to submit an offer for any procurement contract under the set-aside program if such concern: (1) is primarily engaged in the wholesale or retail trade; (2) is a regular dealer in the product to be offered; and (3) represents that it will supply the product of a domestic small business manufacturer, unless the Administrator waives this clause because of the absence of small business manufacturers participating in the Federal market. Requires Government procurement contracts to contain a provision providing for liquidating damages if the prime contractor does not award subcontracts to small businesses controlled by disadvantaged individuals. Requires each agency subject to the defense procurement program to: (1) insure that no reduction will occur in the number or dollar value of contracts awarded pursuant to such policy and the set-aside program; and (2) implement such policy without changing the set-aside program. Directs procurement center representatives to report to their supervisors all instances of noncompliance with the prohibition on a reduction in contracts under the defense procurement policy. Sets forth procedures for determining if a concern has exceeded the size limitation for a small business. Prohibits the SBA from restricting the award of set-aside contracts to a limited number of standard industrial classification codes in an approved business plan in a manner that excludes a concern from industrial activities where it has the potential for success. Repeals the requirement that in the case of the Department of Defense the Director of the Office of Small and Disadvantaged Business Utilization report to the Under Secretary of Defense for Acquisition. Requires the Office of Small and Disadvantaged Business Utilization for each agency to make recommendations to contracting offers on whether a particular contract should be awarded under: (1) the program giving priority to areas of high unemployment; (2) the set-aside program; or (3) the defense procurement policy. Requires the SBA to publish in the Federal Register regulations on implementing this Act with respect to the small business development program. Prohibits SBA employees from performing any of the principal functions of a Business Opportunity Specialist, unless specified training is received. Requires a Business Opportunity Specialist to: (1) conduct contract negotiations on behalf of the SBA for set-aside contracts; and (2) assist firms in the specialist's portfolio in receiving such contracts. Requires the Administrator to ensure that the performance appraisal system for Business Opportunity Specialists affords recognition on how well such Specialist's assigned portfolio of concerns participating in the minority business development program achieves competitiveness. Requires the Comptroller General to provide an annual report on: (1) loans and financial assistance to small business concerns located in areas of high unemployment; and (2) set-aside contracts. Repeals the requirement that the small business development program assist concerns in developing comprehensive business plans. Makes economically disadvantaged Indian tribes exempt from specified requirements for competition for set-aside contracts. Requires competition to continue on specified set-aside contracts if: (1) the competition was based on price and other price-related factors; and (2) there is a reasonable expectation that at least two concerns will continue to submit offers at fair market prices. Requires the SBA and the appropriate Federal agencies to make sustained efforts to negotiate contract modifications for fair market price for any unpriced options in set-aside contracts previously awarded. Authorizes appropriations to carry out certain provisions of this Act. Requires the Comptroller General to report to the Congress on the introduction of competition into specified set-aside contracts. Terminates the requirement for competition if: (1) the Comptroller General finds it has impeded the business development purposes of this Act; and (2) the Congress enacts a joint resolution agreeing with the findings of the Comptroller General.

Amends the Small Business Act to limit participation in the Small Business Administration's (SBA) small business and capital ownership development program. (Participation shall be conditioned upon the business concern meeting specified criteria of competitiveness.) Provides additional assistance (including special contracts and training grants) for business concerns deemed to be in the "developmental stage" of program participation. Allows the SBA to purchase developmental investments in business concerns deemed to be in the "transitional stage" of program participation. (Business concerns in the "transitional stage" may also receive the assistance provided business concerns in the "developmental stage.") Establishes within the Treasury a revolving fund to be used by the SBA to purchase such developmental investments. Authorizes appropriations for the fund. Allows the Administrator of the SBA to approve joint venture agreements between program participants and other businesses if such a venture will enhance the participant's progress toward competitive viability and strengthen the free enterprise system. Allows the SBA to award Government procurement contracts under the small business set-aside program based upon a competition between eligible program participants. Provides mainstreaming assistance for business concerns which have graduated from the program. Establishes time limitations for program participation. Sets forth procedures for determining the "fair market price" with respect to the awarding of a Government procurement contract under such Act. Entitles a small business selected by the SBA to perform or negotiate such a contract to receive a written statement detailing the method used to estimate the current fair market price and to protest the use of such method to the Administrator. States that gross receipts and employment attributable to the small business set-aside program shall not be included in determining the size of the business concern for any program or activity conducted under such Act or the Small Business Investment Act of 1958. Sets forth criteria for SBA designation of a small business concern to negotiate a contract requirement under such Act. Prohibits any SBA employee from owning stock, during his or her term of employment and for a period of five years after such employment, in a firm that was certified to receive contracts pursuant to such Act during such person's term of employment. Sets forth other restrictions on the activities of SBA employees. Increases from $50,000 to $300,000 the fine for misrepresenting the status of any concern or person as a "small business concern" or "minority concern." Allows the Committee on Small Business of either House of the Congress to direct the SBA Inspector General to investigate specified SBA programs and activities. Directs the SBA to: (1) conduct meetings with program participants to ascertain the extent of regulations needed to implement this Act; and (2) publish such implementing rules and regulations in the Federal Register. Prohibits any SBA employee from performing any of the principal functions of a Business Opportunity Specialist, a loan officer, or a Business Development Specialist as those functions relate to this Act unless such employee receives specialized training. Describes such training.