Small Business Gets a Wave of Reg Changes.

During the first quarter of 2001 in the nation's capital, the small business community has witnessed an array of legislative and regulatory developments. The welfare of small business and its role in the economy is clearly a priority for the new administration. President Bush acknowledged recently that 75 percent of new jobs are created by small businesses. Here's a look at the action thus far.

Rep. Dan Burton, R-Ind., has sponsored H.R. 327--the Small Business Paperwork Relief Act--designed to ease federal paper work requirements on small businesses. The bill would require:

* The director of the Office of Management and Budget to publish a complete list of federal requirements relating to the collection of information by small businesses.

* Establishment of a task force to study further streamlining of such requirements.

* All federal agencies to take additional steps to reduce the required paperwork for small businesses with fewer than 25 employees.

* All federal agencies to establish one point of contact for all small-business matters.

Status: This bill passed the House without opposition and awaits action in the Senate. Sen. John E Kerry, D-Mass., has pro posed S. 174, the Microloan Program Improvement Act of 2001. The Microloan Program, administered by the Small Business Administration (SBA), is intended to provide venture capital to start-up small businesses. The program currently administers its loans through certified intermediaries. The proposed legislation would ease eligibility standards for intermediaries and strike the requirement that Microloans be short-term.

Kerry also has sponsored S. 295, the Small Business Energy Emergency Relief Act of 2001, which would provide SBA disAster loans for small businesses hit by high natural gas prices. Under the legislation, a firm that has suffered substantial economic loss or expects to do so, because of volatile natural gas prices, would be eligible for loans up to $1.5 million dollars. Such loans would be guaranteed at a 4 percent interest rate and would apply only if state and local loans are not available.

Sen. Christopher Bond, R-Mo., has introduced S. 395, the Independent Office of Advocacy Act of 2001. The Bond bill would require that the SBA's Office of Advocacy be given its own line-item budget. The bill would require the Office of Advocacy to evaluate and report on:

* Regulations and issues affecting small business, as well as suggestions for appropriate corrective action.

* Efforts by private industry and the federal government to assist veteran-owned businesses.

A General Accounting Office report (GAO-01-273), requested by Rep. Tom Davis, R-Va., and Rep. Steve Horn, R-Calif., delineates potential reasons for low participation in the Small Disadvantaged Business (SDB) program. The federal government set a government-wide procurement goal of 5 percent for SDBs. As of August, 9,034 small businesses had been certified as SDBs. SBA had predicted that 30,000 small businesses would participate. The GAO report suggests that the low participation results form three major factors:

* The perception that the application Process is burdensome.

* Doubts about the potential success of the program.

* A belief that the benefits do not justify the effort.

* Another GAO study (GAO-01-119) responded to concerns that reforms of the acquisition system during the 1990s had hurt small businesses. The GAO found that the results of acquisition reform are a mixed bag. According to the study, the following changes had a potentially negative impact:

* The Federal Acquisition Streamlining Act of 1994 (FASA) created multiple-award contracts (MAC).

* The Clinger-Cohen Act of 1996 permitted the use of government-wide contracts (GWAC).

* Use of government purchase cards is permitted for purchases below $2,500, an area that was previously limited to small business contracts.

*Contract bundling-the consolidation of two or more procurement requirements into one-was increased.

The above reforms, the study, found, may have unintentionally hurt small business by raising the volume of product allocated per purchase, increasing the geographic service area and removing previous restrictions on small contracts.

The following revisions, the GAO said, had a potentially positive impact:

* FASA raised the limit for contracts reserved for small business from $25,000 to $100,000.

*The Small Business Reauthorization Act of 1997 increased the goal for the percent of federal contracts to be awarded to small businesses from 20 to 23 percent of the total.

A memorandum from White House aide Andrew Card, immediately after the Bush inauguration, asked that all federal agencies voluntarily participate in a rulemaking freeze for 60 days until the new administration had a chance to get settled.

As a result, the New Market Venture Program was delayed until April 23. This program, enacted by Congress last year, was designed to provide venture capital to small businesses willing to locate in underutilized markets.

After the rulemaking freeze came the president's budget blueprint. It indicated that the Bush administration views the program as redundant. Thus, it will not be funded in the president's budget request.

Just two days before the inauguration, the Federal Register issued a final rule pertaining to the SBA HUBZone program. The final rule contained four major provisions:

* The HUBZone program does not apply to contracts awarded by state or local governments.

* The definition of "principle office" is changed to mean the location where the greatest number of employees perform their work. This definition does not apply to the service or contract industry, because the nature of their work includes multiple job sites.

* Qualified HUBZone small business concerns (SBC) are allowed to have affiliates.

* Program eligibility restrictions are eased for qualified HUBZone SBC that operate as non-manufactures. This rule also was postponed for 60 days, until May 1.