SMALL BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT ACT OF 1978 HEARINGS BEFORE THE SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, MARKETING, AND THE FAMILY FARMER OF THE SELECT COMMITTEE ON SMALL BUSINESS UNITED STATES SENATE NINETY-FIFTH CONGRESS SECOND SESSION ON SMALL BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT ACT OF 1978 MARCH 16 AND 20, 1978 LAW LIBRARY DOCUMENTS DEPARTMENT AUG 15 1978 UNIVERSITY OF CALIFORNIA Printed for the use of the Select Committee on Small Business 29-399 O U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1978 SELECT COMMITTEE ON SMALL BUSINESS GAYLORD NELSON, Wisconsin, Chairman THOMAS J. MCINTYRE, New Hampshire SAM NUNN, Georgia WILLIAM D. HATHAWAY, Maine LOWELL P. WEICKER, JR., Connecticut WILLIAM B. CHERKASKY, Executive Dire.or SUBCOMMITTEE ON ECONOMIC Development, Marketing, and the Family Farmer SAM NUNN, Georgia, Chairman WILLIAM D. HATHAWAY, Maine BOB PACKWOOD, Oregon CONTENTS Statement of Senators- Chiles, Hon. Lawton, a U.S. Senator from the State of Florida.... Adams, Ted, Unified Industries, Arlington, Va.. 113 Dupont, Margarette, chairman of the board, National Economic Develop- 101 Lewis, Ronald, vice president, National Association of Black Manufactur- ers O'Bannon, Dona, president, National Association of Women Business Ponticelli, Anthony, representing the National Construction Industry Council, accompanied by Robert White, National Electrical Contractors Association; and John Ellis, Associated General Contractors of Weaver, Hon. A. Vernon, Administrator, U.S. Small Business Administra- Wexler, Anne, Deputy Under Secretary of Commerce, and Chairperson, Task Force on Women Business Owners, accompanied by Charlotte Taylor, Executive Director, Task Force on Women Business Owners; and Carolyn Jefferson, congressional liaison, Department of Commerce Williams, Herbert J., Atlanta Associated Contractors, accompanied by EXHIBIT Statement of Hon. A. Vernon Weaver, Administrator, U.S. Small Business Administration, before the Committee on Governmental Affairs, Subcommit- tee on Federal Spending Practices and Open Government, U.S. Senate, SMALL BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT ACT OF 1978 THURSDAY, MARCH 16, 1978 U.S. SENATE, SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, MARKETING, and the FamILY FARMER, SELECT COMMITTEE ON SMALL BUSINESS, The subcommittee met, pursuant to call, at 10:07 a.m., in room 424, Russell Senate Office Building, Hon. Sam Nunn, chairman of the subcommittee, presiding. Present: Senator Nunn. Also present: Larry M. Yuspeh, financial analyst; and Judith K. Hillegonds, staff assistant. STATEMENT OF HON. SAM NUNN, A U.S. SENATOR FROM THE STATE OF GEORGIA Senator NUNN. The subcommittee will come to order. The Small Business Administration's so-called 8(a) minority business development program has failed to develop viable, private sector businesses. Through the use of sole source Federal contracts in conjunction with management, technical, and financial assistance, the 8(a) program is supposed to develop strong and growing minority small businesses. I say frankly as we begin these hearings, all evidence is that the program has not gone that way. The 8(a) program has fallen far short of this goal. Of over 3,700 firms that have participated in the program since fiscal year 1968, only 33 have both completed the program and are known presently to have a positive net worth. A SBA internal review board report and a General Accounting Office report requested by the Senate Small Business Committee have generally agreed on the reasons why the 8(a) program does not develop viable, private sector firms as it was originally intended to do. The GAO report found no area of 8(a) program management to be adequate. There are too few staff, and they are poorly trained. Many SBA business development specialists, according to the GAO, cannot even read a financial statement. No management and technical assistance is available under the program and the process for determining which Federal contracts shall be available for the program is grossly inefficient. One of the underlying reasons for the utter failure of this Federal minority business development effort is that the program has no legislative basis. |