Washington Report

Contracting Programs Face Setback in Legislation

The small business community suffered a blow on Friday when an amendment in the FY 2010 Department of Defense Authorization Act that would place the HUBZone, 8(a), and service-disabled veterans government contracting programs on an equal playing field was removed during conference negotiations.

Senators Mary Landrieu (La.) and Olympia Snowe (Maine), who serve as the Senate small business committee’s chair and ranking member, respectively, issued a joint release expressing their disappointment.

“In addition to the fact that [small businesses] should be given the opportunity to compete equally, placing one program over another has created confusion and disarray among contracting officers and small business owners alike, which essentially hinders [the businesses’] potential success,” said Landrieu.

The two lawmakers introduced the amendment in response to two Government Accountability Office decisions that gave the HUBZone preference over the other programs on set-aside contracts. Both the Office of Management and Budget and the Department of Justice weighed in, agreeing that the GAO rule contradicts Small Business Administration regulations that call for parity among all three.

As a result of the conflict, agencies have been pulling back contracts and reneging on previous agreements. And because of fraud related to fake HUBZone companies, the SBA has had to be a lot more diligent in the certification process for that program to ensure that applicants meet the requirements. Agencies also have been awarding fewer contracts. The amendment was crafted in response to those concerns.

“It is truly unsettling that members of the House decided to strip this critical provision in conference,” said Snowe. She also said that she plans to explore other avenues through which she can successfully move the amendment forward.

Committee Focuses on Pushing Green Technology

The House Subcommittee on Commerce, Trade and Consumer Protection held a hearing Wednesday on strategies to spur the creation of green jobs by increasing green technology exports. According to the New American Foundation, between 1997 and 2008, the nation’s trade balance in green technology went from a $12 billion surplus to a deficit of $8.9 billion, said subcommittee chairman Rep. Bobby Rush (Ill.) He also pointed out that only six of the world’s top 30 green technology companies are American.

“If our green technology exports continue to plummet, the U.S. will miss out on a once-in-a-generation opportunity to become a global leader in the green energy sector,” warned Rush.

Mary Saunders, representing the Department of Commerce’s International Trade Administration, testified that ITA is developing initiatives to encourage more American firms to produce green products and services. She recently hosted a roundtable focusing on “new and unexpected types of entrants” in this industry. ITA has 300 trade specialists in U.S. Export

Assistance Centers across the country who provide in-depth counseling to help companies realize their export potential. And the agency is accepting applications for a trade mission to Senegal and South Africa.

Saunders also urged businesses to contact the Trade Information Center (800-USA-TRADE), which provides basic export counseling and information on all federal export assistance programs. In FY 2009, she added, it responded to 36,000 inquiries, 75% of which were from small- and mid-sized businesses.

“The best thing we can do to encourage green technology exports is build up our own market,” said Saunders. “You can’t export what you don’t manufacture.”

Expiration Date Approaching for Tax Incentives

Tax incentives for distressed communities, including Empowerment Zones (EZ) and Renewable Communities (RC), are set to expire at the end of the year unless Congress and the White House take steps to extend them. The House Ways and Means Subcommittee on Select Revenue Measures held a Wednesday morning hearing on the topic at which government officials and business owners discussed the program’s merits and suggested improvements.

The most popular incentive is the employment credit of up to $3,000 for each EZ resident that a business employs to work in an empowerment zone. The maximum yearly credit in RC areas is $1,500. Both, said HUD General Deputy Assistant Secretary Nelson Bregon, encourage businesses to employ residents. An EZ bond program provides low-cost financing for businesses where EZ residents comprise at least 35% of their workforce. Bregon would like to see these and other incentives extended to also include distressed rural areas.

“These incentives are very important for low-income distressed communities around the country, and they work particularly in industries like textiles and apparel, where there’s a lot of pressure to go abroad to get low-wage labor in Mexico or South America. They need to be reauthorized for a period that allows for predictability, for potential investors and businesses thinking about expansion,” said Rep. Artur Davis (Ala).

Earlier this year, Davis introduced the Empowerment Zone Renewal Community and Enterprise Community Enhancement Act of 2009, which calls for a five-year extension. The White House has requested a one-year extension, but based on testimony at the hearing, Davis believes it is “softening” on that.

“We came reasonably close to getting it included in the stimulus and I’m hopeful that we’ll get it included in some tax bill this year,” he said.

Trade Agency Seeks Bigger Export Role for Small Business

U.S. Trade Representative Ron Kirk is seeking ways to expand opportunities for American small- and medium-sized enterprises (SMEs) to export their products and services.

In a letter sent this week to the chairman of  the U.S. International Trade Commission, Kirk requested that the commission develop three reports

that describe the current state of SME participation in U.S. exports, analyze their performance in comparison to export activities of SMEs from other leading economies, and examine SMEs that provide trade-able services and identify any barriers that may disproportionately affect the ability of SMEs to export products or services.

USTR is sharpening its focus on small- and medium-sized American businesses to craft new trade policies and enforce existing ones in ways that will help these firms grow exports around the world and grow jobs here at home,” Kirk said. In addition, USTR plans to set priorities for new and existing trade agreements that are more responsive to those businesses’ needs.

Senate Small Business Committee chair Sen. Mary Landrieu (La.) and ranking member Sen. Olympia Snowe (Maine) jointly praised Kirk’s efforts. “With more advocacy and better coordination among agencies, small businesses can create new and higher-paying jobs, lessen the trade deficit and make our nation better able to compete in the global marketplace,” said Landrieu. “In addition to these changes, I would like Ambassador Kirk to consider our request for an assistant USTR exclusively for small business. This will ensure that there is an advocate for small businesses in the room during trade negotiations.”

The two lawmakers plan to release in the coming weeks a bipartisan bill to increase small business trade opportunities.