The head of the Small Business Administration yesterday told a House subcommittee that the 3-month-old noratorium on entrants to the federal government's main program for channeling business to minority firms will last for at least another three months.
SBA Adminstrator A. Vernon Weaver said the additional time is needed to complete a review of the companies in the program, and of the criteria used to determine eligibility.
Weaver's announcement brought sharp critism from the subcommittee.
"I am shocked today, Vernon, that you tell us now [the moratorium will be lifted in] January," said Chairman Joseph P. Addabb (D-N.Y.). "Every time we hear testimony from you, it's two more months.
"I believe your office has overreacted. I don't believe the moratorium's going to help anyone except those who seek to destroy the program," Addabbo said.
Rep. Herman Badillo (D-N.Y.) threatened to sue SBA to force an end to the moratorium, a move that would echo a successful suit filed by several members of Congress against then-President Nixon's impoundment of $12 billion in sewer and social service funds in 1973.
The program at issue is SBA's 8(a) program, in which SBA awards federal contracts to eligible firms owned by socially or economically disadvantaged persons. In fiscal year 1976 the program accounted for about $370 million, or more than 80 per cent of federal purchases from minority firms.
Weaver declared the moratorium on July 20, after a Senate committee unearthed past alleged abuses of the program, including participation by firms not truly controlled by disadcantaged persons. While current 8(a) firms are still receiving contracts, Weaver said, only a handful of new firms have been allowed to enter the program.
In the meantime, Weaver said, 52 firms have been dropped from 8(a) as a result of 3 review Weaver ordered along with the moratorium; for reasons ranging from failure to submit needed documentation to questions about the eligibility of the companies.
Weaver said at yesterday's hearing before the Subcommittee on Minority Enterprise and General Oversight that the criteria used in the review are necessarily subjective, and suggested that if the committee is unhappy with his agency's methods it should legislate new criteria for the program.
"I wish we were able to come up with a more certain method when it comes to the question of a person's eligibility," Weaver testified. "I fear that we're not going to be able to do so as long as the program has as its basic tenet economic or social disadvantage."