The Senate Small Business Committee yesterday approved legislation designed to replace a decade of largely unsuccessful programs with a new generation of federal aid to businesses owned by minority-group members, women and disadvantaged whites.
The measure, and a companion passed by the House in March, would shift the Small Business Administration's emphasis from simply providing federal contracts to these special-category firms to creating a full-fledged business development program, with contracts as only one element, for them.
It would also require firms which receive federal contracts for more than $500,000 to develop mechanisms for directing subcontracts to firms owned by members of disadvantaged groups.
The bill aproved yesterday is a weakened version of the House measure than many observers expected. House committee staffers said there should be little trouble working out a compromise in conference, if the full Senate approves the bill.
The bills are aimed at restructuring the "black capitalism" program initiated under former president Nixon in 1968.
That program relied on a previously little-used section of SBA's enabling legislation, known as Section 8 (a), to set aside certain contracts for minority-owned firms. But in 10 years, of the 3,726 firms to enter the program, only 149 have graduated from government support to independence.
The major reasons for the program's failure, according to officials who have shent several months studying it, are absence of technical and management assistance to special category firms, in adequate contracts, uncertainty about who is eligible for the program and administrative sloppiness.
Both the House and Senate bills specifically address the issues of management assistance, contract availability and eligibility.
Both bills would for the first time require SBA to provide help in accounting, bookkeeping, loan packaging, and other forms of management assistance to all the firms in the aid-to-disadvantaged-business program. Currently, management assistance efforts are scattered and ineffective.
Both bills make plans for subcontracting to disadvantaged firms a requirement for firms receiving large government contracts.
The House bill would allow SBA to specify that any contract from any government agency is appropriate for its set-aside program. That provision is not included in the Senate version.
The eligibility question is the stickiest in the program. The issue has been joined in the perceptions of many observers as a contest between minority and women entrepreneurs for access to the set-aside program, a contest both groups have tried vigorously to prevent.
Carefully drafted language in the House bill describes blacks and Hispanics as victims of discrimination and automatically eligible for the program. It places the burden on the government to prove they are not "socially and economically disadvantaged." Meanwhile, women and others who want to participate in the program would themselves have to prove lthat they are disadvantaged.
The Senate bill makes an effort to set more quantifiable standards, basing eligibility on the business owner's liquid net assets with standards that vary for different kinds of businesses and different regions of the country.
"There are a lot of strong feeling on both sides of this," (eligibility issue)," said Sen. Sam Nunn (D-Ga.), author of the Senate version. His language, Nunn said, "does not limit eligibility to minority firms. It makes it clear that the criteria are economic and social disadvantage.
"It means all races, all creeds, all sexes . . . but it makes clear that many minority firms qualify and that we want the program to help them."
The Carter administration has taken no position on the bill, although it has engaged in a flurry of activity around the minority business issue.
Congressional sources have speculated Carter is concerned about possible inflationary aspects of the bill, but is reluctant to veto a bill the minority business community wants badly.