From the Office of Senator Kerry

Wednesday, March 20, 2002

Today, Sen. John F. Kerry, Chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, submitted comments to the Small Business Administration (SBA) raising serious concerns about key provisions in the SBA's proposed rule, which seeks to establish parity between the 8(a) Business Development program and the Historically Underutilized Business Development (HUBZone) program.

"Although I support parity between these programs, the SBA has missed the mark and proposed a rule that is too generous to the HUBZone program," said Sen. Kerry. "HUBZone firms should receive Federal contracts from the larger procurement pie, not at the expense of 8(a) firms. The SBA should make the necessary changes to the proposed rule to ensure 8(a) firms are protected." In his comment letter, Sen. Kerry states that the proposed rule goes against Congressional intent and opens the HUBZone program to potential fraud. Sen. Kerry made the following recommendations on the proposed rule:

Include provisions to keep current 8(a) contracts within the 8(a) program and a statement to specifically protect the 8(a) program; Remove the language referring to a Federal agency's goal as the determining factor in deciding between an 8(a) and a HUBZone contracting vehicle; Reinstate the super-priority previously available to firms that have both 8(a) and HUBZone certification; and Maintain the current definition of a HUBZone employee.

Sen. Kerry points to the definition of an employee under the proposed rule as a clear example of the SBA missing the mark on Congressional intent. Sen. Kerry stated "Under this rule, a small business would meet the employment requirements of the HUBZone legislation by providing morning doughnuts and coffee to office volunteers. Congress never intended unpaid volunteers to be used to meet the hiring requirements of the HUBZone program."

Sen. Kerry, a key supporter of both the 8(a) and HUBZone programs, was instrumental in saving the 8(a) program in 1997, when the HUBZone legislation would have placed the 8(a) program below the HUBZone program. Sen. Kerry was successful in amending the legislation to ensure the 8(a) program was protected. His amendments established equality (parity) between the programs and raised the governmentwide procurement goal to 23 percent (up from 20 percent) to accommodate the HUBZone program's 3 percent goal. Sen. Kerry believes both programs are critical for providing contracting opportunities to minority-owned firms.