Mr. KERRY. Mr. President, I am pleased today to introduce a critical piece of legislation intended to help small businesses receive their fair share of the Federal procurement pie and to ensure that they are being treated fairly within the Federal procurement system. I would like to thank my cosponsors, Senators Bond, Cleland, Cantwell, Bingaman and Carnahan for working with me and small business groups to craft this legislation, as well as Congressman Albert Wynn, for his partnership on this legislation. Congressman Wynn will soon be introducing companion legislation in the House.

In my time as Chairman of the Committee on Small Business and Entrepreneurship and previously as Ranking Member, two facts regarding small business procurement have made themselves very clear, small businesses are not getting their fair share of Federal procurement and there is no one in the entire Federal Government with the sole responsibility of advocating for small businesses, governmentwide, in the procurement process and ensuring that Federal agencies and large business prime contractors treat small businesses fairly. Some individuals are responsible for portions of this job, but no one performs this role as their primary job function or has the authority to do so solely.

I felt this was a glaring oversight and looked to the current make-up of the SBA to see if it could be rectified. My solution is a new position modeled along the Small Business Administration's, SBA, regulatory ombudsman, which could focus solely on procurement matters. A new ombudsman for small business procurement, or the Small and Disadvantaged Business Ombudsman, is needed to fill this role for procurement matters, just as the SBA's National Ombudsman does for regulatory issues. By creating a parallel position, each ombudsman can focus on his or her key mission, without detracting from either regulatory or procurement issues important to the small business community.

While no legislation alone can ever solve the complex problems faced by small businesses in today's Federal procurement environment, I believe the creation of a Small and Disadvantaged Business Ombudsman at the SBA will put us firmly on the right track and address several procurement issues raised through program oversight and communication with small business owners.

For example, small businesses frequently contact my office to report problems they are having with a prime contractor or a contracting agency. Too often, these businesses are afraid to come forward and make an official complaint for fear of being blackballed and denied future contracting opportunities. The SDB Ombudsman will provide one solution for these small businesses who fear being blacklisted by allowing them to submit confidential complaints. The SDB Ombudsman will have the responsibility of tracking these complaints and trying to rectify them.

The SDB Ombudsman will also work to change the culture at Federal procuring agencies by tracking and reporting on the training of procurement personnel and working to ensure that this training not only includes the "How to's" of small business participation, but also includes training on why small business participation is crucial to agency success and the national economy.

Until the Federal Government, at all levels, realizes the importance of doing business with small business, small business participation in Federal procurement will continue to decline, our Nation will lose its access to a wide range of small business suppliers, and small businesses across the country will continue to lose billions of dollars in procurement opportunities year after year. Of critical importance in the legislation is the first statutory consequence of an agency failing to meet its small business goals. Under the legislation, if an agency fails to meet any small business goal, the agency would be required to submit a report and an action plan to the SDB Ombudsman detailing why the agency failed to meet its small business goal or goals, and what the agency intends to do to remedy the situation.

The SDB Ombudsman will also be responsible for tracking compliance with Section (k) of the Small Business Act, which stipulates, in part, that the Director of the Office of Small and Disadvantaged Business Utilization at each Federal agency shall report to the head or deputy head of the agency. Late last year, with the support of Ranking Member Bond, I sent a letter to 21 Federal agencies to gauge compliance with this provision. Using a very lenient standard of compliance, I have concluded that at least nine of the Federal agencies surveyed are in violation of Section (k) of the Small Business Act. This is unacceptable.

On June 19, 2002, the Committee on Small Business and Entrepreneurship help a roundtable to discuss Federal procurement policies. The roundtable, title "Are Government Purchasing Policies Hurting Small Business ?" was attended by a wide range of small business advocates, small business owners and government officials. One of the topics discussed during the roundtable was my draft proposal, the SDB Ombudsman Act, to create a new position at the SBA to monitor Federal agency compliance with certain provisions of the Small Business Act and serve as a focal point to assist small businesses that were treated unfairly in the Federal procurement process.

During the Roundtable, I asked the participants for their recommendations on how to improve the legislation to ensure that the SDB Ombudsman serves as the most effective advocate possible for small business. The Committee record was also kept open for two weeks so that participants could submit further comments.

I have now reviewed the Committee record and further submissions and am pleased to say that the responses were very positive. Several important suggestions were made to strengthen the Office of Small and Disadvantaged Business Utilization at each Federal agency as an important corollary to the creation of the SDB Ombudsman, since the SDB Ombudsman would be relying on each OSDBU to fulfill his or her statutory responsibilities.

Many other small businesses have come to the Committee on Small Business and Entrepreneurship and requested that we strengthen the OSDBUs at each agency as well. This legislation fulfills that request by including six new provisions.

First, the legislation clarifies that OSDBU Directors shall report to the highest level at each agency. In the study I mentioned previously, too often, an agency cited a bifurcated reporting system whereby the OSDBU Director reports to the head or deputy head on small business matters, but to other, lower-ranking personnel for budgetary or personnel matters. The Small Business Act does not envision such a system. Therefore, I felt it necessary to clarify, in no uncertain terms, that the OSDBU Director must report to the head or deputy head of his or her agency only, for all matters.

Second, the legislation requires that all OSDBU Directors now be career personnel. The Director's position is one of advocacy, which often entails challenging co-workers and political personnel, including superiors. Under current law, OSDBU Directors may be political appointees. While this has worked in some instances, I believe the small business community would be better served by career personnel with job protections.

Third, the legislation requires the OSDBU Director to be well-qualified in assisting small businesses with procurement matters. No one disputes the expertise of Federal procurement officials; however, procurement expertise does not always translate to small business procurement expertise. This provision will help ensure that small businesses are being served by those who understand their particular procurement needs.

Fourth, the legislation requires that, at major Federal agencies, the OSDBU Director have no job responsibilities outside the scope of the authorizing legislation. This provision was included because far too many agencies assign the OSDBU Director title to their procurement chief or another official with similar responsibilities, while the actual OSDBU program is run by someone else. This provision will stop this abuse.

Fifth, the legislation requires that a procurement chief not serve as the Director of the OSDBU program at a Federal agency. I firmly believe that the OSDBU Director's goal is fundamentally different from, and at times even opposed to, that of a chief procurement official who must be fair to all Federal contractors. An OSDBU Director's role is one of advocacy. He or she must take the side of small business , and no procurement chief can do this and perform both jobs fairly and effectively. While OSDBU Directors at major Federal agencies are barred from having additional responsibilities under this legislation, non-major Federal agency OSDBU Directors may. This provision will help ensure that at our non-major Federal agencies, the OSDBU Director can act fairly on behalf of small businesses.

Sixth, the legislation provides statutory authority for the OSDBU Council. Under the legislation, each OSDBU Director will have membership on the Council, which will meet at least once every two months. The Council's role is to discuss issues of importance to the OSDBUs and the small business community they serve. OSDBU Directors serving at major Federal agencies have as a part of their responsibilities an obligation, under this legislation, to attend Council meetings. This provision was included to once again prevent Federal agencies from circumventing the Small Business Act. Attendance at Council meetings will help ensure that Federal agencies are complying with the law and that OSDBU Directors are small business advocates, not simply procurement personnel with two hats.

One final note on the legislation is that the inclusion of a provision to increase the governmentwide small business prime contracting procurement goal from 23 percent to 30 percent has been retained, although it will now be phased in over three years: 26 percent in FY 2004, 28 percent in FY 2005 and 30 percent in FY 2006 and thereafter.

When I first made the suggestion that the small business procurement goal should be increased seven percentage points, my office received numerous calls, both in support of the increase and in opposition. Some even suggested raising the goal to a level of 40 percent. But, by and large, those in opposition pointed to one fact: The Federal Government has never achieved such a level of small business procurement participation. And while that is true, no one said that it was impossible. Given the disappointing achievement of the Federal Government on the current small business goal of 23 percent, I believe it is time to raise the bar.

When Congress enacted goals as part of the Small Business act, the goals were intended to be a minimum standard of achievement. For too long, the goals have been treated as a target for attainment, not a minimum level of acceptable small business participation. This too must change. Almost every year the Federal Government comes very close to hitting the small business prime contracting goal of 23 percent right on the head. Some years it does slightly better, and some years, unfortunately, it does slightly worse. However, this trend demonstrates one important principle, the government is firmly shooting for 23 percent, no more--no less.

By raising the statutory goal, it is my hope that the Federal Government will shoot for the higher target and succeed. But I ask my colleagues to look at this critically in that the goal for small business isn't so much being raised as the 77 percent of Federal procurement that now goes to large businesses, which represent only a tiny portion of all Federal contractors, is being reduced to 70 percent. So if the small business goal should increase to 30 percent, 70 percent of all Federal procurement will still be awarded to a relatively small number of all Federal contractors. Is this fair to small business? No. But it is an improvement.

I am pleased to say that my legislation is supported by groups representing primarily small businesses or small business contractors, such as the National Small Business United, NSBU, Women Impacting Public Policy, WIPP, and the Association of Small and Disadvantaged Business, as well as advocacy groups such as the Latin American Management Association, LAMA, the Minority Business Enterprise Legal Defense and Education Fund, MBELDEF, and the Veterans of Foreign Wars, VFW.

I thank them as well as the cosponsors of this legislation, Senators Bond, Cleland, Cantwell, Bingaman and Carnahan for their assistance, input and support, and I look forward to continuing to work with them on this and other important issues.

I ask unanimous consent that the text of the Small and Disadvantaged Business Ombudsman Act be printed in the Record.