Mr. KERRY. Madam President, today I am introducing legislation to help our nation's 8(a) Business Development, BD, and HUBZone firms compete more effectively in the Federal marketplace.

This bipartisan legislation, cosponsored by Senator Kit Bond, stems from a 1997 commitment Senator Bond and I made to each other to seek equality between the Small Business Administration's, SBA, 8(a)BD program and the HUBZone program.

Much has been made lately of the SBA's proposed rule to establish "parity" or equality between these two important programs. Some in the contracting community have opposed the proposed rule because they have concerns about the decline in the number of contracts and contract dollar values being awarded to 8(a)BD firms. I share the concerns of the contracting community in this regard, but I do not blame the HUBZone program for this decline. Rather, I blame the current procurement environment.

In 1997, working with then-Chairman of the Senate Committee on Small Business, Senator Bond, I took the necessary steps to protect the 8(a)BD program. In my negotiations with Senator Bond, he agreed to change the legislation creating the HUBZone program from one of HUBZone priority to one of equality between the 8(a)BD and HUBZone programs. Further, we negotiated a 3 percent increase in the Federal Government's small business goal, raising it from 20 percent to 23 percent, in order to accommodate the HUBZone program, which when fully phased in for Fiscal Year 2003 will have a 3 percent governmentwide goal. This increase was put in place specifically to accommodate the HUBZone program and ensure that 8(a)BD firms did not lose Federal contracts to the HUBZone program.

The fact remains, however, despite these protections, that 8(a)BD firms are experiencing a decline in Federal procurement, which some place as high as 34 percent since 1997. The cause of this decline has its roots in the new procurement environment created by the reforms in the mid-1990s, such as passage of the Federal Acquisition Streamlining Act and the Federal Acquisition Reform Act, the regulatory changes to procurement programs in response to the Adarand Inc. v. Pena decision, and reductions in the acquisition workforce. Because negative trends hit minority-owned firms first and hardest, these small businesses have borne a disproportionate share of the percentage decline in Federal contract dollars being awarded to small businesses.

To help combat the negative effects of procurement reform, I have been taking a very close look at the SBA's programs to assist small businesses, especially small businesses owned by socially and economically disadvantaged individuals. The legislation being introduced today is the first step in halting and reversing the decline brought about by procurement reform.

This legislation specifically addresses two critical areas of the 8(a)BD and HUBZone programs. The first deals with the relationship between the two programs when a small business has received both an 8(a)BD and a HUBZone certification, the second deals with the sole-source threshold issue for these firms.

First, an important factor in my decision to support the HUBZone legislation with the negotiated changes to protect the 8(a)BD program was the concept known as "super-priority" or "priority-preference." The priority-preference stems from Congressional intent that firms that are both 8(a)BD and HUBZone certified receive a preference over a firm that has a certification in only one program. In addition, the priority-preference was intended to allow these firms to combine the price evaluation preference available to them under each program, with the understanding that any offeror would still need to meet a "responsiveness" test in terms of their offer. Unfortunately, the new rule proposed by the SBA does not include the priority-preference, and the SBA has issued guidance that states that the priority-preference has no statutory provision to support its creation.

Although I strongly disagree with the SBA's decision to end the priority-preference, this legislation will rectify the situation by creating a statutory priority-preference for firms that have both an 8(a)BD and a HUBZone certification. Such a provision will help combine the benefits of each program and bring additional jobs and opportunities to underdeveloped areas. I view this provision as a win-win for the 8(a)BD and HUBZone contracting communities.

Second, this legislation makes an important update to both the 8(a)BD and HUBZone programs by raising the sole-source thresholds. One of the most important attributes of both of these programs is the authority for small businesses to receive contracts on a sole-source basis. This excellent benefit is limited, however, by a cap on the dollar amount for sole-source contracts. Currently, contracts for goods and services are limited to $3 million, while manufacturing contracts are limited to $5 million. This legislation updates those limits by $1 million for each category--an update that has been needed for some time and that Senator Bond and I nearly succeeded in including in the Small Business Reauthorization Act of 2000. By increasing the sole-source thresholds, the Federal government will immediately put more contract dollars into the hands of 8(a)BD and HUBZone firms.

As I mentioned earlier in my statement, this legislation is merely one step in the process to help reverse the negative trends procurement reform has had on our nation's small businesses.

It is my hope that we can move this legislation through the Senate quickly, and I would urge all of my colleagues to lend their support.