After eight years of development and growth, the 8(a) program has been refined from one of emphasizing volume of Federal contracts for disadvantaged companies to one of putting all SBA assistance capabilities into developing more viable firms. This approach is expected to give a company the greatest possible chance to attain a competitive position in the marketplace on its own. (Additional detail on the 8(a) program is contained in the Procurement Assistance chapter.) Minority Vendors The Office of Minority Small Business operates a Minority Vendors program, which is not only a referral service for the public and private sectors using minority vendors, but through the use of specialists in the field provides the tools of assistance available through all of SBA programs as a follow-up. A major milestone was reached in the program when SBA and United Airlines announced a joint venture which brings together the airlines' purchasing requirements with SBA's knowledge of minority vendors and management, technical and financial support. Interagency Agreement In May, SBA and the Department of Commerce's Office of Minority Business Enterprise (OMBE) signed a memorandum of understanding to strengthen and expand their support of minority business activity. Plans call for the national and field offices of both agencies to coordinate day-to-day program activities and conduct joint projects with a view to eliminating duplication. The agreement covers: 1. Development of both short- and long-range joint objectives and a comprehensive evaluation system. 2. Completion of a joint review of management and technical assistance staff standards and a joint evaluation of the SBA Minority Vendors program and the OMBE Purchasing Council program. 3. Coordination of a joint effort to review and improve knowledge of success factors of minority firms. 4. Coordination of program improvements. During the year, the Agency's Deputy Administrator was appointed vicechairman of the government-wide Interagency Council for Minority Business Enterprise. Advocacy "Small businesses are the cornerstone of the American economy . . . As the proprietors of small business, you possess those traits of individual initiative, self-reliance and creativity we prize so highly in America." With these statements in his keynote address at this year's SBA "Bicentennial Salute to Small Business," President Ford reaffirmed his personal commitment as an advocate of small business. It is this same philosophy that has provided the impetus for the Agency's Advocacy program. Advocacy by the SBA consists of assistance, consultation and representation on small business matters with other Government agencies, state and local officials, and private groups to assure that the actions and policies of these organizations are responsive to the needs of small business. The implementation of this mandate is the primary responsibility of the SBA's Office of Chief Counsel for Advocacy, but all offices within the Agency have an advocacy function as they carry out their assistance programs. Intervening for Small Firms The Advocacy office is mandated by law to "serve as a focal point for the receipt of complaints, criticisms, and suggestions concerning the policies and activities of the Administration and any other Federal agency which affects small business." To fulfill this mission, a channel must be provided for the communication of individual small business views, and positive action must be taken to resolve any problems that are brought to the SBA's attention. Counseling or advising small business constituents is one way to resolve, the problems that result from inadequate or insufficient information about Federal regulations. A substantial portion of advocacy efforts has increasingly involved casework, as individual small business concerns have turned to the SBA for help with problems which require effective intervention within the Federal Government. While the casework problems of these small businesses are inevitable, they are more effectively addressed by being worked out in conjunction with trade, business or professional organizations. In this manner, the millions of U.S. small business enterprises will more likely be reached, and the majority viewpoint of the small businesses operating in the particular economic activity will be represented. Casework problems cover a wide range of issues from difficulties in complying with Environmental Protection Agency regulations, to alleged inequities in cases that come under the jurisdiction of the Interstate Commerce Commission. To facilitate the handling of such matters, contacts were established with high level officers from 37 different Federal agencies, who serve as small business liaison when problems arise concerning their agencies. Through coordinated efforts, small business difficulties are reconciled consistent with the enabling legislation of the various Federal agencies involved. In this way, it is hoped the Federal Government can be sensitized to the immediate needs of small businesses. Addressing Problem Causes For the long run, however, advocacy activities must also confront the basic causes of small business problems. These causes are often a direct result of the exclusion of small business from the decision making process in Federal agencies. The policies and regulations with the greatest impact on small business have frequently been established without input from the small business community concerning its needs. The SBA intervened before the Federal Trade Commission in connection with its proposed trade regulation rule on credit practices. SBA urged the FTC to adopt 21 specific points concerning effects of the proposed rule on small concerns as issues for the required FTC hearings on the proposal. SBA argued that P.L. 93-637, which requires the FTC to issue a statement concerning the economic effects of each adopted rule on small business, necessitates full FTC consideration of small business issues at FTC hearings on proposed rulemaking. The proposed rule on credit practices, SBA stated, would impose significant additional costs on small business retailers. SBA submitted letters to the Interstate Commerce Commission and the Department of Justice supporting more flexible ICC rules to allow small trucking firms to continue to operate through "gateways" in carriage of Department of Defense military household goods shipments. SBA supported a suit brought for this purpose and to assure continuance of a fair share of such Government traffic for small firms. SBA is working with Federal officials in a number of agencies to change the way policies are formulated, the regulations are developed, and the way these regulations are implemented to include a consideration of the unique needs of small business. Activities in regard to the issue of product liability illustrate the techniques utilized to provide for small business input. Product Liability SBA was the first Federal entity to recognize that product liability had become a major problem for small business. A preliminary report on the legal, economic, and financial implications of this problem for small business has served as the prototype for a Commerce-SBA study requested by the President's Economic Policy Board. The Agency also participated in a White House conference of trade association representatives, who presented legislative and program options for Federal action. At the present time, SBA is representing the small business community in a comprehensive multi-agency effort requested by the Executive Branch to develop remedies for product liability problems. Association Activities A key source of and channel for advocacy information is provided by trade and commercial associations. The working relationship between 175 small business and trade associations and the SBA has been deepened and lines of communication have been developed with additional groups. There have been mutual explorations of their organizations, procedures, programs, functions, opinions, etc. Efforts to act and speak in a unified voice in behalf of small business have met with success and promise continued rewarding results. The business organizations have been active in behalf of the small business community and SBA in many areas. They have supplied information and positions on legislation, testified at hearings, surveyed their memberships, and, in turn, communicated with them to broaden exposure of the SBA and its efforts made in behalf of the small business areas. The small business organizations and their members have become increasingly more active on the SBA Advisory Councils, the SCORE and ACE programs, and other activities, to educate, penetrate, communicate, and unify the small business community. They have acted in concert with Federal agencies to improve the attitude of the citizens and their Federal Government in the areas of taxation, health and safety, pollution control, etc. The Advisory Councils Local business, professional, and academic leaders throughout the country The members advise the Agency on problems confronting small business on local and national levels and offer suggestions to overcome these problems as well as suggestions to improve the Agency programs and services. They also serve as a communications link between the Agency and the small business community and are now playing a major advocacy role in their cities and states. Total membership on the Councils at year's end was 2,086, of which 172 were members of the governing National Advisory Council. National Advocacy Winner In national competition among all the states, Glennville, Georgia, a small, rural community was named by the Agency as "Small Business Advocate of the Year" for its community effort in establishing new businesses and jobs in the face of adverse economic circumstances. New Role for Advocacy Near the close of the year the Congress passed and the President signed P.L. 94305, which affects the Agency's advocacy function in the following ways: 1. The Chief Counsel for Advocacy will now be a Presidential appointee subject to confirmation by the Senate. 2. The Chief Counsel is directed to undertake a major study of “small business in the American economy and the contribution which small business can make in improving competition, encouraging economic and social mobility for all citizens . . . increasing productivity . . . and a host of other critical areas. This study is to be completed by mid-year 1977 and the report made directly to the President and Congress. 3. The Chief Counsel would continue to perform all other advocacy functions on a continuing basis. 4. Federal Departments and Agencies were directed to furnish the Chief Counsel with reports and other information deemed necessary to carry out his advocacy duties. The SBA's public information and public affairs functions became part of the Advocacy office as a move to coordinate programs that will strengthen awareness among the public of the full range of services available in the Agency. Study Completed The greatest adverse effects of Government regulations on small businesses are related to environmental and safety and health regulations. This is the principal conclusion of a study, "The Impact on Small Business Concerns of Government Regulations Which Force Technological Change," prepared under contract for SBA by Charleswater Associates, Inc. The study analyzed both macroeconomic and microeconomic impacts of air, water, noise, and safety and health control regulations on the economy and on small business. It showed that the impact on small firms was greater than for large firms; compliance expenditures per unit of output are inversely proportional to the size of the firm. The study recommended that the most costeffective step the SBA could take to alleviate the impact of Federal technologyforcing legislation and regulation is to intervene in Federal legislative and regulatory processes as an active, but objective, advocate of small business needs and interests. |