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108th Congress                                            Rept. 108-142
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
     VETERANS ENTREPRENEURSHIP AND BENEFITS IMPROVEMENT ACT OF 2003

                                _______
                                

                  June 5, 2003.--Ordered to be printed

                                _______
                                

   Mr. Smith of New Jersey, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1460]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 1460) to amend title 38, United States Code, to 
permit the use of education benefits under such title for 
certain entrepreneurship courses, to permit veterans enrolled 
in a vocational rehabilitation program under chapter 31 of such 
title to have self-employment as a vocational goal, and for 
other purposes, having considered the same, reports favorably 
thereon with amendments and recommends that the bill as amended 
do pass.

  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Veterans Entrepreneurship and Benefits 
Improvement Act of 2003''.

SEC. 2. AUTHORIZATION FOR STATE APPROVING AGENCIES TO APPROVE CERTAIN 
                    ENTREPRENEURSHIP COURSES.

  (a) Approval of Entrepreneurship Courses.--Section 3675 of title 38, 
United States Code, is amended by adding at the end the following new 
subsection:
  ``(c)(1) A State approving agency may approve the entrepreneurship 
courses offered by a qualified provider of entrepreneurship courses.
  ``(2) For purposes of this subsection, the term `entrepreneurship 
course' means a non-degree, non-credit course of business education 
that enables or assists a person to start or enhance a small business 
enterprise.
  ``(3) Subsection (a) and paragraphs (1) and (2) of subsection (b) do 
not apply to--
          ``(A) an entrepreneurship course offered by a qualified 
        provider of entrepreneurship courses; and
          ``(B) a qualified provider of entrepreneurship courses by 
        reason of such provider offering one or more entrepreneurship 
        courses.''.
  (b) Business Owners Not Treated as Already Qualified.--Section 3471 
of such title is amended by inserting before the last sentence the 
following: ``The Secretary shall not treat a person as already 
qualified for the objective of a program of education offered by a 
qualified provider of entrepreneurship courses solely because such 
person is the owner or operator of a business.''.
  (c) Inclusion of Entrepreneurship Courses in Definition of Program of 
Education.--Subsection (b) of section 3452 of such title is amended by 
adding at the end the following: ``Such term also includes any course, 
or combination of courses, offered by a qualified provider of 
entrepreneurship courses.''
  (d) Inclusion of Qualified Provider of Entrepreneurship Courses in 
Definition of Educational Institution.--Subsection (c) of section 3452 
of such title is amended by adding at the end the following: ``Such 
term also includes any qualified provider of entrepreneurship 
courses.''.
  (e) Definition of Qualified Provider of Entrepreneurship Courses.--
Section 3452 of such title is further amended by adding at the end the 
following new subsection:
  ``(h) The term `qualified provider of entrepreneurship courses' 
means--
          ``(1) a small business development center described in 
        section 21 of the Small Business Act (15 U.S.C. 648), and
          ``(2) the National Veterans Business Development Corporation 
        (established under section 33 of such Act (15 U.S.C. 657c)) 
        insofar as the Corporation offers or sponsors an 
        entrepreneurship course (as defined in section 3675(c)(2) of 
        this title).''.
  (f) Effective Date.--The amendments made by this section shall apply 
to courses approved by State approving agencies after the date of the 
enactment of this Act.

SEC. 3. PROCUREMENT PROGRAM FOR SMALL BUSINESS CONCERNS OWNED AND 
                    CONTROLLED BY SERVICE-DISABLED VETERANS.

  The Small Business Act (15 U.S.C. 631 et seq.) is amended by 
redesignating section 36 as section 37 and by inserting after section 
35 the following new section:

``SEC. 36. PROCUREMENT PROGRAM FOR SMALL BUSINESS CONCERNS OWNED AND 
                    CONTROLLED BY SERVICE-DISABLED VETERANS.

  ``(a) Sole Source Contracts.--In accordance with this section and not 
withstanding any other provision of law, a contracting officer may 
award a sole source contract to any small business concern owned and 
controlled by service-disabled veterans if--
          ``(1) such concern is determined to be a responsible 
        contractor with respect to performance of such contract 
        opportunity and the contracting officer does not have a 
        reasonable expectation that 2 or more small business concerns 
        owned and controlled by service-disabled veterans will submit 
        offers for the contracting opportunity;
          ``(2) the anticipated award price of the contract (including 
        options) will not exceed--
                  ``(A) $5,000,000, in the case of a contract 
                opportunity assigned a standard industrial 
                classification code for manufacturing; or
                  ``(B) $3,000,000, in the case of any other contract 
                opportunity; and
          ``(3) in the estimation of the contracting officer, the 
        contract award can be made at a fair and reasonable price.
  ``(b) Restricted Competition.--In accordance with this section and 
not withstanding any other provision of law, a contracting officer may 
award contracts on the basis of competition restricted to small 
business concerns owned and controlled by service-disabled veterans if 
the contracting officer has a reasonable expectation that not less than 
2 small business concerns owned and controlled by service-disabled 
veterans will submit offers and that the award can be made at a fair 
market price.
  ``(c) Appeal by Administrator.--Not later than 5 days after the date 
on which the Administration is notified of a contracting officer's 
decision not to award a contract opportunity under this section to a 
small business concern owned and controlled by service-disabled 
veterans, the Administrator may notify the contracting officer of the 
intent to appeal the contracting officer's decision, and within 15 days 
of such date the Administrator may file a written request for 
reconsideration of the contracting officer's decision with the 
Secretary of the department or agency head.
  ``(d) Relationship to Other Contracting Preferences.--A procurement 
may not be made from a source on the basis of a preference provided 
under subsection (a) or (b) if the procurement would otherwise be made 
from a different source under section 4124 or 4125 of title 18, United 
States Code, or the Javits-Wagner-O'Day Act (41 U.S.C. 46 et seq.).
  ``(e) Enforcement; Penalties.--Rules similar to the rules of 
paragraphs (5) and (6) of section 8(m) shall apply for purposes of this 
section.
  ``(f) Contracting Officer.--For purposes of this section, the term 
`contracting officer' has the meaning given such term in section 
27(f)(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 
423(f)(5)).''.

SEC. 4. AUTHORIZATION TO PROVIDE ADAPTED HOUSING ASSISTANCE TO CERTAIN 
                    DISABLED MEMBERS OF THE ARMED FORCES WHO REMAIN ON 
                    ACTIVE DUTY.

  Section 2101 of title 38, United States Code, is amended by adding at 
the end the following new subsection:
  ``(c)(1) The Secretary may provide assistance under subsection (a) to 
a member of the Armed Forces serving on active duty who is suffering 
from a disability described in paragraph (1), (2), or (3) of that 
subsection if such disability is the result of an injury incurred or 
disease contracted in or aggravated in line of duty in the active 
military, naval, or air service. Such assistance shall be provided to 
the same extent as assistance is provided under that subsection to 
veterans eligible for assistance under that subsection and subject to 
the requirements of the second sentence of that subsection.
  ``(2) The Secretary may provide assistance under subsection (b) to a 
member of the Armed Forces serving on active duty who is suffering from 
a disability described in subparagraph (A) or (B) of paragraph (1) of 
that subsection if such disability is the result of an injury incurred 
or disease contracted in or aggravated in line of duty in the active 
military, naval, or air service. Such assistance shall be provided to 
the same extent as assistance is provided under such subsection to 
veterans eligible for assistance under that subsection and subject to 
the requirements of paragraph (2) of that subsection.''.

SEC. 5. REINSTATEMENT OF MINIMUM REQUIREMENTS FOR SALE OF VENDEE LOANS.

  (a) In General.--Section 3733(a) of title 38, United States Code, is 
amended--
          (1) by striking paragraph (2) and redesignating paragraphs 
        (3), (4), (5), and (6) as paragraphs (2), (3), (4), and (5), 
        respectively; and
          (2) in subparagraph (B)(i) of paragraph (3), as so 
        redesignated, by striking ``paragraph (5) of this subsection'' 
        and inserting ``paragraph (4)''.
  (b) Increase in Maximum Percentage.--Section 3733(a)(1) of such title 
is amended--
          (1) by striking ``65 percent'' in the first sentence and 
        inserting ``85 percent''; and
          (2) by striking the second sentence.
  (c) Stylistic Amendment.--Section 3733 of such title is amended by 
striking ``paragraph (1) of this subsection'' each place it appears and 
inserting ``paragraph (1)''.

SEC. 6. PAYMENT OF ACCRUED BENEFITS.

  (a) Repeal of Limitation on Payment.--Subsection (a) of section 5121 
of title 38, United States Code, is amended by striking ``for a period 
not to exceed two years'' in the matter preceding paragraph (1).
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect with respect to deaths occurring on or after the date of the 
enactment of this Act.

  Amend the title so as to read:

      A bill to amend title 38, United States Code, to improve 
education and entrepreneurship benefits, housing benefits, and 
certain other benefits for veterans, and for other purposes.

                              Introduction

    The reported bill reflects the Committee's consideration of 
several bills introduced during the 108th Congress, to include 
H.R. 241, H.R. 761, H.R. 1460, and H.R. 1949.
    On April 10, 2003, the Subcommittee on Benefits held a 
hearing on H.R. 241, the Veterans Beneficiary Fairness Act of 
2003, introduced by the Chairman and Ranking Member of the 
Committee, Honorable Christopher H. Smith and Honorable Lane 
Evans, respectively, on January 8, 2003; H.R. 533, the Agent 
Orange Veterans' Disabled Children's Benefits Act of 2003, 
introduced by Honorable Lane Evans, Honorable Ciro D. 
Rodriguez, Honorable Bob Filner, Honorable Luis V. Gutierrez, 
Honorable Corrine Brown, Honorable Vic Snyder, Honorable Mike 
McIntyre, Honorable Bernard Sanders, Honorable Jose E. Serrano, 
and Honorable Henry A. Waxman on February 5, 2003; H.R. 761, 
the Disabled Servicemembers Adapted Housing Assistance Act of 
2003, introduced on February 13, 2003, by Honorable Lane Evans, 
Honorable Christopher H. Smith, Honorable Ciro D. Rodriguez, 
Honorable Bob Filner, Honorable Rick Renzi, Honorable Corrine 
Brown, Honorable Silvestre Reyes, Honorable Michael H. Michaud, 
Honorable Sheila Jackson-Lee, Honorable James R. Langevin, and 
Honorable Bernard Sanders; H.R. 850, the Former Prisoners of 
War Special Compensation Act of 2003, introduced by Honorable 
Michael K. Simpson, Honorable Christopher Cox, Honorable John 
A. Boehner, Honorable David Dreier, Honorable Henry J. Hyde, 
Honorable Jim Kolbe, Honorable James A. Leach, Honorable C.L. 
``Butch'' Otter, Honorable F. James Sensenbrenner, Jr., and 
Honorable Joe Wilson on February 13, 2003; H.R. 966, the 
Disabled Veterans' Return-to-Work Act of 2003, introduced on 
February 27, 2003, by Honorable Henry E. Brown, Jr., Chairman 
of the Subcommittee on Benefits and Honorable Ciro D. 
Rodriguez, then-Ranking Member of the Subcommittee on Benefits, 
along with Honorable Christopher H. Smith and Honorable Lane 
Evans; and H.R. 1048, the Disabled Veterans Adaptive Benefits 
Improvement Act of 2003, introduced by Honorable Henry E. 
Brown, Jr., Honorable Ciro D. Rodriguez, Honorable Christopher 
H. Smith and Honorable Lane Evans on March 4, 2003.
    On April 30, 2003, the Subcommittee on Benefits held a 
hearing on H.R. 1460, the Veterans Entrepreneurship Act of 
2003, introduced on March 27, 2003, by Honorable Rick Renzi, 
Honorable Christopher H. Smith, Honorable Lane Evans, Honorable 
Henry E. Brown, Jr., Honorable Donald A. Manzullo, Honorable 
Bob Beauprez, and Honorable Michael H. Michaud; H.R. 1712, the 
Veterans Federal Procurement Opportunity Act of 2003, 
introduced on April 10, 2003, by Honorable Lane Evans, 
Honorable Bob Filner, Honorable Michael H. Michaud, and 
Honorable Darlene Hooley; and H.R. 1716, the Veterans Earn and 
Learn Act, introduced on April 10, 2003, by Honorable 
Christopher H. Smith and Honorable Lane Evans, along with 
Honorable Henry E. Brown, Jr. and Honorable Michael H. Michaud, 
Chairman and Ranking Member, respectively, of the Subcommittee 
on Benefits.
    On May 7, 2003, the Subcommittee on Benefits met and 
unanimously ordered H.R. 241, H.R. 761, H.R. 1460, as amended, 
and H.R. 1949 reported favorably to the full Committee.
    On May 15, 2003, the full Committee met and ordered H.R. 
1460 reported favorably, as amended, to the House by unanimous 
voice vote.

                      Summary of the Reported Bill

    H.R. 1460, as amended, would:

    1. LAuthorize the use of VA education benefits to pay for 
non-degree, non-credit entrepreneurship courses at approved 
institutions.

    2. LFurnish federal agencies discretionary authority to 
create ``sole-source'' contracts for service-disabled veteran-
owned small businesses--up to $5 million for manufacturing 
contract awards and up to $3 million for non-manufacturing 
contract awards.

    3. LFurnish federal agencies discretionary authority to 
restrict certain contracts to service-disabled veteran-owned 
small businesses if at least two such concerns are qualified to 
bid on the contract.

    4. LExtend VA's specially adapted housing grant to severely 
disabled servicemembers prior to separation from active duty 
service.

    5. LReinstate the Department of Veterans Affairs' vendee 
loan program.

    6. LRepeal current law restricting a surviving spouse or 
dependent children to receiving no more than two years of 
accrued benefits if the veteran dies while a claim for VA 
periodic monetary benefits is being processed.

                       Background and Discussion

    Authorization for State Approving Agencies to approve 
certain entrepreneurship courses.-- Section 2 of the bill would 
allow veterans, disabled veterans, dependent spouses and 
children of certain disabled or deceased veterans, and members 
of the Guard and Reserve to use VA education benefits to enroll 
in non-degree, non-credit entrepreneurship courses offered by a 
Small Business Development Center (SBDC) and the National 
Veterans Business Development Corporation. VA would be 
prohibited from considering a beneficiary as already qualified 
for the objective of a program of education offered by a 
qualified provider of an entrepreneurship course solely because 
he or she is the owner or operator of a small business.
    The Committee notes the testimony of VA Deputy Secretary, 
Dr. Leo S. Mackay, Jr., as illustrative of support for this 
provision:

        Veterans would receive several benefits from such 
        courses. Some veterans are not willing or able to 
        complete a degree program. This program offers a viable 
        alternative to a complete degree program for those 
        wishing to start a small business. Moreover, veterans 
        who take advantage of these courses are more likely to 
        succeed as small-business entrepreneurs. The potential 
        for positive effects on the economy, with enhanced 
        competition and creativity within the marketplace, is 
        significant.

    The Committee also notes the Small Business Administration 
(SBA) helps fund 1,000 SBDCs in the United States, Puerto Rico, 
U.S. Virgin Islands, Guam, and American Samoa. SBDCs are 
operated in partnership with colleges and universities or 
governmental entities. About 60 percent of SBDCs pre-venture 
clients go on to start businesses. Small businesses in the last 
decade accounted for about 70 percent of the new jobs created 
in our economy. The National Veterans Business Development 
Corporation also sponsors small business development courses at 
locations nationwide as part of its outreach program.

    Procurement program for small business concerns owned and 
controlled by service-disabled veterans.-- Section 3 of the 
bill would give federal agency contracting officers the 
discretionary authority to create sole source contracts for 
service-disabled veteran-owned businesses of up to $5 million 
for manufacturing other SBA awards and $3 million for non-
manufacturing awards. This section would also furnish 
contracting officers discretionary authority to restrict 
certain contracts to service-disabled veteran-owned small 
businesses if at least two such concerns are qualified to bid 
on the contract. This provision would not supercede any 
preferences under law for prison-made (Federal Prison 
Industries) products or products made by the blind or disabled 
(Javits-Wagner-O'Day Act). This provision also would not accord 
service-disabled veterans ``priority'' over procurement 
preferences under the SBA 8(a), Women's, or HubZone programs.
    The Committee notes the 1999 report of the bipartisan 
Congressional Commission on Servicemembers and Veterans 
Transition Assistance recommended that ``Special assistance, 
such as lending opportunities and access to a disadvantaged 
business development program like SBA's 8(a) program is needed 
to support disabled veteran entrepreneurs.'' H.R. 1460, as 
amended, does not make service-disabled veteran-owned small 
businesses part of the 8(a) program, but it does give them sole 
source/setaside-type contracting opportunities on a 
discretionary basis.
    The Commission also concluded that, ``Disabled-veteran 
entrepreneurs require additional assistance because these 
business owners encounter costs and impediments that are not 
factors for their non-disabled competitors'' and ``As a matter 
of fundamental fairness, Congress should accord veterans a full 
opportunity to participate in the economic system that their 
service sustains.''
    Public Law 106-50 created a 3 percent government-wide goal 
for procurement from service-disabled veteran-owned businesses. 
Currently, Federal departments and agencies fall far short of 
this goal. This provision is designed to furnish such 
organizations additional tools for meeting this goal. The 
Administration supports such additional tools. Ms. Angela 
Styles, Administrator, Office of Federal Procurement Policy, 
testifed that such a tool is needed as government-wide 
implementation of the 3 percent goal has been ``abysmal.''
    The Committee notes the testimony of Mr. Brian E. Lawrence 
of the Disabled American Veterans, as illustrative of the 
support for this provision:

        For newly established businesses, one contract can be 
        the difference between success and failure. Disabled 
        veterans who successfully establish their own 
        businesses are able to contribute to Federal revenue by 
        paying taxes; disabled veterans who have no options 
        other than to draw VA Individual Unemployability 
        compensation cannot contribute revenue, and Federal 
        spending is increased. From an economic standpoint, it 
        is clearly advantageous to our society to provide 
        disabled veterans sufficient opportunity to become 
        self-employed.

    Authorization to provide adapted housing assistance to 
certain disabled members of the armed forces who remain on 
active duty.-- Section 4 of the bill would allow disabled 
servicemembers to apply for VA's specially adapted housing 
grant before being discharged from active duty. VA provides a 
grant to offset the cost of modifying a home to accommodate a 
veteran's disabilities. Under current law, the servicemember 
may not apply for the grant until he or she is actually 
discharged from military service or placed on the Temporary 
Disabled Retirement List. Because the servicemember may not 
have an accessible place to live upon discharge, he or she may 
need to extend a hospital stay. Servicemembers who suffer a 
catastrophic disability while on active duty are eligible to 
apply for VA's specially adapted automobile grant prior to 
discharge from military service. This provision would ease the 
readjustment of these servicemembers to civilian life.

    Reinstatement of minimum requirements for sale of vendee 
loans.-- Section 5 of the bill would reinstate the vendee loan 
program, which VA administratively terminated on January 23, 
2003. When a purchaser agrees to buy a foreclosed VA home, VA 
often offers to finance the sale by establishing a vendee loan 
to encourage the prompt sale of the home. Vendee loans are made 
at market interest rates and often require a down payment. 
Borrowers are assessed a 2.25 percent funding fee.
    The vendee loan program is based on sound business 
principles, and there is an ample body of empirical data 
indicating that offering vendee financing is cost effective to 
the government. The Committee views vendee loans as an 
important tool to obtain a higher return on property sales, 
which reduces the overall cost of program operations.

    Payment of accrued benefits.-- Section 6 of the bill would 
repeal the two-year limitation on accrued benefits so that a 
veteran's survivor may receive the full amount of the award and 
not be penalized if VA does not process claims in a timely 
manner. Current law restricts a surviving spouse to receiving 
no more than two years of accrued benefits if a veteran dies 
while a claim for VA periodic monetary benefits (other than 
insurance and servicemen's indemnity) is being processed. VA is 
making efforts to lower claims processing times, but it can 
sometimes take more than two years to correctly determine and 
adjudicate a claim for disability compensation or nonservice-
connected pension benefits, especially when the claim has been 
appealed to the Board of Veterans' Appeals or the United States 
Court of Appeals for Veterans Claims.

                      Section-By-Section Analysis

    Section 1 would provide that this Act may be cited as the 
``Veterans Entrepreneurship and Benefits Improvement Act of 
2003''.

    Section 2(a) would amend section 3675 of title 38, United 
States Code, by adding a new subsection authorizing a State 
Approving Agency to approve entrepreneurship courses offered by 
a qualified provider of entrepreneurship courses. This section 
would also define `entrepreneurship course' as a non-degree, 
non-credit course of business education that enables or assists 
a person to start or enhance a small business enterprise. 
Current law sections 3675(a) and 3675(b)(1) and (2) regarding 
approval of accredited courses do not apply to an 
entrepreneurship course offered by a qualified provider of 
entrepreneurship courses and a qualified provider of 
entrepreneurship courses by reason of such provider offering 
one or more entrepreneurship courses.

    Section 2(b) would amend section 3471 of title 38, United 
States Code, to provide that the Secretary shall not treat a 
person as already qualified for the objective of a program of 
education offered by a qualified provider of entrepreneurship 
courses solely because such person is the owner or operator of 
a business.

    Section 2(c) would amend subsection (b) of section 3452 of 
title 38, United States Code, by including entrepreneurship 
courses offered by a qualified provider in the definition of 
program of education.

    Section 2(d) would amend subsection (c) of section 3452 of 
title 38, United States Code, to include any qualified provider 
of entrepreneurship courses in the definition of educational 
institution.

    Section 2(e) would further amend section 3452 by defining 
the term `qualified provider of entrepreneurship courses' as 
(1) a small business development center described in section 21 
of the Small Business Act (15 U.S.C. 648) and (2) the National 
Veterans Business Development Corporation (established under 
section 33 of 15 U.S.C. 657(c)), insofar as the Corporation 
offers or sponsors an entrepreneurship course (as defined in 
section 3675(c)(2) of title 38, United States Code).

    Section 2(f) would provide that the changes made by this 
section shall apply to courses approved by State Approving 
Agencies after the date of the enactment of this Act.

    Section 3 would amend the Small Business Act (15 U.S.C. 631 
et seq.) by redesignating section 36 as section 37 and by 
inserting after section 35 a new section 36 establishing a 
procurement program for small business concerns owned and 
controlled by service-disabled veterans. New section 36(a) 
would furnish contracting officers with discretionary authority 
to award a sole source contract to any small business concern 
owned and controlled by service-disabled veterans if the 
following three criteria are met: (1) such concern is 
determined to be a responsible contractor with respect to 
performance of such contract opportunity and the contracting 
officer does not have a reasonable expectation that two or more 
small business concerns owned and controlled by service-
disabled veterans will submit offers for the contracting 
opportunity; (2) the anticipated award price of the contract 
(including options) will not exceed (A) $5,000,000, in the case 
of a contract opportunity assigned a standard industrial 
classification code for manufacturing; or (B) $3,000,000, in 
the case of any other contract opportunity; and (3) in the 
estimation of the contracting officer, the contract award can 
be made at a fair and reasonable price.

    New section 36(b) would furnish contracting officers the 
discretionary authority to make contract awards on the basis of 
competition restricted to small business concerns owned and 
controlled by service-disabled veterans if the contracting 
officer has a reasonable expectation that not less than two 
small business concerns owned and controlled by service-
disabled veterans will submit offers and that the award can be 
made at a fair market price.

    New section 36(c) would require that not later than five 
days after the date on which the Administrator is notified of a 
contracting officer's decision not to award a contract 
opportunity under this section to a small business concern 
owned and controlled by service-disabled veterans, the 
Administrator may notify the contracting officer of the intent 
to appeal the contracting officer's decision, and within 15 
days of such date the Administrator may file a written request 
for reconsideration of the contracting officer's decision with 
the Secretary of the department or agency head.

    New section 36(d) would require that a procurement may not 
be made from a source on the basis of a preference provided 
under subsection (a) or (b) if the procurement would otherwise 
be made from a different source under section 4124 or 4125 of 
title 18, United States Code, or the Javits-Wagner-O'Day Act 
(41 U.S.C. 46 et seq.).

    New section 36(e) would require that with respect to 
matters of enforcement and penalties, rules similar to the 
rules of paragraphs (5) and (6) of section 8(m) shall apply for 
purposes of this new section.

    New section 36(f) would require that for purposes of this 
section, the term `contracting officer' has the meaning given 
such term in section 27(f)(5) of the Office of Federal 
Procurement Policy Act (41 U.S.C. 423(f)(5)).

    Section 4 would amend section 2101 of title 38, United 
States Code, to provide that the Secretary may provide 
specially adapted housing assistance to an eligible member of 
the Armed Forces to the same extent as assistance is provided 
to eligible veterans.

    Section 5(a) would reinstate the minimum requirements for 
sale of vendee loans. With respect to current law section 
3733(a), section 5(a) would strike paragraph (2) and 
redesignate paragraphs (3), (4), (5), and (6), as paragraphs 
(2), (3), (4), and (5), respectively. In subparagraph (B)(i) of 
paragraph (3), as so redesignated, this subsection would strike 
the words paragraph (5) and insert the words paragraph (4).

    Section 5(b) would amend current section 3733(a)(1) of 
title 38, United States Code, by requiring that not more than 
85 percent, nor fewer than 50 percent, of the purchases made 
during any fiscal year of real property acquired by the 
Secretary as the result of a defaulted loan, may be financed by 
a loan made by the Secretary. This section would also strike 
the current authority to increase to 80 percent the maximum 
percentage in any fiscal year of real property acquired by the 
Secretary as a result of loan defaults.

    Section 6(a) would repeal the two-year limitation on 
payment of accrued benefits in subsection (a) of section 5121 
of title 38, United States Code.

    Section 6(b) would provide that this section take effect 
with respect to deaths occurring on or after date of enactment 
of this Act.

                    Performance Goals and Objectives

    The reported bill would authorize veterans benefits 
enhancements and program improvements under laws administered 
by the Department of Veterans Affairs and the Small Business 
Administration. Performance goals and objectives are 
established in their annual performance plans and are subject 
to the Committee's regular oversight.

             Statements of the Views of the Administration

                     Department of Veterans Affairs

                            [April 30, 2003]

   Complete Statement of Honorable Leo S. Mackay, Jr., Ph.D., Deputy 
Secretary of Veterans Affairs, Before the House Committee on Veterans' 
                   Affairs, Subcommittee on Benefits

    Mr. Chairman and Members of the Subcommittee, thank you for 
providing me the opportunity to testify before you this morning on 
three measures affecting Department of Veterans Affairs education and 
vocational rehabilitation programs and small-business opportunities for 
veterans. The three bills on today's hearing agenda include: H.R. 1460, 
the ``Veterans Entrepreneurship Act of 2003''; H.R. 1716, the 
``Veterans Earn and Learn Act''; and H.R. 1712, the ``Veterans Federal 
Procurement Opportunity Act of 2003.''
    Before I discuss the bills the Subcommittee is considering today, I 
would like to note that, although the Budget Enforcements Act's pay-as-
you-go requirements and discretionary spending caps expired on 
September 30, 2002, the Administration supports the extension of these 
budget enforcement mechanisms in a manner that ensures fiscal 
discipline and is consistent with the President's budget. As you know, 
these measures would affect direct spending and receipts and, 
therefore, the support VA expresses for most of the provisions of the 
bills is contingent on accommodating the provisions within the overall 
budget submitted by the President.
    I note also that, as the number of laudable acquisition preference 
programs increase, the Government must ensure that it uses insofar as 
possible open competition among qualified firms, to ensure that the 
Government acquires through our free market system with taxpayer 
dollars the best possible goods and services at the lowest possible 
price.

H.R. 1460--``VETERANS ENTREPRENEURSHIP ACT OF 2003''

    Mr. Chairman, section 2 of H.R. 1460 would amend provisions of 
title 38, United States Code, to permit veterans to use VA educational 
assistance benefits to enroll in non-degree, non-credit business 
``entrepreneurship'' courses offered by small business development 
centers or offered by the National Veterans Small Business Development 
Corporation. Specifically, section 2 of the bill would provide that 
State Approving Agencies may approve non-credit courses of business 
education that enable or assist persons to start or enhance small 
business enterprises. ``Qualified providers'' of such entrepreneurship 
courses would include small business development centers, as defined by 
section 21 of the Small Business Act, and the National Veterans 
Business Development Corporation. A person would not be considered by 
VA as already qualified for the objective of a program of education 
offered by a qualified provider of an entrepreneurship course solely 
because he or she is the owner or operator of a business. These 
amendments apply to courses approved by State approval agencies after 
the date of enactment of the Act.
    Veterans would receive several benefits from such courses. Some 
veterans are not willing or able to complete a degree program. This 
program offers a viable alternative to a complete degree program for 
those wishing to start a small business. Moreover, veterans who take 
advantage of these courses are more likely to succeed as small-business 
entrepreneurs. The potential for positive effects on the economy, with 
enhanced competition and creativity within the marketplace, is 
significant. The bill's provision for oversight of these courses by 
State Approving Agencies should ensure program quality. While we 
support the goals of this provision, it is not included in the 
President's Budget and an offset would have to be found. We will be 
pleased to work with the Subcommittee to find an offset for this 
important provision.
    Enactment of this section would result in an estimated cost of $1.5 
million in fiscal year 2004 and a ten-year total cost of $32 million.
    Section 3 of H.R. 1460 would amend 38 U.S.C. Sec. 3104 to provide 
that, for purposes of pursuing a program of vocational rehabilitation 
under chapter 31 of title 38, United States Code, a disabled veteran 
may establish ``self-employment'' in a small business enterprise as a 
vocational goal without regard to any requirement of unemployability.
    Current law permits us to serve veterans with serious service-
connected disabilities who require self employment and/or homebound 
training in order to achieve an acceptable level of vocational 
rehabilitation. We are also able to provide limited assistance to other 
veterans with employment handicaps.
    Mr. Chairman, last month the Department established a new advisory 
committee, the Vocational Rehabilitation and Employment (VR&E;) Task 
Force, and charged it with conducting an independent review of the VR&E; 
program. Among other responsibilities, it will evaluate eligibility 
criteria for vocational rehabilitation services under VA's program, and 
report its recommendations to the Secretary. We are asking the Task 
Force to evaluate the change in law proposed by section 3 of H.R. 1460, 
and will be furnishing you our official views once we have the benefit 
of that advice.
    Enactment of this section would result in a cost of $750,000 in 
fiscal year 2004 and a ten-year total cost of $101 million.
    Section 4 of H.R. 1460 would authorize a contracting officer to 
make sole source awards to small business concerns owned and controlled 
by service-disabled veterans (SDVBs) if such business is determined to 
be capable of performing the contract, award can be made at a fair 
price, there is no reasonable expectation that two or more SDVBs would 
submit offers, and certain dollar thresholds are not exceeded. It would 
also authorize contracting officers to restrict competition to SDVBs if 
there is a reasonable expectation that at least two SDVBs will submit 
offers and award can be made at a fair market price. The Administrator 
of the Small Business Administration would have the authority to appeal 
contracting officers' decisions not to award a contract opportunity to 
SDVBs to the Secretary of the department or agency head. This law would 
not supercede any other preference under law for prison-made (Federal 
Prison Industries) products or products made by the blind or disabled 
(JWOD).
    The provision of a set-aside is an unusually strong measure that 
inhibits open market functioning. It is only appropriate in this 
instance due to the singular worthiness of service-disabled veterans 
for preferential treatment. Its use here would not be meant to 
establish a general precedent.
    VA supports section 4 of H.R. 1460. Providing these veterans 
business opportunities is altogether consistent with VA's mission to 
serve our Nation's veterans and will help VA and the Nation honor its 
commitment to them.
    We estimate the total cost associated with enactment of H.R. 1460 
to be $2.25 million for fiscal year 2004 and $133 million over ten 
years.

           *         *         *         *         *

                                ------                                


                     Department of Veterans Affairs

                            [April 10, 2003]

 Complete Statement of Daniel L. Cooper, Under Secretary for Benefits, 
   Before the Subcommittee on Benefits, House Committee on Veterans' 
                                Affairs

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to testify today on several bills of great interest to 
veterans.

H.R. 241

    H.R. 241, the ``Veterans Beneficiary Fairness Act of 2003,'' would 
eliminate a discrepancy regarding the limitation on the period for 
which retroactive benefits due and unpaid a claimant may be paid to 
others after the claimant's death. In the interest of fairness, we 
support enactment of this bill.
    Under 38 U.S.C. Sec. 5121, periodic monetary benefits to which an 
individual was entitled at death under existing ratings or decisions or 
based on evidence on file with the Department of Veterans Affairs (VA) 
at the time of death are paid upon the death of the individual to 
specified classes of survivors according to a prescribed order of 
preference. Prior to a recent court decision, VA had construed section 
5121 to limit the payment of any benefits under that section to the 
retroactive period specified in the statute, regardless of whether the 
payment was based on an existing rating or decision or on evidence on 
file at the date of death. The retroactive payment period, originally 
one year, was extended to two years by Public Law 104-275, the 
``Veterans' Benefits Improvements Act of 1996.''
    On December 10, 2002, the United States Court of Appeals for 
Veterans Claims (CAVC) issued its decision in Bonny v. Principi, 16 
Vet. App. 504 (2002). In that decision, the court held that 38 U.S.C. 
Sec. 5121(a) specifies two kinds of benefits: benefits that have been 
awarded to an individual in existing ratings or decisions but not paid 
prior to the individual's death, and benefits that could be awarded 
based on evidence in the file at the time of death. The court held 
that, in the case of the first type of benefits, the statute requires 
that an eligible survivor is to receive the entire amount of the award; 
only the latter type of ``accrued'' benefits is subject to the two-year 
limitation in 38 U.S.C. Sec. 5121(a). The court based its 
interpretation of the statute primarily on the punctuation of section 
5121(a).
    The CAVC's Bonny decision has resulted in differing entitlements 
under section 5121 based on the status of the deceased's claim at the 
time of his or her death. H.R. 241 would eliminate this distinction by 
amending section 5121 to eliminate the two-year limitation on payment 
of retroactive benefits for all classes of beneficiaries under that 
statute.
    The distinction the Bonny decision draws between the two categories 
of claimants--those whose claims had been approved and those whose 
entitlement had yet to be recognized when they died--is really one 
without a difference. In either case, a claimant's estate is deprived 
of the value of benefits for which he or she was, in life, eligible. 
H.R. 241 would remove this inequitable distinction, and we support its 
enactment.
    We estimate the cost of complying with the Bonny decision for 
fiscal year (FY) 2004 to be $1.7 million and $18.2 million for the 
period FY 2004 through FY 2013. We estimate the incremental cost to 
implement H.R. 241, that is, the difference between the cost of 
complying with the court's decision and the cost of enactment of H.R. 
241, to be $5.9 million for FY 2004 and $65.8 million for the period FY 
2004 through FY 2013.
    In addition, we note one technical change needed in H.R. 241 should 
it be enacted. The comma in current section 5121(a) following 
``existing ratings or decisions'' should be deleted to clarify, for 
purposes of 38 U.S.C. Sec. Sec. 5121(b) and (c) and 5122, that the term 
``accrued benefits'' includes both benefits that have been awarded to 
an individual in existing ratings or decisions but not paid prior to 
the individual's death, as well as benefits that could be awarded based 
on evidence in the veteran's file at the time of death.



           *         *         *         *         *
H.R. 761

    Mr. Chairman, you also requested our comments on two proposals that 
would affect the Specially Adapted Housing program authorized by 
chapter 21 of title 38, United States Code. Under current law, veterans 
who are entitled to compensation for certain permanent and total 
service-connected disabilities described in section 2101 of title 38 
are eligible for a grant to adapt their homes with features made 
necessary by the nature of their disabilities.
    The first proposal, Mr. Chairman, is H.R. 761, the ``Disabled 
Servicemembers Adapted Housing Assistance Act of 2003,'' which would 
permit VA to provide Specially Adapted Housing assistance to disabled 
members of the Armed Forces who remain on active duty pending medical 
separation. VA favors enactment of H.R. 761.
    This bill would permit members of the Armed Forces with the 
service-connected disabilities described in section 2101 to apply for 
Specially Adapted Housing benefits and permit VA to process their 
applications and award benefits without having to wait for the 
servicemembers to be released from active duty. H.R. 761 could provide 
some affected veterans the opportunity to move into an adapted home as 
soon as they are separated from active duty, or at least much sooner 
than is possible under current law. With this accelerated determination 
of eligibility and assistance, veterans could avoid continued 
institutional care, thus improving their quality of life and increasing 
their independence. This could also reduce the cost to VA of in-patient 
healthcare for some affected veterans.
    Because Specially Adapted Housing grants are a one-time-only 
benefit, the enactment of this measure should not materially increase 
either the total number of grants provided under this program or the 
dollar amount of such grants. Rather, H.R. 761 would merely accelerate 
the payment of this benefit to certain individuals who, under current 
law, would become entitled to the same benefit upon their release from 
active duty. Accordingly, VA estimates that the enactment of H.R. 761 
would produce insignificant costs or savings.

           *         *         *         *         *


               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 19, 2003
Hon. Christopher H. Smith
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1460, the Veterans 
Entrepreneurship and Benefits Improvement Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah T. 
Jennings, who can be reached at 226-2840.

            Sincerely,
                                       Douglas Holtz-Eakin,
                                                           Director
    Enclosure.

               Congressional Budget Office Cost Estimate

 H.R. 1460, Veterans Entrepreneurship and Benefits Improvement Act of 
                                  2003

As ordered reported by the House Committee on Veterans' Affairs on May 
                                15, 2003

Summary
    H.R. 1460 would affect several veterans programs, including 
housing, education, and compensation. H.R. 1460 would also 
amend the Small Business Act by establishing a specific set-
aside preference for service-disabled, veteran-owned small 
businesses.
    Provisions in H.R. 1460 would both increase and decrease 
direct spending. Taken together, CBO estimates that enacting 
this legislation would reduce net direct spending for veterans 
benefits by $66 million in 2004, about $180 million over the 
2004-2008 period, and about $340 million over the 2004-2013 
period. In addition, CBO estimates that implementing H.R. 1460 
would cost less than $500,000 a year over the 2004-2008 period, 
assuming the availability of appropriated funds.
    H.R. 1460 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
Estimated cost to the federal government
    The estimated budgetary impact of H.R. 1460 is shown in 
Table 1. The costs of this legislation fall within budget 
functions 700 (veterans benefits and services) and 800 (general 
government).



TABLE 1. ESTIMATED BUDGETARY IMPACT OF H.R. 1460 (By fiscal 
year, in millions of dollars)






                                                                   2003    2004    2005    2006    2007    2008    2009    2010    2011    2012    2013
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                               CHANGES IN DIRECT SPENDING
Estimated Budget Authority......................................       0     -66     -32     -24     -26     -29     -30     -31     -33     -32     -34
Estimated Outlays...............................................       0     -66     -32     -24     -26     -29     -30     -31     -33     -32     -34
--------------------------------------------------------------------------------------------------------------------------------------------------------




Basis of estimate
  Direct spending

    The legislation would affect direct spending in veterans' 
programs for housing, education, and compensation. Table 2 
summarizes those effects, and the individual provisions that 
would affect direct spending are described below.



TABLE 2. ESTIMATED CHANGES IN DIRECT SPENDING FOR VETERANS' 
BENEFITS UNDER H.R. 1460 (Outlays, by fiscal year, in millions 
of dollars)






                    Description of Provision                       2003    2004    2005    2006    2007    2008    2009    2010    2011    2012    2013
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                               CHANGES IN DIRECT SPENDING
Vendee Loan Program.............................................       0     -68     -34     -26     -28     -31     -32     -33     -35     -34     -36
Entrepreneurship Courses........................................       0       1       1       1       1       1       1       1       1       1       1
Accrued Benefits................................................       0       1       1       1       1       1       1       1       1       1       1
Adapted Housing.................................................       0       *       *       *       *       *       *       *       *       *       *
                                                                 ---------------------------------------------------------------------------------------
  Total Changes in Veterans' Benefits...........................       0     -66     -32     -24     -26     -29     -30     -31     -33     -32     -34
--------------------------------------------------------------------------------------------------------------------------------------------------------
* less than $500,000.




    Vendee Loan Program. Section 5 would reinstate the vendee 
home loan program which was discontinued by the Department of 
Veterans Affairs (VA) on January 31, 2003. Before that date, 
when a veteran defaulted on his mortgage and the home went into 
foreclosure, VA often acquired the property and issued a new 
direct loan when the property was sold. These loans are called 
vendee loans. CBO estimates that reinstating the program would 
save VA roughly $35 million a year over the 2004-2013 period. 
Higher savings in 2004 result from lower interest rate 
assumptions for that year compared to those projected for the 
2005-2013 period. The bill also would require VA to finance 
between 50 percent and 85 percent of such sales through the 
vendee loan program. Before the program was terminated, VA 
financed roughly 60 percent of such sales with vendee financing 
and CBO estimates that it would continue to do so under the 
bill. The estimated savings for this provision is the net 
effect of three individual program effects (two with savings 
and one with costs), as explained below.

    Based on historical data, CBO estimates that under the bill 
roughly 14,000 vendee loans would be made each year with an 
average loan amount of $98,000. Vendee loans lower the subsidy 
cost of the V A home loan program in two ways. First, VA 
receives more money for homes sold with vendee financing than 
those sold with other financing (16 percent more in 2002). 
Since the proceeds from these home sales are considered 
recoveries of losses from the guaranteed loans that were 
foreclosed, enacting this section would increase recoveries and 
therefore lower subsidy costs in the guaranteed loan portfolio. 
CBO estimates that VA would save an average of $68 million a 
year in guaranteed loan subsidies over the 2004-2013 period. 
Second, because vendee loans have lower prepayment and default 
rates than other direct loans made by VA, this provision also 
would lower subsidy costs for direct loans by an average of $28 
million a year over the 2004-2013 period.
    Finally, before the program was terminated in 2003, VA sold 
most vendee loans on the secondary mortgage market and 
guaranteed their timely repayment; CBO estimates that it would 
continue to do so under the bill. Based on historical data, CBO 
estimates that VA would sell an average of $1.2 billion in 
vendee loans annually, at a subsidy cost of roughly $60 million 
a year.

    Entrepreneurship Courses. Section 2 would allow eligible 
veterans, survivors, and dependents to receive education 
benefits for entrepreneurship courses offered by a Small 
Business Development Center (SBDC) or by the National Veterans 
Business Development Corporation, also known as The Veterans 
Corporation.

    According to the Small Business Administration, 17,581 
veterans received training from SBDCs in fiscal year 2001. The 
SBDCs offer a number of courses for individuals who own or are 
interested in starting a small business, generally at little or 
no cost. Based on analysis of the available courses and 
tuition, CBO estimates that about 3,000 veterans, survivors, 
and dependents who are eligible for veterans' education 
benefits would each take three courses a year with an average 
tuition of $45 each, and that the tuition would increase with 
inflation.
    In the Veterans Entrepreneurship and Small Business 
Development Act of 1999 (Public Law 106-50), the Congress 
established The Veterans Corporation, a federally chartered 
corporation, tasked to assist veterans with the formation and 
expansion of small business concerns. The Veterans Corporation 
began offering entrepreneurship classes to veterans this year, 
and they intend to enroll 1,500 veterans in 2004 and 3,000 
veterans in 2005. Tuition for the course is currently $350, and 
CBO expects it will increase with inflation to about $445 by 
2013. Because education benefits usually expire 10 years after 
separating from military service, CBO expects that less than 
half of these students would be eligible for veterans education 
benefits.
    Taken together, CBO expects that, under section 2, the 
SBDCs and The Veterans Corporation would train about 5,000 
veterans, survivors and dependents a year who are eligible for 
education benefits from the VA. We estimate the annual cost for 
this training would be about $1 million.

    Accrued Benefits. Section 6 would eliminate the two-year 
limit on accrued benefits payable to eligible survivors of 
veterans who die while VA is processing their claims for 
disability compensation. Under current law, when an individual 
applies for benefits administered by VA, any benefits that are 
awarded are paid retroactive to the date of application. If the 
applicant dies before receiving his or her retroactive 
benefits, certain survivors can apply to receive up to two 
years worth of the unpaid benefits. VA refers to these benefits 
that are due but unpaid to deceased applicants as ``accrued 
benefits.''
    Before December 2002, VA applied the two-year limit on 
accrued benefits to all cases in which the applicant died 
before receiving payment. On December 10, 2002, the United 
States Court of Appeals for Veterans Claims (CAVC) decided in 
Bonny v. Principi that the two-year limit applies differently 
to the following two groups:

     LApplicants who die before VA makes the final 
decision on the application, and
     LApplicants who die after VA makes the final 
decision on the application but before receiving payment.

    CAVC ruled that if the applicant dies before receiving 
payment but after VA approves the claim, eligible survivors are 
due the entire amount of the award due to the applicant.
    Eligible survivors of applicants who die during the 
processing of the claim but before VA makes a final decision, 
however, are eligible for only two years of accrued benefits.
    Section 6 would eliminate the two-year limit on accrued 
benefits for all eligible survivors, regardless of whether VA 
has made a final decision on the claim. Based on information 
provided by VA, CBO estimates that VA awards accrued benefits 
payments to about 3,700 survivors a year and that, under 
current law (reflecting the Bonny decision), about 18 percent 
or 670 of these cases would be paid the full amount. Based on 
information provided by VA, CBO estimates that no more than 10 
percent of the roughly 3,000 remaining accrued benefits 
payments would reflect more than two years of unpaid benefits.
    VA only tracks data on the number of claims processed for 
accrued benefits payments and is unable to identify the number 
of claims it approves; whether these claims are for disability 
compensation, veterans pension, or other veterans' income 
security benefits; or the amount of the average payment. Absent 
this information, CBO assumes that all accrued benefits 
payments would be for veterans disability compensation because 
the majority of applications for VA benefits are for such 
payments. We also assume that all accrued benefits would be 
paid at an average disability rating of 30 percent, consistent 
with average benefit payments for new compensation cases, and 
that, on average, these 300 cases would receive an extra six 
months worth of payments.
    According to data provided by VA, in 2002 the average 
annual compensation payment for a disability rating of 30 
percent was $4,092. Such payments are adjusted annually for 
increases in the cost of living. Thus, CBO estimates that 
enacting H.R. 1460 would increase direct spending for 
compensation benefits by less than $1 million in 2004, $3 
million over the 2004-2008 period, and $7 million over the 
2004-2013 period.

    Adapted Housing. Section 4 would allow severely disabled 
members of the armed forces to receive specially adapted 
housing grants from VA while still on active duty. CBO 
estimates that enacting this provision would increase direct 
spending for veterans readjustment benefits by less than 
$500,000 in 2004.

    VA currently administers two grant programs to assist 
severely disabled veterans in acquiring housing that is adapted 
to their disabilities, or in modifying their existing housing. 
Under current law, veterans who are classified by the VA as 
totally disabled and who have certain mobility limitations are 
entitled to receive housing grants of up to $48,000. Totally 
disabled veterans who are blind or have lost the use of their 
hands are entitled to receive grants of up to $9,250. Section 4 
would allow similarly disabled servicemembers, on active duty 
pending a medical separation, to receive these grants.
    Data from VA indicates that about 180 servicemembers 
separate from the armed services each year with disabilities 
the VA rates as totally disabling. Based on information from VA 
about the number of totally disabled veterans receiving these 
grants, CBO estimates that about 20 servicemembers a year 
typically apply for and receive housing grants averaging 
$37,000 shortly after they separate from the service. According 
to the Department of Defense, servicemembers typically remain 
on active duty about four to six months pending a medical 
separation. CBO expects that being able to apply for and 
potentially receive the adapted housing grants during that time 
period would allow about half of these servicemembers to 
receive the grants one fiscal year earlier than they would have 
otherwise. Thus, CBO estimates that about $370,000 in outlays 
for readjustment benefits that would have occurred in 2005 
would, under H.R. 1460, occur in 2004. We also estimate that 
the net effect on outlays over the 2005-2013 period would be 
negligible because we estimate that outlays of roughly that 
same amount that would have occurred in 2006 and subsequent 
years would also now occur one fiscal year earlier offsetting 
the reduction in outlays in 2005 and subsequent years caused by 
shifting outlays forward.

  Spending subject to appropriation

    Section 3 would establish conditions that federal 
contracting officers may use to award sole service contracts or 
restrict competition for contracts if a small business that is 
owned and controlled by a service-disabled veteran is capable 
of performing a contract. CBO expects that agencies would incur 
additional administrative costs for contracting officers to 
consider such small businesses for contracts, but we estimate 
that these administrative costs would be less than $500,000 
annually.
Intergovernmental and private-sector impact
    H.R. 1460 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments.
Previous CBO estimate
    CEO prepared estimates for two bills that are similar or 
identical to provisions in H.R. 1460. On March 20, 2003, CBO 
transmitted a cost estimate for H.R. 241, the Veterans 
Beneficiary Fairness Act of 2003, as introduced on January 8, 
2003, which is identical to section 6 of H.R. 1460. On April 9, 
2003, CBO transmitted an estimate for H.R. 761, the Disabled 
Servicemembers Adapted Housing Assistance Act of 2003, as 
introduced on February 13, 2003, which is identical to section 
4 of H.R.1460. The cost estimates for sections 6 and 4 are 
identical to those for H.R. 241 and H.R. 761, respectively.
Estimate prepared by:
    Federal Costs:
        Compensation: Melissa E. Zimmerman (226-2840)
        Education Benefits: Sarah T. Jennings (226-2840)
        Housing: Sunita D'Monte (226-2840)
        General Government: Matthew Pickford (226-2860)
    Impact on State, Local, and Tribal Governments: Gregory 
Warring (225-3220)
    Impact on the Private Sector: Carla Tight Murray (226-2900)
Estimate approved by:
    Peter H. Fontaine
    Deputy Assistant Director for Budget Analysis

                     Statement of Federal Mandates

    The preceding Congressional Budget Office cost estimate 
states that the bill contains no intergovernmental or private 
sector mandates as defined in the Unfunded Mandates Reform Act.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *


PART II--GENERAL BENEFITS

           *       *       *       *       *       *       *


CHAPTER 21--SPECIALLY ADAPTED HOUSING FOR DISABLED VETERANS

           *       *       *       *       *       *       *


Sec. 2101. Veterans eligible for assistance

  (a)  * * *

           *       *       *       *       *       *       *

  (c)(1) The Secretary may provide assistance under subsection 
(a) to a member of the Armed Forces serving on active duty who 
is suffering from a disability described in paragraph (1), (2), 
or (3) of that subsection if such disability is the result of 
an injury incurred or disease contracted in or aggravated in 
line of duty in the active military, naval, or air service. 
Such assistance shall be provided to the same extent as 
assistance is provided under that subsection to veterans 
eligible for assistance under that subsection and subject to 
the requirements of the second sentence of that subsection.
  (2) The Secretary may provide assistance under subsection (b) 
to a member of the Armed Forces serving on active duty who is 
suffering from a disability described in subparagraph (A) or 
(B) of paragraph (1) of that subsection if such disability is 
the result of an injury incurred or disease contracted in or 
aggravated in line of duty in the active military, naval, or 
air service. Such assistance shall be provided to the same 
extent as assistance is provided under such subsection to 
veterans eligible for assistance under that subsection and 
subject to the requirements of paragraph (2) of that 
subsection.

           *       *       *       *       *       *       *


PART III--READJUSTMENT AND RELATED BENEFITS

           *       *       *       *       *       *       *


CHAPTER 34--VETERANS' EDUCATIONAL ASSISTANCE

           *       *       *       *       *       *       *


SUBCHAPTER I--PURPOSE; DEFINITIONS

           *       *       *       *       *       *       *


Sec. 3452. Definitions

  For the purposes of this chapter and chapter 36 of this 
title--
  (a)  * * *
  (b) The term ``program of education'' means any curriculum or 
any combination of unit courses or subjects pursued at an 
educational institution which is generally accepted as 
necessary to fulfill requirements for the attainment of a 
predetermined and identified educational, professional, or 
vocational objective. Such term also means any curriculum of 
unit courses or subjects pursued at an educational institution 
which fulfill requirements for the attainment of more than one 
predetermined and identified educational, professional, or 
vocational objective if all the objectives pursued are 
generally recognized as being reasonably related to a single 
career field. Such term also means any unit course or subject, 
or combination of courses or subjects, pursued by an eligible 
veteran at an educational institution, required by the 
Administrator of the Small Business Administration as a 
condition to obtaining financial assistance under the 
provisions of section 7(i)(1) of the Small Business Act (15 
U.S.C. 636(i)(1)). Such term also includes licensing or 
certification tests, the successful completion of which 
demonstrates an individual's possession of the knowledge or 
skill required to enter into, maintain, or advance in 
employment in a predetermined and identified vocation or 
profession, provided such tests and the licensing or 
credentialing organizations or entities that offer such tests 
are approved by the Secretary in accordance with section 3689 
of this title. Such term also includes any course, or 
combination of courses, offered by a qualified provider of 
entrepreneurship courses.
  (c) The term ``educational institution'' means any public or 
private elementary school, secondary school, vocational school, 
correspondence school, business school, junior college, 
teachers' college, college, normal school, professional school, 
university, or scientific or technical institution, or other 
institution furnishing education for adults. For the period 
ending on September 30, 1996, such term includes any entity 
that provides training required for completion of any State-
approved alternative teacher certification program (as 
determined by the Secretary). Such term also includes any 
private entity (that meets such requirements as the Secretary 
may establish) that offers, either directly or under an 
agreement with another entity (that meets such requirements), a 
course or courses to fulfill requirements for the attainment of 
a license or certificate generally recognized as necessary to 
obtain, maintain, or advance in employment in a profession or 
vocation in a high technology occupation (as determined by the 
Secretary). Such term also includes any qualified provider of 
entrepreneurship courses.

           *       *       *       *       *       *       *

  (h) The term ``qualified provider of entrepreneurship 
courses'' means--
          (1) a small business development center described in 
        section 21 of the Small Business Act (15 U.S.C. 648), 
        and
          (2) the National Veterans Business Development 
        Corporation (established under section 33 of such Act 
        (15 U.S.C. 657c)) insofar as the Corporation offers or 
        sponsors an entrepreneurship course (as defined in 
        section 3675(c)(2) of this title).

           *       *       *       *       *       *       *


SUBCHAPTER III--ENROLLMENT

           *       *       *       *       *       *       *


Sec. 3471. Applications; approval

  Any eligible veteran, or any person on active duty (after 
consultation with the appropriate service education officer), 
who desires to initiate a program of education under this 
chapter shall submit an application to the Secretary which 
shall be in such form, and contain such information, as the 
Secretary shall prescribe. The Secretary shall approve such 
application unless the Secretary finds that (1) such veteran or 
person is not eligible for or entitled to the educational 
assistance for which application is made, (2) the veteran's or 
person's selected educational institution or training 
establishment fails to meet any requirement of this chapter or 
chapter 36 of this title, (3) the veteran's or person's 
enrollment in, or pursuit of, the program of education selected 
would violate any provision of this chapter or chapter 36 of 
this title, or (4) the veteran or person is already qualified, 
by reason of previous education or training, for the 
educational, professional, or vocational objective for which 
the program of education is offered. The Secretary shall not 
treat a person as already qualified for the objective of a 
program of education offered by a qualified provider of 
entrepreneurship courses solely because such person is the 
owner or operator of a business. The Secretary shall notify the 
veteran or person of the approval or disapproval of the 
veteran's or person's application.

           *       *       *       *       *       *       *


CHAPTER 36--ADMINISTRATION OF EDUCATIONAL BENEFITS

           *       *       *       *       *       *       *


SUBCHAPTER I--STATE APPROVING AGENCIES

           *       *       *       *       *       *       *


Sec. 3675. Approval of accredited courses

  (a)  * * *

           *       *       *       *       *       *       *

  (c)(1) A State approving agency may approve the 
entrepreneurship courses offered by a qualified provider of 
entrepreneurship courses.
  (2) For purposes of this subsection, the term 
``entrepreneurship course'' means a non-degree, non-credit 
course of business education that enables or assists a person 
to start or enhance a small business enterprise.
  (3) Subsection (a) and paragraphs (1) and (2) of subsection 
(b) do not apply to--
          (A) an entrepreneurship course offered by a qualified 
        provider of entrepreneurship courses; and
          (B) a qualified provider of entrepreneurship courses 
        by reason of such provider offering one or more 
        entrepreneurship courses.

           *       *       *       *       *       *       *


CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS

           *       *       *       *       *       *       *


SUBCHAPTER III--ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


Sec. 3733. Property management

  (a)(1) Of the number of purchases made during any fiscal year 
of real property acquired by the Secretary as the result of a 
default on a loan guaranteed under this chapter for a purpose 
described in section 3710(a) of this title, not more than [65] 
85 percent, nor less than 50 percent, of such purchases may be 
financed by a loan made by the Secretary. [The maximum 
percentage stated in the preceding sentence may be increased to 
80 percent for any fiscal year if the Secretary determines that 
such an increase is necessary in order to maintain the 
effective functioning of the loan guaranty program.]
  [(2) After September 30, 1990, the percentage limitations 
described in paragraph (1) of this subsection shall have no 
effect.]
  [(3)] (2) The Secretary may, beginning on October 1, 1990, 
sell any note evidencing a loan referred to in paragraph (1)--
          (A)  * * *

           *       *       *       *       *       *       *

  [(4)] (3)(A) Except as provided in subparagraph (B) of this 
paragraph, the amount of a loan made by the Secretary to 
finance the purchase of real property from the Secretary 
described in [paragraph (1) of this subsection] paragraph (1) 
may not exceed an amount equal to 95 percent of the purchase 
price of such real property.
  (B)(i) The Secretary may waive the provisions of subparagraph 
(A) of this paragraph in the case of any loan described in 
[paragraph (5) of this subsection] paragraph (4).

           *       *       *       *       *       *       *

  [(5)] (4) The Secretary may include, as part of a loan to 
finance a purchase of real property from the Secretary 
described in [paragraph (1) of this subsection] paragraph (1), 
an amount to be used only for the purpose of rehabilitating 
such property. Such amount may not exceed the amount necessary 
to rehabilitate the property to a habitable state, and payments 
shall be made available periodically as such rehabilitation is 
completed.
  [(6)] (5) The Secretary shall make a loan to finance the sale 
of real property described in [paragraph (1) of this 
subsection] paragraph (1) at an interest rate that is lower 
than the prevailing mortgage market interest rate in areas 
where, and to the extent, the Secretary determines, in light of 
prevailing conditions in the real estate market involved, that 
such lower interest rate is necessary in order to market the 
property competitively and is in the interest of the long-term 
stability and solvency of the Veterans Housing Benefit Program 
Fund established by section 3722(a) of this title.

           *       *       *       *       *       *       *

  (c)(1)  * * *
  (2) The Secretary shall include a summary of the information 
compiled, and the Secretary's findings, under [paragraph (1) of 
this subsection] paragraph (1) in the annual report submitted 
to the Congress under section 529 of this title. As part of 
such summary and findings, the Secretary shall provide a 
separate analysis of the factors which contribute to 
foreclosures of loans which have been assumed.

           *       *       *       *       *       *       *


PART IV--GENERAL ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


CHAPTER 51--CLAIMS, EFFECTIVE DATES, AND PAYMENTS

           *       *       *       *       *       *       *


SUBCHAPTER III--PAYMENT OF BENEFITS

           *       *       *       *       *       *       *


Sec. 5121. Payment of certain accrued benefits upon death of a 
                    beneficiary

  (a) Except as provided in sections 3329 and 3330 of title 31, 
periodic monetary benefits (other than insurance and 
servicemen's indemnity) under laws administered by the 
Secretary to which an individual was entitled at death under 
existing ratings or decisions, or those based on evidence in 
the file at date of death (hereinafter in this section and 
section 5122 of this title referred to as ``accrued benefits'') 
and due and unpaid [for a period not to exceed two years], 
shall, upon the death of such individual be paid as follows:
          (1)  * * *

           *       *       *       *       *       *       *

                              ----------                              


SMALL BUSINESS ACT

           *       *       *       *       *       *       *


SEC. 36. PROCUREMENT PROGRAM FOR SMALL BUSINESS CONCERNS OWNED AND 
                    CONTROLLED BY SERVICE-DISABLED VETERANS.

  (a) Sole Source Contracts.--In accordance with this section 
and not withstanding any other provision of law, a contracting 
officer may award a sole source contract to any small business 
concern owned and controlled by service-disabled veterans if--
          (1) such concern is determined to be a responsible 
        contractor with respect to performance of such contract 
        opportunity and the contracting officer does not have a 
        reasonable expectation that 2 or more small business 
        concerns owned and controlled by service-disabled 
        veterans will submit offers for the contracting 
        opportunity;
          (2) the anticipated award price of the contract 
        (including options) will not exceed--
                  (A) $5,000,000, in the case of a contract 
                opportunity assigned a standard industrial 
                classification code for manufacturing; or
                  (B) $3,000,000, in the case of any other 
                contract opportunity; and
          (3) in the estimation of the contracting officer, the 
        contract award can be made at a fair and reasonable 
        price.
  (b) Restricted Competition.--In accordance with this section 
and not withstanding any other provision of law, a contracting 
officer may award contracts on the basis of competition 
restricted to small business concerns owned and controlled by 
service-disabled veterans if the contracting officer has a 
reasonable expectation that not less than 2 small business 
concerns owned and controlled by service-disabled veterans will 
submit offers and that the award can be made at a fair market 
price.
  (c) Appeal by Administrator.--Not later than 5 days after the 
date on which the Administration is notified of a contracting 
officer's decision not to award a contract opportunity under 
this section to a small business concern owned and controlled 
by service-disabled veterans, the Administrator may notify the 
contracting officer of the intent to appeal the contracting 
officer's decision, and within 15 days of such date the 
Administrator may file a written request for reconsideration of 
the contracting officer's decision with the Secretary of the 
department or agency head.
  (d) Relationship to Other Contracting Preferences.--A 
procurement may not be made from a source on the basis of a 
preference provided under subsection (a) or (b) if the 
procurement would otherwise be made from a different source 
under section 4124 or 4125 of title 18, United States Code, or 
the Javits-Wagner-O'Day Act (41 U.S.C. 46 et seq.).
  (e) Enforcement; Penalties.--Rules similar to the rules of 
paragraphs (5) and (6) of section 8(m) shall apply for purposes 
of this section.
  (f) Contracting Officer.--For purposes of this section, the 
term ``contracting officer'' has the meaning given such term in 
section 27(f)(5) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 423(f)(5)).
  Sec. [36.] 37. All laws and parts of laws inconsistent with 
this Act are hereby repealed to the extent of such 
inconsistency.