Minority Business Development Agency: An Overview of Its History and Current Issues

November 9, 2017 – April 30, 2021 R45015

Minority Business Development Agency:
An Overview of Its History and Current
Issues
Updated April 30, 2021
Congressional Research Service
https://crsreports.congress.gov
R45015

Minority Business Development Agency: An Overview of Its History and Current Issues

Summary
The Department of Commerce’s Minority Business Development Agency (MBDA) is the lead
federal agency dedicated to supporting the growth and global competitiveness of the minority
business community. President Richard Nixon originally established this agency as the Office of
Minority Business Enterprises (OMBE), with the signing of Executive Order 11458. The
MBDA’s mission is to assist minority business enterprises (MBEs) in overcoming social and
economic disadvantages that have limited their participation in the nation’s free enterprise
system. Through a network of local business development centers, the MBDA carries out this
mission by providing technical and managerial expertise, support and resources as well as
advocacy and research on behalf of minority-controlled business enterprises.
The MBDA, and its predecessor OMBE, were created by executive order. The MBDA receives
annual appropriations from Congress. Congress has continued to provide appropriations in
support of the agency's mission even as various Administrations have reorganized and reoriented
the agency and the delivery of its assistance programs and services. The Carter Administration
renamed the agency and refocused its efforts on helping businesses of all sizes develop into
medium and large-scale businesses, particularly in growth industries. In 1981, the Ronald Reagan
Administration established the Minority Business Development Center program, which became
the MBDA's primary method for delivering technical and management services to minority
businesses. The George H.W. Bush Administration proposed eliminating the agency and
transferring its mission to the Small Business Administration (SBA), but ultimately continued the
agency as an entity within the Department of Commerce. The Clinton Administration supported
substantial increases in the agency's budget to fund the establishment of Rural Business
Development Centers, and the activities of the Minority Business Development Centers and
Minority Business Opportunity Committees. The George W. Bush Administration continued
efforts to coordinate the MBDA's programs with the programs of the SBA, pledged to focus its
resources on minority firms with at least $500,000 or more in annual revenues, and to increase
their presence in the global economy. The Obama Administration placed increased emphasis on
quantifying the impact of MBDA activities, increasing the efficient delivery of its services to
minority business communities, and increasing coordination with other federal agencies. The
Trump Administration's first budget request proposed to close out the agency, and later budget
requests proposed to reduce the agency's budget by approximately 75%.
The agency’s activities are designed to expand access to capital, markets, and contracts through
public and private sector programs, policy, and research. Technical assistance and other services
are principally provided to MBEs through specialty projects and a network of business centers
located in areas with the largest concentration of minority populations and the largest number of
minority businesses. The MBDA coordinates with other federal agencies, non-governmental
organizations, and private firms to expand capital access and export opportunities for MBEs.
Although Congress has never enacted a statutory authorization for the agency, it has appropriated
funding for MBDA for over 50 years. Considerations for Congress include the absence of
enabling legislation; the coordination of services for MBEs across federal agencies; and
disagreements over the agency’s funding.
This report will be updated as events warrant.
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Minority Business Development Agency: An Overview of Its History and Current Issues

Congressional Research Service

Minority Business Development Agency: An Overview of Its History and Current Issues

Introduction
The Department of Commerce’s Minority Business Development Agency (MBDA) is the lead
federal agency dedicated to supporting the development and expansion of the minority business
community. Numerous congressional hearings, undergirded by historical and current academic
research, have documented that members of minority groups confront disparities and
disadvantages in creating new businesses or expanding markets and opportunities for existing
minority business enterprises.1 These barriers include difficulty in accessing capital, a lack of
capacity or expertise, and exclusion from business networks. Given these difficulties, Congress
and successive presidential administrations since the Nixon Administration have supported
national policies intended to address these disparities through the MBDA.
The MBDA’s primary mission is to assist minority businesses in achieving entrepreneurial
participation and parity in the nation’s free enterprise system and in overcoming social and
economic disadvantages that have limited their participation in the past. To these ends, the
MBDA is charged with formulating and coordinating federal policies and programs in support of
minority business enterprises by providing technical and managerial expertise, support, and
resources through a network of local business development centers. This report includes
 a discussion of the agency’s origins and authority;
 a brief history of its efforts to meet its mandate and mission;
 the agency’s funding history, including Administration requests and final
appropriations;
 a review of the agency’s recent performance and accomplishments;
 a review of selected assessments and reviews of the agency’s performance; and
 a review of current issues and recommendations for reform.
Although Congress has never enacted a statutory authorization for the agency, it has appropriated
funding for MBDA for the past 48 years. The Trump Administration has proposed reducing the
agency’s funding from $34 million in FY2017 to $6 million for FY2018, with the intent of
terminating the agency. The House Appropriations Committee reported a bill (H.R. 3267) that
was incorporated into the House-passed version of H.R. 3354, which would provide an
appropriation of $34 million for FY2018. The Senate Appropriations Committee also reported a
bill (S. 1662) that recommends an appropriation of $34 million for FY2018.
Agency Origins and Authority: A Brief History
The MBDA was originally established as the Office of Minority Business Enterprises (OMBE) by
President Richard Nixon with the signing of Executive Order (E.O.) 11458 on March 5, 1969.2

1 15 C.F.R. 1400.2, Determination of Group Eligibility for MBDA Assistance, defines Minority Business Enterprise as
a business which is owned or controlled by one or more socially or economically disadvantaged persons. Socially
disadvantaged persons means those persons who have been subjected to cultural, racial, or ethnic prejudice because of
their identity as members of a group without regard to their individual qualities. Economically disadvantaged persons
means those persons whose ability to compete in the free enterprise system has been impaired due to diminished capital
and credit opportunities because of their identity as members of a group without regard to their individual qualities, as
compared to others in the same line of business and competitive market area. Person means a citizen of the United
States or an alien lawfully admitted for permanent residence.
2 Executive Order 11458, “Prescribing Arrangements for Developing and Coordinating a National Program for
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During the 1968 presidential campaign, then Republican candidate Nixon embraced the idea of
“Black Capitalism,” which promoted increasing minority participation in the U.S. economy as
owners and managers as a means of not only promoting economic advancement and parity, but
political power as well. Eager to demonstrate his commitment to these goals and pressed by civil
rights advocates to fulfill his campaign promise, President Nixon chose to bypass Congress and
the legislative process, instead opting to establish a cabinet level committee on minority
enterprise.3 Within the first 100 days of his administration, President Nixon had established the
OMBE as a policy prescription for issues of racial inequality and social injustice.
The mission of the OMBE, as outlined in the E.O. 11458, was threefold:
 encourage the coordination of the plans, operations and programs of the federal
government in ways that strengthen participation of minority businesses in the
activities of federal agencies;
 promote the deployment of the resources of state and local governments,
businesses, trade associations and other nongovernmental entities in support of
minority businesses; and
 establish a clearinghouse that would identify and disseminate information in
support of successful operation of minority business enterprises (MBEs).
E.O. 11458 also established an Advisory Council on Minority Enterprise (ACME), charging it
with advising and supporting the Secretary of Commerce on matters affecting the success of
minority businesses, including recommendations for further actions. During the first two years,
the ACME played a significant role in shaping the OMBE’s agenda. The ACME helped develop
efforts to increase minority participation in franchises.4
Stymied by organizational difficulties, including a lack of cooperation from other cabinet level
departments, an inexperienced staff, and the absence of a dedicated budget, the OMBE struggled
during its first years of operation. It was also handicapped in pursuing its mission by the
Commerce Secretary’s decision “not to become involved in individual cases or with programs at
the operational level and not to seek to encroach upon existing programs functions of other
federal agencies.”5

Minority Business Enterprise,” 34 Federal Register 4937, March 5, 1969.
3 Members of the committee included Secretary of Commerce Maurice Stans; Secretary of Health, Education, and
Welfare Robert H. Finch; Secretary of Housing and Urban Development George Romney; Secretary of Agriculture
Clifford Hardin; and Secretary of Transportation John Volpe; from Dean Kotlowski, “Black Power-Nixon Style: The
Nixon Administration and Minority Business Enterprise,” The Business History Review, vol. 72, no. 3 (Autumn 1998),
p. 420.
4 In 1969, eager to demonstrate results, the OMBE co-sponsored with the Small Business Administration (SBA) what
was dubbed the 25 x 25 x 2 program, which was one of two federal programs focused on increasing minority
participation in the franchise industry. The plan involved the OMBE, during eight separate rounds, recruiting 25
national franchisors who each would commit to awarding 25 franchises to minority owners each year for a two-year
period. See U.S. Congress, Senate Select Committee on Small Business, The Economic Effects of Franchising,
committee print, prepared for the Small Business Administration by Urban B. Ozanne, D.B.A. and Shelby D. Hunt. Ph.
D, Graduate School of Business, the University of Wisconsin, 92nd Cong., 1st sess., September 8, 1971, Committee
Print (Washington: GPO, 1971), pp. 51-55 and pp. 187-198. Two years later, the franchising initiatives and SBA’s
commitment to minority business development were criticized in a 1971 committee print released by the Senate Select
Committee on Small Business. In addition, the OMBE initiated efforts to increase capital assets in minority-controlled
banking institutions to be made available to minority businesses.
5 Dean Kotlowski, “Black Power-Nixon Style: The Nixon Administration and Minority Business Enterprise,” The
Business History Review, vol. 72, no. 3 (Autumn 1998), p. 424.
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E.O. 11625—Expanding Agency Role
To address concerns raised during the initial two years of the OMBE’s operations, President
Nixon, on October 13, 1971, signed E.O. 11625, Prescribing Additional Arrangements for
Developing and Coordinating a National Program for Minority Business Enterprise.6 The new
E.O. was intended to clarify and strengthen the role of OMBE. In remarks made when the new
E.O. was issued, President Nixon noted the following:
This order gives the Secretary a clear mandate to establish and carry out Federal policy
concerning minority enterprise and to coordinate the related efforts of all Federal
departments and agencies. It also directs the departments and agencies to develop
systematic data collection processes concerning their minority enterprise programs and to
cooperate in expanding the overall Federal effort.7
In addition to reinforcing the objectives of the original E.O., the new E.O. called for the OMBE to
create a network of minority business centers. These centers would be charged with providing
managerial and technical assistance to minority businesses and conducting special projects,
including providing direct financial assistance to minority businesses. This development marked
the agency’s evolution from one of an advisory role undertaken principally through the ACME to
one actively supporting the development of minority business enterprises using public-private
partnerships.
Rebranding the Agency
During the Carter Administration, Congress considered, but did not pass, enabling legislation
authorizing the agency and its mission. However, in 1979, the Carter Administration reorganized
and renamed the agency the Minority Business Development Agency. The reorganization was, in
part, a response to reports that characterized the agency efforts in support of minority enterprises
as fragmented, heavily focused on small businesses, and favoring the number of firms assisted
rather than the quality of assistance provided. The Carter Administration efforts were intended to
refocus the agency on assisting “minority businesses develop into medium- and large-size firms
in growth industries that produced jobs, stabilized communities, and improved the overall
economy.”8
Evolving Delivery System
Successive Administrations since the Carter Administration have changed the agency’s focus and
reorganized the delivery of assistance and services. In 1981, the Reagan Administration
established the Minority Business Development Center program (MBDC), which became the
MBDA’s primary method for delivering technical and management services to minority
businesses. The approximately 100 centers, located in metropolitan areas, served as one-stop
service centers intended to address the needs of minority entrepreneurs. The centers focused on

6 Executive Order 11625, “Prescribing Additional Arrangements for Developing and Coordinating a National Program
for Minority Business Enterprise,” 3 C.F.R. §1971-1975.
7 U.S. President (Nixon), “Special Message to the Congress Urging Expansion of the Minority Business Enterprise
Program,” Public Papers of the Presidents of the United States: Richard Nixon 1971, vol. 332 (Washington: GPO,
1972), pp. 1041-1046.
8 U.S. Congress, House Committee on Small Business, Subcommittee on General Oversight and Minority Enterprise,
Establishment of a Minority Business Development Administration in the Department of Commerce, 96th Cong., 2nd
sess., June 9, 1980 (Washington: GPO, 1980), pp. 2-3.
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recruiting and encouraging private corporations to do business with minority firms, including
creating a directory of minority firms and their capabilities. President Ronald Reagan also issued
E.O. 12432, Minority Business Enterprise Development, which required federal agencies with
substantial procurement and grant-making authority to develop plans that encourage minority
business participation in federal procurement, contracts, and grants.9 President George H.W. Bush
proposed eliminating the agency and transferring its mission to the Small Business
Administration (SBA), but ultimately continued the agency as an entity within the Department of
Commerce.
In 1994, President Clinton issued E.O. 12928, Promoting Procurement with Small Businesses
Owned and Controlled by Socially and Economically Disadvantaged Individuals, Historically
Black Colleges and Universities, and Minority Institutions.10 Although E.O. 12928 did not
directly reference E.O. 11625, it reiterated support for expanding access to federal procurement
contracts for businesses owned by socially and economically disadvantaged individuals, black
colleges and universities, and other minority institutions. The Clinton Administration supported
substantial increases in the agency’s budget. In seeking to expand the reach and capacity of the
MBDA, the Clinton Administration sought increases to fund the establishment of Rural Business
Development Centers, and the activities of the MBDCs and Minority Business Opportunity
Committees (MBOC).
In 1996, the agency announced the initiation of a pilot program, the Community Based
Enhancement Services (CBES). According to the Federal Register Notice on March 6, 1996, the
goal of the CBES was “to enable MBDA to enter into strategic alliances, coordinating the
delivery of its services with those of other entities capable of assisting in minority and/or small
and disadvantaged business development in a particular market.”11
An audit of the pilot program found significant deficiencies in MBDA’s administration of the
pilot project, noting that MBDA failed to monitor and assess the grantees’ performance in accord
with its own handbook.12 The report recommended that MBDA develop project-specific
performance measures to reflect the nature of the project, assign staff with adequate technical and
business expertise to monitor project activities, and undertake timely and thorough evaluation to
determine program effectiveness.13
The MBDA, under the George W. Bush Administration, continued efforts to coordinate its
programs with the programs of the SBA supporting minority and disadvantaged firms. The Bush
Administration, based on research findings, pledged to focus its resources on minority firms with
$500,000 or more in annual revenues.14 A report, The State of Minority Business Enterprise,

9 Executive Order 12432, “Minority Business Enterprise Development,” 48 Federal Register 32551, July 14, 1983.
10 Executive Order 12928, “Promoting Procurement With Small Businesses Owned and Controlled by Socially and
Economically Disadvantaged Individuals, Historically Black Colleges and Universities, and Minority Institutions,” 59
Federal Register 48377, September 20, 1994.
11 Department of Commerce, Minority Business Development Agency, “Implementation of Pilot Community-Based
Enhanced Services (CBES) Initiative in Baltimore, Maryland, and the Identification of Other Markets to Be Considered
as Alternatives to the Minority Business Development Center Program for the Delivery of Management and Technical
Assistance to Minority Firms and Entrepreneurs,” 61 Federal Register 8919-8920, March 6, 1996.
12 U.S. Department of Commerce, Office of Inspector General, Minority Business Development Agency Community-
Based Enhanced Services Pilot Project Award Not Effectively Monitored, Final Audit Report No. EDD-9406-8-0002,
Washington, DC, May 1998, pp. i-ii.
13 Ibid., p. 8.
14 U.S. Department of Commerce, Minority Business Development Agency, The State of Minority Business
Enterprises, An Overview of the 2002 Survey of Business Owners, Washington, DC, August 2006, p. 30,
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concluded that minority firms with gross annual receipts of $500,000 or more generated a much
larger percentage of all minority revenues and paid employees compared to minority firms with
annual gross receipts under $500,000.15
The agency funded programs and services include
 National Enterprise Centers staffed by MBDC personnel who provided support
services, including referrals and marketing services, to business entities of
significant size and capacity;
 MBDCs, which provided consultant services to firms with significant growth
potential; and
 MBOCs that provided consulting services, including identifying potential sources
of equity and working capital; assisting minority entrepreneurs gain access to
profitable markets.
The agency also funded a number of projects intended to address communities with special needs
(Special Projects). Other activities included supporting youth entrepreneurship (Emerging
Minority Business Leaders Program), improving access to capital (Equity Capital Access
Committee), and the continued development of an online database of potential procurement and
contracting opportunities.
Global Competitiveness
Starting in the 1990s, the agency began to focus on assisting minority firms to enter and compete
in the global economy. A 2003 MBDA study explored issues and opportunities for minority
businesses seeking international opportunities. The preliminary study’s key findings included the
following observations:
 Minority businesses may not be able to compete directly with massive U.S.
companies that have already established a multinational presence in developed
economies.
 However, by capitalizing on their unique competitive strengths, especially in
developing countries, minority-business enterprises (MBEs) can compete with
larger multinational companies.
 A secondary conclusion is that the quality of information about MBE interaction
with the international economy is badly outdated, and further research must be
conducted. Given the need to design successful policies and programs to support
MBE international expansion, this lack of data is a critical hurdle that must be
overcome.16
During the Obama Administration, in addition to a focus on facilitating entry or expansion of
minority firms into the global market place, increased emphasis was placed on quantifying the

https://www.mbda.gov/sites/mbda.gov/files/migrated/files-attachments/
StateofMinorityBusiness2002SurveyofBusinessOwners.pdf.
15 Sumiye “Sue” Obuko, Ph.D. and Mark Planting, The State of Minority Business Enterprises: An Overview of the
2007 Survey of Business Owners, U.S. Department of Commerce, Minority Business Development Agency,
Washington, DC, December 1, 2007, p. 22, https://www.mbda.gov/sites/mbda.gov/files/migrated/files-attachments/
StateofMinorityBusinessEnterprises.pdf.
16 John Owens and Robert Pazornik, Globalization and Minority-Owned Businesses in the United States: Assessment
and Prospects, Minority Business Development Agency, Preliminary Study, Washington, DC, September 28, 2003, p.
1, https://www.mbda.gov/sites/mbda.gov/files/migrated/files-attachments/MBEintheGlobalEconomy.pdf.
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impact of MBDA activities, increasing the efficient delivery of services to minority business
communities, and increasing coordination with other federal agencies. Federal agencies that have
partnered with MBDA include the SBA, the International Trade Administration, the Import-
Export Bank, the National Institute of Standards and Technology, and the Economic Development
Administration.
Current Programs and Funding Structure
Although the agency provides services to minority businesses of any size, the MBDA primarily
focuses its services on businesses with revenues of at least $1 million annually, in high-growth
areas, or with rapid growth potential in such areas as technology and bio-medicine.17 The agency
provides a number of services principally through a network of business centers located in areas
with the largest concentration of minority populations and the largest number of minority
businesses.
Business Center Program
Located in areas with the largest concentration of minority populations and the largest number of
minority businesses, MBDA business centers provide a range of services to minority-owned firms
seeking to expand to new markets, both foreign and domestic. The range of technical assistance
and business services provided include business consulting, private equity and venture capital
opportunities, facilitating joint ventures and strategic partnerships. The services are provided on a
fee-for-services basis to qualified minority business enterprises by MBDA business center
operators.
Applicants eligible to compete to operate an MBDA business center include nonprofit
organizations, for-profit businesses, state and local governments, institutions of higher education,
and Native American tribal entities. The minimum annual MBDA award to operate a center is
$250,000 a year with a location adjustment for high-cost areas. The contract period typically runs
for three years, with an option for two additional years. Operators are expected to contribute 33%
of the MBDA grant award.
Currently the MBDA funds 31 Business Centers and10 Specialty Centers, including four centers
dedicated to exports; four centers focused on manufacturing; one center focused on capital
formation; and one center dedicated to procurement.
The range of services currently offered by MBDA is identified in Table 1.
Table 1. MBDA Programs and Activities
Programs
Activities
Business Services
Help clients conduct risk analysis and identify: international trade
opportunities; sources of capital; procurement, contract and
subcontracting opportunities; and strategies to expand market footprint.
Capital Pathways Program
Free, and nationwide workshop series provides minority entrepreneurs
with up-front credit counseling, business lending options, and technical
assistance.

17 The SBA is also a source of funding for minority small businesses and often partners with MBDA in providing
assistance to minority firms. MBDA often provides technical and management assistance by helping a minority
business entity qualify for SBA’s Section (8)(a) small disadvantage business program.
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Programs
Activities
Grants Competition
Encourage proposals for new programs, education, outreach, innovative
projects or sponsorships that are not addressed through the business
center program. This announcement is not a method for awarding
congressionally directed funds or existing funded awards.
Inclusive Innovation Initiative (I-3)
I-3 is a national effort to increase the participation of minority business
enterprises (MBEs) and minority-serving institutions in technology
transfer. The initiative wil focus on expanding opportunities for MBEs
engaged in developing innovative business solutions in today’s top emerging
industries and the innovations of the future.
Mil ennials Entrepreneurs Redefined Provide resources and connect a national network of minority community's
most promising entrepreneurs. Serving diverse mil ennials (aged 18-35)
who (a) have not yet started a business but have an innovative idea, or (b)
have an emerging business with less than $10,000 in capital and/or revenue.
Office of Native American Business
Help clients conduct risk analysis and develop strategies that wil expand
Development
their market footprint by assisting them in identifying international trade
opportunities; sources of capital; and procurement, contracting and
subcontracting opportunities.
Path to Sustainability Contracting
A pilot program to help improve the number and dol ar value of contracts
Initiative Project
awarded to minority-serving institutions (MSIs). The Path to Sustainability
Contracting Initiative Project is to evaluate existing programs and help
develop new minority owned public private research partnerships.
Pipeline to Inclusive Innovation
Pipeline to Inclusive Innovation (PII) Initiative aims to increase the number
Initiative
of under-represented inventors, scientists and technology-focused minority
business enterprises engaged in federally-funded innovation and technology
programs.
Tribal Consultations
Tribal consultations are intended to provide a venue for tribal leaders to
share insights, make recommendations and discuss concerns regarding
MBDA’s business development and entrepreneurial services in Indian
Country. MBDA operates five business centers with an expertise in
American Indian-Alaska Native business. They are located in Anchorage,
AK; Bismarck, ND; Fresno, CA; Santa Fe, NM; and Tulsa, OK.
Source: MBDA, 2017.
Funding History
Despite efforts to provide a statutory mandate for the mission of the MBDA, Congress has not
enacted enabling legislation during the agency’s 48-year history. Instead, Congress has continued
to provide appropriations in support of the agency’s mission even as various Administrations
have reorganized and reoriented the agency and its mission or considered defunding the agency’s
activities and merging its mission with that of the SBA.
Since its inception as OMBE, appropriations in support of the agency’s activities and operations
have totaled over $1.8 billion dollars. Since 1996, the agency’s annual appropriations have
remained relatively unchanged, fluctuating between $25 million and $31.5 million in nominal,
noninflation adjusted dollars. Figure 1 is a graphic representation of OMBE/MBDA
appropriations history from FY1970 to FY2017 as detailed in Error! Reference source not found..
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Figure 1. OMBE/MBDA Appropriations History: 1970 to 2017

Source: Budget Appendices of the United States.
During the agency’s 48-year history Congress has appropriated approximately $1.8 billion in
support of the agency’s mission, as shown in Error! Reference source not found..
Table 2. MBDA Appropriations, FY1970 – FY2021
(in millions of dollars)
Fiscal Year
Admin. Request
Enacted
1970
1.5
1.2
1971
1.8
2.1
1972
3.5
43.6
1972 supplemental
40
40
1973
63.6
63.9
1974
74.5
35.6
1975
52
52
1976
52.6
49.8
1977
0
50.3
1978
50.3
49.4
1979
60.6
57.9
1980
58.8
58.9
1981
62.9
59.6
1982
65.4
56.6
1983
50
47.3
1984
54
53.9
1985
49.6
49.6
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Fiscal Year
Admin. Request
Enacted
1986
44.8
43
1987
45.4
39.8
1988
4.6
39.7
1989
0
39.7
1990
0
39.7
1991
46.2
41.1
1992
0
42.6
1993
37.9
37.9
1994
46
44.1
1995
46.2
43.8
1996
47.9
32
1997
34
28
1998
28
25
1999
28.1
27.3
2000
27.6
27.3
2001
28.2
27.3
2002
28.4
28.3
2003
29.8
28.9
2004
29.5
28.9
2005
34.5
29.9
2006
30.7
30
2007
29.6
30
2008
28.7
28.6
2009
29
29.8
2010
31
31.5
2011
32.3
30.3
2012
32.3
30.3
2013
28.7
27.5
2014
29.3
28
2015
28.3
30
2016
30
32
2017
35.6
34
2018
6
39
2019
10
40
2020
10
42
2020 supplemental

10
2021
10.3
48
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Fiscal Year
Admin. Request
Enacted
2021 supplemental

25
Source: Budget Appendices of the United States.

FY2018 Appropriations
Trump Administration Budget Request
The Trump Administration’s proposed budget for FY2018 requested $6 million for MBDA. This
amount is significantly less than the $34 million appropriated for FY2017. This amount,
moreover, would be used to facilitate the termination of the agency and the orderly closeout of its
activities beginning in 2018. According to budget documents, the Administration supports the
termination of the MDBA and its programs as part of its wider efforts to reduce federal spending
and to redefine the role of the federal government in domestic affairs. MBDA and its activities are
among a number of federal programs that support private sector job creation.18 The
Administration’s opposition may be rooted in a view of federalism which argues that these kinds
of activities are rightly the responsibilities of state and local governments and the private and
nonprofit sectors, not the federal government. Supporters of the MBDA contend that the agency’s
mission is critical to the nation’s economic future and that the agency’s programs and services
address a number of deficiencies and impediments faced by minority entrepreneurs.
Table 3. MBDA Appropriations: FY2018
(in millions of dollars)
FY2017
FY2018
S. Approp.
Admin.
House Passed
Committee
Actual
Request
(H.R. 3354)
(S. 1662)
Final
34.0
6.0
34.0
34.0
—
Source: FY2018 Budget Appendix.
House-Passed Bill
On July 13, 2017, the House Appropriations Committee approved the FY2018 Commerce,
Justice, Science and Related Agencies (CJS) appropriations bill (H.R. 3267) by a vote of 31-21.
This bill would provide an appropriation of $34 million for the MBDA activities and expenses for

18 Other agencies and programs that support private job creation and economic development include programs of the
Small Business Administration; federally chartered regional economic development agencies, including the
Appalachian Regional Commission, the Delta Regional Authority, the Northern Great Plains Regional Development
Authority, the Denali Commission, the Southeast Crescent Commission, the Southwest Regional Authority, and the
Northern-tier Regional Commission; the Economic Development Administration and its programs; the rural
development programs administered by the Rural Development Administration of the Department of Agriculture; and
the Community Development Block Grant program administered by the Department of Housing and Urban
Development.
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FY2018. The report accompanying the bill (H.Rept. 115-231) includes language that would direct
the MBDA to allocate at least 50% ($17 million) of its appropriation through cooperative
agreements, external awards, and grants.19 Report language would also direct the MBDA to
submit a report to the Committee on the state of minority businesses, including an evaluation of
their access to capital. This report is to be submitted to the Committee within 180 days after
enactment of the bill.20 The language of the bill was incorporated into an FY2018 omnibus
appropriation measure, H.R. 3354, which passed the House on September 14, 2017.
Senate Appropriations Committee Bill
On July 27, 2017, the Senate Appropriations Committee reported (S.Rept. 115-139) its version of
FY2018 CJS appropriations bill (S. 1662). The committee-reported bill recommends $34 million
for MBDA activities. This is the same amount appropriated for MBDA activities in FY2017. The
report accompanying the bill acknowledges the unique role MBDA plays as the only federal
agency dedicated exclusively to promoting and assisting minority owned businesses, and
encourages the agency to submit an annual report to Congress, including recommendations on
improving minority businesses access to capital. For a review of FY2018 budget request and
recommendations see Table 3.
Continuing Resolution
Congress did not complete the FY2018 appropriations process for CJS, including MBDA, before
the beginning of fiscal year. On September 8, 2017, Congress passed the Continuing
Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act,
2017, P.L. 115-56. The act funds MBDA at the same rate provided in the Consolidated
Appropriation Act for FY2017, P.L. 115-31, minus a 0.6791% rescission, until December 8, 2017,
or until the FY2018 CJS appropriations are signed into law.
Agency Performance and Accomplishments
The MBDA measures its effectiveness using a number of performance measures. According to
the latest data available, FY2015, the MBDA reported 26,896 jobs were created or retained with
the assistance of MBDA resources. MBDA jobs created or retained included the number of new
full-time and/or part-time positions reported on the client’s payroll, and positions MBDA clients
would have eliminated without the contract and/or financing obtained with the help of MBDA.
Nearly 100,000 jobs were created or retained from FY2012 through FY2015. (See Table 4.)
The source of data regarding contracts, financial transactions, and jobs created/retained are
reported by MBDA Business Centers and are verified by MBDA headquarters staff. The
performance data date of retrieval was January 21, 2015.
Table 4. Jobs Created and Retained: FY2012 to FY2015

2012
2013
2014
2015
Total
Jobs Created
6,498
11,575
14,319
12,507
44,899
Jobs Retained
10,224
14,129
16,337
14,389
55,079

19 U.S. Congress, House Committee on Appropriations, Commerce, Justice, Science, and Related Agencies
Appropriations Bill, 2018, 115th Cong., 1st sess., July 17, 2017, H.Rept. 115-231 (Washington: GPO, 2017), p. 7.
20 Ibid.
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2012
2013
2014
2015
Total
Total
16,722
25,704
30,656
26,896
99,978
Source: MBDA.
The total dollar value of contracts awarded to, and capital secured by minority businesses with the
assistance of MBDA for FY2015 totaled $5.9 billion, with $4.3 billion in private sector capital
and contracts representing 72% of the total (see Figure 2). At 14.7%, federal contracts and capital
awarded to minority firms in FY2015 accounted for the second highest sector (see Table 5).
Table 5. FY2015 Contracts and Capital by Sector Source
(in millions of dollars)

Public Sector

Not

Private
Federal
State
Local
Disclosed
Total
Dol ar Value of Contracts a
2,457.1
781.3
235.2
238.6
260.7
3,978.9
Dol ar Value of Capital b
1,815.4
90.0
5.6
15.9
15.0
1,941.9
Total Dol ar Value
4,272.5
871.3
240.8
254.5
275.7
5,920.8
Percentage of Total Dol ar Value
72.2
14.7
4.1
4.3
4.7
100.0
Source: MBDA Annual Performance Report, 2015.
a. Dol ar Value of Awarded Contracts and Procurements represents the total dol ar value of successful y
awarded contracts and/or the total principal value of executed sales/delivery contracts of
services/products/intellectual rights and/or other binding financial considerations secured by clients of the
MBDA Business Centers, with the assistance of Center staff. For purposes of this performance element,
Dol ar Value of Awarded Contracts and Procurements are those transactions which have a specific dol ar
value, and which produce a commercial benefit for the client firm.
b. Dol ar Value of Awarded Financial Transactions represents the total principal value of approved loans,
equity financings, bonds, leases (property and equipment), assets under management or other binding
financial agreements secured by clients of the MBDA Business Centers with the assistance of Center staff.
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Minority Business Development Agency: An Overview of Its History and Current Issues

Figure 2. Percent Distribution of Contracts Awarded and Capital Secured by MBDA
Assisted Minority Business Enterprises: FY2015

Source: MBDA Performance Report, 2015.
As detailed in Table 6, Return on Taxpayer Investment (ROI) is intended to measure the
effectiveness of MBDA annual appropriations in leveraging or attracting other investments. To
calculate ROI the total value of contracts and capital obtained by clients as a result of their work
with MBDA is divided by the Agency’s fiscal year budget appropriation. In FY2014, $247.6 in
total investments was generated by every $1 in MBDA funds appropriated. In FY2015, the ratio
declined to $197.4 for every $1 in funds appropriated.
Table 6. Return on Taxpayer Investments

2012
2013
2014
2015
Total Investment ($ in mil ion)
3,584.5
4,789.5
6,933.7
5,920.8
Total Appropriation( $ in
30.3
27.5
28.0
30.0
mil ions)
Return on Taxpayer Investment
118.3
174.2
247.6
197.4
Sources: MBDA and the fol owing appropriations acts: P.L. 112-55; P.L. 113-6; P.L. 113-76; and P.L. 113-235.
Assessments and Evaluations
During its 48-year history, MBDA has been the subject of numerous critical reports. These reports
have examined the agency’s efficacy in creating and assisting minority businesses, performance
measures used to gauge progress in achieving agency objectives, and program management and
duplication issues.
PART Evaluation 2007
Starting in 2002, the George W. Bush Administration initiated its Program Assessment Rating
Tool (PART) as a means of evaluating the effectiveness of federal programs. The PART
instrument was a set of questionnaires focused on four elements: purpose and design; strategic
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planning; program management; and program outcomes. A PART evaluation of the agency
conducted in 2007 found MBDA performance to be Adequate with high marks for program
purpose and design (80%); strategic planning (75%); and program management (100%).21 Among
the highlights, the evaluation noted the following:
 The program has developed appropriate annual and long-term measures that
focused on the direct impact of its assistance on business clients. However, more
research and evaluation needs to be conducted on the long-term impact of MBDA
assistance.
 The program has strong management. It awards grants using a competitive
process, and provides sufficient oversight of grant activities, including tracking
of progress towards meeting performance goals.
 While MBDA is focused on minority small businesses, there are many other
sources of business assistance and support at the federal, state, and local level. At
the federal level, the SBA provides similar assistance through its entrepreneurial
development programs.22
Office of Inspector General Reports
Past reports of the Commerce Department’s Office of Inspector General (IG) examined various
aspects of the agency and its operations. Two of the reports are summarized below.23
 A 2006 report by the Department of Commerce IG found that MBDA
performance measures were undermined by inappropriately combining results for
three different programs and unreliable performance data. The report was
initiated after the agency reported a 300% increase in the number of clients
assisted during the 2004 program year by MBOCs despite a decrease in FY2004
appropriations. The report found that MBDA, in reporting FY2004 results,
inappropriately combined results for MBOCs with two other programs (Business
Development Centers and the Phoenix program), resulting in the inflation of the
number of clients served by MBOCs.24 The MBDA director concurred with the
recommendations of the report, which directed MBDA to define clearly key
performance measures and the types of actions that may be counted toward
measuring the “dollar value of contract awards obtained,” and report
performance measures of its programs separately.
 A 1998 audit report by the IG identified deficiencies in the process MBDA used
to monitor the performance of a pilot project that would test the viability of the
Community-Based Enhancement Services initiatives as an alternative to the
Minority Business Development Center. The IG report found that MBDA

21 Office of Management and Budget, Program Assessment: Minority Business Development Agency, Washington, DC,
2007, https://obamawhitehouse.archives.gov/sites/default/files/omb/assets/omb/expectmore/summary/
10000034.2007.html.
22 Ibid.
23 Another report of note is the U.S. Government Accountability Office, Minority Business Development Agency Needs
to Address Program Weaknesses, RCED-91-114, April 16, 1991, http://www.gao.gov/products/RCED-91-114.
24 Department of Commerce, Office of Inspector General, Minority Business Development Agency Value of MBDA
Performance Measures is Undermined by Inappropriate Combining of Program Results and Unreliable Performance
Data from MBOC Program, /FSD-17252-5-0001, Washington, DC, September 2005, https://www.oig.doc.gov/
OIGPublications/MBDA-FSD-17252-5-0001-09-2005.pdf.
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monitoring of the pilot project failed to follow the agency’s written policies and
procedures and thus was ineffective in its assessment of the program. The MBDA
concurred with the findings of the report and voiced a commitment to:
incorporating the recommendations put forth by the report, which included
assigning staff with appropriate expertise who will follow MBDA policies and
procedures; and developing project specific performance measures and specific
reporting requirements to reflect the specific nature of the project.25
Legislative Proposals
After promulgating E.O. 11458, creating the MBDA, the Nixon Administration announced on a
number of occasions its intention to introduce legislation that would have provided statutory
authority for the activities of the newly created OMBE. Despite these pronouncements, the Nixon
Administration did not propose enabling legislation. Since its inception, a number of bills have
been introduced that would have provided statutory authority for the agency and its mission. The
following is a list of bills introduced in past Congresses that would have established statutory
authority for the agency and its activities. No bills were introduced during the 114th Congress that
would authorize the MBDA.
1. The 96th Congress considered, but did not pass, legislative proposals that would
have provided a statutory mandate for the agency and its mission. The House
Committee on Small Business held hearings on bills (H.R. 6904 and S. 2565) that
would have established a permanent MBDA within the Department of
Commerce.26 The House bill, introduced by Representatives Parren Mitchell and
Joseph Addabbo, would have granted the agency the authority to engage in a
number of activities in support of the agency’s mission, including equity
financing of minority business; financial and technical assistance in penetrating
domestic and foreign markets; and minority business management education. A
Senate bill, S. 2565, introduced by Senator Abraham Ribicoff and backed by the
Carter Administration, would have authorized the creation of a Minority Business
Development Agency focused on the provision of technical assistance to minority
firms. The Senate bill included much of the language of E.O. 11625.
2. During the 99th Congress, Representative Parren Mitchell introduced H.R. 4632,
a bill that would have denied any appropriations to the MBDA to avoid potential
duplication of services with the SBA’s Associate Administrator for Minority
Small Business and Capital Ownership Development. The activities of the
MBDA, as well as any unexpended balances, would have been transferred to the
SBA Associate Administrator for Minority Small Business and Capital
Ownership Development.
3. During the 101st through the 104th Congress, Representative Kweisi Mfume
introduced legislation (H.R. 1769, H.R. 373, H.R. 278, H.R. 114, respectively)
that would have re-designated MBDA as the Minority Business Development
Administration. The bill would have directed the MBDA to assist disadvantaged

25 United States Department of Commerce, Office of the Inspector General, Minority Business Development Agency
Community-Based Enhancement Services Pilot Project Award Not Effectively Monitored, EDD-9406-8-0002,
Washington, DC, June 1998, p. 8, https://www.oig.doc.gov/OIGPublications/MBDA-EDD-9406-2-06-1998.pdf.
26 Department of Commerce, National Advisory Council on Minority Business Enterprise Recommendations,
Washington, DC, December 2013, https://www.mbda.gov/sites/mbda.gov/files/migrated/files-attachments/
NACMBEFinalReport041314.PDF.
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Minority Business Development Agency: An Overview of Its History and Current Issues

businesses penetrate domestic and foreign markets; encourage firms to form joint
ventures to increase their share of the market; provide financial assistance to
public and private entities in support of the mission of MBDA; conduct pilot
projects that would assist disadvantaged businesses obtain and expand access to
capital; support management education efforts; and conduct research aimed at
advancing the nation’s understanding of the issues and opportunities surrounding
minority business enterprises.
4. During the 111th Congress, Senator Bob Casey introduced S. 4026, the Minority
Business Development Improvements Act of 2010. This bill would have required
that the MBDA establish the Minority Business Development Program and
charged it with providing qualified minority businesses with technical assistance
and contract procurement assistance. This bill would have also outlined minority
business qualification requirements for the program. It would have required that
(1) not less than 51% of the qualified minority business is directly and
unconditionally owned or controlled by historically disadvantaged individuals;
and (2) each officer or other individual exercising control over regular operations
would meet the definition of a historically disadvantaged individual.
Additionally, the bill would have authorized the program to provide technical
assistance to qualified disadvantaged businesses and support efforts to expand
federal procurement opportunities for disadvantaged businesses. Also during the
111th Congress, Representative Bobby L. Rush introduced H.R. 4343, the
Minority Business Development Improvements Act of 2009, which would have
required the National Director of the Minority Business Development Agency to
establish and administer a Minority Business Development Program focused on
providing loan guarantees, technical assistance, and contract procurement
assistance to qualified minority businesses. The bill would have defined a
qualified minority business as an entity in which 51% of the entity is directly
owned and controlled by historically disadvantaged individuals. In addition, the
net worth of each principle of the minority business entity did not exceed $2
million. The bill would have directed the National Director of MBDA to: (1)
establish a database to assist prime contractors in identifying historically
disadvantaged firms for subcontracting, (2) enter into agreements to provide set-
aside contracting opportunities to minority businesses, and (3) terminate a
minority business from the program for specified violations. Representative Rush
also introduced H.R. 4929, Expanding Opportunities for Main Street Act of 2010.
This bill included a provision that would have required MBDA to establish a
Minority Business Development Program with the objective of providing
technical assistance, loan guarantees, and contract procurement assistance to
minority businesses. This bill would have also authorized MBDA to (1) enter into
agreements to provide set-aside contracting opportunities to minority businesses;
and (2) terminate a minority business from the program for specified violations.
This bill would have also required MBDA to establish a database to assist prime
contractors in identifying historically disadvantaged firms for subcontracting.
5. During the 112th Congress, Senator Udall introduced S. 1334, Expanding
Opportunities for Main Street Act of 2011. An identical bill (H.R. 2424) was
introduced by Representative Rush. Both bills’ MBDA provisions are identical to
provisions included in H.R. 4929, introduced by Representative Rush during the
111th Congress.
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Minority Business Development Agency: An Overview of Its History and Current Issues

6. During the 113th Congress, Representative Bobby Rush introduced H.R. 2551,
Expanding Opportunities for Main Street Act. Title II of the bill deals exclusively
with the MBDA and include same provisions included in H.R. 4343, introduced
during the 111th Congress.
Current Issues and Recommendations for Reform
In 2012, the National Advisory Council on Minority Business Enterprise (NACMBE) released a
set of recommendations aimed at improving MBDA’s effectiveness. The NACMBE, which was
created by the Obama Administration in 2010, is a voluntary body comprised of representatives
from business and nonprofit sectors. The 2012 recommendations included the following:
 centralizing and consolidating minority business development efforts of the
federal government into one single well-funded agency;
 assisting minority-owned businesses’ development long-term contractual
relations with larger business enterprises that would facilitate integration;
 expanding access to capital by establishing new sources of capital through the
use of tax credits in exchange for equity capital investments in minority-owned
businesses or by an enterprise bond fund;
 establishing an MBE Academy that would provide ongoing education to minority
business owners through a public private partnership; and
 building a comprehensive longitudinal database that supports long-term policy
analysis of the issues and opportunities.27
Duplication of SBA Activities
Whether the MBDA complements or duplicates the activities of SBA programs targeted to the
socially and economically disadvantaged has been a perennial issue. Although there have been
several calls for the termination of the MBDA and the transfer of its activities to the SBA, there
have also been suggestions put forth that SBA programs that support minority business
development should be transferred to MBDA. Proponents of the MBDA have consistently argued
that the agency focus complements rather than conflicts with the goals of SBA. The MBDA
focuses on enhancing the capacity and reach of medium and large scale minority firms, while
leaving primary support for small and startup minority firms to the SBA.
Absence of Enabling Legislation
The MBDA’s creation by executive order means that the agency’s continued existence or
termination is the decision of each new President. Though there have been a number of past
proposals that would have provided statutory authority for the MBDA, none of these proposals
have been passed. Absent specific statutory requirements, the President may exercise authority to
effectively terminate the discretionary activities of the agency at any time without congressional
consultation or consent. Nevertheless, Congress may choose to appropriate funds specifically to

27 Department of Commerce, National Advisory Council on Minority Business Enterprise Recommendations,
Washington, DC, December 2013, https://www.mbda.gov/sites/mbda.gov/files/migrated/files-attachments/
NACMBEFinalReport041314.PDF.
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Minority Business Development Agency: An Overview of Its History and Current Issues

carry out such purposes, and potentially supersede Presidential discretion.28 In addition, Congress
may act to revoke or modify the executive order. It may also act to support the executive order by
codifying its provisions.29

Author Information

Julie M. Lawhorn

Analyst in Economic Development Policy

Acknowledgments
This report was originally authored by retired CRS Analyst, Eugene Boyd. Mr. Boyd received research
from Christina Miracle Finch in the preparation of this report.

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

28 In general, when Congress appropriates a specific amount of budget authority for a specific purpose, the President
has only limited authority to order executive branch agencies to reduce or withhold funds. Decisions by federal courts,
including a unanimous decision by the Supreme Court in Train v City of New York, 420 U.S. 35 (1975), and the
enactment of the Congressional Budget and Impoundment Control Act of 1974, P.L. 93-344, clarified this. Specifically,
under ICA, the President can withhold funds for a limited time if he complies with specific reporting requirements to
Congress, but he cannot permanently prevent the obligation or expenditure of funds provided in law unless Congress
agrees.
29 For a discussion of congressional revocation and modification of executive orders see CRS Report RS20846,
Executive Orders: Issuance, Modification, and Revocation, by Todd Garvey.
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