102 STAT. 3872 PUBLIC LAW 100-656—NOV. 15, 1988

(5) The Administration shall, to the maximum extent practicable,
minimize delay, eliminate excess regulation, and require only such
paperwork as may be necessary to effect the orderly and efficient
management of the Program established by section 7(j)(10) of the
Small Business Act (15 U.S.C. 6360X10)) and the award of contracts
pursuant to section 8(a) of such Act (15 U.S.C. 637(a)).

(g) STANDARD INDUSTRIAL CLASSIFICATION CODE LIMITATIONS.—Sec-
tion 8(a)(7) of the Act (15 U.S.C. 637(a)(7)) is amended by—

(1) inserting "(AT after "(7)"; and

(2) adding the following new subparagraph:

"(B) Limitations established by the Administration in its regula-
tions and procedures restricting the award of contracts pursuant to
this subsection to a limited number of standard industrial classifica-
tion codes in an approved business plan shall not be applied in a
manner that inhibits the logical business progression by a partici-
pating small business concern into areas of industrial endeavor
where such concern has the potential for success.".

(h) NON-MANUFACTURER RULE.—Section 8(a) of the Act (15 U.S.C.
637(a)) is further amended by adding the following new paragraph:
"(17)(A) An otherwise responsible business concern that is in
compliance with the requirements of subparagraph (B) shall not be
denied the opportunity to submit and have considered its offer for
any procurement contract for the supply of a product to be let
pursuant to this subsection or subsection (a) of section 15 solely
because such concern is other than the actual manufacturer or
processor of the product to be supplied under the contract.

"(B) To be in compliance with the requirements referred to in
subparagraph (A), such a business concern shall—

"(i) be primarily engaged in the wholesale or retail trade;
"(ii) be a regular dealer, as defined pursuant to section 35(a) of
title 41, United States Code (popularly referred to as the Walsh-
Healey Public Contracts Act), in the product to be offered the
Government or be specifically exempted from such section by
section 7(j)(13)(C); and

"(iii) represent that it will supply the product of a domestic
small business manufacturer or processor, except that, the
Administrator may waive the application of the clause, as it
pertains to the furnishing of a product manufactured or proc-
essed by a small business, for any class of products for which
there are no small business manufacturers or processors in the
Federal market."

SEC. 304. SUBCONTRACTING ASSISTANCE.

(a) ENCOURAGING COMPLIANCE.—Section 8(d)(4) of the Small Busi-
ness Act (15 U.S.C. 637(d)(4)) is amended by adding at the end
thereof the following new subparagraph:

"(F)(i) Each contract subject to the requirements of this paragraph
or paragraph (5) shall contain a clause for the payment of liquidated
damages upon a finding that a prime contractor has failed to make a
good faith effort to comply with the requirements imposed on such
contractor by this subsection.

"(ii) The contractor shall be afforded an opportunity to dem-
onstrate a good faith effort regarding compliance prior to the
contracting officer's final decision regarding the impositon of dam-
ages and the amount thereof. The final decision of a contracting
officer regarding the contractor's obligation to pay such damages, or