Federal Register/Vol. 84, No. 228/Tuesday, November 26, 2019
Total Page：16
File Type：pdf, Size：1020Kb
65222 Federal Register / Vol. 84, No. 228 / Tuesday, November 26, 2019 / Rules and Regulations SMALL BUSINESS ADMINISTRATION program. 83 FR 54812. SBA had not on HUBZone small businesses to issued a comprehensive regulatory continually demonstrate that they meet 13 CFR Parts 115, 121, 125, 126, and amendment to the HUBZone program all eligibility requirements at the time of 127 since the program’s initial each offer and award for any HUBZone RIN 3245–AG38 implementation over twenty years ago. contract opportunity. SBA’s review of the HUBZone program SBA recognizes the challenge many Small Business HUBZone Program and in response to President Trump’s firms face in attempting to meet the Government Contracting Programs directive highlighted several areas that requirement that at least 35% of the needed revision. In order to address firm’s employees live in a HUBZone. AGENCY: U.S. Small Business these deficiencies, SBA proposed to Firms with a significant number of Administration. clarify and modify a number of the employees may have a hard time ACTION: Final rule. regulations implementing the program meeting this requirement because it is to reflect current policies, eliminate often difficult to find a large number of SUMMARY: The U.S. Small Business ambiguities in the regulations, and individuals living in a HUBZone who Administration (SBA or Agency) is reduce burdens on small businesses and possess the necessary qualifications. amending its regulations for the procuring agencies. Smaller firms also have a hard time Historically Underutilized Business The proposed rule initially called for meeting this requirement because the Zone (HUBZone) Program to reduce the a 60-day comment period, with loss of one employee could adversely regulatory burdens imposed on comments due by December 31, 2018. affect their HUBZone eligibility. If a HUBZone small business concerns and Due to the scope and significance of the certified HUBZone small business government agencies, implement new proposed changes, SBA subsequently receives a Federal contract (HUBZone or statutory provisions, and eliminate published a notice in the Federal otherwise), it often must hire additional ambiguities in the regulations. This Register on December 31, 2018 that employees to perform the contract, thus comprehensive revision to the extended the comment period to jeopardizing its status as a certified HUBZone Program clarifies current February 14, 2019. 83 FR 67701. HUBZone small business if it no longer HUBZone Program policies and In addition, SBA proposed to meets the requirement that at least 35% procedures and makes changes that will implement section 1701(i) of the of its employees reside in a HUBZone. benefit the small business community National Defense Authorization Act for This would make it ineligible for any by making the HUBZone Program more Fiscal Year 2018 (NDAA 2018), Public future HUBZone contracts. The 35% efficient and effective. The rule is Law 115–91, 131 Stat. 1283 (December HUBZone residency requirement can intended to make it easier for small 12, 2017), which by amending the also make it hard for service contractors business concerns to understand and definition of ‘‘HUBZone small business to perform contracts in other locations. comply with the program’s concern,’’ allows certain certified For example, if a firm wins a contract requirements and to make the HUBZone HUBZone small business concerns to in another state, it would most likely program a more attractive avenue for maintain their HUBZone status until need to hire additional employees from procuring agencies. 2021. In addition, based on comments that state. If there is no HUBZone near DATES: This rule is effective on received, SBA is implementing sections that location, the firm would have to December 26, 2019. 1701(b), 1701(c), and parts of section hire non-HUBZone residents to perform 1701(h) of the NDAA 2018 that are the contract, which would most likely FOR FURTHER INFORMATION CONTACT: effective January 1, 2020, as discussed make it ineligible for future HUBZone Brenda Fernandez, Office of further below. contracts. Government Contracting, 202–205–7337 A challenge HUBZone participants To alleviate these problems, or [email protected]. have faced over the last two decades is § 126.500(a) of the final rule requires SUPPLEMENTARY INFORMATION: understanding the definitions of key only annual recertification rather than components of the program Background immediate recertification at the time of requirements. HUBZones change based every offer for a HUBZone contract On January 30, 2017, President Trump on economic data. Once certified, it is award. This reduced burden on certified issued Executive Order 13771 directing unrealistic to expect a business concern HUBZone small businesses will allow a federal departments and agencies to or its employees to relocate in order to firm to remain eligible for future reduce regulatory burdens and control attempt to maintain the concern’s HUBZone contracts for an entire year, regulatory costs. In response to this HUBZone status if the area where the without requiring it to demonstrate that directive, SBA initiated a review of all business is located or employees reside it continues to meet all HUBZone of its regulations to determine which loses its HUBZone status. The proposed eligibility requirements at the time it might be revised or eliminated. This rule detailed changes to help the submits an offer for each additional final rule implements revisions to the HUBZone program achieve its intended HUBZone opportunity. A concern HUBZone program. The HUBZone results: Investment and continued would represent that it is a certified program was established pursuant to the employment in distressed communities. HUBZone small business concern at the HUBZone Act of 1997 (HUBZone Act), First, the rule proposed to treat an time of each offer, but its eligibility Title VI of the Small Business individual as a HUBZone resident if that would relate back to the date of its Reauthorization Act of 1997, Public Law individual worked for the firm and certification or recertification, not to the 105–135, enacted December 2, 1997. resided in a HUBZone at the time the date of the offer. The concern would be The stated purpose of the HUBZone concern was certified or recertified as a required to come into compliance with program is to provide for Federal HUBZone small business concern and the 35% HUBZone residency contracting assistance to HUBZone he or she continues to work for that requirement again at the time of its small business concerns. 15 U.S.C. same firm, even if the area where the annual recertification in order to 657a(a). individual lives no longer qualifies as a continue to be eligible for additional On October 31, 2018, SBA published HUBZone or the individual has moved HUBZone contracts after the one-year in the Federal Register a comprehensive to a non-HUBZone area. Second, the certification period. SBA also requested proposal to amend the HUBZone rule proposed to eliminate the burden comments on whether seasonal VerDate Sep<11>2014 16:57 Nov 25, 2019 Jkt 250001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\26NOR2.SGM 26NOR2 Federal Register / Vol. 84, No. 228 / Tuesday, November 26, 2019 / Rules and Regulations 65223 employees can or should be counted such as written offers of employment, also maintains the proposed and still maintain the integrity of the published advertisements seeking consequences for firms that do not meet HUBZone eligibility requirements. employees, and attendance at job fairs.’’ the standard. SBA believes that it is SBA received extensive responses to 13 CFR 126.103. important that firms adhere to the the proposed rule from 98 commenters, SBA believes that it would be helpful requirements. The attempt to maintain which comprised about 370 specific to have clearer guidelines that would standard is already an exception to the comments. SBA addresses each allow firms to adequately plan and general 35% residency requirement, and proposed amendment below, including ensure that they are in fact maintaining SBA believes that a situation in which the disposition of any comments. compliance and continued eligibility. a firm that does not meet this relaxed SBA proposed to amend this definition standard and faces little or no II. Section-by-Section Analysis and by adding that falling below 20% consequence would not further SBA’s Comments Received HUBZone residency during the goal of ensuring firms meet the 1. Definitions performance of a HUBZone contract requirements of the program. would be deemed a failure to attempt to Two comments supported the change The proposed rule revised, added, or maintain compliance with the statutory but requested clarity as to what it means eliminated several definitions set forth 35% HUBZone residency requirement. to attempt to maintain in relation to in 13 CFR 126.103 in order to remove In such a case, SBA would propose that recertification, continued eligibility, and ambiguities and make the HUBZone the concern be decertified from the the change made in § 126.501 providing program easier for firms to use. HUBZone program. SBA requested that certification lasts for one year. SBA proposed to delete the comments on how best to look at this These commenters raised concerns definitions of ‘‘Alaska Native Village’’ 20% minimum requirement, specifically about firms merely hiring several and ‘‘ANCSA’’ (i.e., Alaska Native as to whether a different percentage is employees immediately before an Claims Settlement Act) and incorporate also reasonable and would accomplish upcoming recertification date, those terms in an amended definition of the objectives of the HUBZone program employing those individuals for a short ‘‘Alaska Native Corporation (ANC)’’ to while not unduly burdening firms time to meet the 20% threshold, but make the regulations more readable. performing HUBZone contracts. only for a small window of time right SBA received several comments that did SBA received 20 comments on the before recertification. SBA agrees with not oppose the proposed change but proposed change.