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SEC. 1701. AMENDMENTS TO HUBZONE PROVISIONS
OF THE SMALL BUSINESS ACT. (a)
Transfer Of HUBZone Definitions.—
(1) REDESIGNATION.—Section 31 of the
Small Business Act (15 U.S.C. 657a) is amended by
redesignating subsections (b), (c), and (d) as subsections
(c), (d), and (e), respectively.
(2) TRANSFER.—Subsection (p) of section 3 of the Small
Business Act (15 U.S.C. 632(p)) is transferred to section 31
of the Small Business Act (15 U.S.C. 657a), inserted so as to
appear after subsection (a), and redesignated as subsection
(b), and is amended—
(A) by striking “In this Act:” and
inserting “In this section:”;
(B) in paragraph (1)—
(i) by striking “term” and
inserting “terms”; and
(ii) by striking “means” and inserting “or ‘HUBZone’
mean”; and
(C) by striking paragraph (2) (and
redesignating subsequent paragraphs accordingly).
(3) DEFINITION OF QUALIFIED HUBZONE
SMALL BUSINESS CONCERN.—Section 3 of the Small Business Act
(15 U.S.C. 632), as amended by paragraph (2), is further
amended by inserting after subsection (o) the following new
subsection (p):
“(p) Qualified HUBZone Small Business Concern.—In this Act,
the term ‘qualified HUBZone small business concern’ has the
meaning given such term in section 31(b).”.
(4) CONFORMING AMENDMENTS.—
(A) MENTOR-PROTEGE PROGRAM.—Section
831(n)(2)(G) of the National Defense Authorization Act for
Fiscal Year 1991 (Public Law 101–510; 104 Stat. 1607; 10
U.S.C. 2302 note) is amended by striking “section 3(p) of
the Small Business Act (15 U.S.C. 632(p))” and inserting
“section 31(b) of the Small Business Act”.
(B) TITLE 10.—Section 2323 of title 10, United States Code,
is amended by striking “section 3(p) of the Small Business
Act” each place it appears and inserting “section 31(b) of
the Small Business Act”.
(C) SMALL BUSINESS ACT.—Section 8(d)(3)(G) of the Small
Business Act (15 U.S.C. 637(d)(3)(G)) is amended by striking
“section 3(p) of the Small Business Act” and inserting
“section 31(b)”.
(D) COMPREHENSIVE SMALL BUSINESS SUBCONTRACTING
PLANS.—Section 834 of the National Defense Authorization Act
for Fiscal Years 1990 and 1991 (15 U.S.C. 637 note) is
amended by striking “section 3(p)(5) of such Act (15 U.S.C.
632(p)(5))” and inserting “section 31(b) of such Act”.
(E) CONTRACTS FOR COLLECTION SERVICES.—Section 3718 of title
31, United States Code, is amended by striking “section 3(p)
of the Small Business Act” each place it appears and
inserting “section 31(b) of the Small Business Act”.
(F) TITLE 41.—Title 41, United States Code, is amended—
(i) in section 1122, by striking
“section 3(p) of the Small Business Act (15 U.S.C.
632(p))” each place it appears and inserting “section
31(b) of the Small Business Act”; and
(ii) in section 1713, by striking “section 3(p) of the
Small Business Act (15 U.S.C. 632(p))” and inserting
“section 31(b) of the Small Business Act”.
(G) TITLE 49.—Title 49, United
States Code, is amended—
(i) in section 47107, by striking
“section 3(p) of the Small Business Act” each place it
appears and inserting “section 31(b) of the Small Business
Act”; and
(ii) in section 47113(a)(3), by striking “section 3(p) of
the Small Business Act (15 U.S.C. 632(o))” and inserting
“section 31(b) of the Small Business Act”.
(b) Amendments To Definitions Of
Qualified Census Tract And Qualified Nonmetropolitan County.—
(1) IN GENERAL.—Paragraph (3) of
section 31(b) of the Small Business Act (as transferred and
redesignated by subsection (a)) is amended—
(A) in subparagraph (A)—
(i) by amending clause (i) to read
as follows:
“(i) IN GENERAL.—The term ‘qualified census tract’ means a
census tract that is covered by the definition of
‘qualified census tract’ in section 42(d)(5)(B)(ii) of the
Internal Revenue Code of 1986 and that is reflected in an
online tool prepared by the Administrator described under
subsection (d)(7).”; and
(ii) in clause (ii), by inserting “and that is reflected
in the online tool described under clause (i)” after “such
section”; and
(B) in subparagraph (B)—
(i) in the matter preceding clause
(i), by inserting “that is reflected in the online tool
described under subparagraph (A)(i) and” after “any
county”; and
(ii) in clause (ii)—
(I) in subclause (I), by
striking “nonmetropolitan”; and
(II) by striking “the most recent data available” each
place it appears and inserting “a 5-year average of the
available data”.
(2) TECHNICAL AMENDMENTS.—Paragraph
(3)(B) of section 31(b) of the Small Business Act (as
transferred and redesignated by subsection (a)), as amended by
paragraph (1), is further amended—
(A) in clause (i), by striking
“section 42(d)(5)(C)(ii) of the Internal Revenue Code of
1986” and inserting “section 42(d)(5)(B)(ii) of the Internal
Revenue Code of 1986”; and
(B) in clause (ii)(III), by striking “section 42(d)(5)(C)(iii)
of the Internal Revenue Code of 1986” and inserting “section
42(d)(5)(B)(iii) of the Internal Revenue Code of 1986”.
(c) Amendments To Definitions Of Base
Closure Area And Qualified Disaster Area.—Paragraph (3) of
section 31(b) of the Small Business Act (as transferred and
redesignated by subsection (a)), as amended by subsection (b),
is further amended—
(1) by amending clause (ii) of
subparagraph (D) to read as follows:
“(ii) LIMITATION.—A census tract or nonmetropolitan county
described in clause (i) shall be considered to be a base
closure area for a period beginning on the date on which the
Administrator designates such census tract or nonmetropolitan
county as a base closure area and ending on the date on which
the base closure area ceases to be a qualified census tract
under subparagraph (A) or a qualified nonmetropolitan county
under subparagraph (B) in accordance with the online tool
prepared by the Administrator described under subsection
(d)(7), except that such period may not be less than 8
years.”; and
(2) by amending subparagraph (E) to read as follows:
“(E) QUALIFIED DISASTER AREA.—
“(i) IN GENERAL.—Subject to clause
(ii), the term ‘qualified disaster area’ means any census
tract or nonmetropolitan county located in an area where a
major disaster has occurred or an area in which a
catastrophic incident has occurred if such census tract or
nonmetropolitan county ceased to be qualified under
subparagraph (A) or (B), as applicable, during the period
beginning 5 years before the date on which the President
declared the major disaster or the catastrophic incident
occurred.
“(ii) DURATION.—A census tract or nonmetropolitan county
shall be considered to be a qualified disaster area under
clause (i) only for the period of time ending on the date
the area ceases to be a qualified census tract under
subparagraph (A) or a qualified nonmetropolitan county under
subparagraph (B), in accordance with the online tool
prepared by the Administrator described under subsection
(d)(7) and beginning—
“(I) in the case of a major
disaster, on the date on which the President declared the
major disaster for the area in which the census tract or
nonmetropolitan county, as applicable, is located; or
“(II) in the case of a catastrophic incident, on the date
on which the catastrophic incident occurred in the area in
which the census tract or nonmetropolitan county, as
applicable, is located.
“(iii) DEFINITIONS.—In this
subparagraph:
“(I) MAJOR DISASTER.—The term
‘major disaster’ means a major disaster declared by the
President under section 401 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C.
5170).
“(II) OTHER DEFINITIONS.—The terms ‘census tract’ and
‘nonmetropolitan county’ have the meanings given such
terms in subparagraph (D)(iii).”.
(d) Amendment To Definition Of
Redesignated Areas.—Paragraph (3) of section 31(b) of the Small
Business Act (as transferred and redesignated by subsection
(a)), as amended by subsection (c), is further amended by
amending subparagraph (C) to read as follows:
“(C) REDESIGNATED AREA.—The term
‘redesignated area’ means any census tract that ceases to be
qualified under subparagraph (A) and any nonmetropolitan
county that ceases to be qualified under subparagraph (B) for
a period of 3 years after the date on which the census tract
or nonmetropolitan county ceased to be so qualified.”.
(e) Governor-Designated Covered
Area.—Section 31(b) of the Small Business Act (as transferred
and redesignated by subsection (a)), is amended—
(1) in paragraph (1)—
(A) in subparagraph (E), by striking
“or” at the end;
(B) in subparagraph (F), by striking the period at the end
and inserting “; or”; and
(C) by inserting after subparagraph (F) the following new
subparagraph:
“(G) a Governor-designated covered area.”;
(2) in paragraph (3) (as amended by
subsection (c)), by adding at the end the following new
subparagraph:
“(F) GOVERNOR-DESIGNATED COVERED AREA.—
“(i) IN GENERAL.—A
‘Governor-designated covered area’ means a covered area that
the Administrator has designated by approving a petition
described under clause (ii).
“(ii) PETITION.—For a covered area to receive a designation
as a Governor-designated covered area, the Governor of the
State in which the covered area is wholly contained shall
include such covered area in a petition to the Administrator
requesting such a designation. In reviewing a request for
designation included in such a petition, the Administrator
may consider—
“(I) the potential for job
creation and investment in the covered area;
“(II) the demonstrated interest of small business concerns
in the covered area to be designated as a
Governor-designated covered area;
“(III) how State and local government officials have
incorporated the covered area into an economic development
strategy; and
“(IV) if the covered area was a HUBZone before becoming
the subject of the petition, the impact on the covered
area if the Administrator did not approve the petition.
“(iii) LIMITATIONS.—Each calendar
year, a Governor may submit not more than 1 petition
described under clause (ii). Such petition shall include all
covered areas in a State for which the Governor seeks
designation as a Governor-designated covered area, except
that the total number of covered areas included in such
petition may not exceed 10 percent of the total number of
covered areas in the State.
“(iv) CERTIFICATION.—If the Administrator grants a petition
described under clause (ii), the Governor of the
Governor-designated covered area shall, not less frequently
than annually, submit data to the Administrator certifying
that each Governor-designated covered area continues to meet
the requirements of clause (v)(I).
“(v) DEFINITIONS.—In this subparagraph:
“(I) COVERED AREA.—The term
‘covered area’ means an area in a State—
“(aa) that is located outside of
an urbanized area, as determined by the Bureau of the
Census;
“(bb) with a population of not more than 50,000; and
“(cc) for which the average unemployment rate is not
less than 120 percent of the average unemployment rate
of the United States or of the State in which the
covered area is located, whichever is less, based on the
most recent data available from the American Community
Survey conducted by the Bureau of the Census.
“(II) GOVERNOR.—The term
‘Governor’ means the chief executive of a State.
“(III) STATE.—The term ‘State’ means each of the several
States, the District of Columbia, the Commonwealth of
Puerto Rico, the United States Virgin Islands, Guam, the
Commonwealth of the Northern Mariana Islands, and American
Samoa.”.
(f) Repeal Of 5-Year Limitation On
HUBZone Status Of Base Closure Areas.—Section 152(a) of title I
of division K of the Consolidated Appropriations Act, 2005 (15
U.S.C. 632 note) is amended by repealing paragraph (2).
(g) Amendment To Definition Of Qualified HUBZone Small Business
Concern.—Paragraph (4) of section 31(b) of the Small Business
Act (as transferred and redesignated by subsection (a)) is
amended to read as follows:
“(4) QUALIFIED HUBZONE SMALL BUSINESS
CONCERN.—The term ‘qualified HUBZone small business concern’
means a HUBZone small business concern that has been certified
by the Administrator in accordance with the procedures
described in this section.”.
(h) Amendments To HUBZone Program.—
(1) CLARIFICATIONS TO ELIGIBILITY FOR
HUBZONE PROGRAM.—Section 31(d) of the Small Business Act, as
redesignated by subsection (a), is amended to read as follows:
“(d) Eligibility Requirements;
Enforcement.—
“(1) CERTIFICATION.—In order to be
eligible for certification by the Administrator as a
qualified HUBZone small business concern, a HUBZone small
business concern shall submit documentation to the
Administrator stating that—
“(A) at the time of
certification and at each examination conducted pursuant
to paragraph (4), the principal office of the concern is
located in a HUBZone and not fewer than 35 percent of
its employees reside in a HUBZone;
“(B) the concern will attempt to maintain the applicable
employment percentage under subparagraph (A) during the
performance of any contract awarded to such concern on
the basis of a preference provided under subsection (c);
and
“(C) the concern will ensure that the requirements of
section 46 are satisfied with respect to any subcontract
entered into by such concern pursuant to a contract
awarded under this section.
“(2) VERIFICATION.—In carrying out
this section, the Administrator shall establish procedures
relating to—
“(A) the filing, investigation, and
disposition by the Administration of any challenge to the
eligibility of a HUBZone small business concern to receive
assistance under this section (including a challenge, filed
by an interested party, relating to the veracity of
documentation provided to the Administration by such a
concern under paragraph (1)); and
“(B) verification by the Administrator of the accuracy of
any documentation provided by a HUBZone small business
concern under paragraph (1).
“(3) TIMING.—The Administrator shall
verify the eligibility of a HUBZone small business concern
using the procedures described in paragraph (2) within a
reasonable time and not later than 60 days after the date on
which the Administrator receives sufficient and complete
documentation from a HUBZone small business concern under
paragraph (1).
“(4) RECERTIFICATION.—Not later than 3 years after the date
that such HUBZone small business concern was certified as a
qualified HUBZone small business concern, and every 3 years
thereafter, the Administrator shall verify the accuracy of any
documentation provided by a HUBZone small business concern
under paragraph (1) to determine if such HUBZone small
business concern remains a qualified HUBZone small business
concern.
“(5) EXAMINATIONS.—The Administrator shall conduct program
examinations of qualified HUBZone small business concerns,
using a risk-based analysis to select which concerns are
examined, to ensure that any concern examined meets the
requirements of paragraph (1).
“(6) LOSS OF CERTIFICATION.—A HUBZone small business concern
that, based on the results of an examination conducted
pursuant to paragraph (5) no longer meets the requirements of
paragraph (1), shall have 30 days to submit documentation to
the Administrator to be eligible to be certified as a
qualified HUBZone small business concern. During the 30-day
period, such concern may not compete for or be awarded a
contract under this section. If such concern fails to meet the
requirements of paragraph (1) by the last day of the 30-day
period, the Administrator shall not certify such concern as a
qualified HUBZone small business concern.
“(7) HUBZONE ONLINE TOOL.—
“(A) IN GENERAL.—The Administrator
shall develop a publicly accessible online tool that depicts
HUBZones. Such online tool shall be updated—
“(i) with respect to HUBZones
described under subparagraphs (A) and (B) of subsection
(b)(3), beginning on January 1, 2020, and every 5 years
thereafter;
“(ii) with respect to a HUBZone described under subsection
(b)(3)(C), immediately after the area becomes, or ceases
to be, a redesignated area; and
“(iii) with respect to HUBZones described under
subparagraphs (D), (E), and (F) of subsection (b)(3),
immediately after an area is designated as a base closure
area, qualified disaster area, or Governor-designated
covered area, respectively.
“(B) DATA.—The online tool required
under subparagraph (A) shall clearly and conspicuously
provide access to the data used by the Administrator to
determine whether or not an area is a HUBZone in the year in
which the online tool was prepared.
“(C) NOTIFICATION OF UPDATE.—The Administrator shall include
in the online tool a notification of the date on which the
online tool, and the data used to create the online tool,
will be updated.
“(8) LIST OF QUALIFIED HUBZONE SMALL
BUSINESS CONCERNS.—The Administrator shall establish and
publicly maintain on the internet a list of qualified HUBZone
small business concerns that shall—
“(A) to the extent practicable, include the name, address, and
type of business with respect to such concern;
“(B) be updated by the Administrator
not less than annually; and
“(C) be provided upon request to any Federal agency or other
entity.
“(9) PROVISION OF DATA.—Upon the
request of the Administrator, the Secretary of Labor, the
Administrator of the Federal Emergency Management Agency, the
Secretary of Housing and Urban Development, and the Secretary
of the Interior (or the Assistant Secretary for Indian
Affairs), shall promptly provide to the Administrator such
information as the Administrator determines to be necessary to
carry out this subsection.
“(10) PENALTIES.—In addition to the penalties described in
section 16(d), any small business concern that is determined
by the Administrator to have misrepresented the status of that
concern as a ‘qualified HUBZone small business concern’ for
purposes of this section shall be subject to liability for
fraud, including section 1001 of title 18, United States Code,
and sections 3729 through 3733 of title 31, United States
Code.”.
(2) PERFORMANCE METRICS.—Section 31 of the Small Business Act
(15 U.S.C. 657a) is amended—
(A) in subsection (a)—
(i) by inserting “(to be known as
the HUBZone program)” after “program”; and
(ii) by inserting “, including promoting economic
development in economically distressed areas (as defined
in section 7(m)(11)),” after “assistance”;
(B) by redesignating subsection (e)
(as redesignated by subsection (a)) as subsection (f); and
(C) by inserting after subsection (d) the following new
subsection:
“(e) Performance Metrics.—
“(1) IN GENERAL.—Not later than 1 year after the date of the
enactment of this subsection, the Administrator shall
publish performance metrics designed to measure the success
of the HUBZone program established under this section in
meeting the program’s objective of promoting economic
development in economically distressed areas (as defined in
section 7(m)(11)).
“(2) COLLECTING AND MANAGING HUBZONE DATA.—The Administrator
shall develop processes to incentivize each regional office
of the Administration to collect and manage data on HUBZones
within the geographic area served by such regional office.
“(3) REPORT.—Not later than 90 days after the last day of
each fiscal year, the Administrator shall submit to the
Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of the House of
Representatives a report analyzing the data from the
performance metrics established under this subsection and
including—
“(A) the number of HUBZone small business concerns that lost
certification as a qualified HUBZone small business concern
because of the results of an examination performed under
subsection (d)(5); and
“(B) the number of those concerns that did not submit
documentation to be recertified under subsection (d)(6).”.
(3) AUTHORIZATION OF APPROPRIATIONS.—Section 31(f) of the
Small Business Act, as redesignated by paragraph (2), is
amended by striking “fiscal years 2004 through 2006” and
inserting “fiscal years 2020 through 2025”.
(i) Current Qualified HUBZone Small Business Concerns.—A
HUBZone small business concern that was qualified pursuant
to section 3(p)(5) of the Small Business Act on or before
December 31, 2019, shall continue to be considered as a
qualified HUBZone small business concern during the period
beginning on January 1, 2020, and ending on the date that
the Administrator of the Small Business Administration
prepares the online tool depicting qualified areas described
under section 31(d)(7) (as added by subsection (h) of this
section).
(j) Effective Date.—The provisions of this section shall
take effect—
(1) with respect to subsection (i), on the date of the
enactment of this section; and
(2) with respect to subsections (a) through (h), on January
1, 2020.
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Amendments to HUBZone provisions of the Small Business Act (sec.
1701)
The Senate amendment contained a provision (sec. 899C)
that would expand the pool of eligible communities for the Small
Business Administration’s (SBA) Historically Underutilized
Business Zone (HUBZone) program and provides much-needed
flexibility to rural small businesses participating in the
program. This provision would allow governors to directly
petition SBA to designate additional rural areas as HUBZones;
would reduce the number of a small firm’s employees required to
live within a HUBZone from 35 to 33 percent; and would require
SBA’s HUBZone office to make a decision on a governor’s
application within 60 days.
The House bill contained no similar provision.
The House recedes with an amendment that would change the nonmetropolitan county formula, currently used for the SBA
HUBZone program, to the State medium income; this would allow
more than 1,000 more HUBZone areas to qualify for the program.
It would create new performance metrics for the SBA HUBZone
program; it would also require the SBA to conduct biennial and
random program examinations, and if a firm loses certification
due to an examination, it would have 30 days to submit
documentation to the SBA reestablishing certification. It would
require the SBA to process HUBZone applications within 60 days
after submission; require firms to recertify every 3 years;
consolidate the HUBZone statutes from section 3 (definitions)
and section 31 (HUBZone program) into the HUBZone program
section. It would also establish a new time model for the
HUBZone program, recalculating in 5-year increments starting in
2020; requiring the establishment of a new HUBZone map that will
refresh every 5-years (starting in 2020). It would allow State
governors to petition the SBA to certify as a HUBZone in an area
that would otherwise not qualify; would require the SBA to
maintain a list of qualified firms online; update appropriations
language to 2020; and would ensure that Base Realignment and
Closure (BRAC) areas maintain their HUBZone status for a certain
number of years. Finally, this provision would keep current
qualified and redesignated firms eligible until January 1, 2020;
and in 2020, the rest of the provision will be enacted moving
the HUBZone program into its proposed 5-year cycle. |
