2024-21362. Clarification to HUBZone Program Updates and Clarifications and Potential Reforms

Document Headings

Document headings vary by document type but may contain the following:

1. the agency or agencies that issued and signed a document
2. the number of the CFR title and the number of each part the document amends, proposes to amend, or is directly related to
3. the agency docket number / agency internal file number
4. the RIN which identifies each regulatory action listed in the Unified Agenda of Federal Regulatory and Deregulatory Actions

See the Document Drafting Handbook for more details.

Small Business Administration

1. 13 CFR Part 126

AGENCY:

U.S. Small Business Administration.

ACTION:

Clarification to proposed rule.

SUMMARY:

The U.S. Small Business Administration (SBA or Agency) publishes this document to clarify the scope of a proposed rule published on August 23, 2024. The proposed rule is intended to clarify and improve policies implemented as part of a comprehensive revision to the Historically Underutilized Business Zone (HUBZone) program regulations in 2019; to propose several changes to SBA's size and 8(a) Business Development (BD) regulations, and technical changes to the Women-Owned Small Business (WOSB) and Veteran Small Business Certification (VetCert) programs; and to move program-specific recertification requirements to a new section that would cover all size and status recertification requirements. The proposed rule does not address the exclusion from affiliation available to mentor-protégé joint ventures or the applicability of the HUBZone price evaluation preference to HUBZone joint ventures formed under the Mentor-Protégé Program. Those issues are outside the scope of the proposed rule.

DATES:

Comments on the proposed rule published at 89 FR 68274 (Aug. 23, 2024) must be received on or before October 7, 2024.

ADDRESSES:

You may submit comments, identified by Docket No. SBA-2024-0007 or RIN 3245-AH68, by any of the following methods:

• Federal eRulemaking Portal: https://www.regulations.gov and follow the instructions for submitting comments.
• Mail (for paper submissions): Laura Maas, HUBZone Program, 409 Third Street SW, Washington, DC 20416.

Instructions: All submissions received must include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. All comments received will be posted on https://www.regulations.gov. If you wish to submit confidential business information (CBI) as defined in the User Notice at https://www.regulations.gov, please submit the comments to Laura Maas and highlight the information that you consider to be CBI and explain why you believe this information should be held confidential. SBA will make a final determination as to whether the comments will be published or not.

FOR FURTHER INFORMATION CONTACT:

Laura Maas, Deputy Director, Office of HUBZone, [e-mail], [phone].

SUPPLEMENTARY INFORMATION:

SBA issued a proposed rule concerning the HUBZone program regulations under RIN 3245-AH68. 89 FR 68274 (Aug. 23, 2024). The proposed rule is intended to clarify and improve several regulatory provisions, including those governing HUBZone contract eligibility. The proposed rule would also make several changes to SBA's size and 8(a) Business Development (BD) program regulations. In particular, the rulemaking would consolidate and redesignate the separate recertification requirements for SBA's size, 8(a) BD, HUBZone, Woman-Owned Small Business, and Service-Disabled Veteran-Owned Small Business programs to a new section to reduce confusion and to ensure consistent application of the size and status recertification requirements. ( print page 76752) Additionally, the proposed rule would make several clarifications and changes to the Mentor-Protégé Program. First, it would clarify that mentors must be organized as for-profit business concerns. Second, the rule also proposed to establish consequences and options following the acquisition of a firm that is currently participating as a mentor in SBA's Mentor-Protégé Program. Third, the proposed rule would revise the Mentor-Protégé Program regulations to make clear that a business concern cannot be a protégé for a total of more than 12 years. The proposed rule has a 45-day comment period, with comments due on or before October 7, 2024.

Pursuant to the Agency's Tribal Consultation Policy, SBA consults with Tribes, Alaska Native Corporations (ANC), and other Native communities prior to implementing regulatory or policy changes with a direct and substantial effect on their participation in the HUBZone and 8(a) BD programs. SBA recognizes that regular communication and collaboration between the SBA and its Tribal and ANC stakeholders are vital to improving their program participation experience and maximizing the benefits to Native American communities, even where SBA is not actively considering program policy changes. SBA therefore makes efforts to consult Native communities periodically to obtain input on how the SBA could improve its programs. To these ends, SBA announced that it was holding Tribal consultations concerning the proposed rule and the following two matters. 89 FR 59010 (July 22, 2024).

First, the proposed rule explained that SBA was seeking input on how best to implement Executive Order (E.O.) 14112, Reforming Federal Funding and Support for Tribal Nations To Better Embrace Our Trust Responsibilities and Promote the Next Era of Tribal Self-Determination, which directed agencies to identify and execute policy reforms designed to promote accessible, equitable, and flexible administration of Federal funding and support programs for Tribal Nations to better live up to the Federal Government's trust responsibilities and help address the needs of all Tribal Nations. The Agency requested comments on several potential opportunities for reform as well as one change SBA had already made to address the business and economic development needs of Tribal Nations.

Second, SBA requested comments on prospective policy changes addressing joint venture participation in SBA programs. Specifically, SBA requested input on the perception that mentor-protégé joint ventures are winning an inordinate number of orders issued under small business multiple award contracts and suggestions on how to incentivize a more equitable marketplace for individual small businesses who compete against mentor-protégé joint ventures for multiple award, small business contracts. SBA also sought comments on the perception that small businesses often enter joint ventures to seek multiple award contract awards because procuring agency past performance and experience requirements make it difficult for many small businesses to qualify for the awards individually. SBA explained it was considering whether to propose eliminating the exception to affiliation between an SBA-approved mentor and its protégé for multiple award contracts to address this concern. In the alternative, the Agency might consider proposing a rule that would allow an exclusion from affiliation for a joint venture between a protégé firm and its mentor only for contracts or orders that do not exceed five years. Lastly, the proposed rule stated SBA was considering steps to eliminate the applicability of the HUBZone price evaluation preference to HUBZone joint ventures formed under the Mentor-Protégé Program.

This document clarifies that the above-referenced possible prospective policy change to eliminate or restrict the exclusion from affiliation available to mentor-protégé joint ventures is outside the scope of the proposed rule published on August 23, 2024. Additionally, SBA is not addressing the applicability of the HUBZone price evaluation preference to HUBZone joint ventures formed under the Mentor-Protégé Program as part of this proposed rule. To the extent SBA decides to propose amendments to its mentor-protégé joint venture policies beyond those outlined in the rulemaking published on August 23, 2024, the Agency would do so through a separate proposed notice and comment rulemaking action in which all interested SBA stakeholders may participate.

Jaqueline Robinson-Burnette,

Associate Administrator, Office of Government Contracting and Business Development.