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SBA has been reviewing its processes and procedures for implementing the HUBZone program and has determined that several of the regulations governing the program should be amended in order to resolve certain issues that have arisen. As a result, the proposed rule would constitute a comprehensive revision of part 126 of SBA's regulations to clarify current HUBZone Program regulations, and implement various new procedures. The amendments will make it easier for participants to comply with the program requirements and enable them to maximize the benefits afforded by participation. In developing this proposed rule, SBA will focus on the principles of Executive Orders 12866, 13771, and 13563 to determine whether portions of regulations should be modified, streamlined, expanded or repealed to make the HUBZone program more effective and/or less burdensome on small business concerns. At the same time, SBA will maintain a framework that helps identify and reduce waste, fraud, and abuse in the program.

Statement of Need:

The purpose of the proposed rule is to increase economic investment and employment in Historically Underutilized Business Zones (HUBZones).

Summary of the Legal Basis:

The rule makes a number of changes necessary to clarify the HUBZone program's regulations and to make the program easier to use for small business contractors and procuring agencies.

Alternatives:

The alternative to the proposed regulations would be the status quo, where businesses cannot request reconsideration when their application is denied, must be eligible at the time of offer and time of award, and must recertify every 3 years. SBA has modeled the revised processes based on its other contracting programs (e.g., 8(a) request for reconsideration and annual review) and believes that these processes have worked well for these programs and should therefore be utilized for the HUBZone program.

Anticipated Costs and Benefits:

Overall, this proposed rule would reduce annual burden on HUBZone small business concerns. The proposed implementation of a formal request for reconsideration process would provide consistency in the processes for SBA’s programs and would be beneficial to HUBZone applicants because it would allow them to correct deficiencies and come into compliance without waiting 90 days to reapply for the program.  This should enable additional firms to be more quickly certified for the HUBZone program, allowing them to seek and be awarded HUBZone contracts sooner. SBA estimates that the proposed reconsideration process would increase the annual hourly burden on small business concerns applying to the HUBZone program by approximately 15 hours. The proposed requirement for HUBZone small business concerns to recertify annually to SBA that they continue to meet all of the HUBZone eligibility requirements, instead of requiring them to undergo a recertification every three years, would increase the annual hourly burden by approximately 3,800 hours.  The proposed change removing the requirement for HUBZone small business concerns to represent or certify that they are eligible at the time of offer and award for every HUBZone contract would reduce burden on HUBZone small business concerns by approximately 4,200 hours.  The proposed change to allow an employee who resides in a HUBZone at the time of a HUBZone concern’s certification or recertification to continue to count as a HUBZone employee as long as the individual remains an employee of the firm will greatly reduce burden on firms, as they will not have to continuously track whether their employees still reside in a HUBZone or seek to employ new individuals if the location in which one or more current employees reside loses its HUBZone status.  We estimate that this should reduce the hourly burden by 2,500 hours annually.

Risks:

There is very little risk associated with this proposed rule