Proposed Rule2022-25012
Small Business Development Centers
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 13, 2022
Issuing agencies
Small Business Administration
Abstract
This rule proposes revisions to Small Business Development Centers Program (the SBDC Program or the Program) regulations to align with current policy and guidance from the U.S. Small Business Administration (SBA or the Agency) and to incorporate updates to uniform administrative requirements, cost principles, and audit requirements for Federal awards (Uniform Guidance). This proposed rule also includes policy and procedural changes identified by the Agency as necessary to preserve the integrity and legislative intent of the Program.
Full Text
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[Federal Register Volume 87, Number 238 (Tuesday, December 13, 2022)]
[Proposed Rules]
[Pages 76127-76148]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25012]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 238 / Tuesday, December 13, 2022 /
Proposed Rules
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 130
[Docket No. SBA-2015-0005]
RIN 3245-AE05
Small Business Development Centers
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: This rule proposes revisions to Small Business Development
Centers Program (the SBDC Program or the Program) regulations to align
with current policy and guidance from the U.S. Small Business
Administration (SBA or the Agency) and to incorporate updates to
uniform administrative requirements, cost principles, and audit
requirements for Federal awards (Uniform Guidance). This proposed rule
also includes policy and procedural changes identified by the Agency as
necessary to preserve the integrity and legislative intent of the
Program.
DATES: To be assured of consideration, written comments must be
postmarked on or before February 13, 2023.
ADDRESSES: In order to ensure proper receipt, written comments must be
submitted through one of the following methods only. You may submit
comments, identified by RIN 3245-AE05 by one of the following methods:
<bullet> Preferred method: Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the online instructions for submitting
comments.
<bullet> Mail: Comments should be addressed to Rachel Karton,
Program Manager, Small Business Development Centers, U.S. Small
Business Administration, 409 Third Street SW, Room 6253, Washington, DC
20416.
Comments sent by other methods not listed above will not be
accepted and subsequently, not posted. All comments submitted in
response to this proposed rule will be included in the record and will
be made available to the public. Duplicate comments are not considered.
Please be advised that the substance of the comments and the identity
of the individuals or entities submitting the comments will be subject
to public disclosure. SBA will make the comments publicly available on
the internet via <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
If you wish to submit Confidential Business Information (CBI) as
defined in the user notice at <a href="http://www.regulations.gov">www.regulations.gov</a>, you must submit such
information to the U.S. Small Business Administration, Rachel Karton,
Program Manager, Small Business Development Centers, 409 Third Street
SW, Room 6253, Washington, DC 20416, or send by email to
<a href="/cdn-cgi/l/email-protection#d4a7b6b0b7a6b1b3a794a7b6b5fab3bba2"><span class="__cf_email__" data-cfemail="3d4e5f595e4f585a4e7d4e5f5c135a524b">[email protected]</span></a>. Highlight the information that you consider to be CBI
and explain why you believe SBA should hold this information as
confidential. SBA will review your information and determine whether it
will make the information public.
FOR FURTHER INFORMATION CONTACT: Rachel Karton, Program Manager for the
SBDC Program, at 202-205-6766 or <a href="/cdn-cgi/l/email-protection#4a382b29222f2664242f3d272b2467212b383e25240a39282b642d253c"><span class="__cf_email__" data-cfemail="1062717378757c3e7e75677d717e3d7b7162647f7e506372713e777f66">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory
The SBDC Program was authorized in 1980 by the Small Business
Development Centers Act of 1980 (Pub. L. 96-302, 94 Stat. 833) and is
currently codified in section 21of the Small Business Act, 15 U.S.C.
648 (the Act). According to the Act, the purpose of the Program is to
assist in establishing SBDCs explicitly to provide ``management and
technical assistance'' to small businesses. Section 21(a)(3)(A)
requires SBA to consult with the recognized association of SBDCs in any
rulemaking action for the Program.
B. History
Title II of the Small Business Development Act of 1980, authorized
the SBDC Program at an initial annual funding level of $8.5 million.
The new law specifically provided for Federal funding to be matched
one-for-one with non-Federal funds and required an evaluation of the
Program to be submitted to Congress by January 31, 1983.
SBA's Associate Administrator, Small Business Development Centers
(AA/SBDC) holds statutory responsibility for the general management and
oversight of the SBDC Program by means of a cooperative agreement with
each recipient organization. A recipient organization is an institution
of higher education or state agency which receive Federal funds to
operate an SBDC. Through these recipient organizations, the SBDC
Program is made available to the American public to provide small
businesses and aspiring entrepreneurs with a wide array of technical
assistance, strengthening business performance and sustainability, and
enabling the creation of new business entities.
The SBDC Program regulations were revised in 1995, see 60 FR 31504
(June 13, 1995). The statute authorizing the SBDC Program has since
been amended numerous times. The annual notice of funding opportunity
has become, for all practical purposes, the document which interprets
statutory requirements of the Program and aligns them with current
policies and procedures. To maintain consistency in Program
administration and implementation, it is necessary to revise the
regulations to outline current policies and procedures. Many of the
proposed changes are enforced through the current notice of funding
opportunity. Therefore, SBA is proposing to revise Program regulations
to incorporate those changes for efficiency and transparency of the
SBDC Program.
SBA published an advanced notice of proposed rulemaking (ANPRM) was
published on April 2, 2015, at 80 FR 17708, seeking comments on the
development of new definitions, clarification of existing program
requirements, and the renewal or termination of the notice of award.
The ANPRM also solicited comments on international trade counselor
certification requirements, required steps for the selection of Lead
Center Directors, procedures for international travel, and procedures
regarding the determination to effect suspension, termination or
nonrenewal of an SBDC's cooperative agreement.
SBA received 133 comments on this ANPRM, which have been considered
during the development of this proposed rule. Comments received
generally fell into four categories: the role of the District Office,
definitions/clarifications, client confidentiality, and the Lead Center
Director hiring process. First, SBA proposes to clarify and define the
role of the District Office regarding
[[Page 76128]]
grant oversight activities by proposing new definitions and procedures
throughout program regulations. Second, SBA proposes the addition of 23
new definitions and the revision of existing definitions to explicitly
define and clarify the various roles, procedures, documents, and
categories of funding. Third, a new section is proposed to codify SBDC
client confidentiality requirements under the Act. Finally, the rule
proposed to add the current process of hiring a Lead Center Director,
as outlined in the cooperative agreement. The intent of these changes
would be to make Program operations more streamlined and less onerous
for recipient organizations and the Agency and to align with current
practices required under the notice of funding opportunity and
cooperative agreement. The majority of the proposed changes made, which
were discussed in comments received through the ANPRM are already
required and implemented by the SBDCs; however, these proposed
regulations would codify existing requirements to ensure consistency in
Program regulations.
Through the ANPRM, the Agency also sought feedback on its existing
collection and use of individual SBDC client data.
This proposed rule also incorporates the Uniform Guidance at 2 CFR
part 200, which streamlined and consolidated government requirements
for receiving and using Federal awards to reduce administrative burden
and improve outcomes. The Uniform Guidance was published in the Federal
Register (79 FR 75871) on December 19, 2014, and became effective for
new and continuation awards issued on or after December 26, 2014.
C. Section-by-Section Analysis
Section 130.100 Introduction
SBA proposes to add a paragraph providing a broad overview of the
Program and purpose. SBA believes that this will provide clarity.
Section 130.110 Definitions
This section proposes to add 23 new definitions to clarify and
codify current District Office responsibilities, State/Lead Center
Director responsibilities, and define other terms already in use in the
notice of funding opportunity.
Section 130.200 Eligible Entities
As required in the Small Business Act, 15 U.S.C. 656 and 648(a)(1),
this section proposes to add a Women's Business Center operating
pursuant to section 29 of the Small Business Act as an entity eligible
to apply to be a Lead Center SBDC. This section also proposes to add
eligibility criteria for the Commonwealth of the Northern Mariana
Islands.
Section 130.300 Small Business Development Centers (SBDCs)
This section would codify the statutory authority for the
Administrator to operate and administer the SBDC Program through
cooperative agreements issued to recipient organizations, as
established under the Small Business Act.
Section 130.310 Area of Service
This section proposes to require service centers to be primarily
housed within institutions of higher education or a Women's Business
Center operating pursuant to section 29 of the Small Business Act,
under paragraph (c).
Section 130.320 Operating Requirements
This section proposes to add five requirements already in use in
the notice of funding opportunity as paragraphs (d) through (g) of the
section to standardize SBDC naming/branding nationwide and enhance the
current conflict of interest policy as follows:
<bullet> The name of the Lead SBDC must contain the official
identification of ``Small Business Development Center'' and that,
unless waived by the AA/SBDC, the SBDC has one year from the date of
promulgation to make any necessary changes;
<bullet> Any entity operating as an SBDC service center, whether
receiving Federal funding or not, is now considered a part of the
recipient organization's network and is required to report its goals,
achievements, etc. as any other service center;
<bullet> The process to obtain the minimum number of required staff
members for international trade assistance as required by the Act; and
<bullet> The requirement for every SBDC to annually sign the
conflict of interest form and to have a policy, which addresses how the
recipient organization will deal with competing and conflicting issues.
Section 130.330 SBDC Services and Restrictions on Service
SBA proposes to provide an overview of the services that an SBDC
must provide to prospective entrepreneurs and existing small businesses
and the related reporting requirements. Further, SBA proposes to
require the SBDC network work with other state and local government
programs providing assistance to small businesses and potential small
business. This change will provide clarity and transparency to the
regulations and is consistent with the notice of funding opportunity.
Section 130.340 Specific Program Responsibilities
This section proposes to clarify the responsibilities of the AA/
SBDC and the SBDC Lead Center Director (Lead Center Director).
Currently, this section refers to SBA as the entity making decisions or
determinations. The proposed rule would distinguish between AA/SBDC and
the District Director to provide for more transparent identification of
roles and responsibilities for the public.
Section 130.350 SBDC Advisory Boards
This section would replace the words ``shall'' and ``may'' with
``must'' and ``will'' and imposes term limits and language to provide
guidance to the boards, consistent with the cooperative agreement.
Section 130.360 Selection of the SBDC Lead Center Director
This section would codify the current selection process, for SBDC
Lead Center Director utilized by SBDCs.
Section 130.370 Contracts With Other Federal Agencies
This section proposes to codify the requirements process for an
SBDC to enter a contract with another Federal agency.
Section 130.380 Client Privacy
Section 21(a)(7) of the Act requires SBDCs and the Administration
to protect the privacy of any individual or small business receiving
assistance in the Program. Under this proposed rule, an SBDC, including
its contractors and other agents, would not be permitted to disclose to
an entity outside the individual SBDC, the name, address, email
address, or telephone number, referred to as ``client contact data'' of
any individual or small business without the consent of such individual
or small business, unless such disclosure meets on the three exceptions
discussed below.
The three exceptions, as authorized by the Act, would permit
disclosure if: (1) a court orders the Administrator to disclose the
information in any civil or criminal enforcement action initiated by a
Federal or state agency; or (2) the Administrator considers such a
disclosure to be necessary for the purpose of conducting a financial
audit of a center, not including those required under Sec. 130.830, as
determined on a case-by-case basis when formal requests
[[Page 76129]]
are made by a Federal or state agency. Such formal requests must
justify and document the need for individual client contact and/or
Program activity data to the satisfaction of the Administrator; or (3)
SBA requires client contact data to directly survey SBDC clients.
This rule would require SBDCs to provide an opportunity for clients
to opt in to allow SBA to obtain their contact data. SBA's use of
client contact data would be restricted only to conduct survey and
studies that help stakeholders better understand how the services the
client received affect their business outcomes over time. These surveys
or studies would include, but not be limited to, program evaluation and
performance management studies.
Under this proposed rule, the agency would not allow use of client
contact data for any other purpose beyond program surveys or studies.
This proposed rule would also prohibit the denial of services to
clients solely based on a client's refusal to provide consent to use
their contact data for study purposes.
Section 21(a)(7)(C) of the Act directs the Agency to publish
standards for requiring disclosures of client information during a
financial audit. Other Federal or state agencies making such disclosure
requests would be required to submit formal requests including a
justification for the need for individual client contact and/or Program
activity data for the Administrator's review on a case-by-case basis.
Public comments on these proposed standards are encouraged.
This proposed rule would also codify the current privacy
protections in place in the Program employed by the Agency. Any reports
on the Program produced by an SBDC, including its contractors and other
agents, and the Agency, could not disclose individual client
information without consent from the client. Any such reports could
only report activity data in the aggregate, unless given consent, to
protect the individual privacy of clients.
Section 130.400 Application Procedure
Currently, this section is not used. This section would require all
SBDC applicants to comply with the current annual notice of funding
opportunity procedures for their new or renewal applications to receive
consideration. This proposed rule would reinforce that an SBDC
applicant must follow procedures for submitting a new or renewal
application, to clarify the application procedures.
Section 130.410 New Applications
Currently, this section outlines outdated procedures that are no
longer enforced. This proposed rule would codify the current new
application procedures utilized by SBDCs, which require applicants to
be located in the same state/region where the SBDC is located. This
section also proposes new recruitment and selection procedures for new
recipient organizations.
Section 130.420 Renewal Applications
Currently, this section outlines outdated procedures that are no
longer enforced. This proposed rule would revise the existing renewal
and nonrenewal process to reflect the process currently utilized by
SBDCs. Factors of consideration in the renewal application under
paragraph (c) would be expanded to include corrective measures
implemented as a result of examinations conducted; and the
accreditation provision of Sec. 130.810(c), including any conditions,
recommendations from the accreditation report, and corrective measures
implemented, affecting the recipient organization and the SBDC network.
Section 130.430 Application Decisions
This proposed rule would clarify and make transparent the existing
approval process of an application by outlining the options to grant
approval, conditional approval, or denial of an application.
Section 130.440 Maximum Grant
This proposed rule would codify the limitations on grant funding
set forth in section 21(a)(6)(C) of the Act and the exceptions set
forth under paragraph (b). The legislative language was revised in this
codification to be clear and transparent.
Section 130.450 Matching Funds
This proposed rule would expand and clarify the requirements on
matching funds for cash, in-kind, or authorized indirect funds so that
it is clearer and more transparent.
Under this proposed rule, paragraph (c) would be added to clarify
matching requirements for insular territories.
Paragraph (d) would codify the requirement for all applicants to
submit a certification of cash match and program income, currently
required by the notice of funding opportunity.
Paragraph (e) would require all matching funds, in addition to the
Federal and Program income funds, to be under the direct management of
the SBDC State/Region Director.
Paragraph (g) would expand the list of unallowable sources of
matching funds.
Section 130.460 Budget Justification
This section proposes to add the current budget justification
procedures used by SBDCs, as required by the notice of funding
opportunity. In accordance with 2 CFR part 200, the SBDC would be
required to have the prior approval from the Agency for the purchase of
equipment, either through a specific disclosure in an annual cost
proposal or through an approved amendment to an existing cooperative
agreement.
This proposed rule would also outline procedures for foreign travel
requests. Specifically, all foreign travel requests would be required
to be submitted to the appropriate District Director and the Office of
Small Business Development Centers (OSBDCs) Program Manager for review
and then to the AA/SBDC for final approval.
Paragraph (i) would be revised to allow dues to the recognized
association to be charged to the cooperative agreement.
Section 130.465 Restricted and Prohibited Costs
Under this proposed rule, this new section would prohibit the use
of Federal funds, matching funds and program income as required under
the cooperative agreement for the purposes identified as unallowable in
applicable sections of 2 CFR part 200. Currently regulations do not
restrict the use of these above cited funds. These proposed changes, in
accordance with 2 CFR part 200, would ensure that program funds are not
used by recipient organizations for the purpose of sub-grants, or as
seed money for venture capital, or for other purposes outside the scope
of authorized SBDC activities.
Section 130.470 Fees
This section proposes to prohibit SBDC network entities, staff,
consultants, or volunteers to solicit or accept fees or other
compensation for counseling services, including, but not limited to,
business or marketing plan development, loan packaging or credit
application assistance, or other advisory services described in the
Act. SBA proposes to add a second paragraph to codify, clarify and make
more transparent the intent of the section.
Section 130.480 Program Income
This section proposes to codify the existing requirement that SBDCs
may not report program income as a matching resource. Further, unused
program income is permitted to be carried over to the subsequent budget
period by the SBDC network; however, the aggregate amount of network
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program income cannot exceed 25 percent of the total SBDC budget
(Federal and matching expenditures). The intent of the section remains
the same; however, it is revised to make it clearer and more
transparent.
Section 130.490 Property Standards
This rule proposes to create a new section to require the SBDCs to
adopt and implement the respective Office of Management and Budget
(OMB) guidelines for property standards.
Section 130.500 Advances and Reimbursements
Current regulations outline the process for SBDC submission of
reimbursement requests and advancements. Under this rule, the language
of this section is revised to provide clarity and transparency. The
intent of the section remains the same.
Section 130.600 Cooperative Agreement
Currently, this section is not used. This section proposes to
codify program requirements currently enforced through the notice of
funding opportunity and followed by the SBDCs.
Under this proposed rule, paragraph (a) would require that a
recipient organization will incorporate the cooperative agreement into
its SBDC sub-agreements and contracts, which is already being done by
the SBDCs.
Paragraph (b) would clarify that SBA will not direct or otherwise
approve any sub-agreements entered by the recipient organization with
service centers, vendors, or contractors.
Paragraph (c) would outline procedures for developing performance
goals and measurements, negotiating the goals and measurements, and
consequences of not meeting those goals and measurements. Also, SBA
loan goals would not be negotiated or incorporated into the cooperative
agreement without the written approval of the AA/SBDC.
Paragraph (d) would outline contracting procedures and require
SBDCs to follow the related guidelines set forth in 2 CFR part 200.
Section 130.610 Grant Administration and Cost Principles
This section proposes to add new paragraphs (b) and (c) for
clarification and transparency. Paragraph (b) proposes to codify 2 CFR
part 200 requirements applicable to grant administration and cost
principles for both the recipient organizations and service center
organizations.
Paragraph (c) would codify SBA's authority to propose additional
requirements, beyond those set forth in both the uniform grant
administrative requirements and cost principles, where necessary to
ensure the effective and efficient management of the SBDC Program.
Section 130.620 Revisions and Amendments to Cooperative Agreements
This section proposes to revise paragraph (a) by outlining required
prior approval requests by SBDCs for revisions to the cooperative
agreement and add a new paragraph (b) for clarity and transparency. As
is current practice, paragraph (b) would authorize the AA/SBDC to amend
one or more cooperative agreements to authorize unanticipated out-of-
state travel by SBDC personnel responding to a need for services in a
Presidentially Declared Major Disaster Area and to address how travel
costs are to be handled. Paragraph (b) would authorize SBA to provide
financial assistance to SBDCs, or any proposed consortium of such
individuals or entities, to spur disaster recovery and growth of small
business concerns located in an area for which the President has
declared a major disaster.
Section 130.630 Dispute Resolution Procedures
This section proposes to clarify the existing procedures for a
financial dispute or a programmatic or non-financial dispute for
clarity and transparency. The intent of this section remains the same.
Section 130.700 Suspension, Termination, and Non-Renewal
This section proposes to revise and clarify the procedures for
suspension, termination or non-renewal for clarity and transparency.
Under this proposed rule, paragraphs (b)(11) through (15) would be
added for efficiency and transparency.
Paragraph (a)(1) would clarify the current termination process of
an SBDC. Under this proposed rule, the termination would be immediately
enforced on of the date of the notice of termination. The recipient
organization would not incur further obligations under the cooperative
agreement after the date of termination, unless otherwise expressly
stated to do so. The award funds would not be available for obligations
incurred after the effective date of termination, unless expressly
authorized under the notice of termination. The recipient organization
would have 120 days to submit final closeout documents to SBA.
Paragraph (a)(2) would allow the recipient organization to continue
to conduct project activities and incur allowable expenses until the
end of the current budget period in instances when the SBA has elected
to not to renew a cooperative agreement. Under this proposed rule, if a
recipient organization does not seek to renew the grant, it must notify
the District Office and send a letter of intent to withdraw to the AA/
SBDC.
Paragraph (a)(3) would add the sentence, ``A decision to suspend a
cooperative agreement is effective immediately.'' Under this proposed
rule, the notice of suspension would recommend that the recipient
organization cease work on the project immediately and would place SBA
under no obligation to reimburse any expenses incurred by a recipient
organization while it is under suspension.
Under this proposed rule, paragraph (b)(11) through (15) would be
added for clarity and transparency on the causes for termination or
suspension.
Currently the administrative procedure for suspension, termination,
and non-renewal is found in the cooperative agreement. Under this
proposed rule, the new administrative procedures are outlined under
paragraph (c) as well as the responsibilities of the AA/SBDC in these
circumstances.
Under this proposed rule, paragraph (d) is added to outline the
administrative review of suspension, termination, and non-renewal
actions as well as the required process for SBDCs to submit the request
for administrative review.
Section 130.800 Oversight of the SBDC Program
This section would be revised to clarify the existing broad
language used to outline program oversight requirements by adding three
new paragraphs.
Section 130.810 SBA Review Authority
This rule proposes to revise paragraph (c) to reiterate 15 U.S.C.
648(k)(2) of the Small Business Act and proposes to state that SBA may
not renew or extend any cooperative agreement with an SBDC unless the
center has been approved under the accreditation program, except that
the AA/SBDC may waive such accreditation requirement, at their
discretion, upon showing that the center is making a good faith effort
to obtain accreditation. This section proposes to clarify and provide
more detail on the review authority provided to SBA regarding the SBDC
Program.
[[Page 76131]]
Section 130.820 Records and Recordkeeping
This rule proposes to revise the existing broad instructions on
records and recordkeeping requirements for an SBDC to provide clarity
and transparency. The proposed revisions include more narrow
instructions to clarify each required step in the current process.
Section 130.825 Reports
This rule proposes to require SBDCs to submit performance and
financial reports to SBA for review, as currently required by the
notice of funding opportunity. The proposed revisions outline the
frequency of the reporting, electronic data reporting which includes
counseling and training records, and specific details for each of the
performance reports and financial reports.
Section 130.830 Audits and Investigations
Current regulations provide general but outdated, compliance
instructions to the SBDCs regarding audits and investigations performed
by SBA's Office of Inspector General. This section would be updated and
revised with more specific and clear instructions.
Section 130.840 Closeout Procedures
Current regulations do not include closeout procedures; rather,
these are found in the cooperative agreement. Under this proposed rule,
this new section would be added to outline closeout procedures for the
recipient organization to ensure that program funds and property
acquired or developed under the SBDC cooperative agreement are fully
reconciled and transferred seamlessly between recipient organizations,
service centers, or other Federal programs.
D. Comments Request
SBA invites interested persons to submit written comments on this
proposed rule. Your written comments on the proposed rule should be
specific, should be confined to issues pertinent to the proposed rule,
and should explain the reason(s) for any change you recommend or
proposal(s) you oppose. Where possible, you should reference the
specific section or paragraph of the proposal you are addressing. We
invite specific comments on various aspects of the rule as described in
this preamble.
Readers are encouraged to closely review each section of the
proposed rule in conjunction with current regulations to fully
comprehend the extent of the rule and its changes. SBA invites comment
on all aspects of this proposed rule, including the underlying
policies. Submitted comments will be viewable on Regulations.Gov by
searching under the Docket Number (SBA-2015-0005) or the Regulation
Identifier Number (RIN 3245-AE05).
Compliance With Executive Orders 12866, 12988, 13132, and 13563, the
Paperwork Reduction Act (44 U.S.C. Ch. 35), the Congressional Review
Act (5 U.S.C. 801-808), and the Regulatory Flexibility Act (5 U.S.C.
601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
proposed rule is a ''significant'' regulatory action for the purposes
of Executive Order (E.O.) 12866. Accordingly, the next section contains
SBA's Regulatory Impact Analysis.
Regulatory Impact Analysis
1. Is there a need for this regulatory action?
The SBDC rules were last revised in 1995 (see 60 FR 31504) (June
13, 1995). However, the statute authorizing the SBDC Program has been
amended numerous times since the last rulemaking (for a full listing of
amending legislation, see the history notes at 15 U.S.C. 648). For
example, SBA proposes to update the regulation as required by section
21(a)(7) of the Small Business Act to protect the privacy of any
individual or small business receiving assistance in the Program.
SBA believes it is now necessary to revise the regulations to
outline current policies and procedures for the SBDC Program for
consistency. This proposed regulation also incorporates the changes
required by the 2 CFR part 200 and other grant changes that have taken
place over the last 25 years. Additionally, the America's Small
Business Development Centers (ASBDC), the recognized association as
established in section 21(a)(3)(A), has requested changes that are
consistent with the revisions made in the notice of funding opportunity
and cooperative agreement. Furthermore, the SBA received 133 comments
to the ANPRM that was published on April 2, 2015, some of which are
incorporated in this proposed rule.
In the absence of this rule, there would be inconsistency between
the regulations and Program governing documents, including the notice
of funding opportunity and the cooperative agreement. Currently, SBA
and the SBDCs reference three or more documents to find guidance on the
Program, and the annual notice of funding opportunity and cooperative
agreement have become, for all practical purposes, documents which
interpret the statute. Also, SBA has limited authority to hold SBDCs
accountable for low or non-performance. While low or non-performance is
a rare occurrence, SBA's only current recourse is to write conditions
into the SBDC notice of award. The proposed rule would strengthen SBA's
oversight and accountability, as intended by Congress, and reduce
burden by consolidating programmatic guidance to one document.
2. What are the potential benefits and costs of this regulatory action?
The potential benefits of this proposed rule are based on
incorporating all the changes that have been made with the publication
2 CFR part 200, other grant changes over the past 20 years, and a
streamlining of both the notice of funding opportunity and the
cooperative agreement. Specifically, the rule provides guidance on the
determination of the official name of the SBDC; directs minimum
reporting for, and hiring of, State Directors; applying for other
grants/other sources of funds; clarifies Project Officer
responsibilities; clarifies matching funds, such as in-kind funds;
funding expenditures; eligible entities budget justification; provides
guidance regarding the collection and use of individual SBDC client
data; adds new sections regarding suspension, termination, and non-
renewal, payments and reimbursements, property standards, confidential
information--among others.
The new regulations will simplify and streamline notice of funding
opportunity language to contain only that information that the
applicant organization must submit and not all the other information
that will now be written into the regulations. Moreover, having the
regulations in one document would make administering the Program by the
SBDCs much easier by not having to reference three or more different
documents. The estimated reduction in burden to this consolidation is
presented in the table below:
[[Page 76132]]
Table 1--Estimate of Savings to SBDCs
----------------------------------------------------------------------------------------------------------------
Number of expected Average time or money
Outcomes occurrence per year saved per occurrence Total annual savings
(A).................. (B).................. (A x B)
----------------------------------------------------------------------------------------------------------------
Provision of better information 62 SBDCs............. 4 hours at $120.22, 248 hours, $29,815.
leading to better choices. \1\/hr = $480.88.
Increased efficiency from clarity 62 SBDCs............. 2 hours at $120.22\1\/ 124 hours, $14,907.
and agreement with other related hr = $240.44.
documents.
-----------------------------------------------------
Total Savings.................. ..................... ..................... 372 hours $44,722.
----------------------------------------------------------------------------------------------------------------
\1\ Based on the most recently available data, from 2019 Salary Survey of America's SBDC, hourly wage of a State
Director ($60.11) plus 100% for benefits. Salary Survey (<a href="http://americassbdc.org">americassbdc.org</a>), p. 3.
There are currently 62 SBDCs that would benefit from this new
regulation. We estimate the changes to the rule will create a four-hour
benefit per SBDC from better information leading to better SBDC choices
because the revisions will clarify definitions and provide guidance on
various issues. We estimate a two-hour increase in efficiency per SBDC
from the clarity that the revisions to the rule will provide because
the rule will be in agreement with the notice of funding opportunity
and the cooperative agreement, leading to less confusion and
streamlined processes due to consolidation of programmatic guidance.
Using the average hourly wage of an SBDC State Director, the total
annual benefit of these revisions comes to $44,722 for all the 62
SBDCs. We anticipate that these benefits will be realized over
perpetuity in that SBDCs will continue to experience better decision-
making from the clarification and additional guidance provided and
increased efficiency from only having to reference one document.
---------------------------------------------------------------------------
\2\ Based on the most recently available data, from 2019 Salary
Survey of America's SBDC, hourly wage of an Accounting, Grants, and
Finance Position of ($29.45) plus 100 percent for benefits. Salary
Survey (<a href="http://americassbdc.org">americassbdc.org</a>), p. 12.
\3\ Based on the 2022 salary of a GS-14 step 5 analyst in the DC
area plus 100 percent for benefits. SALARY TABLE 2022-DCB (<a href="http://opm.gov">opm.gov</a>).
---------------------------------------------------------------------------
There are also several benefits that cannot be quantified. One of
these benefits is the increased security that the rule provides SBDCs
through its requirements to protect the privacy of an individual or
small business receiving assistance in the Program. Another benefit to
revising and updating the regulations is that it would give SBA more
authority to enforce the requirements as written in the regulations
which is something currently lacking in the Program.
There are some costs incurred by the SBDCs in initially reading and
interpreting the new regulation. There is an additional requirement for
application procedures which currently only exists in the notice of
funding opportunity. We estimate that this will add approximately two
hours of burden for SBDCs. The SBDCs also must provide a certification
of cash match and program income for which a requirement currently
exists only in the notice of funding opportunity. Additionally, the
rule would require SBDCs to submit performance and financial reports to
SBA for review, as currently required by the notice of funding
opportunity. These requirements are reflected in the most recent
Information Collection Requests for the reporting requirements for
SBDCs, so while reflected here, these requirements do not change the
Paperwork Reduction Act cost burden. SBA staff must review these
reporting requirements which we estimate will take SBA staff 30 minutes
twice a year to review. These costs are summarized below:
Table 2--Estimate of Costs to SBDCs/SBA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Amount of time
required Value of time Frequency Number of businesses or Total annual cost
(hours) per year individuals affected
(A) (B)...................... (C) (D).......................... (A x B x C x D)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Read and interpret the regulation. 2 $120.22 \1\/hr........... 1 62 SBDCs..................... 124 hours, $14,907.
Reporting......................... 2 $58.90 \2\/hr............ 2 62 SBDCs..................... 248 hours, $14,607.
Reviewing Reports (SBA)........... 0.5 $137.10 \3\/hr........... 2 For 62 SBDCs................. 62 hours, $8,500.
---------------------------------------------------------------------------------------------------------------------
Total Administrative Costs.... .............. ......................... ........... ............................. 434 hours, $38,015.
--------------------------------------------------------------------------------------------------------------------------------------------------------
The undiscounted schedule of benefits and costs over the first
three years of the rule (with the values in year three to continue in
perpetuity) are presented in the following table:
[[Page 76133]]
Table 3--Schedule of Costs/(Savings) Over 3-Year Horizon
------------------------------------------------------------------------
Benefits Costs
------------------------------------------------------------------------
Year 1.......................... 372 hours......... 434 hours.
$44,722........... $38,015.
Year 2.......................... 372 hours......... 310 hours.
$44,722........... $23,107.
Year 3.......................... 372 hours......... 310 hours.
$44,722........... $23,107.
------------------------------------------------------------------------
The annualized net savings of this proposed rule is $20,640 with a
7 percent discount rate, assuming annual savings of $44,722 in
perpetuity and costs in the first year of $38,015 and afterwards costs
of $23,107, in perpetuity.
3. What alternatives have been considered?
SBA considered two alternatives to this rulemaking. First would be
using internal SBA guidance, such as Standard Operating Procedures
(SOPs), to interpret existing rules. SBA also considered continued
interpretation of program requirements through the cooperative
agreement negotiation process. However, under the applicable statute,
SBA must consult with the ASBDC when developing ``documents: (i)
announcing the annual scope of activities pursuant to this section,
(ii) requesting proposals to deliver assistance as provided by this
section, and (iii) governing the general operations and administration
of the Small Business Development Centers (SBDC) Program, specifically
including the development of regulations and a uniform negotiated
cooperative agreement for use on an annual basis when entering into
individual negotiated agreements with small business development
centers'' (15 U.S.C. 648(a)(3)(A)).
In addition to this consolidation requirement, SBA values the input
of the public. The rulemaking process would provide an opportunity for
both the ASBDC and the public to comment on changes made to the
Program. SBA also identified a need to streamline changes made to the
notice of funding opportunity and cooperative agreement, and any
changes in Federal grant procedures, since the Program regulations were
last revised. Since this proposed rule is an all-encompassing revision
of the current regulations, SBA does not believe that more extreme
changes could be made at this time. Also, this statute specifically
includes a direction for SBA to develop regulations for the SBDC
Program with the ASBDC and SBDCs. For these reasons, SBA believes that
proceeding with a rulemaking is the best approach to revise SBDC
Program requirements at this time.
Summary
The changes proposed for this rule will not negatively affect
access to the Program for small businesses or nascent entrepreneurs.
All small business and nascent entrepreneurs will continue to have
access to the full services provided by the SBDCs. In fact, there will
be a de minimis cost savings realized by SBDCs because they will not
have to reference multiple documents for guidance and the guidance in
the rule will be more beneficial to SBDCs. There are also some non-
quantifiable benefits such as increased privacy and the ability for SBA
to enforce the requirements laid out in the rule. SBA invites comment
from the public on the costs or savings assumed in this analysis.
Summary
The changes proposed for this rule will not negatively affect
access to the Program for small businesses or nascent entrepreneurs.
All small business and nascent entrepreneurs will continue to have
access to the full services provided by the SBDCs. In fact, there will
be a de minimis cost savings realized by SBDCs because they will not
have to reference multiple documents for guidance and the guidance in
the rule will be more beneficial to SBDCs. There are also some non-
quantifiable benefits such as increased privacy and the ability for SBA
to enforce the requirements laid out in the rule. SBA invites comment
from the public on the costs or savings assumed in this analysis.
Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
It is anticipated that this rule will not be a significant regulatory
action and, therefore, was not subject to review under Section 6(b) of
E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, Department of Defense
(DoD), General Services Administration (GSA), and National Aeronautics
and Space Administration (NASA) will send the rule and the ``Submission
of Federal Rules Under the Congressional Review Act'' form to each
House of the Congress and to the Comptroller General of the United
States. A major rule cannot take effect until 60 days after it is
published in the Federal Register. This rule is not anticipated to be a
major rule under 5 U.S.C. 804.
Executive Order 12988
This action meets applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
There are seven recipients that are grantees of the SBDC Program
that are hosted by state economic development organizations. They are
Colorado, Illinois, Indiana, Minnesota, Montana, Ohio, and West
Virginia. All other grantees are hosted by institutions of higher
education. This rule imposes no additional or special burdens on the
state-based SBDCs. As mentioned above the grantees are currently
abiding by these proposed regulations and 2 CFR part 200 as the
requirements are already in the notice of funding opportunity and
cooperative agreement. The recipient organizations apply or volunteer
to participate in the Program and can withdraw at any time.
SBA has determined that this proposed rule will not have
substantial, direct effects on the states, on the relationship between
the National Government and the states, or on the distribution of power
and responsibilities among the various levels of government. Therefore,
for the purposes of Executive Order 13132, SBA has determined that this
proposed rule has no federalism implications warranting preparation of
a federalism assessment. However, SBA invites comments on issues
relating to the federalism aspects of this proposed rule.
Paperwork Reduction Act, 44 U.S.C. Ch. 35
SBA has determined that this proposed rule would not impose
additional reporting and recordkeeping requirements under the Paperwork
Reduction Act (PRA). Currently, there
[[Page 76134]]
are two PRA submissions associated specifically with the SBDC Program:
(1) OMB control number 3245-0140 Cooperative Agreement; and (2) OMB
control number 3245-0169, Federal Cash Transaction Report, Financial
Status Report, Program Income Report, and Narrative Program Report.
These will not change, and no new requirements are required in the
proposed rule.
Regulatory Flexibility Act, 5 U.S.C. 601-612
When an agency issues a rulemaking proposal, the Regulatory
Flexibility Act (RFA) requires the agency to prepare an Initial
Regulatory Flexibility Analysis (IRFA) describing the economic impact
that the proposed rulemaking may have on small entities. Section 605 of
the RFA allows an agency to certify a rule, in lieu of preparing an
analysis, if the rulemaking is not expected to have a significant
economic impact on a substantial number of small entities.
The proposed rule revises regulations to outline current policies
and procedures for the SBDC Program. Specifically, the proposed rule
will clarify and define the role of the District Office regarding
cooperative agreement oversight activities by adding definitions and
procedures throughout the proposed regulations. Second, SBA proposes to
add 23 definitions that refine and explain various roles, procedures,
documents, and categories of funding and proposes to revise other
definitions for clarification. Third, a section is proposed to be added
to codify SBDC client confidentiality. Finally, the current process of
hiring a State/Region Director is outlined in an SBA policy notice;
however, the proposed regulation proposes to codify and refine this
process. Most of these proposed changes are already implemented by the
SBDCs, and these proposed regulations are codifying them.
The proposed rule will impact 62 SBDCs that primarily fall into the
North American Industry Classification System (NAICS) codes 611210
(junior colleges) and 611310 (colleges, universities, and professional
schools). In addition, seven SBDCs are hosted by state economic
development organizations, such as state Departments of Trade or
Commerce.
A junior college is considered small if its annual receipts are
$28.5 million \4\ or less while colleges, universities, and
professional schools are considered small if annual receipts are $30.5
million or less. As shown in Table 2, only one SBDC can be considered
small under both size standards. Note that these size standards do not
apply to the seven SBDCs hosted by state organizations; however, state
organizations under NAICS 92 (public administration) do not have
applicable small business size standards but would not be considered
small using the standards of NAICS codes 611210 or 611310.
Table 5--SBDC Size Standard by NAICS Code
------------------------------------------------------------------------
SBA small business
size standard:
NAICS code annual receipts Count
threshold
------------------------------------------------------------------------
Junior Colleges (611210).......... Less than or equal 1
to $28.5 million.
Greater than $28.5 7
million.
Colleges, Universities, and Less than or equal 0
Professional Schools (611310). to $30.5 million.
Greater than $30.5 47
million.
Public Administration (92)........ No standard 7
established.
---------------
Total......................... .................... 62
------------------------------------------------------------------------
The purpose of the rule is to codify existing practices and to
provide consistency between regulations and the Program's governing
documents and practices. The Regulatory Impact Analysis presented
earlier describes the costs and savings of the rule and the small net
savings relative to the number of entities. Accordingly, the
Administrator of the SBA, hereby, certifies to the Chief Counsel of
Advocacy of SBA that this rule will not have a significant economic
impact on a substantial number of small entities. SBA invites comment
from the public on this certification.
RISE Act (Research Investment To Spark the Economy Act of 2021, H.R.
7308)
The Administrator may authorize an SBDC to provide advice,
information, and assistance, as described in subsection (c) of the
Small Business Act, to a small business concern located outside of the
state, without regard to geographic proximity to the small business
development center, if the small business concern is located in an area
for which the President has declared a major disaster.
The Administrator may provide financial assistance to an SBDC, a
Women's Business Center described in section 29 of the Small Business
Act, SCORE, or any proposed consortium of such individuals or entities
to spur disaster recovery and growth of small business concerns located
in an area for which the President has declared a major disaster.
List of Subjects in 13 CFR Part 130
Grant programs--business, Small businesses, Technical assistance.
For the reasons stated in the preamble, the Small Business
Administration proposes to amend 13 CFR part 130 as follows:
PART 130--SMALL BUSINESS DEVELOPMENT CENTERS
0
1. The authority citation for part 130 is revised to read as follows:
Authority: 15 U.S.C. 634(b)(6), 648, and 648 note.
0
2. Revise Sec. 130.100 to read as follows:
Sec. 130.100 Introduction.
(a) Objective. The Small Business Development Centers (SBDC)
Program creates a broad-based system of assistance for the small
business community by linking the resources of Federal, state, and
local governments with the resources of the educational community and
the private sector. The Program provides small businesses and aspiring
entrepreneurs with a wide array of technical assistance and support to
strengthen performance and sustainability of existing small businesses,
and to enable the creation of new business entities. The Small Business
Administration (SBA or the Agency) articulates its responsibilities for
the general management and oversight of the SBDC Program by means of a
cooperative agreement with the recipient organization.
---------------------------------------------------------------------------
\4\ SBA Table of Size Standards.
---------------------------------------------------------------------------
(b) Incorporation of amended references. All references in this
part to Standard Operating Procedures, SBA
[[Page 76135]]
official policies and procedures, and award documents incorporate all
ensuing changes or amendments to such sources.
(c) Adoption of other regulations. References in this part to 2 CFR
part 200 and other provisions in this part include those regulations
into this part as they exist at the time of use.
0
3. Amend Sec. 130.110 by:
0
a. Adding the definition ``Accreditation process'' in alphabetical
order;
0
b. Revising the definitions ``Applicant organization'' and
``Application'';
0
c. Removing the definition ``Area of Service'' and adding the
definition ``Area of service'' in its place;
0
d. Adding the definitions ``Associate Administrator/Entrepreneurial
Development (AA/ED)'' and ``Associate Administrator/Small Business
Development Centers (AA/SBDC)'' in alphabetical order;
0
e. Removing the definition ``Catch Match'' and adding the definition
``Cash match'' in its place;
0
f. Adding the definitions ``Clearinghouse'' and ``Client'' in
alphabetical order;
0
g. Removing the definitions ``Cognizant Agency'' and ``Cooperative
Agreement'' and adding the definitions ``Cognizant agency'' and
``Cooperative agreement'' in their places, respectively;
0
h. Revising the definition of ``Counseling'';
0
i. Adding the definition ``Counseling record'' in alphabetical order;
0
j. Revising the definitions ``Direct costs'' and ``Dispute'';
0
k. Adding the definition ``District Office'' in alphabetical order;
0
l. Revising the definitions ``Grants Management Specialist'', ``In-kind
contributions'', and ``Indirect costs'';
0
m. Adding the definitions ``Insular areas'' and ``Key personnel'' in
alphabetical order;
0
n. Revising the definitions ``Lead Center'' and ``Lobbying'';
0
o. Adding the definitions ``Matching funds'', ``Notice of funding
opportunity'', ``Notice of non-renewal'', ``Notice of suspension'',
``Notice of termination'', and ``Office of Small Business Development
Centers (OSBDC)'' in alphabetical order;
0
p. Removing the definition ``Overmatched Amount'' and adding the
definition ``Overmatched amount'' in its place;
0
q. Adding the definitions ``Prior approval'' and ``Program funds'' in
alphabetical order;
0
r. Revising the definition ``Program income'';
0
s. Removing the definition ``Program manager'' and adding ``Program
Manager'' in its place;
0
t. Adding the definition ``Program performance data'' in alphabetical
order;
0
u. Removing the definition ``Project officer'' and adding the
definition ``Project Officer'' in its place;
0
v. Revising the definition ``Project period'';
0
w. Adding the definition ``Proposal'';
0
x. Revising the definition ``Recipient organization'';
0
y. Adding the definition ``SBDC Lead Center Director'' in alphabetical
order;
0
z. Revising the definition ``SBDC network'';
0
aa. Adding the definitions ``SBDC satellite location'', ``SBDC service
center'', and ``SBDC Service Center Director'' in alphabetical order;
0
bb. Removing the definition ``Specialized Services'' and adding the
definition ``Specialized services'' in its place;
0
cc. Revising the definition ``Training''; and
0
dd. Adding the definition ``Training record'' in alphabetical order.
The additions and revisions read as follows:
Sec. 130.110 Definitions.
Accreditation process. A process to evaluate a small business
development center for purposes of extending or renewing a cooperative
agreement with SBA to ensure management strength, financial
accountability, and economic impact.
Applicant organization. A qualified eligible entity that applies
for Federal financial assistance to establish, administer, and operate
an SBDC network under a new or renewed cooperative agreement.
Application. Also referred to as the proposal, the written
submission by a new applicant organization or an existing recipient
organization describing its projected SBDC activities for the upcoming
budget period and requesting SBA funding for use in its operations.
Area of service. As designated in the cooperative agreement, the
state or region in which an applicant organization proposes to provide
services, or in which a recipient organization currently provides
services.
Associate Administrator/Entrepreneurial Development (AA/ED). The
individual who is appointed by the SBA Administrator to oversee the
Office of Entrepreneurial Development (OED), where the SBDC Program is
located.
Associate Administrator/Small Business Development Centers (AA/
SBDC). The individual who is statutorily mandated to administer the
SBDC Program.
* * * * *
Cash match. Non-Federal funds budgeted and expended by the
recipient organization and/or sponsoring SBDC organization for direct
costs of the project. Cash match excludes indirect costs, overhead
costs, in-kind contributions, and program income.
Clearinghouse. A grant to allow Small Business Development Centers
participating in the Program to exchange information about their
programs; and provide information central to technology transfer.
Client. An entrepreneur or existing small business seeking services
provided by the SBDC.
Cognizant agency. The Federal awarding agency that provides the
predominant amount of direct funding to a recipient. See 29 CFR part
99.
Cooperative agreement. A legal instrument of financial assistance
between a Federal awarding agency or pass-through entity and a non-
Federal entity that, consistent with 31 U.S.C. 6302-6305:
(1) Is used to enter into a relationship the principal purpose of
which is to transfer anything of value from the Federal awarding agency
or pass-through entity to the non-Federal entity to carry out a public
purpose authorized by a law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or services for the Federal
Government or pass-through entity's direct benefit or use.
(2) Is distinguished from a grant in that it provides for
substantial involvement between the Federal awarding agency or pass-
through entity and the non-Federal entity in carrying out the activity
contemplated by the Federal award.
(3) The term does not include:
(i) A cooperative research and development agreement as defined in
15 U.S.C. 3710a; or
(ii) An agreement that provides only:
(A) Direct United States Government cash assistance to an
individual;
(B) A subsidy;
(C) A loan;
(D) A loan guarantee; or
(E) Insurance.
(4) Is a negotiated legal agreement between SBA and a recipient
organization containing the terms and conditions under which SBA
provides Federal funds for the performance of SBDC activities.
* * * * *
Counseling. Qualifying technical or management assistance, as
defined in the cooperative agreement, provided through the SBDC Program
to clients on an individual basis, as established by policy.
[[Page 76136]]
Counseling record. A record that provides individual client contact
information, demographics about the client/business and data on the
counseling provided.
Direct costs. Expenditures that can be identified specifically with
a final cost objective and are further defined in 2 CFR part 200.
Dispute. A programmatic or financial disagreement that the
recipient organization requests be handled in accordance with the
dispute resolution procedures set forth at Sec. 130.630.
District Office. The local SBA office, in collaboration with the
OSBDC, charged with ensuring that small business market needs are met
by the SBDC; conducting the regularly scheduled compliance reviews;
monitoring statements as required; and collaborating with the SBDC to
perform joint events and trainings.
* * * * *
Grants Management Specialist. An SBA employee within the Office of
SBDC, designated by the AA/SBDC, who meets the Office of Management and
Budget (OMB) standards and certifications and is responsible for the
budgetary review, award, and administration of one or more SBDC
cooperative agreements.
In-kind contributions. Property, facilities, services, or other
non-monetary contributions from non-Federal sources. See 2 CFR part 215
(OMB Circular A-110) and part 143 of this chapter, as applicable.
Indirect costs. Costs generally incurred for a common or joint
purpose. See 2 CFR part 220 (OMB Circular A-21), 2 CFR part 225 (OMB
Circular A-87), and/or 2 CFR part 230 (OMB Circular A-122).
Insular areas. Territories include the Virgin Islands, Guam,
American Samoa, the Trust Territory of the Pacific Islands, and the
Government of the Northern Mariana Islands. See 48 U.S.C. 1469a.
Key personnel. Principal staff of the Lead Center and SBDC service
centers, including SBDC Lead Center Directors, SBDC Service Center
Directors, or managers of International Trade Centers, Technology
Program Centers, and directors of other SBDC specialty programs and any
other leadership positions identified by the SBDC network.
Lead Center. The administrative office of the recipient
organization that operates and manages an SBDC network.
Lobbying. ``Lobbying'' as described in OMB Circulars A-21, A-87,
and A-122 and Public Law 101-121, section 319, which discuss the
limitations on use of appropriated funds to influence decisions of
certain of Federal officials, including Members of Congress, Federal
contracting, and financial transactions.
Matching funds. The combined amounts of non-Federal cash and non-
cash resources proposed for the cooperative agreement or claimed to
fulfill statutory match requirements.
Notice of funding opportunity. The annual solicitation that an
applicant organization or recipient organization must respond to in its
initial or renewal application.
Notice of non-renewal. A notice provided to an SBDC stating that
the SBA will not renew the cooperative agreement with the current
recipient organization.
Notice of suspension. A notice provided to an SBDC stating that the
SBDC is under suspension.
Notice of termination. A notice provided to an SBDC stating that
the SBDC is terminated.
Office of Small Business Development Centers (OSBDC). The SBA
program office providing leadership and program oversight, managing the
funding formula, program budget, and the establishment and maintenance
of all program policy over the national SBDC network.
Overmatched amount. Contributions of non-Federal cash and of non-
cash resources for authorized SBDC activities in excess of the
statutorily required match.
Prior approval. The written concurrence from the appropriate SBA
AA/SBDC, Deputy Associate Administrator for the Office of Small
Business Development Centers, Grants Management Officer, Grants
Management Specialist, or Program Manager for a proposed action or
amendment to the SBDC cooperative agreement.
* * * * *
Program funds. Also referred to as project funds and defined as all
funds authorized under the cooperative agreement including, but not
limited to, Federal funds, cash match, non-cash match from indirect
costs, in-kind contributions, and program income revenues.
Program income. Gross income earned as a result of the Federal
award during the period of performance, including funds received under
a sponsorship agreement, as defined in 2 CFR 200.80.
Program Manager. An SBA employee designated by the AA/SBDC, who
oversees and monitors the SBDC network operations, including meeting
the statutorily required programmatic reviews.
Program performance data. Any anonymous data or information that
captures the outputs of the SBDC service center and outcomes of
services provided to clients.
Project Officer. The individual who serves as the primary local
contact for the SBDC, conducts regular compliance oversight as required
by AA/SBDC, working in conjunction with the Program Manager.
Project period. The total annual period of performance for an award
made under the notice of funding opportunity.
Proposal. Also known as the application, the written submission by
a new applicant organization or an existing recipient organization
describing its projected SBDC activities for the upcoming budget period
and requesting Federal funding for use in its operations.
Recipient organization. The selected applicant organization
receiving Federal funding to deliver SBDC services under a cooperative
agreement.
* * * * *
SBDC Lead Center Director. Also referred to as the State/Region
Director, an individual or position for which 100 percent of the
individual's time and effort is allocated to the SBDC grant program and
other grant programs that provide comparable management and technical
assistance to the small business community in accordance with the
cooperative agreement. For the purposes of meeting the Program
requirements, no less than 75 percent of the SBDC Lead Center
Director's time and effort must be devoted specifically to the SBDC
grant. The SBDC Lead Center Director has clear and complete control of
all SBDC Program funds.
SBDC network. The Lead Center, SBDC service centers, and SBDC
satellite locations funded and affiliated by sub-agreements and
comprising a single service delivery network administered by a
recipient organization.
SBDC satellite location. A geographic point of service delivery
that operates on a full- or part-time basis under direct management of
an SBDC Lead Center Director or SBDC Service Center Director.
SBDC service center. An entity operating full-time authorized by
the Lead Center to perform SBDC counseling and training services. Any
type of organization can be an SBDC service center or SBDC satellite
location.
SBDC Service Center Director. The individual responsible for SBDC
Program implementation and
[[Page 76137]]
management at an SBDC service center within an SBDC network.
* * * * *
Specialized services. SBDC services other than counseling or
training, e.g., extensive research, hiring outside consultants for a
client, translation services, etc.
* * * * *
Training. An educational activity or event presented by an SBDC
that delivers a structured program of knowledge on an entrepreneurial
or business-related subject, as established in the cooperative
agreement.
Training record. A record that provides aggregate data about a
training event to include training topic and program format.
0
4. Amend Sec. 130.200 by:
0
a. Removing the paragraph designation and heading from paragraph (a)
introductory text;
0
b. Removing paragraph (b);
0
c. Redesignating paragraphs (1) through (4) as paragraphs (a) through
(d);
0
d. Redesignating paragraph (5) as paragraph (h);
0
e. Redesignating paragraph (6) as paragraphs (g);
0
e. Adding paragraphs (e) and (f);
0
f. In newly redesignated paragraph (g), removing the period and adding
``; or'' in its place; and
0
g. Revising newly redesignated paragraph (h).
The additions and revision read as follows:
Sec. 130.200 Eligible entities.
* * * * *
(e) A Women's Business Center operating pursuant to section 29 of
the Small Business Act (15 U.S.C. 656);
(f) The Commonwealth of the Northern Mariana Islands SBDC must have
its principal office located in the Commonwealth of the Northern
Mariana Islands (CNMI) and must:
(1) Be a CNMI government or agency;
(2) Be a regional entity;
(3) Be a CNMI-chartered development, credit, or finance
corporation;
(4) Be an institution of higher education (including but not
limited to any land-grant college or university, any college or school
of business, engineering, commerce, or agriculture, community college
or junior college);
(5) Be a current SBA Women's Business Center (WBC); or
(6) Be any entity formed by two or more of the entities in
paragraphs (f)(1) through (5) of this section;
* * * * *
(h) Any entity operating continually as a recipient organization on
or before December 31, 1990.
0
5. Revise Sec. 130.300 to read as follows:
Sec. 130.300 Small Business Development Centers (SBDCs).
The Small Business Development Center Program is established under
the statutory authority of the Small Business Act (15 U.S.C. 648) and
administered through cooperative agreements issued to recipient
organizations.
0
6. Revise Sec. 130.310 to read as follows:
Sec. 130.310 Area of service.
(a) The AA/SBDC will designate, in the cooperative agreement, the
geographic area of service of each recipient organization. Generally,
no more than one recipient organization may be located in a state.
(1) The AA/SBDC may determine that making awards to multiple
recipient organizations in a state is necessary to more effectively
implement the Program and provide services to all interested small
businesses.
(2) Once the Administration has entered into a cooperative
agreement, a subsequent decision to change the recipient organization's
area of service will be considered a non-renewal or termination. This
decision will be subject to the procedures outlined in Sec. 130.700.
(b) The recipient organization must locate its Lead Center and SBDC
service centers in the designated area of service to ensure that
services are readily accessible to all small businesses within the
designated area of service.
(c) The recipient organization must ensure that any new SBDC
service centers established within its area of service are primarily
housed within institutions of higher education or a Women's Business
Center (WBC) operating pursuant to section 29 of the Small Business Act
(15 U.S.C. 656) as stated in section 21(a)(1) of the Small Business Act
(15 U.S.C. 648(a)(1).
(d) The allocation of resources, including site locations of the
Lead Center and the SBDC service centers, will be reviewed for adequacy
of coverage by SBA as part of the application review process for each
budget period.
Sec. 130.320 [Removed]
0
7. Remove Sec. 130.320.
Sec. Sec. 130.330, 130.340, 130.350, and 130.360 [Redesignated as
Sec. Sec. 130.320, 130.330, 130.340, and 130.350]
0
8. Redesignate Sec. Sec. 130.330, 130.340, 130.350, and 130.360 as
Sec. Sec. 130.320, 130.330, 130.340, and 130.350.
0
9. Amend newly redesignated Sec. 130.320 by:
0
a. Revising paragraph (a);
0
b. Adding a final sentence to paragraph (b);
0
c. Revising paragraph (c);
0
d. Redesignating paragraphs (d) and (e) as paragraphs (h) and (i);
0
e. Adding new paragraphs (d) and (e) and paragraphs (f) and (g); and
0
f. Revising newly redesignated paragraphs (h) and (i).
The revisions and additions read as follows:
Sec. 130.320 Operating requirements.
(a) The recipient organization has the contractual responsibility
for performing the duties of the Lead Center in accordance with the
cooperative agreement. The Lead Center must be an independent
department within the recipient organization, having its own staff,
including a full-time SBDC Director.
(b) * * * The Lead Center must conduct and document annual
financial and programmatic reviews and evaluations of its SBDC service
centers consistent with Sec. 130.820(a).
(c) The Lead Center's and SBDC service center's services shall be
available to the public throughout the year during the normal hours of
the business community. In addition, every effort should be made to
provide assistance, including during non-business hours, both in-person
and virtually, as appropriate, to meet local community business demands
and needs. Variations from these schedules or other anticipated
closures will be included in the new or annual renewal application.
Emergency closures will be reported to the SBA District Office as soon
as is feasible.
(d) The specific identification ``Small Business Development
Center'' must be a part of the official name of every SBDC Lead Center
and SBDC service center within the SBDC network, unless waived by the
AA/SBDC.
(e) Any entity operating as an SBDC service center, whether
receiving Federal funding or not, is considered a part of the recipient
organization's network and as such the recipient organization is
required to report to the OSBDC each SBDC service center's performance
as well as any funds or program income generated by the activities of
that entity.
(f) An SBDC network may seek the designation as a Small Business
Technology Development Center in accordance with the recognized
association's accreditation program. An SBDC network proposing to use
the identification ``Small Business Technology Development Center''
must follow the recognized association procedures, obtain the written
[[Page 76138]]
concurrence of the AA/SBDC, and meet the accreditation requirements
established by the recognized association.
(g) Each SBDC must maintain a minimum number of export and trade
certified counselors to assist clients develop export and international
trade opportunities. The standard for establishing the number of
counselors required to have this certification is based on the total
number of full-time equivalent (FTE) counseling employees in an SBDC's
network. The minimum number of certified counselors for an SBDC network
is the lesser of:
(1) Five counselors; or
(2) Ten percent of the total number of FTE counselors in the
network.
(h) The Lead Center and all its SBDC service centers must implement
and have in effect at all times, a uniform and enforceable conflict of
interest policy applicable to all SBDC employees, contractors,
consultants, and volunteers and signed annually. At a minimum, this
policy must be consistent with the conflict of interest principles set
forth in 2 CFR 2701.112.
(i) The SBDC network will comply with 13 CFR parts 112, 113, 117,
and 136 requiring that no person, on the grounds of race, color,
handicap, marital status, national origin, race, religion, or gender,
be excluded from participation in, be denied the benefits of, or
otherwise be subjected to discrimination under any program or activity
conducted by the SBDC network.
0
10. Amend newly redesignated Sec. 130.330 by:
0
a. Revising paragraph (a);
0
b. Removing the words ``are encouraged to'' from paragraph (b)(1) and
adding in their place the word ``must'';
0
c. Revising paragraphs (b)(2) through (6) and (c);
0
d. Adding paragraph (d).
The revisions and addition read as follows:
Sec. 130.330 SBDC services and restrictions on service.
(a) Services. The SBDC network must provide prospective
entrepreneurs and existing small businesses, known as clients, with
counseling, training, and specialized services. The SBDC must create
counseling records for clients when required by the cooperative
agreement. The services provided must relate to the formation,
financing, management, and operation of small business enterprises. The
network must provide services that meet local needs as determined
through periodic needs assessments, which are continually improved to
keep pace with changing local small business needs. It is the
responsibility of the recipient organization to change local SBDC
service centers, as necessary, to meet the needs of the communities it
serves in accordance with Sec. Sec. 130.310 and 130.620. See section
21(c)(3) of the Small Business Act (15 U.S.C. 648(c) (36)) for the full
list of compulsory services. To the extent possible, SBDCs will work in
collaboration with other Federal, state, and local government programs
that assist small businesses and will coordinate and cooperate, to the
extent practicable, with other local public and private providers of
small business assistance. An SBDC Lead Center should use and
compensate qualified small business vendors as one of its resources.
(b) * * *
(2) SBDCs may provide loan packaging services to SBDC clients free
of charge as stated in Sec. 130.470.
(3) SBDCs should prepare their clients to represent themselves to
lending institutions. SBDCs may attend meetings with lenders to assist
clients in preparing financial packages; however, neither SBDC staff
nor their agents may take a direct or indirect role in representing
clients in loan negotiations.
(4) SBDCs should disclose to their clients that financial
counseling assistance, including loan packaging, will not guarantee
receipt of or imply approval of a loan or loan guarantee.
(5) SBDCs may not make loans, intervene in loan decisions, service
loans, make credit recommendations or influence decisions regarding the
award of any loans or lines of credit on behalf of the SBDC's clients,
including having SBDC personnel serve on panels or boards that review
loan applications.
(6) With respect to SBA loan guaranty programs, SBDCs may accompany
an applicant organization appearing before SBA or a lender but may not
advocate, recommend approval or otherwise attempt in any manner to
influence SBA or a lender to provide financial assistance to any of its
clients.
(c) Special emphasis initiatives. Periodically, SBA may identify,
and include in the cooperative agreement, portions of the general
population to be targeted for assistance by SBDCs and specific focus
areas including, but not limited to: base closure assistance;
cybersecurity and preparedness; employee ownership program; and
intellectual property protections.
(d) Portable assistance. This cooperative agreement is a startup
and sustainability non-matching program to be conducted by eligible
SBDCs in communities that are economically challenged as a result of a
business or government facility downsizing or closing, which has
resulted in the loss of jobs or small business instability. These funds
will be used for small business development center personnel expenses
and related small business programs and services.
0
11. Revise newly redesignated Sec. 130.340 to read as follows:
Sec. 130.340 Specific program responsibilities.
(a) Policy development. The AA/SBDC will establish program policies
and procedures to improve the delivery of services by SBDCs to the
small business community, and to enhance compliance with applicable
laws, regulations, OMB guidelines, and Executive orders. The AA/SBDC
will, to the extent practicable, consult with the recognized
association.
(b) Program administration. The AA/SBDC or designee will recommend
the annual program budget, establish appropriate funding levels in
compliance with the statute, and review the annual budgets submitted by
each applicant. The AA/SBDC will also select applicants to participate
in the Program, to maintain a clearinghouse to provide for the
dissemination and exchange of information between SBDCs, and to conduct
audits of recipients of SBDC grants.
(c) Responsibilities of SBDC Lead Center Directors. (1) The SBDC
Lead Center Director must be an individual dedicating not less than 75
percent of their time to the supervision and control of the SBDC on
behalf of the recipient organization. The position may not be held by a
company or contractor.
(2) The SBDC Lead Center Director position must have direct
reporting authority, at a minimum, equivalent to that of a college dean
in a university setting or the third level of management or
administration within a state agency.
(3) The Lead Center Director will direct and monitor program
activities and financial affairs of the SBDC network to ensure
effective delivery of services to the small business community, and
compliance with applicable laws, regulations, 2 CFR part 200, and the
terms and conditions of the cooperative agreement.
(4) The SBDC Lead Center Director must have the authority necessary
to control all personnel, budgets, and expenditures under the
cooperative agreement.
(5) The SBDC Lead Center Director will serve as the SBA's principal
contact for all matters involving the SBDC network including, but not
limited to, ensuring that state and local needs are
[[Page 76139]]
addressed; financial and programmatic reporting are submitted; service
centers are providing training; employees have experience necessary to
conduct meaningful counseling; etc.
0
12. Amend newly redesignated Sec. 130.350 by:
0
a. Removing the word ``must'' from paragraph (a)(1) and adding in its
place the word ``will'';
0
b. Revising paragraphs (a)(2) through (4) and (6) and (b)(1); and
0
c. Adding paragraphs (b)(3) through (5).
The revisions and additions read as follows:
Sec. 130.350 SBDC advisory boards.
(a) * * *
(2) This advisory board will be referred to as a State SBDC
Advisory Board in a state/territory having only one recipient
organization, and a Regional SBDC Advisory Board in a state having more
than one recipient organization.
(3) These advisory boards must consist of representatives from
small businesses or associations representing small businesses.
Membership must be derived from the entire area of service.
(4) New Lead Centers must establish a State or Regional SBDC
Advisory Board by the beginning of the second project period.
* * * * *
(6) The reasonable cost of travel of any Board member for official
Board activities will be paid out of the SBDC's budgeted funds. Federal
and program funds are not to be used to compensate advisory board
members for non-travel related expenses such as time and effort.
(b) * * *
(1) The SBA will establish a National SBDC Advisory Board comprised
of members who are not Federal employees, appointed by the SBA
Administrator. The Board will elect a chairperson. Three members of the
Board will be from universities, or their affiliates and the remainder
will be from small businesses or associations representing small
businesses. Board members will serve staggered 3-year terms. The SBA
Administrator may appoint successors to fill unexpired terms.
* * * * *
(3) The reasonable cost of travel of any National SBDC Advisory
Board member for official Board activities will be paid by SBA out of
SBDC line-item program funds.
(4) Each member of the Board will be entitled to be compensated at
the rate not in excess of pay for individuals occupying the position
under GS-15 of the General Schedule for each day engaged in activities
of the Board and shall be entitled to be reimbursed for expenses as a
member of the Board.
(5) The Board will meet at least semiannually and at the call of
the Chairman of the Board.
0
13. Add a new Sec. 130.360 to read as follows:
Sec. 130.360 Selection of the SBDC Lead Center Director.
(a) Selection. Selection of an SBDC Lead Center Director must be
accomplished in accordance with the guidelines set forth in the notice
of funding opportunity and cooperative agreement.
(b) Vacancy. (1) The recipient organization must notify the
appropriate SBA District Director (DD), Regional Administrator, and AA/
SBDC within 10 business days of either:
(i) Being notified by the incumbent SBDC Lead Center Director of
their intent to vacate the position; or
(ii) Its formal decision to remove the incumbent SBDC Lead Center
Director.
(2) If the position will be vacated prior to the selection of a
replacement, the recipient organization must appoint an interim SBDC
Lead Center Director, prior to the vacancy, who will serve in that
capacity until a permanent SBDC Lead Center Director is in position.
(3) The recipient organization must inform the SBA District
Director, Regional Administrator, and the AA/SBDC within 10 business
days of the appointment of the interim SBDC Lead Center Director and
provide that individual's contact information.
(4) An interim Lead Center Director must allocate at least 75
percent of their time and effort to the SBDC Program until a permanent
SBDC Lead Center Director is in position. This must be documented in
accordance with the policies of the recipient organization. An interim
SBDC Lead Center Director must be knowledgeable about sponsored
programs. The appointment period for such interim SBDC Lead Center
Director will not exceed 120 days. Should more time be needed the
recipient organization must obtain prior approval from the AA/SBDC for
an extension.
0
14. Add Sec. 130.370 to read as follows:
Sec. 130.370 Contracts with other Federal agencies.
(a) An SBDC Lead Center or SBDC service center organization may
enter into a contract or grant with a Federal department or agency to
provide specific assistance to small business concerns in accordance
with paragraphs (b) and (c) of this section.
(b) Prior to bidding on a non-SBA Federal award or contract, the
SBDC Lead Center or service center must obtain written consent from the
AA/SBDC or designee regarding the subject and general scope of the
award or contract to ensure that performance under the award or
contract does not represent a conflict with the SBA's cooperative
agreement.
(c) Federal funds from other Federal programs (except for certain
Community Development Block Grant program funds) may not be counted as
match for purposes of the SBDC Program. In addition, match expenditures
reported to the SBA under the cooperative agreement may not be used or
reported as match for another Federal program.
0
15. Add Sec. 130.380 to read as follows:
Sec. 130.380 Client privacy.
(a) SBDCs, including their contractors and other agents, are not
permitted to disclose the Client's name, address, email address, or
telephone number, hereafter referred to as ``client contact data,'' of
individuals or small businesses that obtain any type of assistance from
the Program to any person or entity other than the SBDC, without the
consent of the client, except in instances where:
(1) Court orders require the SBA Administrator to do so in any
civil or criminal enforcement action initiated by a Federal or state
agency;
(2) The Administrator considers such a disclosure to be necessary
for the purpose of conducting a financial audit of a center, not
including those required under Sec. 130.830, as determined on a case-
by-case basis when formal requests are made by a Federal or state
agency. Such formal requests must justify and document the need for
individual client contact and/or program activity data to the
satisfaction of the Administrator; or
(3) SBA requires client contact data to directly survey SBDC
clients.
(b) SBDCs must provide an opportunity for a client to opt-in to
allow the SBA to obtain client contact data. The SBA may use the
permitted client contact data only to conduct surveys or studies that
help stakeholders better understand how the services the client
received affect their business outcomes over time. These surveys or
studies would include, but not be limited to:
(1) Studying evaluation and performance management;
(2) Measuring the effect and economic or other impact of Agency
programs;
(3) Assessing public and SBDC partner needs;
(4) Measuring customer satisfaction;
(5) Guiding program policy development;
(6) Improving grant-making processes; and
[[Page 76140]]
(7) Other areas SBA determines would be valuable to strengthen the
SBDC Programs and/or enhance support for SBDC clients.
(c) SBDCs may not deny access to services to clients solely based
on their refusal to provide consent as referenced in this section.
(d) Any reports or studies on program activity produced by SBDC
and/or the Administrator, including their contractors and other agents,
may not disseminate client contact data and must only report data in
the aggregate. Individual client contact data will not be disclosed in
any way that could individually identify a client.
(e) SBDCs and the Administrator, including their contractors and
other agents, must obtain consent from the client prior to publishing
media or reports that identify an individual client.
(f) This section does not restrict the Agency in any way from
access and use of program performance data.
0
16. Revise Sec. 130.400 to read as follows:
Sec. 130.400 Application procedures.
All SBDC applicants must comply with the annual notice of funding
opportunity, including format, conditions, submission requirements, and
due dates, for their new or renewal application to receive
consideration.
0
17. Revise Sec. 130.410 to read as follows:
Sec. 130.410 New applications.
(a) New applicants. New applicants must comply with the
requirements set forth in the applicable notice of funding opportunity,
including format, conditions, and due dates for their applications to
receive consideration.
(b) Consideration. Except in cases involving insular areas, only
those applicants operating under Sec. 130.200 and incorporated solely
within the state/region where the new SBDC is to be located will
receive consideration.
(c) Recruiting and selecting new recipient organizations. (1) SBA
will use a fair, open and competitive procurement process to solicit
proposals for new SBDC Program awards.
(2) After completion of an objective review process, the AA/SBDC
will make the final selection and notify the successful applicant.
(3) The newly selected recipient organization may, with prior
written approval from the SBA, incur qualified pre-award matching
expenditures for the establishment of the Lead Center office, to
recruit Lead Center staff, and to cover other related start-up
expenditures to the extent permitted under 2 CFR 215.25(e)(1).
0
18. Revise Sec. 130.420 to read as follows:
Sec. 130.420 Renewal applications.
(a) The recipient organization will submit the renewal application
to OSBDC using the submission process outlined in the annual notice of
funding opportunity.
(b) If the OSBDC chooses to not renew the award of an existing
recipient organization or the recipient organization elects not to
reapply, the OSBDC will award a cooperative agreement for the conduct
of an SBDC project to a new recipient organization in the same area of
service using a competitive process. If the OSBDC has initiated a non-
renewal or termination action, the Agency will not issue the new award
until all administrative remedies have been exhausted. For further
information regarding the termination and non-renewal procedures, see
Sec. 130.700.
(c) Significant factors considered in the renewal application
review will include:
(1) The applicant's ability to obtain matching funds;
(2) The quality of prior performance under the cooperative
agreement;
(3) The results of any examination conducted pursuant to Sec.
130.810(b);
(4) Corrective measures implemented as a result of examinations
conducted; and
(5) The accreditation provisions of Sec. 130.810(c) including any
conditions, accreditation report recommendations, and corrective
measures implemented, affecting the recipient organization and the SBDC
network.
(d) The OSBDC will review the renewal application for conformity
with the notice of funding opportunity. The AA/SBDC may request
additional information and documentation prior to issuing the
cooperative agreement.
0
19. Revise Sec. 130.430 to read as follows:
Sec. 130.430 Application decisions.
(a) New applications will either be accepted or rejected in
accordance with the evaluation criteria set forth in the applicable
notice of funding opportunity. The AA/SBDC may approve, or
conditionally approve, or deny any new application. The AA/SBDC may
approve or conditionally approve or deny a renewal application. The AA/
SBDC may also reject a renewal application after following due process
in accordance with the procedures set forth in Sec. 130.700. If a
renewal application is conditionally approved, the requirements that
the recipient organization must meet in order to obtain full and
unconditional approval, will be specified as special terms and
conditions in the cooperative agreement.
(b) In the event of a conditional approval, the SBA may fund a
recipient organization for one or more specified periods of time up to
a maximum of one budget period. If the recipient organization fails to
comply with the special terms and conditions of the award to the
satisfaction of the AA/SBDC within the allotted time period, the AA/
SBDC may suspend, non-renew, or terminate the cooperative agreement
with the SBDC, in accordance with the procedures set forth in Sec.
130.700.
0
20. Revise Sec. 130.440 to read as follows:
Sec. 130.440 Maximum grant.
(a) No recipient organization will receive an SBDC grant, in any
fiscal year under a cooperative agreement, exceeding the greater of the
minimum statutory amount, or its pro rata share of all SBDC grants as
determined by the statutory formula set forth in section 21(a)(4)(C) of
the Small Business Act (15 U.S.C. 648(a)(4)(C)). This limit does not
apply to the distribution of supplemental funds, or to grants provided
pursuant to sections 21(a)(4)(C)(viii) and 21(a)(6) of the Small
Business Act (15 U.S.C. 648(a)(6)).
(b) Additional grants are subject to the limitations set forth in
section 21(a)(6) of the Small Business Act unless the statute providing
for the additional grant states otherwise.
0
21. Amend Sec. 130.450 by:
0
a. Revising the second sentence of paragraph (a);
0
b. Revising the third sentence and removing the fourth sentence of
paragraph (b);
0
c. Revising paragraphs (c) through (e); and
0
d. Adding new paragraphs (f) through (h).
The additions and revisions read as follows:
Sec. 130.450 Matching funds.
(a) * * * Cash match must equal at least 50 percent of the SBA
funds used by the SBDC. * * *
(b) * * * Any additional requirements, specifications, or
deliverables must be clearly identified in the budget narrative. * * *
(c) Under the authority of 48 U.S.C. 1469a(d), the AA/SBDC may, at
his/her discretion, waive any requirement of matching funds for an
insular territory otherwise required by law to be provided.
Notwithstanding any other provision of law, in the case of American
Samoa, Guam, the Virgin
[[Page 76141]]
Islands, and the Commonwealth of the Northern Mariana Islands, any
department or agency shall waive any requirements for local matching
funds under $200,000, including in-kind contributions, required by law
to be provided by American Samoa, Guam, the Virgin Islands, and the
Commonwealth of the Northern Mariana Islands.
(d) All applicants must submit a certification of cash match and
program income. This certification must be executed by an authorized
official of the recipient organization and must identify any SBDC
service center organization(s) providing cash match under a subcontract
or other agreement.
(e) In addition to the Federal and program income funds, all
matching funds must be under the direct management of either the SBDC
Lead Center Director or an SBDC Service Center Director, when budgeted
under an SBDC service center organization.
(f) The Grants Management Specialist will determine whether
matching funds and cash match set forth in the budget proposal are
sufficient to issue the cooperative agreement.
(g) Overmatched amounts are funds that are contributions of non-
Federal cash and of non-cash resources for authorized SBDC activities
in excess of the statutorily required match.
(1) Recipient organizations are encouraged to identify overmatched
amounts as part of the cooperative agreement. The recipient
organization must fully identify the amount and sources of claimed
overmatched amounts. If overmatched amounts are reported, they are
subject to the provisions of the cooperative agreement and SBA biennial
programmatic and financial examinations.
(2) An overmatched amount can be applied as matching funds for any
funding increase (i.e., supplemental funds) received by the SBDC during
the budget period, as long as the total cash match contributed by the
SBDC is 50 percent or more of the total SBA funds tendered during the
budget period and provided that the total match is still 100 percent.
(3) Allowable overmatched amounts which have not been used in the
manner described in this section may, with the approval of the AA/SBDC,
be used as a credit to offset any confirmed audit disallowances
applicable only to the budget period in which the overmatched amount
exists and the two previous budget periods. Such offsetting funds shall
be considered matching funds.
(h) The following sources cannot be used as matching funds for the
SBDC network:
(1) Uncompensated student labor;
(2) SCORE, SBA, Women's Business Centers, or other SBA resource
partners;
(3) Program income or fees collected from individuals or small
businesses receiving assistance;
(4) Federal funds other than Community Development Block Grant
(CDBG) funds;
(5) In-kind contributions, or indirect costs not solely dedicated
to the SBDC Program, or under its control;
(6) Any resource allocated and claimed as a matching cost to
another federally funded program; or
(7) Funds or other resources provided for an agreed upon scope of
work inconsistent with the authorized activities of the SBDC Program.
0
22. Revise Sec. 130.460 to read as follows:
Sec. 130.460 Budget justification.
(a) General. The SBDC Lead Center Director, as a part of the annual
renewal proposal, or the applicant organization's authorized
representative, in the case of a new SBDC application, shall prepare
and submit to the SBA Project Officer the budget justification for the
upcoming budget period. The budget shall be reviewed annually upon
submission of a renewal application.
(b) Direct costs. At least 80 percent of SBA funding must be
allocated to the direct cost of program delivery.
(c) Indirect costs. If the applicant organization or recipient
organization waives all indirect costs, then 100 percent of SBA funding
must be allocated to program delivery. If the reimbursements of some,
but not all, indirect costs are waived to meet the matching funds
requirement, the lesser of the following may be allocated as reimbursed
indirect costs of the Program and charged against the Federal
contribution:
(1) Twenty percent of Federal contribution; or
(2) The amount remaining after the waived portion of indirect costs
is deducted from the total indirect costs allowed by the SBA.
(d) Separate SBDC service provider budgets. The applicant
organization shall include separate budgets for all SBDC service
providers in conformity with OMB requirements. Applicable direct cost
categories and indirect cost base/rate agreements will be included for
the Lead Center and all SBDC service providers, using a rate equal to
or less than the negotiated predetermined rate. If no such rate exists,
the sponsoring SBDC organization or SBDC service provider will
negotiate a rate with its cognizant agency. In the event the sponsoring
SBDC organization or SBDC service provider does not have a cognizant
agency, the rate shall be, in accordance with OMB guidelines:
(1) Negotiated with the SBA Project Officer; or
(2) Apply the OMB de minimis rate.
(e) Cost principles. Principles for determining allowable costs are
contained in 2 CFR part 200, subpart E.
(f) Costs associated with lobbying. No program funds may be used
for lobbying activities, either directly by the SBDC or indirectly
through outside organizations, except those activities permitted by
OMB. Restrictions on and reports of lobbying activities by the SBDC
shall be in accordance with 2 CFR part 200 and section 319 of Public
Law 101-121.
(g) Salaries. (1) Where the recipient organization is an
educational institution, the salaries of the SBDC Lead Center Director
and the SBDC Service Center Director must approximate the average
annualized salary of a full professor and an assistant professor,
respectively, in the school or department in which the SBDC is located.
If a recipient organization is not an educational institution, the
salaries of the SBDC Lead Center Director and the subcenter Directors
must approximate the average salaries of parallel positions within the
recipient organization. In both cases, the recipient organization
should consider the Director's longevity in the Program, the number of
subcenters, the size of the SBDC budget, the number of service centers,
and the individual's experience and background.
(2) Salaries for Lead Center Directors should be comparable to
salaries paid Lead Center Directors in other states or regions with
comparably sized programs, responsibilities, and authority.
(3) Salaries for all other positions within the SBDC should be
based upon level of responsibility and be comparable to salaries for
similar positions in the area served by the SBDC.
(h) Equipment. In accordance with 2 CFR part 200, capital
expenditures for equipment must have the prior approval of the Program
Manager of the OSBDC, either through a specific disclosure in an annual
cost proposal or through an approved amendment to an existing
cooperative agreement.
(i) Travel. (1) All travel must be separately identified in the
proposed budget under the categories of: planned in-state/region,
planned out-of-state/region, unanticipated in-state/region, or
[[Page 76142]]
unanticipated out-of-state/region. Unplanned travel estimates may be
based on the SBDC's experience.
(2) The cost of all proposed travel must be equal to or less than
the rate for coach class, apply directly to the specific work of the
SBDC, be incurred in the normal course of program administration, and
conform to the written travel policies, including per-diem rates, of
the recipient organization or the sponsoring SBDC organization. (Per
diem rates, including lodging, will not exceed those authorized by the
recipient organization.)
(3) Transportation costs must be justified in writing, including
the estimated cost, number of persons traveling, and the benefit to be
derived by the small business community from the proposed travel.
(4) Any proposed unplanned out-of-state/region travel exceeding the
approved amount budgeted for this category must be submitted to the SBA
for approval on a case-by-case basis prior to traveling.
(5) All foreign travel requests must be submitted to the
appropriate District Director and the SBDC Program Manager for review
and provided to the AA/SBDC for final approval in accordance with the
notice of funding opportunity. Foreign travel charged to the SBDC
cooperative agreement or performed by SBDC staff, while on duty for the
recipient organization, must be approved in advance.
(i) Planned foreign travel costs allocable to the SBDC cooperative
agreement for SBDC network staff may be approved by AA/SBDC through the
annual proposal process, but such planned costs must be fully disclosed
and justified in the budget narrative for Agency review. Prior approval
should be obtained from the AA/SBDC prior to travel in accordance with
2 CFR part 200.
(ii) Unanticipated foreign travel must be approved using the
process set forth in this paragraph (i).
(j) Dues. Dues to the recognized association may be charged to the
cooperative agreement. Costs proposed for membership in any civic or
community organization, however, must be justified in terms of the
benefit to the SBDC derived from this expenditure. All other
requirements of 2 CFR 200.454 apply. In addition, all memberships
purchased with project funds must be in the name of the SBDC Program
rather than in the name of an individual.
0
23. Add Sec. 130.465 to read as follows:
Sec. 130.465 Restricted and prohibited costs.
(a) SBA prohibitions are consistent with those outlined in 2 CFR
part 200.
(b) An SBDC must not use project funds as collateral for a loan or
other such monetary purpose.
(c) An SBDC must not use project funds for memorabilia, gifts,
prizes, souvenirs, entertainment, alcoholic beverages, amusement,
social activities, or any other such costs.
(d) Prior written approval from the AA/SBDC is need for SBDC
project funds to be used for the purpose of fundraising activities and
costs. SBDCs may include in initial applications and renewal
applications proposed fundraising activities. After issuance of an
approved cooperative agreement, an SBDC wishing to seek prior approval
for new fundraising activities not already approved should follow the
prior approval guidance in the cooperative agreement. Prohibited
fundraising activities include, but are not limited to:
(1) Costs of organized fundraising, endowment drives;
(2) Financial or capital campaigns; or
(3) Solicitation of gifts and bequests.
(e) Project funds found to be used in violation of the restrictions
in this section may be cause for termination, suspension, or non-
renewal of the cooperative agreement.
0
24. Revise Sec. 130.470 to read as follows:
Sec. 130.470 Fees.
(a) An SBDC may charge clients a reasonable fee to cover the costs
of training (sponsored or cosponsored) by the SBDC, the sale of books,
the rental of equipment or space, research work, hiring outside
consultants for a particular client, or other specialized services.
(b) SBDC network entities, staff, consultants, or volunteers must
not solicit or accept fees or other compensation for counseling
services, including, but not limited to, business or marketing plan
development, loan packaging or credit application assistance, or other
advisory services described in section 21 of the Small Business Act.
0
25. Revise Sec. 130.480 to read as follows:
Sec. 130.480 Program income.
(a) Program income and interest earned on program income, may only
be used for authorized purposes and in accordance with 2 CFR 200.307
and the cooperative agreement, such as to expand the quantity or
quality of services, resources or outreach provided by the SBDC
network.
(b) Program income may not be reported or used as a matching
resource. Unused program income must be carried over to the subsequent
budget period by the SBDC network; however, the aggregate amount of
network program income cannot exceed 25 percent of the total SBDC
budget (Federal and matching expenditures).
(c) Program income exceeding 25 percent of the total approved SBDC
budget must be expended by the SBDC network prior to the end of the
budget/project period in which the excess occurs.
(d) The Lead Center must report the consolidated program income
sources and uses as an attachment to the financial status report for
the SBDC network during the budget period. The SBDC must provide a
narrative describing how program income was used to further program
objectives.
(e) For SBDC sponsored activities in which revenue will be shared
with a third party, the SBDC must document the reason for the shared
revenue and provide a reasonable basis for the shared amount. The basis
should include an analysis of actual costs of the activity(ies).
0
26. Add Sec. 130.490 to read as follows:
Sec. 130.490 Property standards.
The SBDC Program regulations adopt and implement guidelines in 2
CFR part 200. Additionally, the SBA interest in material property
extends to capital equipment and supplies (with an aggregate value of
at least $5,000) obtained with resources budgeted and reported under
the cooperative agreement. This includes acquisitions made using
Federal, matching (including in-kind), or program income sources.
0
27. Revise Sec. 130.500 to read as follows:
Sec. 130.500 Reimbursements and advancements.
(a) SBA reimbursement of grant funds to recipient organizations is
via electronic transfer. Detailed instructions for the recipient
organizations are included in the cooperative agreement. Reimbursement
requests must be complete, accurate, and reported to the SBA using the
proper forms to ensure timely payment by the Agency.
(b) Reimbursement requests may be for the estimated or actual
Federal share of SBDC network expenses. Recipient organizations will
submit semi-annual and annual financial reports as instructed in the
cooperative agreement.
(c) The management of advanced Federal funds by recipient
organizations must be in accordance with 2 CFR part 200 and the Agency
must be notified of and paid all amounts due from interest accrued on
advances.
(d) When the Agency determines that an overpayment of Federal funds
has
[[Page 76143]]
been made, whether the overpayment discovered is revealed by year end
reconciliation of invoicing, a financial examination, or other means,
then the amount will be due and payable to the Agency within 30 days
upon receipt of written notice to the recipient organization.
0
28. Revise Sec. 130.600 to read as follows:
Sec. 130.600 Cooperative agreement.
(a) Cooperative agreement provisions. A recipient organization will
incorporate into its SBDC sub-agreements and contracts the provisions
of the cooperative agreement.
(b) Sub-agreements. SBA will not direct or otherwise approve any
sub-agreements entered into by recipient organizations with SBDC
service center organizations, vendors, or contractors.
(c) Goals and milestones. (1) The AA/SBDC or designee will develop
performance measurements for SBDC networks and include provisions for
their achievement in the cooperative agreement.
(2) The AA/SBDC or designee will negotiate with the designated
association and Lead Center to establish the annual goals, milestones,
and activities for the cooperative agreement.
(3) Failure to meet the goals and milestones of the cooperative
agreement may result in suspension, termination, or non-renewal in
accordance with the dispute resolution procedures set forth in Sec.
130.630.
(4) Agency loan goals may not be negotiated or incorporated into
the cooperative agreement without the prior written approval of the AA/
SBDC.
(d) Procurement policies and procedures. (1) Recipient
organizations and SBDC service center organizations must have written
procurement and contracting procedures that comply with the applicable
state and local procurement standards and 2 CFR part 200.
(2) Contracts and sub-agreements supported with funds provided
under the cooperative agreement must comply with the procurement
procedures of the recipient organization.
(3) Contracting procedures must encourage open competition among
qualified vendors and promote the effective, efficient, and responsible
use of program resources and OMB guidance.
(4) Contracting procedures should provide for domestic sourcing
preferences to the greatest extent practicable, showing preference for
the purchase, acquisition, or use of goods, products, or materials
produced in the United States.
0
29. Revise Sec. 130.610 to read as follows:
Sec. 130.610 Grant administration and cost principles.
(a) Upon approval of the initial or renewal application, SBA will
enter into a cooperative agreement with the recipient organization,
setting forth the programmatic and fiscal responsibilities of the
recipient organization and SBA, the scope of the project to be funded,
and the budget of the program year covered by the cooperative
agreement.
(b) The SBDC Program adopts and implements OMB guidelines as
published at 2 CFR parts 200 and 2701. The guidelines and principles
apply to both recipient organizations and SBDC service center
organizations. Additional guidance may be promulgated through the
notice of funding opportunity.
(c) The AA/SBDC reserves the right to propose additional
requirements beyond those set forth in both the uniform grant
administrative requirements and cost principles where necessary to
ensure the effective and efficient management of the SBDC Program. See
2 CFR part 200, subpart E.
0
30. Revise Sec. 130.620 to read as follows:
Sec. 130.620 Revisions and amendments to cooperative agreements.
(a) Requests for revisions. The cooperative agreement may not be
unilaterally amended, modified, or revised by the recipient
organization. Rather, a recipient organization must submit a written
request to AA/SBDC along with a copy to the appropriate District Office
when it wants to make one or more revisions to the cooperative
agreement. Written approval from the AA/SBDC is required prior to the
implementation of a proposed revision. Revisions that require amendment
of the cooperative agreement include:
(1) Any change in project scope or objectives that will
substantially change outcomes described in the cooperative agreement;
(2) The addition or deletion of any contracts;
(3) Budget revisions exceeding the limit established in the
cooperative agreement; and
(4) Any proposed sole-source or one-bid contracts exceeding the
limits established by applicable administrative regulations or OMB.
(b) Emergency authorizations. (1) The AA/SBDC may amend one or more
cooperative agreements to authorize unanticipated out-of-state travel
by SBDC personnel responding to a need for services in a presidentially
declared major disaster areas. Notification of this type of
authorization will be accomplished through the publication of an SBA
Notice in the Federal Register.
(2) Proposed and actual travel costs incurred under an emergency
authorization must comply with the requirements of Sec. 130.460(h), as
well as the relevant notice of funding opportunity and OMB guidelines.
0
31. Revise Sec. 130.630 to read as follows:
Sec. 130.630 Dispute resolution procedures.
(a) Financial disputes. (1) A recipient organization wishing to
resolve a financial dispute must submit a written statement to the
appropriate District Office describing the subject of the dispute,
along with any relevant documentation.
(2) If the recipient organization receives an unfavorable decision
from the SBA, it may file an appeal with the AA/SBDC within 30 calendar
days of the date of receipt of the unfavorable decision.
(3) The AA/SBDC may request additional information or documentation
from the recipient organization at any stage of the proceedings. The
response to the request for additional information must be provided in
writing to the AA/SBDC within 15 calendar days of receipt of the
request. The AA/SBDC will transmit a written decision to the recipient
organization within 15 calendar days of receipt of the appeal or within
15 calendar days of receipt of additional information requested.
(4) If the recipient organization receives an unfavorable decision
from the AA/SBDC, it may make a final appeal to the SBA Grants and
cooperative agreements Appeals Committee (the ``Committee''). The final
appeal to the Committee must be filed within 30 calendar days of the
date of receipt of the AA/SBDC's written decision. Copies of the appeal
must also be sent to the Grants Management Specialist and the Program
Manager. If the recipient organization elects not to file an appeal
with the Committee, the decision of the AA/SBDC becomes the final
Agency decision on the matter.
(5) A recipient organization may request a hearing before the
Committee, but such requests will not be granted, unless material facts
are substantially in dispute. Legal briefs and other technical forms of
pleading are not required. However, appeals to the Committee must be in
writing and contain at least the following information and supporting
documentation:
(i) Name and address of the recipient organization;
[[Page 76144]]
(ii) Name and address of the appropriate SBA District Office(s);
(iii) A copy of the underlying cooperative agreement, including all
amendments;
(iv) A statement of the grounds for appeal, with reasons why the
appeal should be sustained;
(v) A statement of the specific relief desired on appeal; and
(vi) If a hearing is requested, a statement of the material facts
the recipient organization believes are substantially in dispute. In
the event a recipient organization fails to provide any of the
information specified above, the Committee may dismiss the appeal.
(6) The Committee may request additional information or
documentation from the recipient organization at any stage in the
proceedings. The recipient organization's response to the Committee
must be submitted, in writing, within 15 calendar days of receipt of
the request.
(7) If a request for a hearing is granted, the Committee will
provide the recipient organization with written instructions and will
afford the parties the opportunity to present their respective
positions to the Committee.
(8) The Chairperson of the Committee, with the advice of the SBA's
Office of General Counsel (OGC), will issue a final written decision
within 30 calendar days of receipt of all information or within 30
calendar days of the completion of the hearing. Copies of the decision
will be provided to the recipient organization, the AA/SBDC, the Grants
Management Specialist, and the SBA Project Officer.
(9) Where a recipient organization's appeal to the Committee
commences or is pending within 120 days of the end of the current
budget period, the recipient organization has the right to request, in
writing, that the matter be handled under an expedited appeal process.
In such circumstances, the Committee, by an affirmative vote of its
membership, may expedite the appeals process to attain final resolution
of a dispute before the anticipated issuance date of a new cooperative
agreement.
(b) Programmatic (non-financial) disputes. (1) The SBDC Lead Center
and the SBA District Office must make every effort to resolve any
disputes that arise between the SBDC network and SBA involving non-
financial, programmatic issues. If the recipient organization is not
satisfied with the resolution, it may, by written request to the AA/
SBDC, seek reconsideration of the programmatic dispute within 30
calendar days. When a recipient organization requests reconsideration
of a programmatic dispute, the appropriate Program Manager will forward
a written summary of the dispute, including comments from the SBDC Lead
Center Director, the SBA District Office, and all other pertinent
background information to the AA/SBDC within 15 calendar days of SBA's
receipt of the request.
(2) The AA/SBDC will transmit a final, written decision to the
recipient organization, the Lead Center Director, the SBA project
officer, and the SBA District Office within 30 calendar days of the
receipt of such documentation, unless the recipient organization agrees
to an extension of time.
0
32. Revise Sec. 130.700 to read as follows:
Sec. 130.700 Suspension, termination, and non-renewal.
(a) General. After entering into a cooperative agreement with a
recipient organization, the SBA may take, as it determines appropriate,
any of the following actions based upon one or more of the
circumstances listed in paragraph (b) of this section.
(1) Termination. AA/SBDC may terminate a cooperative agreement with
a recipient organization at any point when the award no longer
effectuates the Program goals or Agency priorities. A decision to
terminate a cooperative agreement is effective immediately, as of the
date of the notice of termination. A recipient organization may not
incur further obligations under the cooperative agreement after the
date of termination unless it has been expressly authorized to do so in
the notice of termination.
(i) The SBA may make funds remaining under the cooperative
agreement available to satisfy valid financial obligations incurred by
the recipient organization prior to the date of termination. Award
funds will not be available for obligations incurred after the
effective date of termination, unless expressly authorized under the
notice of termination. When a cooperative agreement has been
terminated, the recipient organization has 120 days to submit final
closeout documents to the SBA.
(ii) [Reserved]
(2) Non-renewal. The AA/SBDC may elect not to renew a cooperative
agreement with a recipient organization at any point. In undertaking a
non-renewal action, the AA/SBDC may either choose not to accept or
consider any application for renewal from the recipient organization or
the Agency may choose not to exercise option years remaining under the
cooperative agreement. When a cooperative agreement is not renewed, the
recipient organization may continue to conduct project activities and
incur allowable expenses until the end of the current budget period. If
a recipient organization decides to not seek to renew its grant, it
must notify the District Office and send a letter of intent to withdraw
to the AA/SBDC as soon as it is feasible.
(3) Suspension. (i) The AA/SBDC may suspend a cooperative agreement
with a recipient organization at any point. A decision to suspend a
cooperative agreement is effective immediately. The suspension of a
recipient organization begins on the date the notice of suspension is
issued, and the period of suspension will last no longer than six
months. At the end of the period of suspension or at any point during
that period, the AA/SBDC will either reinstate the cooperative
agreement or commence an action for termination or non-renewal.
(ii) The notice of suspension will recommend that the recipient
organization cease work on the project immediately. The SBA is under no
obligation to reimburse any expenses incurred by a recipient
organization while its cooperative agreement is under suspension. Where
AA/SBDC decides to lift a suspension and reinstate a recipient
organization's cooperative agreement, the Agency may, at its
discretion, choose to reimburse a recipient organization for some or
all of the expenses it incurred in furtherance of project objectives
during the period of suspension. However, there is no guarantee that
the Agency will elect to accept such expenses, and recipient
organizations incurring expenses while under suspension do so at their
own risk.
(b) Cause. The AA/SBDC may terminate, elect not to renew, or
suspend a cooperative agreement with a recipient organization for
cause. The cause may include, but is not limited to the following:
(1) Non-performance;
(2) Poor performance;
(3) Unwillingness or inability to implement changes to improve
performance;
(4) Disregard or material violation of regulations;
(5) Willful or material failure to comply with the terms of the
cooperative agreement, including relevant OMB Circulars;
(6) Conduct of the SBDC Lead Center Director or other key
personnel, reflecting a lack of business integrity or honesty, which is
not properly addressed on the part of the recipient organization or
sponsoring SBDC organizations;
[[Page 76145]]
(7) A conflict of interest on the part of the recipient
organization, the SBDC service centers, the SBDC Lead Center Director,
other key personnel, contractors or volunteers that causes a real or
perceived detriment to a small business concern, a contractor, the SBDC
network, including but not limited to, SBDC service centers, or SBA;
(8) Improper use of Federal funds;
(9) Failure of a Lead Center or its service centers to consent to
audits, examinations, certification reviews, or to maintain required
documents or records;
(10) Failure to implement recommendations from the audits or
examinations within one year of notification of deficiencies;
(11) Failure to implement recommendations from accreditation
reviews within the time frame recommended by the accreditation
committee and established by the AA/SBDC;
(12) Failure of the SBDC Lead Center Director to work at the SBDC
Lead Center on a full-time basis;
(13) Failure to promptly suspend or terminate the employment of an
SBDC Lead Center Director, Service Center Director, or other key
personnel, contractors, or volunteers upon receipt of knowledge or
written information by the recipient organization and/or SBA indicating
that such individual has engaged in conduct which may result or has
resulted in a criminal conviction or civil judgment that would cause
the public to question the SBDC's integrity. The SBDC Lead Center
Director (or other appropriate official in the SBDC network), when
making the decision to suspend or terminate such an employee, must
consider the magnitude of the behavior, the repetitiveness of the
conduct, and the remoteness in time of the behavior underlying any
conviction or judgment;
(14) Failure to maintain adequate client service facilities or
service hours; and
(15) Any other action that materially and adversely affects the
operation or integrity of an SBDC or the SBDC Program.
(c) Administrative procedure for suspension, termination, and non-
renewal. These procedures apply to termination, non-renewal, and
suspension of cooperative agreements with recipient organizations.
(1) Taking action. When the Program Manager has reason to believe
there is cause to suspend, terminate, or non-renew a cooperative
agreement with a recipient organization, either based on his/her own
knowledge or upon information provided by other parties, the AA/SBDC
may undertake an enforcement action by issuing a written notice of
suspension, termination, or non-renewal to the recipient organization.
The effects of such notice are addressed in paragraph (a) of this
section.
(2) Notice requirements. Each notice of suspension, termination, or
non-renewal will set forth the specific facts and reasons for the AA/
SBDC's decision and will include reference to the appropriate legal
authority. The notice will also advise the recipient organization that
it has the right to request an administrative review of the decision to
suspend, terminate, or non-renew its cooperative agreement in
accordance with the procedures set forth in paragraph (d) of this
section. The notice will be transmitted electronically, via email, to
the recipient organization on the same date it is issued by mail.
(3) Relationship to Government-wide suspension and debarment. A
decision by the AA/SBDC to suspend, terminate, or not renew an SBDC
cooperative agreement does not constitute a non-procurement suspension
or debarment of a recipient organization under Executive Order 12549,
Debarment and Suspension, and SBA's implementation of OMB regulations
at 2 CFR part 2700. However, a decision by the AA/SBDC to undertake a
suspension, termination, or non-renewal enforcement action with regard
to a particular SBDC cooperative agreement does not preclude or preempt
the Agency from also taking action to suspend or debar a recipient
organization for purposes of all Federal procurement and/or non-
procurement opportunities.
(d) Administrative review of suspension, termination and non-
renewal actions. When the AA/SBDC has suspended, terminated, or elected
not to renew a cooperative agreement, the recipient organization has
the right to request an administrative review of the enforcement
action. Administrative review of the AA/SBDC's enforcement actions will
be conducted by the Associate Administrator for Entrepreneurial
Development (AA/ED).
(1) Format. There is no prescribed format for a request for an
administrative review of an SBA enforcement action. While a recipient
organization has the right to retain legal counsel to represent its
interests in connection with an administrative review, it is under no
obligation to do so. Formal briefs and other technical forms of
pleading are not required. However, a request for an administrative
review of an SBA enforcement action must be in writing, should be
concise and logically arranged, and must at a minimum include the
following information:
(i) Name and address of the recipient organization;
(ii) Identification of the relevant SBA office/program (i.e.,
Office of Small Business Development Centers/Small Business Development
Center Program);
(iii) Cooperative agreement number;
(iv) Copy of the notice of suspension, termination, or non-renewal;
(v) Statement discussing why the recipient organization believes
the SBA's actions were arbitrary, capricious, an abuse of discretion,
and/or otherwise not in accordance with the law or governing
regulations;
(vi) Identification of the specific relief being sought (e.g.,
lifting of the suspension);
(vii) Statement as to whether the recipient organization is
requesting a hearing, and if so, the reasons why it believes a hearing
is necessary; and
(viii) Copies of any documents or other evidence the recipient
organization believes support its position.
(2) Service. Any recipient organization requesting an
administrative review of an SBA enforcement action must submit copies
of its request (including any attachments) to:
(i) AA/SBDC; and
(ii) the Associate General Counsel for Procurement Law.
(3) Timeliness. To be considered timely, the AA/ED must receive a
request for an administrative review from the recipient organization
within 30 days of the date of the notice of termination, non-renewal,
or suspension. Any request for administrative review received by the
AA/ED more than 30 days after the date of the notice of suspension,
termination, or non-renewal will be considered untimely and will be
rejected without being considered.
(i) In addition, if the AA/ED does not receive a request for an
administrative review within the 30-day deadline, then the decision by
the AA/SBDC to suspend, terminate, or non-renew a recipient
organization's cooperative agreement will become the final Agency
decision on the matter.
(ii) [Reserved]
(4) Standard of review. In order to have the suspension,
termination, or non-renewal of a aooperative agreement reversed on an
administrative review, a recipient organization must successfully
demonstrate that the SBA enforcement action was arbitrary, capricious,
an abuse of discretion, and/or otherwise
[[Page 76146]]
not in accordance with the law or governing regulations.
(5) Conduct of the proceeding. Each party must serve the opposing
party with copies of all requests, arguments, evidence, and any other
filings it submits pursuant to the administrative review. Within 30
days of the AA/ED receiving a request for an administrative review, the
AA/ED must also receive the SBA's arguments and evidence in defense of
its decision to suspend, terminate, or non-renew a recipient
organization's cooperative agreement. If the SBA fails to provide its
arguments and evidence in a timely manner, the administrative review
will be conducted solely on the basis of the information provided by
the recipient organization. After receiving the SBA's response to the
request for an administrative review or after the passage of the 30-day
deadline for filing such a response, the AA/ED will take one or more of
the following actions, as applicable:
(i) Notify the parties whether the AA/ED has decided to grant a
request for a hearing.
(ii) Direct the parties to submit further arguments and/or evidence
on any issues, that she/he believes require clarification.
(iii) Notify the parties that the AA/ED has declared the record to
be closed and therefore will refuse to admit any further evidence or
argument.
(iv) Within 10 calendar days of declaring the record to be closed,
provide all parties with a copy of the AA/ED's written decision on the
merits of the administrative review.
(6) Request for hearing. The AA/ED will only grant a request for a
hearing if she/he concludes that there is a genuine dispute as to a
material fact that cannot be resolved except by the taking of testimony
and the confrontation of witnesses. If the AA/ED grants a request for a
hearing, they will set the time and place for the hearing, determine
whether the hearing will be conducted in person, via telephone or
virtually, and identify which witnesses will be permitted to give
testimony.
(7) Evidence. The recipient organization and SBA each have the
right to submit whatever evidence they believe is relevant to the
matter in dispute. No form of evidence will be permitted unless a party
has made a substantial showing, based upon credible evidence and not
mere allegation, that the other party has acted in bad faith or engaged
in improper behavior.
(8) Decision. The decision of the AA/ED will be effective
immediately as of the date it is issued. The decision of the AA/ED will
represent the final Agency decision on all matters in dispute on
administrative review. No further relief may be sought from or granted
by the Agency. If the AA/ED determines that the SBA's decision to
suspend, terminate, or non-renew a cooperative agreement was arbitrary,
capricious, an abuse of discretion, and/or otherwise not in accordance
with the law, she/he will reverse the Agency's enforcement action and
direct the SBA to reinstate the recipient organization's cooperative
agreement.
(i) Where an enforcement action has been reversed on administrative
review, the SBA will have no more than 10 calendar days to implement
the AA/ED's decision. However, to the extent permitted under the
applicable OMB Circulars, the SBA reserves the right to impose such
special conditions in the recipient organization's cooperative
agreement as it deems necessary to protect the Government's interests.
(ii) [Reserved]
0
33. Revise Sec. 130.800 to read as follows:
Sec. 130.800 Oversight of the SBDC Program.
(a) The AA/SBDC and designees will monitor the SBDC's performance
and its ongoing operations under the cooperative agreement to determine
if the SBDC is making effective and efficient use of program funds for
the benefit of the small business community.
(b) The District Office is the primary contact for the coordination
of the delivery of services to the small businesses in each area of
service.
(c) The AA/SBDC may change the primary contact for coordination at
any time and will notify the recipient organization of such a change in
a timely manner.
0
34. Revise Sec. 130.810 to read as follows:
Sec. 130.810 SBA review authority.
(a) Site visits. The AA/SBDC and designees will coordinate with,
and provide written advance notice to, the SBDC Lead Center Director
when conducting periodic programmatic reviews/visits to the recipient
organization, Lead Center, SBDC service center organizations, and other
service locations. The purpose of these review/visits is to verify
compliance with the cooperative agreement, analyze, assess, and
evaluate performance management regarding its SBDC activities, and if
necessary, make recommendations for improved service delivery.
(b) SBA examinations. The SBA designees shall perform a biennial
programmatic and financial examination of each SBDC network.
(c) Accreditation program. (1) When extending or renewing a
cooperative agreement of an SBDC, SBA shall consider the results of the
examinations and accreditation reviews. See 15 U.S.C. 648(k)(3)(A).
(i) The Small Business Act provides that the Administration may
provide financial support, by contract or otherwise, to the association
for the purpose of developing a SBDCs accreditation program. See 15
U.S.C. 648(k)(2).
(ii) SBDC networks must be reviewed for accreditation purposes and
receive accreditation periodically, as negotiated between the AA/SBDC
and the accreditation committee of the recognized association.
(iii) If an SBDC does not receive accreditation, the SBA may
initiate the non-renewal or termination procedure pursuant to Sec.
130.700.
(iv) The statue at 15 U.S.C. 648(k)(3)(B) states the SBA may not
renew or extend any cooperative agreement with a SBDC unless the center
has been approved under the accreditation program conducted pursuant to
this section, except that the AA/SBDC may waive such accreditation
requirement, at his or her discretion, upon a showing that the center
is making a good faith effort to obtain accreditation.
(2) The AA/SBDC and/or designee will participate in the
deliberations of the accreditation committee.
(d) Audits. The examinations by the SBA will not serve as a
substitute for audits required of Federal recipients under the Single
Audit Act of 1984 (31 U.S.C. 7501) or applicable OMB guidelines (see 2
CFR part 200, subpart F) nor will such internal review substitute for
investigations conducted by the SBA Office of Inspector General under
the authority of the Inspector General Act of 1978 (Pub. L. 95-452, 92
Stat. 1101) as amended (see Sec. 130.830(b)).
0
35. Revise Sec. 130.820 to read as follows:
Sec. 130.820 Records and recordkeeping.
(a) Records. (1) The recipient organization will ensure that all
financial and programmatic records, whether prepared by itself or
another entity, are adequately maintained in accordance with Federal
regulations in order to corroborate its performance and financial
reports to the SBA, as well as to support SBA examinations or other
audits. These records must include adequate documentation to support
the expenditures claimed and activities performed under the cooperative
agreement. The documentation should
[[Page 76147]]
provide the means to verify proper separation of costs among various
Federal awards and non-Federal spending. See also 2 CFR 200.333 through
200.337.
(2) The recipient organization will ensure complete and accurate
detailed financial and programmatic documentation by all SBDC service
center organizations and service centers. The recipient organization
will monitor and oversee its SBDC service center organizations and SBDC
service centers each budget period to ensure compliance with the OMB
guidelines and regulations. See 2 CFR part 200, subpart D.
(i) The recipient organization and Lead Center will ensure that:
(A) All funds received throughout the SBDC network, both Federal
and non-Federal, including program income, are properly accounted for,
adequately safeguarded, accurately reported, and properly used to
further program objectives.
(B) Each SBDC service center organization has reviewed all charges
made to its SBDC accounts, including program income, to ensure that
they are allowable.
(ii) The recipient organization's Lead Center monitoring and
oversight activities must include annual site visits to all its SBDC
service center organizations. The Lead Center will document its review
procedures. These review procedures must ensure that SBDCs are in
compliance with the terms and conditions of the cooperative agreement.
The Lead Center will also document the results of annual reviews of the
financial and program records of its SBDC service center organizations.
(3) The recipient organization must keep records on the amount,
source, and purpose of all funding under the overall management of the
SBDC network, including Federal programs.
(b) Availability of records. (1) All SBDC network records must be
made available to the SBA for review upon request.
(2) All SBDC network records, financial and programmatic, must be
maintained for a period of three years following the date SBA accepted
the annual performance report and final financial status report from
the recipient organization.
(3) The recipient organization will maintain sufficiently detailed
program and financial documentation to facilitate transition and
provide continuous SBDC services when changes occur in SBDC service
center organizations, as well as to support reviews and audits
authorized by the SBA.
0
36. Add Sec. 130.825 to read as follows:
Sec. 130.825 Reports.
(a) General. The recipient organization will submit consolidated
performance and financial reports for the SBDC network to the SBA for
review. These reports will reflect actual SBDC network activity and
accomplishments pertinent to the funding periods. Report formats will
be specified in the annual notice of funding opportunity. See also 2
CFR 200.327 through 200.329.
(b) Frequency. (1) Recipient organizations that have been in the
Program for more than three years must submit financial and
programmatic performance reports 30 calendar days after completion of
six months of operation each budget year.
(2) recipient organizations that have been in the Program for fewer
than three years must submit financial and programmatic performance
reports 30 calendar days after completion of each quarter for the first
three years.
(3) The final report from recipient organizations must be submitted
in accordance with the notice of funding opportunity and terms and
conditions.
(c) Electronic marketing reports. Lead Centers are responsible for
reporting their consolidated network performance data quarterly to the
SBA. The format of the reports will be designated in the notice of
funding opportunity. Lead Centers must ensure that the data is
submitted to the SBA within the timeframe stipulated and that the data
is accurate and complete.
(d) Performance reports. (1) The quarterly and semiannual
performance reports will address, in a brief narrative, the SBDC's
major activities and objectives. The reports should include a
discussion on the progress toward achieving those objectives.
(2) Final performance reports should include an overall summary of
effort expended to deliver the core services described in the
cooperative agreement for the full budget period. A discussion of
performance measurements achieved and an explanation of those
objectives or measurements not met should be included. Performance
reports should be a summary of the activities, events or achievements
by reportable category with an accompanying management analysis.
(e) Financial reports. The recipient organization will provide a
semi-annual and final financial report to the SBA as required by the
notice of funding opportunity and the cooperative agreement, in
accordance with 2 CFR part 200. It is the responsibility of the
recipient organization to prepare and certify financial reports sent to
the SBA for completion and accuracy.
0
37. Revise Sec. 130.830 to read as follows:
Sec. 130.830 Audits and investigations.
(a) Audits--(1) Pre-award reviews. New applicant organizations will
be subject to a pre-award sufficiency review. The purpose of a pre-
award review is to verify the adequacy of the accounting system, the
suitability of proposed costs, and the nature and sources of proposed
matching funds, as well as to verify the programmatic viability
contained within applicant organization's proposal.
(2) Interim or final audits. The recipient organization or the SBA
may conduct SBDC network audits.
(i) Recipient organization must comply with the Single Audit Act
(31 U.S.C. 7501) and applicable OMB Circulars (2 CFR part 200).
(ii) The SBA Office of Inspector General (OIG) or its agents may
conduct, supervise, or coordinate the SBA's audits, which may, at SBA
OIG's discretion, be audits of the SBDC network. In such instances, the
SBA will conduct audits in compliance with Government Auditing
Standards (GAS) (GAO-18-568G) and applicable OMB Circulars (2 CFR part
200).
(b) Investigations. The SBA may conduct investigations to determine
whether any person or entity has engaged in acts or practices
constituting a violation of the Small Business Act, any rule, order, or
regulation in this part issued under that Act, or any other applicable
Federal law.
0
38. Add Sec. 130.840 to read as follows:
Sec. 130.840 Closeout procedures.
(a) General. The purpose of closeout procedures is to ensure that
the program funds and property acquired or developed under the SBDC
cooperative agreement are fully reconciled and transferred seamlessly
between recipient organizations, SBDC service center organizations, or
other Federal programs. The responsibility of conducting closeout
procedures is vested with the recipient organization whose cooperative
agreement is not being renewed. The procedures should be documented and
accomplished in accordance with the applicable property standards and
the provisions of this part.
(b) Supplies and equipment. Supplies and equipment acquired with
funds under the cooperative agreement must be accounted for at
closeout.
(c) Intellectual property. (1) In accordance with the applicable
property standards, intangible property and items
[[Page 76148]]
subject to copyright that are purchased or developed under the
cooperative agreement must be accounted for at closeout.
(2) Inventory and documentation of intellectual property must be
collected by the Lead Center for close out. In circumstances where SBA
is not renewing the cooperative agreement, the recipient organization
must provide an intellectual property inventory and the support
documentation to the SBDC clearinghouse and to the District Office for
disposition instructions.
(d) Responsibilities--(1) Recipient organizations. When an SBDC
cooperative agreement is not being renewed, regardless of cause, the
recipient organization will ensure the following steps are taken in
their closeout process and perform the necessary inventories and
reconciliations prior to submitting the final annual financial report.
(i) An inventory of the SBDC property must be compiled and
evaluated. An asset evaluation final report accounting for the
property, equipment, and the aggregate of usable supplies and materials
must be provided to the Program Manager.
(ii) Program income balances must be reconciled, and unused program
income transferred to the Lead Center from SBDC service center
organization accounts.
(iii) Client counseling and training records, paper and electronic,
must be compiled to facilitate an SBA program closeout review.
(iv) Financial records will be compiled to facilitate an SBA
closeout financial examination.
(2) Close out actions. Recipient organizations that terminate SBDC
service center organization agreements will perform the close out
actions in paragraphs (d)(1)(i) through (iv) of this section to ensure
the safeguard of program resources under the cooperative agreement.
(3) SBA. Upon receipt of the final financial report from a non-
renewing recipient organization, the AA/SBDC will issue disposition
instructions to the former recipient organization as described in
paragraph (e) of this section.
(e) Final disposition. (1) The final financial status report from
the recipient organization must include the information identified in
the inventory process and identify any program income collected from
the SBDC network.
(2) The AA/SBDC will issue written disposition instructions to the
recipient organization providing:
(i) The name and address of the entity or agency to which property
and program income must be transferred;
(ii) A date by which the transfer must be completed;
(iii) Actions to be taken regarding property and program income;
(iv) Actions to be taken regarding program records such as client
and training files; and
(v) Authorization to incur costs for accomplishing the transfer.
Such costs may, when authorized, be applied to residual program income
or Federal or matching funds.
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2022-25012 Filed 12-12-22; 8:45 am]
BILLING CODE 8026-09-P
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</html>Indexed from Federal Register on December 13, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.