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Proposed Rule

8(a) Business Development/Small Disadvantaged Business Status Determinations

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Small Business Administration (SBA).


Notice of proposed rulemaking.


SBA proposes to amend its regulations governing the Small Disadvantaged Business (SDB) program. This proposed rule would grant applicants seeking certification as an SDB a 45-day period to request that SBA reconsider its decision finding the applicant ineligible for SDB certification.


Submit comments on or before April 10, 2000.


Written comments should be addressed to Linda Williams, Deputy Associate Deputy Administrator for Government Contracting and Minority Enterprise Development, U.S. Small Business Administration, 409 Third Street, SW., Washington, DC 20416.

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Terri Dickerson, Acting Associate Administrator, Office of Small Disadvantaged Business Certification and Eligibility, at (202) 619-1727.

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On June 30, 1998, in response to and in conjunction with the Department of Justice and the Federal Acquisition Regulation reform proposals to implement a government-wide SDB program, SBA issued a final rule establishing the procedural framework for certifying firms as SDBs and for processing protests challenging the disadvantaged status of a firm claiming to be an SDB. See 63 FR 35767. Under existing regulations, firms seeking SDB certification must meet certain citizenship, size, ownership, control and social and economic disadvantaged status requirements. Although SBA is responsible for determining an applicant's eligibility for SDB certification, the Agency has approved certain organizations or business concerns (called Private Certifiers) to perform ownership and control determinations.

When an applicant submits an SDB application to SBA, however, SBA's Assistant Administrator for Small Disadvantaged Business Certification and Eligibility (AA/SDBCE) determines whether the applicant satisfies all of the requirements for certification, and issues a single written decision as to whether the applicant qualifies as an Start Printed Page 12956SDB. The current regulations do not grant SDB applicants a right to request that the AA/SDBCE reconsider his or her negative determination of SDB eligibility. Instead, existing regulations afford applicants declined SDB certification on certain grounds the right to appeal the denial to OHA. Further, the regulations provide that once SBA issues a final decision finding the applicant ineligible, the applicant is precluded from reapplying for 12 months after the date of the final SBA decision to decline the application.

SBA has determined that the absence of an opportunity for firms to obtain a reconsideration, coupled with the one year bar on reapplications for SDB certification following a final SBA decision, deprives applicants of a formal mechanism to immediately correct deficiencies in their applications.

This proposed rule would amend SBA's existing regulations, codified at Title 13 Code of Federal Regulation (CFR) part 124, to: (1) Grant applicants the opportunity to request reconsideration and (2) Establish a reconsideration process. This proposed rule would redesignate 13 CFR § 124.1008(f)(3) as 13 CFR § 124.1008(f)(4) and would add a new 13 CFR § 124.1008(f)(3). The new paragraph (3) Would grant applicants denied SDB certification a 45-day period from the date of the AA/SDBCE's written decision to request that the AA/SDBCE reconsider that decision.

As part of the request for reconsideration, this proposed rule would allow applicants to submit additional evidence to show that they have overcome the reason(s) for the AA/SDBCE's denial. If the AA/SDBCE once again declines the application solely on grounds that were not included in the original denial letter, the AA/SDBCE would be required to grant the applicant an additional 45-day period to request that SBA reconsider the new basis for denial. If, however, the AA/SDBCE determines that the applicant is ineligible for SDB certification for one or more of the same reason(s) as addressed in the original decline, the applicant would not be entitled to a second reconsideration.

This proposed rule would not affect an applicant's right under the current 13 CFR 124.1008(f)(3) to appeal the AA/SDBCE's decision denying eligibility. An applicant denied SDB certification based solely on reasons of social disadvantage, economic disadvantage, or disadvantaged ownership or control, would continue to have the right to appeal to OHA. Under this proposed rule, the applicant would have the option to forego the reconsideration process and appeal the AA/SDBCE's initial decision to OHA, or to request reconsideration and if declined a second time solely on those grounds, to appeal the AA/SDBCE's reconsideration decision.

This proposed rule also does not affect an applicant's right with respect to ownership and control determinations of Private Certifiers. Unlike determinations by SBA, the current regulations allow applicants to reapply at any time following a Private Certifier's negative ownership and control determination and therefore obviate the need for a formal reconsideration process.

The proposed reconsideration process under this rule constitutes a procedural amendment that is designed to improve the efficiency and effectiveness of the certification process. This proposed rule also benefits SDB applicants by granting them the right to request that the AA/SDBC&E reconsider his or her denial of SDB eligibility. The proposed rule in no way deprives the public of any existing rights under SBA regulations, nor does it impose any additional burdens on SDB applicants or any other member of the public. For those reasons, SBA is providing a 30-day comment period to avoid unnecessarily delaying the implementation of this rule and to avoid unnecessarily impeding the efficient administration of the SDB certification program.

Compliance With Executive Orders 13132, 12988, and 12866, the Regulatory Flexibility Act (5 U.S.C. 601, et seq.), and the Paperwork Reduction Act (44 U.S.C. Ch. 35)

SBA has determined that this rule is not a significant regulatory action as defined by Executive Order 12866 in that it is not likely to have an annual economic effect of $100 million or more on the economy, result in a major increase in costs or prices, or have a significant adverse effect on competition or the United States economy. SBA certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq, since it would be a procedural amendment to the SDB certification process that would not impose any mandatory requirements on SDB applicants or deprive them of any existing rights under governing SBA regulations.

For purposes of the Paperwork Reduction Act of 1995 (Public Law 104-13), SBA certifies that this interim rule imposes no new reporting or recordkeeping requirements on firms applying to be certified as an SDB. The rule grants certain SDB applicants the right to submit evidence to SBA that they are socially and economically disadvantaged, that they are citizens of the United States, and that they own and control the applicant concern. Once certified as an SDB, this rule does not require an SDB to report any other information to SBA or to maintain additional records.

For purposes of Executive Order 13132, SBA has determined that this proposed rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

For purposes of Executive Order 12988, SBA certifies that this rule is drafted, to the extent practicable, in accordance with the standards set forth in Section 3 of that Order.

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List of Subjects 13 CFR Part 124

  • Government procurement
  • Hawaiian natives
  • Minority businesses
  • Reporting and recordkeeping requirements
  • Technical assistance
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Accordingly, for the reasons set forth above, SBA proposes to amend Title 13, CFR as follows:

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1. The authority citation for 13 CFR part 124 continues to read as follows:

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Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 101-574, and 42 U.S.C. 9815.

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2. Section 124.1008 is amended by redesignating paragraphs (f)(3) and (4) as paragraphs (f)(4) and (5), respectively, and adding a new paragraph (f)(3) to read as follows:

How does a firm become certified as an SDB?
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(f) * * *

(3)(i) If the AA/SDBCE declines the firm's application for SDB certification, the firm may request that the AA/SDBCE reconsider his or her initial decline by submitting a written request to the AA/SDBCE within 45 days of the date of the AA/SDBCE's decision. The applicant may provide any additional information and documentation pertinent to overcoming the reason(s) for the initial decline.

(ii) The AA/SDBCE will issue a written decision within 30 days of receiving the applicant's request for reconsideration, if practicable. The AA/SDBCE may either approve the application, deny it on one or more of the same grounds as the initial decision, or deny it on other grounds. If the application is denied, the AA/SDBCE Start Printed Page 12957will explain why the applicant is not eligible for SDB certification and give specific reasons for the decline. If the AA/SDBCE declines the application solely on issues not raised in the initial decline, the applicant may request another reconsideration as if it were an initial decline. If the AA/SDBCE declines the application for one or more of the same reasons as addressed in the initial decline, the applicant is not entitled to a second reconsideration.

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Dated: March 1, 2000.

Aida Alvarez,


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[FR Doc. 00-5600 Filed 3-9-00; 8:45 am]