[Congressional Record Volume 142, Number 24 (Tuesday, February 27, 1996)]
[Senate]
[Pages S1346-S1349]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND:
  S. 1574. A bill to provide Federal contracting opportunities for 
small business concerns located in historically underutilized business 
zones, and for other purposes; to the Committee on Small Business.


                        The HUBZone Act of 1996

  Mr. BOND. Mr. President, I rise today to introduce a measure called 
the HUBZone Act of 1996. The purpose underlying this bill is to create 
new opportunities for growth through small business opportunities in 
distressed urban and rural communities which have suffered economic 
decline. This legislation will provide for an immediate infusion of 
cash and the creation of new jobs in our Nation's economically 
distressed areas.
  During the 8 years I served as Governor of Missouri, I met frequently 
with community leaders who were seeking help in attracting businesses 
and jobs to their cities and towns. We tried various programs. The 
enterprise zone concept met with some limited success in Missouri but 
the concept was good. Our incentives were limited to State tax relief, 
which was not a very significant element, but I believe that the idea 
of providing incentives for locating businesses in areas of high 
unemployment makes sense.
  Now, in my position representing my State and serving as chairman of 
the Committee on Small Business, I continue to receive pleas for help. 
We have not yet found the perfect formula to bring economic hope and 
independence to these communities. But I believe we are working on it. 
I think we are on the right track.
  The message for help has changed somewhat. Although help has been 
forthcoming from the Federal Government, high unemployment and poverty 
remain. One community leader, for example, has stressed to me that his 
city has all the job training funds it is capable of using. He said, 
``Don't send us any more training funds. Send us some jobs.'' What the 
city, the inner city, and people there need is more jobs.
  Too many of our Nation's cities and rural areas have suffered 
economic decline while others have prospered often with Federal 
assistance. In October of last year, I chaired a hearing before the 
Senate Committee on Small Business on ``Revitalizing America's Rural 
and Urban Communities.'' We heard insightful testimony about the 
importance of changing the U.S. Tax Code, for example, and providing 
other incentives to attract businesses to the communities in need of 
economic opportunity. Their recommendations have merit, and I urge my 
colleagues in the committees with jurisdiction over appropriate 
legislation to take swift action to bring these legislative changes to 
the Senate floor.
  What distinguishes the HUBZone Act of 1996 from other excellent 
proposals is that there is an immediate impact this bill can have on 
economically distressed communities. The HUBZone proposal would benefit 
entire communities by creating meaningful incentives for small 
businesses to operate and provide employment within America's most 
disadvantaged inner-city neighborhoods and rural areas.
  Specifically, the HUBZone Act of 1996 creates a new class of small 
businesses eligible for Federal Government contract set-asides and 
preferences. To be eligible, a small business must be located in a 
historically underutilized business zone--that is the basis for the 
acronym ``HUBZone''--and not less than 35 percent of its work force 
would have to reside in a HUBZone.
  I will contrast the HUBZone proposal in this legislation today with a 
draft Executive order that is being circulated by the Clinton 
administration to establish an empowerment contracting program. I 
commend the President and the administration for focusing on the value 
of targeting Federal Government assistance to low-income communities. 
However, I think that program falls short of meeting the goal of 
helping low-income communities and its residents.
  For example, under the President's proposal, any business, large or 
small, located in a low-income community would qualify for a valuable 
contracting preference, even if it does not employ one resident of the 
community. This is clearly a major deficiency or loophole when trying 
to assist the unemployed and underemployed who live in those target 
areas. A further weakness in the President's proposal is the failure to 
define clearly and objectively the criteria which makes a community 
eligible for his program. We need to avoid creating a new Federal 
program that ends up helping well-off individuals and companies while 
failing to have a significant impact on the poor.
  The HUBZone Act of 1996 makes the contracting preference available 
only if the small business is located in the economically distressed 
area and employs 35 percent of its work force from a HUBZone. That is a 
significant difference. It is one that is clearly designed to attack 
deep-seated poverty in geographic locations within the United States.
  To qualify for the program, the small business would have to certify 
to the Administrator of the U.S. Small Business Administration that it 
is located in a HUBZone and that it will comply with certain rules 
governing subcontracting. In addition, a qualified small business must 
agree to perform at least 50 percent of the contract in a HUBZone 
unless the terms of the contract require that the efforts be conducted 
elsewhere; in other words, a service contract requiring the small 
business' presence in Government-owned or leased buildings, for 
example. In the latter case, no less than 50 percent of the contract 
would have to be performed by employees of the eligible small business.
  Mr. President, the HUBZone Act of 1996 is designed to cut through 
Government redtape while stressing a streamlined effort to place 
Government contracts and new jobs in economically distressed 
communities.
  Many of my colleagues are familiar with the SBA's 8(a) minority small 
business program and some of the rules which are cumbersome for small 
businesses seeking to qualify for the program. Typically, an 8(a) 
program applicant has to hire a lawyer to help prepare the application 
and shepherd it through the SBA procedure, which can often take months. 
In fact, Congress was forced to legislate the maximum time the agency 
could review an application as a last-ditch effort to speed up the 
process. Today, it still takes the SBA at least 90 days, the statutory 
maximum, to review an application.
  The HUBZone Act of 1996 is specifically designed to avoid 
bureaucratic roadblocks that have delayed and discouraged small 
business from taking advantage of Government programs. Simply put, if 
you are a small business located in the HUBZone, employing people from 
a HUBZone, you are eligible. Once eligible, the small business notifies 
the SBA of its participation in the HUBZone program, and it is 
qualified to receive Federal Government contract preferences.
  Our goal in introducing this measure is to have new Government 
contracts being awarded to small businesses in economically distressed 
communities. Therefore, we have included some ambitious goals for each 
Government agency. In 1997, 1 percent of the total value of all prime 
Government contracts would be awarded to small businesses located in 
HUBZones. The goal would increase to 2 percent in 1998, 3 percent in 
1999, and 4 percent in 2000 and each succeeding year.
  HUBZone contracting is a bold undertaking. Passage of the HUBZone Act 
would create hope for inner cities and distressed rural areas that have 
long been ignored. Most importantly, passage of the HUBZone bill will 
create hope for the hundreds of thousands of unemployed or 
underemployed people who long ago thought our country had given up on 
them. This hope is tangible; it is jobs and income.
  We are going to be holding hearings before the Committee on Small 
Business on the HUBZone Act of 1996 and the role our Nation's small 
business community can play in revitalizing our distressed cities and 
rural communities. I really think the HUBZone proposal has great merit. 
I ask my colleagues to look at it, offer comments, 

[[Page S1347]]
if you agree with what we are trying to do, the goal of this program 
and its objective. I welcome cosponsors. I welcome constructive 
discussion and input from those who have an interest in seeing economic 
opportunity brought back to inner-city areas and distressed rural 
communities.
  Mr. President, I ask unanimous consent that the text of the bill and 
a section-by-section analysis of its provisions be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1574

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``HUBZone Act of 1996''.

     SEC. 2. HISTORICALLY UNDERUTILIZED BUSINESS ZONES.

       (a) Definitions.--Section 3 of the Small Business Act (15 
     U.S.C. 632) is amended by adding at the end the following new 
     subsection:
       ``(o) Definitions Relating to Historically Underutilized 
     Business Zones.--For purposes of this section, the following 
     definitions shall apply:
       ``(1) Historically underutilized business zone.--The term 
     `historically underutilized business zone' means any area 
     located within one or more qualified census tracts or 
     qualified nonmetropolitan counties.
       ``(2) Small business concern located in a historically 
     underutilized business zone.--The term `small business 
     concern located in a historically underutilized business 
     zone' means a small business concern--
       ``(A) that is owned and controlled by one or more persons, 
     each of whom is a United States citizen;
       ``(B) the principal office of which is located in a 
     historically underutilized business zone; and
       ``(C) not less than 35 percent of the employees of which 
     reside in a historically underutilized business zone.
       ``(3) Qualified areas.--
       ``(A) Qualified census tract.--The term `qualified census 
     tract' has the same meaning as in section 42(d)(5)(C)(i)(I) 
     of the Internal Revenue Code of 1986.
       ``(B) Qualified nonmetropolitan county.--The term 
     `qualified nonmetropolitan county' means, based on the most 
     recent data available from the Bureau of the Census of the 
     Department of Commerce, any county--
       ``(i) that is not located in a metropolitan statistical 
     area (as that term is defined in section 143(k)(2)(B) of the 
     Internal Revenue Code of 1986); and
       ``(ii) in which the median household income is less than 80 
     percent of the nonmetropolitan State median household income.
       ``(4) Qualified small business concern located in a 
     historically underutilized business zone.--
       ``(A) In general.--A small business concern located in a 
     historically underutilized business zone is `qualified', if--
       ``(i) the small business concern has certified in writing 
     to the Administrator that--

       ``(I) it is a small business concern located in a 
     historically underutilized business zone;
       ``(II) it will comply with the subcontracting limitations 
     specified in Federal Acquisition Regulation 52.219-14;
       ``(III) in the case of a contract for services (except 
     construction), not less than 50 percent of the cost of 
     contract performance incurred for personnel will be expended 
     for employees of that small business concern or for employees 
     of other small business concerns located in historically 
     underutilized business zones; and
       ``(IV) in the case of a contract for procurement of 
     supplies (other than procurement from a regular dealer in 
     such supplies), the small business concern (or a 
     subcontractor of the small business concern that is also a 
     small business concern located in a historically 
     underutilized business zone) will perform work for not less 
     than 50 percent of the cost of manufacturing the supplies 
     (not including the cost of materials) in a historically 
     underutilized business zone; and

       ``(ii) no certification made by the small business concern 
     under clause (i) has been, in accordance with the procedures 
     established under section 30(c)(2)--

       ``(I) successfully challenged by an interested party; or
       ``(II) otherwise determined by the Administrator to be 
     materially false.

       ``(B) Change in percentages.--The Administrator may utilize 
     a percentage other than the percentage specified in under 
     subclause (III) or (IV) of subparagraph (A)(i), if the 
     Administrator determines that such action is necessary to 
     reflect conventional industry practices among small business 
     concerns that are below the numerical size standard for 
     businesses in that industry category.
       ``(C) Construction and other contracts.--The Administrator 
     shall promulgate final regulations imposing requirements that 
     are similar to those specified in subclauses (III) and (IV) 
     of subparagraph (A)(i) on contracts for general and specialty 
     construction, and on contracts for any other industry 
     category that would not otherwise be subject to those 
     requirements. The percentage applicable to any such 
     requirement shall be determined in accordance with 
     subparagraph (B).
       ``(D) List of qualified small business concerns.--The 
     Administrator shall establish and maintain a list of 
     qualified small business concerns located in historically 
     underutilized business zones, which list shall--
       ``(i) include the name, address, and type of business with 
     respect to each such small business concern;
       ``(ii) be updated by the Administrator not less than 
     annually; and
       ``(iii) be provided upon request to any Federal agency or 
     other entity.''.
       (b) Federal Contracting Preferences.--The Small Business 
     Act (15 U.S.C. 631 et seq.) is amended--
       (1) by redesignating section 30 as section 31; and
       (2) by inserting after section 29 the following new 
     section:

     ``SEC. 30. HISTORICALLY UNDERUTILIZED BUSINESS ZONES PROGRAM.

       ``(a) In General.--There is established within the 
     Administration a program to be carried out by the 
     Administrator to provide for Federal contracting assistance 
     to qualified small business concerns located in historically 
     underutilized business zones in accordance with this section.
       ``(b) Contracting Preferences.--
       ``(1) Contract set-aside.--
       ``(A) Requirement.--The head of an executive agency shall 
     afford the opportunity to participate in a competition for 
     award of a contract of the executive agency, exclusively to 
     qualified small business concerns located in historically 
     underutilized business zones, if the Administrator determines 
     that--
       ``(i) it is reasonable to expect that not less than 2 
     qualified small business concerns located in historically 
     underutilized business zones will submit offers for the 
     contract; and
       ``(ii) the award can be made on the restricted basis at a 
     fair market price.
       ``(B) Covered contracts.--Subparagraph (A) applies to a 
     contract that is estimated to exceed the simplified 
     acquisition threshold.
       ``(2) Sole-source contracts.--
       ``(A) Requirement.--The head of an executive agency, in the 
     exercise of authority provided in any other law to award a 
     contract of the executive agency on a sole-source basis, 
     shall award the contract on that basis to a qualified small 
     business concern located in a historically underutilized 
     business zone, if any, that--
       ``(i) submits a reasonable and responsive offer for the 
     contract; and
       ``(ii) is determined by the Administrator to be a 
     responsible contractor.
       ``(B) Covered contracts.--Subparagraph (A) applies to a 
     contract that is estimated to exceed the simplified 
     acquisition threshold and not to exceed $5,000,000.
       ``(3) Price evaluation preference in full and open 
     competitions.--In any case in which a contract is to be 
     awarded by the head of an executive agency on the basis of 
     full and open competition, the price offered by a qualified 
     small business concern located in a historically 
     underutilized business zone shall be deemed as being lower 
     than the price offered by another offeror (other than another 
     qualified small business concern located in a historically 
     underutilized business zone) if the price offered by the 
     qualified small business concern located in a historically 
     underutilized business zone is not more than 10 percent 
     higher than the price offered by the other offeror.
       ``(4) Relationship to other contracting preferences.--
       ``(A) Subordinate relationship.--A procurement may not be 
     made from a source on the basis of a preference provided in 
     paragraph (1), (2), or (3) if the procurement would otherwise 
     be made from a different source under section 4124 or 4125 of 
     title 18, United States Code, or the Javits-Wagner-O'Day Act.
       ``(B) Superior relationship.--A procurement may not be made 
     from a source on the basis of a preference provided in 
     section 8(a), if the procurement would otherwise be made from 
     a different source under paragraph (1), (2), or (3) of this 
     subsection.
       ``(5) Definitions.--For purposes of this subsection, the 
     terms `executive agency', `full and open competition', and 
     `simplified acquisition threshold' have the meanings given 
     such terms in section 4 of the Office of Federal Procurement 
     Policy Act.
       ``(c) Enforcement; Penalties.--
       ``(1) In general.--The Administrator shall enforce the 
     requirements of this section.
       ``(2) Verification of eligibility.--In carrying out this 
     subsection, the Administrator shall establish procedures 
     relating to--
       ``(A) the filing, investigation, and disposition by the 
     Administration of any challenge to the eligibility of a small 
     business concern to receive assistance under this section 
     (including a challenge, filed by an interested party, 
     relating to the veracity of a certification made by a small 
     business concern under section 3(o)(4)(A)); and
       ``(B) verification by the Administrator of the accuracy of 
     any certification made by a small business concern under 
     section 3(o)(4)(A).
       ``(3) Random inspections.--The procedures established under 
     paragraph (2) may provide for random inspections by the 
     Administrator of any small business concern making a 
     certification under section 3(o)(4).
       ``(4) Provision of data.--Upon the request of the 
     Administrator, the Secretary of Labor 

[[Page S1348]]
     and the Secretary of Housing and Urban Development shall promptly 
     provide to the Administrator such information as the 
     Administrator determines to be necessary to carry out this 
     subsection.
       ``(5) Penalties.--In addition to the penalties described in 
     section 16(d), any small business concern that is determined 
     by the Administrator to have misrepresented the status of 
     that concern as a `small business concern located in a 
     historically underutilized business zone' for purposes of 
     this section, shall be subject to the provisions of--
       ``(A) section 1001 of title 18, United States Code; and
       ``(B) sections 3729 through 3733 of title 31, United States 
     Code.''.

     SEC. 3. TECHNICAL AND CONFORMING AMENDMENTS TO THE SMALL 
                   BUSINESS ACT.

       (a) Performance of Contracts.--Section 8(d) of the Small 
     Business Act (15 U.S.C. 637(d)) is amended--
       (1) in paragraph (1)--
       (A) in the first sentence, by striking ``,, small business 
     concerns owned and controlled by socially and economically 
     disadvantaged individuals'' and inserting ``, qualified small 
     business concerns located in historically underutilized 
     business zones, small business concerns owned and controlled 
     by socially and economically disadvantaged individuals''; and
       (B) in the second sentence, by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones,'' after ``small business concerns,'';
       (2) in paragraph (3)--
       (A) by inserting ``qualified small business concerns 
     located in historically underutilized business zones,'' after 
     ``small business concerns,'' each place that term appears; 
     and
       (B) by adding at the end the following new subparagraph:
       ``(F) For purposes of this contract, the term `qualified 
     small business concern located in a historically 
     underutilized business zone' has the same meaning as in 
     section 3(o) of the Small Business Act.'';
       (3) in paragraph (4)--
       (A) in subparagraph (D), by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones,'' after ``small business concerns,''; and
       (B) in subparagraph (E), by striking ``small business 
     concerns and'' and inserting ``small business concerns, 
     qualified small business concerns located in historically 
     underutilized business zones, and'';
       (4) in paragraph (6), by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones,'' after ``small business concerns,'' each 
     place that term appears; and
       (5) in paragraph (10), by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones,'' after ``small business concerns,''.
       (b) Awards of Contracts.--Section 15 of the Small Business 
     Act (15 U.S.C. 644) is amended--
       (1) in subsection (g)(1)--
       (A) by inserting ``qualified small business concerns 
     located in historically underutilized business zones,'' after 
     ``small business concerns,'' each place that term appears; 
     and
       (B) by inserting after the second sentence the following: 
     ``The Governmentwide goal for participation by qualified 
     small business concerns located in historically underutilized 
     business zones shall be established at not less than 1 
     percent of the total value of all prime contract awards for 
     fiscal year 1997, not less than 2 percent of the total value 
     of all prime contract awards for fiscal year 1998, not less 
     than 3 percent of the total value of all prime contract 
     awards for fiscal year 1999, and not less than 4 percent of 
     the total value of all prime contract awards for fiscal year 
     2000 and each fiscal year thereafter.'';
       (2) in subsection (g)(2)--
       (A) in the first sentence, by striking ``,, by small 
     business concerns owned and controlled by socially and 
     economically disadvantaged individuals'' and inserting ``, by 
     qualified small business concerns located in historically 
     underutilized business zones, by small business concerns 
     owned and controlled by socially and economically 
     disadvantaged individuals'';
       (B) in the second sentence, by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones,'' after ``small business concerns,''; and
       (C) in the fourth sentence, by striking ``by small business 
     concerns owned and controlled by socially and economically 
     disadvantaged individuals and participation by small business 
     concerns owned and controlled by women'' and inserting ``by 
     qualified small business concerns located in historically 
     underutilized business zones, by small business concerns 
     owned and controlled by socially and economically 
     disadvantaged individuals, and by small business concerns 
     owned and controlled by women''; and
       (3) in subsection (h), by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones,'' after ``small business concerns,'' each 
     place that term appears.
       (c) Offenses and Penalties.--Section 16 of the Small 
     Business Act (15 U.S.C. 645) is amended--
       (1) in subsection (d)(1)--
       (A) by inserting ``, a `qualified small business concern 
     located in a historically underutilized business zone','' 
     after `` `small business concern',''; and
       (B) in subparagraph (A), by striking ``section 9 or 15'' 
     and inserting ``section 9, 15, or 30''; and
       (2) in subsection (e), by inserting ``, a `small business 
     concern located in a historically underutilized business 
     zone','' after `` `small business concern',''.

     SEC. 4. OTHER TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Title 10, United States Code.--Section 2323 of title 
     10, United States Code, is amended--
       (1) in subsection (a)(1)(A), by inserting before the 
     semicolon the following: ``, and qualified small business 
     concerns located in historically underutilized business zones 
     (as that term is defined in section 3(o) of the Small 
     Business Act)''; and
       (2) in subsection (f), by inserting ``or as a qualified 
     small business concern located in a historically 
     underutilized business zone (as that term is defined in 
     section 3(o) of the Small Business Act)'' after ``subsection 
     (a))''.
       (b) Federal Home Loan Bank Act.--Section 21A(b)(13) of the 
     Federal Home Loan Bank Act (12 U.S.C. 1441a(b)(13)) is 
     amended--
       (1) by striking ``concerns and small'' and inserting 
     ``concerns, small''; and
       (2) by inserting ``, and qualified small business concerns 
     located in historically underutilized business zones (as that 
     term is defined in section 3(o) of the Small Business Act)'' 
     after ``disadvantaged individuals''.
       (c) Small Business Economic Policy Act of 1980.--Section 
     303(e) of the Small Business Economic Policy Act of 1980 (15 
     U.S.C. 631b(e)) is amended--
       (1) in paragraph (1), by striking ``and'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(3) qualified small business concerns located in 
     historically underutilized business zones (as that term is 
     defined in section 3(o) of the Small Business Act).''.
       (d) Small Business Investment Act of 1958.--Section 
     411(c)(3)(B) of the Small Business Investment Act of 1958 (15 
     U.S.C. 694b(c)(3)(B)) is amended by inserting before the 
     semicolon the following: ``, or to a qualified small business 
     concern located in a historically underutilized business 
     zone, as that term is defined in section 3(o) of the Small 
     Business Act''.
       (e) Title 31, United States Code.--
       (1) Contracts for collection services.--Section 3718(b) of 
     title 31, United States Code, is amended--
       (A) in paragraph (1)(B), by inserting ``and law firms that 
     are qualified small business concerns located in historically 
     underutilized business zones (as that term is defined in 
     section 3(o) of the Small Business Act)'' after 
     ``disadvantaged individuals''; and
       (B) in paragraph (3)--
       (i) in the first sentence, by inserting before the period 
     ``and law firms that are qualified small business concerns 
     located in historically underutilized business zones'';
       (ii) in subparagraph (A), by striking ``and'' at the end;
       (iii) in subparagraph (B), by striking the period at the 
     end and inserting ``; and''; and
       (iv) by adding at the end the following new subparagraph:
       ``(C) the term `qualified small business concern located in 
     a historically underutilized business zone' has the same 
     meaning as in section 3(o) of the Small Business Act.''.
       (2) Payments to local governments.--Section 6701(f) of 
     title 31, United States Code, is amended--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by striking ``and'' at the end;
       (ii) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(C) qualified small business concerns located in 
     historically underutilized business zones.''; and
       (B) in paragraph (3)--
       (i) in subparagraph (A), by striking ``and'' at the end;
       (ii) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(C) the term `qualified small business concern located in 
     a historically underutilized business zone' has the same 
     meaning as in section 3(o) of the Small Business Act.''.
       (3) Regulations.--Section 7505(c) of title 31, United 
     States Code, is amended by striking ``small business concerns 
     and'' and inserting ``small business concerns, qualified 
     small business concerns located in historically underutilized 
     business zones, and''.
       (f) Office of Federal Procurement Policy Act.--
       (1) Enumeration of included functions.--Section 6(d) of the 
     Office of Federal Procurement Policy Act (41 U.S.C. 405(d)) 
     is amended--
       (A) in paragraph (5)(C), by inserting ``and of qualified 
     small business concerns located in historically underutilized 
     business zones'' after ``other minorities'';
       (B) in paragraph (10), by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones (as that term is defined in section 3(o) of 
     the Small Business Act),'' after ``small businesses,''; and
     
[[Page S1349]]

       (C) in paragraph (11), by inserting ``qualified small 
     business concerns located in historically underutilized 
     business zones (as that term is defined in section 3(o) of 
     the Small Business Act),'' after ``small businesses,''.
       (2) Procurement data.--Section 19A of the Office of Federal 
     Procurement Policy Act (41 U.S.C. 417a) is amended--
       (A) in subsection (a)--
       (i) by inserting ``the number of qualified small business 
     concerns located in historically underutilized business 
     zones,'' after ``Procurement Policy''; and
       (ii) by inserting a comma after ``women''; and
       (B) in subsection (b), by adding at the end the following: 
     ``For purposes of this section, the term `qualified small 
     business concern located in a historically underutilized 
     business zone' has the same meaning as in section 3(o) of the 
     Small Business Act.''.
       (g) Energy Policy Act of 1992.--Section 3021 of the Energy 
     Policy Act of 1992 (42 U.S.C. 13556) is amended--
       (1) in subsection (a)--
       (A) in paragraph (2), by striking ``or'';
       (B) in paragraph (3), by striking the period and inserting 
     ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(4) qualified small business concerns located in 
     historically underutilized business zones.''; and
       (2) in subsection (b), by adding at the end the following 
     new paragraph:
       ``(3) The term `qualified small business concern located in 
     a historically underutilized business zone' has the same 
     meaning as in section 3(o) of the Small Business Act.''.
       (h) Title 49, United States Code.--
       (1) Project grant application approval conditioned on 
     assurances about airport operation.--Section 47107(e) of 
     title 49, United States Code, is amended--
       (A) in paragraph (1), by inserting before the period ``or 
     qualified small business concerns located in historically 
     underutilized business zones (as that term is defined in 
     section 3(o) of the Small Business Act)'';
       (B) in paragraph (4)(B), by inserting before the period 
     ``or as a qualified small business concern located in a 
     historically underutilized business zone (as that term is 
     defined in section 3(o) of the Small Business Act)''; and
       (C) in paragraph (6), by inserting ``or a qualified small 
     business concern located in a historically underutilized 
     business zone (as that term is defined in section 3(o) of the 
     Small Business Act)'' after ``disadvantaged individual''.
       (2) Minority and disadvantaged business participation.--
     Section 47113 of title 49, United States Code, is amended--
       (A) in subsection (a)--
       (i) in paragraph (1), by striking the period at the end and 
     inserting a semicolon;
       (ii) in paragraph (2), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following new paragraph:
       ``(3) the term `qualified small business concern located in 
     a historically underutilized business zone' has the same 
     meaning as in section 3(o) of the Small Business Act.''; and
       (B) in subsection (b), by inserting before the period ``or 
     qualified small business concerns located in historically 
     underutilized business zones''.
                                                                    ____


   Historically Underutilized Business Zone Act of 1995--Section-by-
                            Section Analysis


                         Section 1. Short Title

       Historically Undercutilized Business Zone Act of 1995, 
     hereinafter referred to as the ``HUBZone Act of 1995.''


          Section 2. Historically Underutilized Business Zones

     Definitions--
       Historically Underutilized Business Zone (HUBZone) is any 
     area located within a qualified metropolitan statistical area 
     or qualified non-metropolitan area.
       Small business concern located in a Historically 
     Underutilized Business Zone is a small business whose 
     principal office is located in a HUBZone and whose workforce 
     includes at least 35% of its employees from one or more 
     HUBZones.
       Qualified Metropolitan Statistical Area is an area where 
     not less than 50% of the households have an income of less 
     than 60% of the metropolitan statistical area median gross 
     income as determined by the Department of Housing and Urban 
     Development.
       Qualified Non-metropolitan Area is an area where the 
     household income is less than 80% of the non-metropolitan 
     area median gross income as determined by the Bureau of the 
     Census of the Department of Commerce.
       Qualified Small Business Concern must certify in writing to 
     the Small Business Administration (SBA) that it (a) is 
     located in a HUBZone, (b) will comply with subcontracting 
     rules in the Federal Acquisition Regulations (FAR), (c) will 
     insure that not less than 50% of the contract cost will be 
     performed by the Qualified Small Business.
     Contracting preferences--
       Contract Set-Aside to a qualified small business located in 
     a HUBZone can be made by a procuring agency if it determines 
     that 2 or more qualified small businesses will submit offers 
     for the contract and the award can be made at a fair market 
     price.
       Sole-source Contracts can be awarded to a qualified small 
     business if it submits a reasonable and responsive offer and 
     is determined by SBA to be a responsible contractor. Sole-
     source contracts cannot exceed $5 million.
       10% Price Evaluation Preference in full and open 
     competition can be made on behalf of the Qualified Small 
     Business if its offer is not more than 10% higher than the 
     other offeror, so long as it is not a small business concern.
     Enforcement; penalties
       The SBA Administrator or his designee shall establish a 
     system to verify certifications made by HUBZone small 
     businesses to include random inspections and procedures 
     relating to disposition of any challenges to the accuracy of 
     any certification. If SBA determines that a small business 
     concern may have misrepresented its status as a HUBZone small 
     business, it shall be subject to prosection under title 18, 
     section 1001, U.S.C., False Certifications, and title 31, 
     sections 3729-3733, U.S.C., False Claims Act.


 Section 3. Technical and Conforming Amendments to the Small Business 
                                  Act

     HUBZone preference
       The Small Business Act is amended to give qualified small 
     business concerns located in HUBZones a higher preference 
     than small business concerns owned and controlled by socially 
     and economically disadvantaged individuals (8(a) 
     contractors).
     HUBZone goals
       This section sets forth government-wide goals for awarding 
     government contracts to qualified small business. In Fiscal 
     Year 1997, the goal will be not less than 1% of the total 
     value of all prime contracts awarded to qualified small 
     businesses located in HUBZones. In FY 1998, this goal will 
     increase to 2%; in FY 1999, it will be 3%; and it will reach 
     4% in FY 2000 and each year thereafter.
     Offenses and penalties
       This section provides that anyone who misrepresents any 
     entity as being a qualified small business in order to obtain 
     a government contract or subcontract can be fined up to 
     $500,000 and imprisoned for not more than 10 years and be 
     subject to the administrative remedies prescribed by the 
     Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801-
     3812).


          Section 4. Other Technical and Conforming Amendments

       This section makes technical amendments to other federal 
     government agency programs that have traditionally provided 
     contract set asides and preferences to disadvantaged small 
     business by expanding each program to include small business 
     located in an Historically Underutilized Business Zone.
                                 ______