[Federal Register Volume 60, Number 113 (Tuesday, June 13, 1995)]
[Rules and Regulations]
[Pages 31054-31063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14371]



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SMALL BUSINESS ADMINISTRATION

13 CFR Part 130


Small Business Development Centers

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: The Small Business Administration (SBA) is promulgating 
regulations governing the Small Business Development Center (SBDC) 
Program. Since enactment of Pub. L. 96-302 establishing the SBDC 
Program in 1980, the Program has been operating under direct statutory 
authority, without regulations. This rule will establish a framework 
for more efficient operation.

EFFECTIVE DATE: This rule is effective on June 13, 1995.

FOR FURTHER INFORMATION CONTACT:
Hardy Patten, Program Manager, (202) 205-6766.

SUPPLEMENTARY INFORMATION: On November 28, 1994, SBA proposed a rule 
(59 FR 60723) to establish a regulatory framework for the SBDC Program, 
which is administered pursuant to Section 21 of the Small Business Act, 
15 U.S.C. Sec. 648 (the ``Act''). In this Program, SBA and the SBDC 
networks provide managerial advice and technical assistance to enhance 
the growth, innovation, and productivity of small businesses. The 
issuance of regulations will clarify Program procedures.
    During a 30-day public comment period on the proposed rule, SBA 
received four comment letters raising 24 individual concerns. After 
analyzing these comments, SBA has decided to make appropriate changes 
to the rule.
    In addition, in accordance with its policy to streamline existing 
and proposed regulations, SBA scrutinized its proposed rule for 
duplication and excess verbiage, eliminating more than 25% of the body 
of the rule, without altering its substance. The following summary of 
issues raised does not discuss streamlining revisions, unless a comment 
pertained to a portion of the proposed rule which has been deleted or 
otherwise revised.

Summary of Issues Raised by Public Comment

    Section 130.100(b) of the proposed rule, providing an overview of 
the Program, has been merged into section 130.100(a). The portion of 
the section which referred to SBA consultation with SBDC Directors and 
recognized organizations representing SBDCs in the formulation of the 
annual Program Announcement and the development of Program guidelines 
was duplicated in section 130.350(a) and was deleted from section 
130.100.
    Several comments were received regarding the consultation 
provision. One comment correctly pointed out that section 21(a)(3)(A) 
of the Act only requires SBA to recognize and consult with the 
organization of which more than a majority of SBDCs are members. SBA 
has revised the proposed rule to refer in section 130.350(a) to ``the 
Recognized Organization'', instead of recognized organizations, and to 
add a definition of Recognized Organization at new section 130.110(y).
    Two other comments suggested that the regulation describe the 
timing and means of obtaining the consultation. [[Page 31055]] SBA 
rejected these suggestion, finding no reason why consultation with SBDC 
Directors or the Recognized Organization should be limited or 
restricted in any manner. Another comment proposed that Program 
guidelines not be developed outside of the regulations. SBA disagrees 
and has deleted the reference to Program guidelines from this final 
rule. SBA will continue to provide guidance and interpretive materials, 
consistent with these regulations, for use by SBDCs and SBA field 
offices.
    Section 130.110 defines terms used in the regulation. Section 
130.100(e) states that Cash Match must be non-Federal funds equal to no 
less than fifty percent of the Federal funds. Section 130.450(e)(4) 
(previously misnumbered as section 130.450(6)(iv)) provides that 
Matching Funds may not be from any other Federal source. With respect 
to both sections, a comment suggested that funds from other Federal 
sources be allowed as Cash Match if the source of the fund specifically 
authorized such use. SBA disagrees, since section 21(a)(4) of the Act 
clearly requires matching funds to be provided from sources other than 
the Federal government.
    One comment warned that the proposed definitions of ``Conflict'' 
and ``Dispute'' created potential for misunderstanding. SBA has 
eliminated the definition of ``Conflict'', distinguishing in section 
130.630 between financial and non-financial Disputes by the different 
procedures provided for resolution.
    The same commenter viewed the definition of ``Key SBDC Employee'' 
in section 130.110(q) as vague and unnecessary. Agreeing with the 
comment, SBA has deleted the section.
    SBA has not adopted another comment requesting that the definition 
of the Grants and Cooperative Agreement Appeals Committee in section 
130.110(l) be revised so that the President of the Recognized 
Organization (or a designee) serve as an ex officio member of the 
Committee. The Committee can still obtain the benefit of the Recognized 
Organization's views and comments whenever required or appropriate.
    Comments alerted SBA to several sections where language in the 
proposed rule referred only to States instead of ``States, Territories 
or the District of Columbia''. SBA has added a definition of ``Area of 
Service'' as section 130.110(c) and revised sections 130.310(a), 
130.310(b) and 130.410(b) as required.
    One comment suggested that section 130.360(a) require 
representation of States or territories on State advisory boards. SBA 
notes that the statutory provision establishing a National SBDC 
Advisory Board designated the number and general composition of the 
board, while the provision establishing the State and regional boards 
was silent as to these matters. Accordingly, SBA has concluded that 
Congress intended that SBDCs have maximum flexibility in composing 
State boards.
    Section 130.340(b) of the proposed rule prohibited SBDCs from 
making loans, servicing loans, making credit decisions regarding the 
award of loans, or making credit recommendations (unless authorized to 
do so by the Administrator). One commenter objected that SBDCs have not 
been making credit recommendations, since they are beyond the 
responsibility of an SBDC. SBA agreed and deleted the reference to 
credit recommendations.
    Under section 130.410, an application for initial funding must 
include a letter from the Governor, or his or her designee, of the 
State or Territory in which the SBDC will operate. A comment suggested 
that such a letter be required to accompany each renewal application as 
well. Since such a requirement would impose a condition upon renewal 
beyond what is required by the statute, SBA rejected the suggested 
change.
    Section 130.430, describing factors to be considered in reviewing 
applications, generated no comments. To implement section 404 of P.L. 
103-403, amending section 21(k) of the Act, SBA has added two factors: 
the results of any examination conducted under Sec. 130.810(b) and the 
pertinent results of any certification process conducted pursuant to 
any certification program developed by the Recognized Organization.
    Section 130.450 delineates the requirements concerning Matching 
Funds. A comment objected that the phrase ``any Cooperative Agreement'' 
implied that there could be more than one between an SBDC and the SBA. 
The sentence was deleted in its entirety as part of the streamlining 
effort.
    Section 130.460 lists the information to be included in the budget 
justification portion of a proposal. Under section 130.460(g) (formerly 
section 130.460(b)(2)(iii)(D)), unplanned out-of-State travel which 
exceeds the approved budgeted amount must be approved by the Project 
Officer. The proposed rule required a written budget revision and a 
written narrative explaining the need for such travel. A commenter 
objected to the paperwork, since approval still rests in the Project 
Officer's discretion. SBA agrees and has deleted the paperwork 
requirement.
    Section 130.470 describes the activities and services for which an 
SBDC may charge a fee. The proposed rule allowed SBDCs to charge a fee 
to cover costs in connection with training activities or specialized 
services. A comment correctly pointed out that specialized services 
were not defined in the proposed rule and that SBDCs often pass through 
to clients the costs of services from third parties. SBA has revised 
the section to include costs of third parties passed through to clients 
and has added a definition of specialized services at Sec. 130.110(cc).
    Proposed sections 130.630 and 130.640, respectively, set forth 
Dispute and Conflict resolution procedures (now consolidated as section 
130.630). One comment objected that the proposed procedures did not 
offer neutral decision-making and separation of functions, suggesting 
that the Dispute resolution procedures include a hearing conducted 
pursuant to Section 554 of the Administrative Procedure Act. Since 
neither financial Disputes nor programmatic (non-financial) Disputes 
involve suspension, termination or failure to renew or extend, SBA 
considered the procedures to be consistent with the statutory 
provisions, reflecting reasonable exercise of administrative discretion 
without adding undue administrative complexity. Therefore, no changes 
were made to either section.
    Section 130.700 generally explains the grounds and procedures for 
suspending, terminating or failing to renew a recipient organization. 
SBA relocated proposed section 130.650 (dealing with procedures for not 
renewing an SBDC) as section 130.700(c) in the final rule. SBA also has 
deleted the reference in section 130.700(a) to former Sec. 130.630 and 
Sec. 130.640 (regarding Dispute and Conflict resolutions), finding it 
to be misleading because Disputes do not involve the suspension, 
termination or failure to renew a Cooperative Agreement.
    Section 130.700(b) sets forth the causes which might lead to 
suspension, termination or failure to renew, including the failure to 
suspend or terminate an SBDC Director, subcenter Director or key SBDC 
employee promptly upon learning that such individual has a criminal 
conviction for a felony, a criminal conviction for a misdemeanor 
involving a variety of listed offenses, or a civil judgment which 
reflects adversely upon his or her business integrity. A comment 
objected that the provisions were so broad that [[Page 31056]] nearly 
any conviction or judgment might trigger the cause. SBA agrees and has 
revised the guidelines.
    SBA made one revision in section 130.700(c)(7) (proposed section 
130.650(g)), changing from 60 days to 120 days the time permitted an 
SBDC to conclude operations and submit close-out documents when its 
application for renewal has been denied.
    Section 130.810 sets forth mechanisms that SBA may use to oversee 
and monitor the SBDC program, including site visits, on-site 
examinations and audits. In order to comply with section 404 of P.L. 
103-403, SBA has made the following changes to the section: (a) 
Sec. 130.810(b) in the proposed rule, providing for required on-site 
reviews, has been deleted in its entirety and has been replaced by a 
new section 130.810(b), requiring SBA examiners to perform biannual 
programmatic and financial examinations of each SBDC; (b) 
Sec. 130.810(d)(1) in the proposed rule, providing for limited scope 
reviews, has been deleted; and (c) a new section 130.810(c) has been 
added permitting SBA to provide financial support to the Recognized 
Organization to develop and implement an SBDC certification program.
    Section 130.830 describes audit procedures. In response to a 
comment, SBA has revised the language to clarify that pre-award audits 
will be conducted by or coordinated with the SBA Office of Inspector 
General according to Government Auditing Standards.
Compliance With Executive Orders 12612, 12778 and 12866; Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq.; and the Paperwork Reduction 
Act, 44 U.S.C. ch. 35.
    SBA certifies that this rule is not a significant rule within the 
meaning of Executive Order 12866 because it does not have an annual 
economic effect in excess of $100 million, result in a major increase 
in costs for individuals or governments, or have a significant adverse 
effect on competition. The rule conforms to existing parameters under 
which the Program is functioning.
    For purposes of Executive Order 12612, SBA certifies that this rule 
has federalism implications. As such, SBA offers the following 
Federalism Assessment.
    This rule is designed to allow the States participating in the 
Program maximum policy-making and administrative discretion within the 
requirements of the law and sound Program management. In formulating 
and implementing the policies set forth in this rule, SBA has 
encouraged State participants to develop their own methods of achieving 
program objectives and has limited the number of uniform national 
requirements.
    For purposes of Executive Order 12778, SBA certifies that this rule 
is drafted in accordance with the standards set forth in section 2 of 
that Order.
    For purposes of the Regulatory Flexibility Act, SBA certifies that 
this rule does not have a significant economic effect on a substantial 
number of small entities because it does not impose material changes on 
the existing program.
    For purposes of the Paperwork Reduction Act, SBA certifies that 
this rule imposes no new reporting or recordkeeping requirements. The 
rule does, however, codify, at sections 130.800 through 130.830, 
paperwork requirements previously cleared by the Office of Management 
and Budget.
List of Subjects in 13 CFR Part 130
    Business development, small businesses, Small Business Development 
Center (SBDC), technical assistance.
    Title 13 of Code of Federal Regulations, Chapter 1 shall be amended 
by adding a new Part 130 as follows:
PART 130--SMALL BUSINESS DEVELOPMENT CENTERS
Sec.
130.100  Introduction.
130.110  Definitions.
130.200  Eligible entities.
130.300  Small Business Development Centers (SBDCs). [Reserved]
130.310  Area of service.
130.320  Location of lead centers and SBDC service providers.
130.330  Operating requirements.
130.340  SBDC services and restrictions on service.
130.350  Specific program responsibilities.
130.360  SBDC advisory boards.
130.400  Application procedure. [Reserved]
130.410  New applications.
130.420  Renewal applications.
130.430  Application decisions.
130.440  Maximum grant.
130.450  Matching funds.
130.460  Budget justification.
130.470  Fees.
130.480  Program income.
130.500  Funding.
130.600  Cooperative agreement. [Reserved]
130.610  General terms.
130.620  Revisions and amendments to cooperative agreement.
130.630  Dispute resolution procedures.
130.700  Suspension, termination and non-renewal.
130.800  Oversight of the SBDC program.
130.810  SBA review authority.
130.820  Reports and recordkeeping.
130.830  Audits and investigations.
    Authority: Sections 5(b)(6) and 21 of the Small Business Act, as 
amended, 15 U.S.C. 634(b)(6) and 648; Pub. L. 101-515, 101 Stat. 
2101; Pub. L. 101-574, 104 Stat. 2814; Pub. L. 102-366, 106 Stat. 
986; and Pub. L. 102-395, 106 Stat. 1828.

Sec. 130.100  Introduction.

    (a) Objective. The 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. Although SBA is 
responsible for the general management and oversight of the SBDC 
Program, a partnership exists between SBA and the recipient 
organization for the delivery of assistance to the small business 
community.
    (b) Incorporation of amended references. All references in these 
regulations to OMB Circulars, other SBA regulations, Standard Operating 
Procedures, and other sources of SBA policy guidance incorporate all 
ensuing changes or amendments to such sources.

Sec. 130.110  Definitions.

    Application. The written submission by a new applicant organization 
or an existing recipient organization explaining its projected SBDC 
activities for the upcoming budget period and requesting SBA funding 
for use in its operations.
    Applicant organization. An entity, described in Sec. 130.200(a), 
which applies to establish and operate an SBDC network.
    Area of Service. The State or territory, or portion of a State or 
territory (when there is more than one SBDC in a State or territory), 
or the District of Columbia, in which an applicant organization 
proposes to provide services or in which a recipient organization 
provides services.
    Budget period. The 12-month period in which expenditure obligations 
are incurred by an SBDC network, coinciding with either the calendar 
year or the Federal fiscal year.
    Cash Match. Non-Federal funds allocated specifically to the 
operation of the SBDC network equalling no less than fifty percent of 
the Federal funds. Cash Match includes direct costs committed by the 
applicant or recipient organization and sponsoring SBDC organizations, 
to the extent that such costs are committed as part of the verified, 
specific, line item direct costs prior to funding. Cash Match does not 
include indirect costs, overhead costs or in-kind contributions.
    Cognizant Agency. The Federal agency, other than SBA, from which a 
recipient organization or sponsoring [[Page 31057]] SBDC organization 
receives its largest grant or greatest amount of Federal funding, and 
from which it obtains an indirect cost rate for budgetary and funding 
purposes, applicable throughout the Federal government.
    Cooperative Agreement. The written contract between SBA and a 
recipient organization, describing the conditions under which SBA 
awards Federal funds and recipient organizations provide services to 
the small business community.
    Cosponsorship. A ``Cosponsorship'' as defined in and governed by 
Sec. 8(b)(1)(A) of the Act and SBA's Standard Operating Procedures.
    Counseling. Individual advice, guidance or instruction given to a 
small business person or entity.
    Direct costs: ``Direct costs'' as defined in Office of Management 
and Budget (OMB) Circulars A-21, A-87 and A-122. Recipient 
organizations must allocate at least 80 percent of the Federal funds 
provided through the Cooperative Agreement to the direct costs of 
program delivery.
    Dispute. Dispute means a program or financial disagreement which 
the recipient organization requests be handled with SBA in a formal 
manner.
    Grants and Cooperative Agreement Appeals Committee. The SBA 
committee, appointed by the SBA Administrator, which resolves appeals 
arising from financial Disputes between a recipient organization and 
SBA.
    Grants Management Specialist. An SBA employee designated by the AA/
SBDCs who is responsible for the financial review, award, and 
administration of one or more SBDC Cooperative Agreements.
    Indirect costs. ``Indirect costs'' as defined in Office of 
Management and Budget (OMB) Circular A-21, A-87 or A-122.
    In-kind contributions. Property, facilities, services or other non-
monetary contributions from non-federal sources. See OMB Circular A-87, 
A-102, or A-110, as appropriate.
    Lead Center. The entity which administers and operates the SBDC 
network.
    Lobbying. Lobbying as described in OMB Circulars A-21, A-87 and A-
122, and Pub. L. 101-121, section 319.
    Overmatched Amount. Non-Federal Contributions to SBDC project 
costs, including cash, in-kind contributions and indirect costs, in 
excess of the statutorily required amount.
    Program Announcement. SBA's annual publication of requirements 
which an applicant or recipient organization must address in its 
initial or renewal application.
    Program income. Income earned or received by the SBDC network from 
any SBDC supported activity as defined in Attachment D of OMB Circular 
A-110 and Attachment E of OMB Circular A-102.
    Program manager. An SBA employee responsible for overseeing the 
operations of one or more SBDCs.
    Project officer. An SBA employee who negotiates the annual 
Cooperative Agreement and monitors the ongoing operations of an SBDC.
    Project period. The period of time, usually in twelve (12) month 
increments, during which the SBDC network operates, beginning on the 
day of award and continuing over a number of budget periods.
    Recipient organization. The name given to an applicant organization 
after funding is approved and the applicant organization enters into a 
Cooperative Agreement. The recipient organization receives the Federal 
funds and is responsible for establishing the Lead Center.
    Recognized Organization. The organization whose members include a 
majority of SBDCs and which is recognized as an SBDC representative by 
SBA in accordance with Sec. 21(a)(3)(A) of the Small Business Act, 15 
U.S.C. 648(a)(3)(A).
    SBDC Director. The full-time senior manager designated by each 
recipient organization and approved by SBA.
    SBDC network. The Lead Center and SBDC service providers.
    SBDC service providers. SBDC network participants, including the 
Lead Center, subcenters (at times referred to as regional centers), 
satellite locations, and any other entity authorized by the recipient 
organization to perform SBDC services.
    Specialized Services. SBDC services other than Counseling and 
Training.
    Sponsoring SBDC organizations. Organizations or entities which 
establish one or more SBDC service providers as part of the SBDC 
network under a contract or agreement with the recipient organization.
    Training. The provision of advice, guidance and instruction to 
groups of prospective and existing small business persons and entities, 
whether by in-person group sessions or by such communication modes as 
teleconferences, videos, publications and electronic media.


Sec. 130.200  Eligible entities.

    (a) Recipient Organization. The following entities are eligible to 
operate an SBDC network:
    (1) A public or private institution of higher education;
    (2) A land-grant college or university;
    (3) A college or school of business, engineering, commerce or 
agriculture;
    (4) A community or junior college;
    (5) An entity formed by two or more of the above entities; or
    (6) Any entity which was operating as a recipient organization as 
of December 31, 1990.
    (b) SBDC Service Providers. SBDC service providers are not required 
to meet the eligibility requirements of a recipient organization.


Sec. 130.300  Small Business Development Centers (SBDCs). [Reserved]


Sec. 130.310  Area of service.

    The AA/SBDC shall designate in writing the Area of Service of each 
recipient organization, consistent with the State plan. More than one 
recipient organization may be located in a State or Territory if the 
AA/SBDC determines it is necessary or beneficial to implement the 
Program effectively and to provide services to all interested small 
businesses.


Sec. 130.320  Location of lead centers and SBDC service providers.

    (a) The recipient organization must locate its Lead Center and SBDC 
service providers so that services are readily accessible to small 
businesses in the Area of Service.
    (b) The locations of the Lead Center and the SBDC service providers 
will be reviewed by SBA as part of the application review process for 
each budget period.


Sec. 130.330  Operating requirements.

    (a) The Lead Center must be an independent entity within the 
recipient organization, having its own staff, including a full-time 
SBDC Director.
    (b) A Lead Center must provide administrative services and 
coordination for the SBDC network, including program development, 
program management, financial management, reports management, promotion 
and public relations, program assessment and evaluation, and internal 
quality control.
    (c) The Lead Center shall be open to the public throughout the year 
during the normal business hours of the recipient organization. 
Anticipated closures shall be included in the annual renewal 
application. Emergency closures shall be reported to the SBA Project 
Officer as soon as is feasible. Other SBDC service providers shall be 
open during the normal business hours of their sponsoring SBDC 
organizations.
    (d) The Lead Center and other SBDC service providers must have a 
conflict of interest policy applicable to their SBDC 
[[Page 31058]] consultants, employees, instructors and volunteers.
    (e) The SBDC network shall comply with 13 CFR parts 112, 113 and 
117, which require that no person shall be excluded on the grounds of 
age, color, handicap, marital status, national origin, race, religion 
or sex from participation in, be denied that benefits of, or otherwise 
be subjected to discrimination under, any program or activity for which 
the recipient organization received Federal financial assistance from 
SBA.


Sec. 130.340  SBDC services and restrictions on service.

    (a) Services. The SBDC network must provide prospective and 
existing small business persons and entities with Counseling, Training 
and Specialized Services, concerning the formation, financing, 
management and operation of small business enterprises, reflecting 
local needs. The recipient organization shall primarily utilize 
institutions of higher education to provide services to the small 
business community. To the extent possible, SBDCs shall use other 
Federal, State, and local government programs that assist small 
business. Services periodically should be assessed and improved to keep 
pace with changing small business needs.
    (b) Access to Capital. (1) SBDCs are encouraged to provide 
counseling services that increase a small business concern's access to 
capital, such as business plan development, financial statement 
preparation and analysis, and cash flow preparation and analysis.
    (2) SBDCs should help prepare their clients to represent themselves 
to lending institutions. While SBDCs may attend meetings with lenders 
to assist clients in preparing financial packages, the SBDCs may not 
take a direct role in representing clients in loan negotiations.
    (3) SBDCs should inform their clients that financial packaging 
assistance does not guarantee receipt of a loan.
    (4) SBDCs may not make loans, service loans or make credit 
decisions regarding the award of loans.
    (5) With respect to SBA guaranty programs, SBDCs may assist clients 
to formulate a business plan, prepare financial statements, complete 
forms which are part of a loan application, and accompany an applicant 
appearing before SBA. Unless authorized by the SBA Administrator with 
respect to a specific program, an SBDC may not advocate, recommend 
approval or otherwise attempt in any manner to influence SBA to provide 
financial assistance to any of its clients. An SBDC cannot collect fees 
for helping a client to prepare an application for SBA financial 
assistance.
    (c) Special emphasis initiatives. From time to time, SBA may 
identify portions of the general population to be targeted for 
assistance by SBDCs. Support of SBA special emphasis initiatives will 
be negotiated each year as part of the application process and included 
in the Cooperative Agreement when appropriate.


Sec. 130.350  Specific program responsibilities.

    (a) Policy development. SBA 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 Circulars and Executive Orders. In doing so, SBA 
should consult, to the extent practicable, with the Recognized 
Organization.
    (b) Responsibilities of SBDC Directors. The SBDC Director shall 
direct and monitor program activities and financial affairs of the SBDC 
network to deliver effective services to the small business community, 
comply with applicable laws, regulations, OMB Circulars and Executive 
Orders, and implement the Cooperative Agreement. The SBDC Director has 
authority to control expenditures under the Lead Center's budget. SBDC 
Directors may manage other programs in addition to the SBDC Program if 
the programs serve small businesses and do not duplicate the services 
provided by the SBDC network. However, SBDC Directors may not receive 
additional compensation for managing these programs. The SBDC Director 
shall serve as the principal contact point for all matters involving 
the SBDC network.


Sec. 130.360  SBDC advisory boards.

    (a) State/Regional Advisory Boards. (1) The Lead Center must 
establish an advisory board to advise, counsel, and confer with the 
SBDC Director on matters pertaining to the operation of the SBDC 
network.
    (2) The advisory board shall be referred to as a State SBDC 
Advisory Board in an Area of Service having only one recipient 
organization, and a Regional SBDC Advisory Board in an Area of Service 
having more than one recipient organization.
    (3) These advisory boards must include small business owners and 
other representatives from the entire Area of Service.
    (4) New Lead Centers must establish a State or Regional SBDC 
Advisory Board no later than the second budget period.
    (5) A State or Regional SBDC Advisory Board member may also be a 
member of the National SBDC Advisory Board.
    (6) The reasonable cost of travel of any Board member for official 
Board activities may be paid out of the SBDC's budgeted funds.
    (b) National SBDC Advisory Board. (1) SBA shall establish a 
National SBDC Advisory Board consisting of nine members who are not 
Federal employees, appointed by the SBA Administrator. The Board shall 
elect a Chair. Three members of the Board shall be from universities or 
their affiliates and six shall be from small businesses or associations 
representing small businesses. Board members shall serve staggered 
three year terms, with three Board members appointed each year. The SBA 
Administrator may appoint successors to fill unexpired terms.
    (2) The National SBDC Advisory Board shall advise and confer with 
SBA's AA/SBDCs on policy matters pertaining to the operation of the 
SBDC program. The Board shall meet with the AA/SBDCs at least 
semiannually.


Sec. 130.400  Application procedure. [Reserved]


Sec. 130.410  New applications.
    (a) If SBA declines to renew an existing recipient organization or 
the recipient organization declines to reapply, SBA may accept 
applications from other organizations interested in becoming a 
recipient organization. An eligible entity may apply by submitting an 
application to the SBA District Office in the Area of Service in which 
the applicant proposes to provide services.
    (b) An application for initial funding of a new SBDC network must 
include a letter by the Governor, or his or her designee, of the Area 
of Service in which the SBDC will operate, or other evidence, 
confirming that the applicant's designation as an SBDC would be 
consistent with the plan adopted by the State government and approved 
by SBA. No such requirement is imposed on subsequent applications from 
existing recipient organizations.
    (c) The application must set forth the eligible entity or entities 
proposing to operate the SBDC network; a list of the Lead Center and 
other SBDC service providers by name, address and telephone number; the 
geographic areas to be serviced; the resources to be used; the services 
that will be provided; the method for delivering the services, 
including a description of how and to what extent academic, private and 
public resources will be used; a budget; a listing of the proposed 
members of the [[Page 31059]] State or Regional Advisory Board and 
other relevant information set forth in the Program Announcement.
    (d) SBA officials may request supplemental information or 
documentation to revise or complete an application.
    (e) Upon written recommendation for approval by the SBA District 
Director, the proposal shall be submitted to the AA/SBDCs for review.


Sec. 130.420  Renewal applications.

    (a) SBDCs shall comply with the requirements in the annual Program 
Announcement, including format and due dates, to receive consideration 
of their renewal applications. The SBA Project Officer, with the 
concurrence of the Program Manager, may grant an extension. The 
recipient organization shall submit the renewal application to the SBA 
office in the District in which the recipient organization is located. 
The annual Program Announcement will include a timetable for SBA 
review.
    (b) After review by the SBA Project Officer and written 
recommendation for approval by the District Director, the Program 
Manager and Grants Management Specialist shall review the renewal 
application for conformity with the Program Announcement, OMB Circulars 
and all other statutory, financial and regulatory requirements. SBA 
officials may request supplemental information and documentation prior 
to issuing the Cooperative Agreement.


Sec. 130.430  Application decisions.

    (a) The AA/SBDCs may approve, conditionally approve, or reject any 
application. In the event of a rejection, the AA/SBDCs shall 
communicate the reasons for rejection to the applicant and the 
appropriate SBA field office. If the approval is conditional, the 
conditions and applicable remedies shall be specified as special terms 
and conditions in the Cooperative Agreement. Upon approval or 
conditional approval, the Grants Management specialist may issue a 
Cooperative Agreement.
    (b) In considering the application, significant factors shall 
include:
    (1) The applicant's ability to contribute Matching Funds;
    (2) For renewal Proposals, the quality of prior performance;
    (3) The results of any examination conducted pursuant to 
Sec. 130.810(b) of these regulations; and
    (4) Any certification resulting from any certification program 
developed by the Recognized Organization.
    (c) In the event of a conditional approval, SBA may conditionally 
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 resolve the specified matters to the AA/SBDCs' satisfaction 
within the allotted time period, SBA has the right to discontinue 
funding the SBDC, subject to the provisions of Sec. 130.700.


Sec. 130.440  Maximum grant.

    No recipient shall receive an SBDC grant 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) of 
the Act.


Sec. 130.450  Matching funds.

    (a) The recipient organization must provide total Matching Funds 
equal to the total amount of SBA funding. At least 50% of the Matching 
Funds must be Cash Match. The remaining 50% may be provided through any 
allowable combination of additional cash, in-kind contributions, or 
indirect costs.
    (b) All sources of Matching Funds must be identified as 
specifically as possible in the budget proposal. Cash sources shall be 
identified by name and account. All applicants must submit a 
Certification of Cash Match and Program Income executed by an 
authorized official of the recipient organization or any sponsoring 
SBDC organization providing Cash Match through a subcontract agreement. 
The account containing such cash must be under the direct management of 
the SBDC Director, or, if provided by a sponsoring SBDC organization, 
its subcenter Director. If a political entity is providing such cash 
and the funds have not been appropriated prior to issuance of the 
Cooperative Agreement, the recipient organization must certify that 
sufficient funds will be available from the political entity prior to 
the use of Federal dollars.
    (c) The Grants Management Specialist is responsible for determining 
whether Matching Funds or Cash Match meet the requirements of the Act 
and appropriate OMB circulars.
    (d) Overmatched Amounts. (1) SBDC are encouraged to furnish 
Overmatched Amounts.
    (2) An Overmatched Amount can be applied to additional Matching 
Funds requirements necessitated by any supplemental funding increase 
received by the SBDC during the budget period, as long as the total 
Cash Match provided by the SBDC is 50% or more of the total SBA funds 
provided during the budget period.
    (3) If used in the manner described in paragraph (d)(2) of this 
section, such Overmatched Amount is reclassified as committed Matching 
Funds.
    (4) Allowable Overmatched Amounts which have not been used in the 
manner described in paragraph (d)(2) of this section may, with the 
approval of the AA/SBDCs, 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.
    (e) Impermissible sources of Matching Funds. Under no circumstances 
may the following be used as sources of the Matching Funds of the 
recipient organization:
    (1) Uncompensated student labor;
    (2) SCORE, ACE, or SBI volunteers;
    (3) Program income or fees collected from small businesses 
receiving assistance;
    (4) Funds or indirect or in-kind contributions from any other 
Federal source.


Sec. 130.460  Budget justification.

    The SBDC Director, as a part of the renewal application, 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.
    (a) Direct costs. Unless otherwise provided in applicable OMB 
circulars, at least eighty percent (80%) of SBA funding must be 
allocated to direct costs of Program delivery.
    (b) Indirect costs. If the applicant organization waives all 
indirect costs to meet the Matching Funds requirement, one hundred 
percent (100%) of SBA funding must be allocated to program delivery. If 
some, but not all, indirect costs are waived to meet the Matching Funds 
requirement, the lesser of the following may be allocated as indirect 
costs of the Program and charged against the Federal contribution:
    (1) Twenty percent (20%) of Federal contribution, or
    (2) The amount remaining after the waived portion of indirect costs 
is subtracted from the total indirect costs.
    (c) Separate SBDC service provider budgets.
    (1) The applicant organization shall include separate budgets for 
all subcontracted SBDC service providers in conformity with OMB 
requirements. Applicable direct cost categories and indirect cost base/
rate agreements shall be included for the Lead Center and all SBDC 
service providers, using a rate [[Page 31060]] equal to or less than 
the negotiated predetermined rate. If no such rate exists, the 
sponsoring SBDC organization or SBDC service provider shall 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 negotiated with the SBA Project Officer in accordance 
with OMB guidelines (see OMB Circular A-21).
    (2) The amount of cash, in-kind contributions and indirect costs 
for the Lead Center and all sub-contracted SBDC service providers shall 
be indicated in accordance with OMB requirements.
    (d) Cost principles. Principles for determining allowable costs are 
contained in OMB Circulars A-21 (cost principles for grants, contracts, 
and other agreements with educational institutions), A-87 (cost 
principles for programs administered by State and local governments), 
and A-122 (cost principles for nonprofit organizations).
    (e) Costs associated with lobbying. No portion of the Federal 
contribution received by an SBDC 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 OMB requirements, Section 319 of Public Law No. 101-
121, and the annual Program Announcement.
    (f) Salaries. (1) If a recipient organization is an educational 
institution, the salaries of the SBDC Director and the subcenter 
Directors 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 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 and the individual's experience 
and background.
    (2) 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.
    (3) Recruitment and salary increases for SBDC Directors, subcenter 
Directors and staff members should conform to the administrative policy 
of the recipient organization.
    (g) Travel. All travel must be separately identified in the 
proposed budget as planned in-State, planned out-of-State, unplanned 
in-State or unplanned out-of-State. All proposed travel must use coach 
class, apply directly to specific work of the SBDC or be incurred in 
the normal course of Program administration, and conform to the written 
travel policies of the recipient organization or the sponsoring SBDC 
organization. (Per diem rates, including lodging, shall not exceed 
those authorized by the recipient organization.) 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. A specific projected amount, based 
on the SBDC's past experience, where appropriate, must also be included 
in the budget for unplanned travel. A more detailed justification must 
be given for unplanned out-of-State travel. Any proposed unplanned out-
of-State travel exceeding the approved budgeted amount for travel must 
be submitted to the Project Officer for approval on a case-by-case 
basis. Travel outside the United States must have prior approval by the 
AA/SBDCs on a case-by-case basis.
    (h) Dues. Costs of memberships in business, technical, and 
professional organizations shall be allowable expenses. The use of 
Federal funds to pay dues for business, technical and professional 
organizations shall be permitted, provided that the payments are 
included in the budget proposal, are approved by the SBA and comply 
with Sec. 130.460(e).


Sec. 130.470  Fees.

    An SBDC may charge clients a reasonable fee to cover the costs of 
Training sponsored or cosponsored by the SBDC, costs of services 
provided by or obtained from third parties, or the costs of providing 
Specialized Services. Fees may not be imposed for Counseling.


Sec. 130.480  Program income.

    (a) Program income for recipient organizations or SBDC service 
providers based in universities or nonprofit organizations shall be 
subject to OMB requirements (see OMB Circular A-110). Program income 
for recipient organizations or SBDC service providers based in State or 
local governments shall be subject to OMB requirements (see the 
provisions of Sec. 7.e and Attachment E of OMB Circular A-102) and 13 
CFR 143.25.
    (b) Program income, including any interest earned on Program 
income, must be used to expand the quantity or quality of services, 
resources or outreach provided by the SBDC network. It cannot be used 
to satisfy the requirements for Matching Funds. The Project Officer 
shall monitor the use of Program income. Any unused Program income will 
be carried over to a subsequent budget period.
    (c) SBDCs must report in detail on standard SBA forms receipts and 
expenditures of program income, including any income received through 
cosponsored activities. A narrative description of how Program income 
was used to accomplish Program objectives shall be included.


Sec. 130.500  Funding.

    The SBA funds Cooperative Agreements through its internal Letter of 
Credit Replacement System (LORS), using SBA standard forms to establish 
and modify letters of credit. SBDCs must use SBA standard forms to draw 
down funds required to meet their estimated or actual expenses and to 
submit quarterly cash transactions reports used by SBA to monitor the 
frequency of drawdowns and the cash-on-hand balance. Repeated drawdowns 
in excess of immediate cash needs may result in the cancellation of the 
letter of credit. If interest results from the deposit of any drawdowns 
in an interest-bearing account, SBDCs, other than State government 
sponsored SBDCs, must report and return such interest annually to SBA.


Sec. 130.600  Cooperative agreement. [Reserved]


Sec. 130.610  General terms.

    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. 
Administrative requirements are contained in 13 CFR 143 and applicable 
OMB Circulars.


Sec. 130.620  Revisions and amendments to cooperative agreement.

    (a) Requests for revisions. The recipient organization may request 
at any time one or more revisions to the Cooperative Agreement on an 
appropriate SBA form signed by the recipient organization's authorized 
representative (including a revised [[Page 31061]] budget and budget 
narrative, if applicable). Revisions will normally relate to changes in 
scope, work or funding during the specified budget year.
    (b) Revisions which require amendment to Cooperative Agreement. The 
Cooperative Agreement shall list the revisions which require Project 
Officer concurrence, review by the Program Manager and the Grants 
Management Specialist, approval of the AA/SBDCs and amendment of the 
Cooperative Agreement. No application for an amendment shall be 
effective until it is approved and incorporated into the Cooperative 
Agreement. Revisions which require amendments shall include:
    (1) any change in project scope or objectives;
    (2) the addition or deletion of any subgrants or contracts;
    (3) the addition of any new budget line items;
    (4) Budget revisions and fund reallocations exceeding the limit 
established by applicable administrative regulations or OMB Circulars, 
either individually or in the aggregate (see paragraphs (c)(1) and 
(c)(2) of this section);
    (5) any proposed sole-source or one-bid contracts exceeding the 
limits established by applicable regulations or OMB Circulars; and
    (6) the carryover from one budget period to the next budget period 
of unobligated, unexpended SBA funds allocable under the Cooperative 
Agreement to nonrecurring, nonseverable bona fide needs of the SBDC 
network as provided in applicable OMB Circulars and the annual Program 
Announcement.
    (c) Revisions which do not require amendments to the Cooperative 
Agreement--(1) Budget revisions. Any budget revision, except those 
which are covered by paragraph (b)(4) of this section. Budget revisions 
require approval of the SBA Project Officer and the AA/SBDCs as 
prescribed by applicable OMB Circulars or 13 CFR 143.30.
    (2) Reallocation of funds. Reallocation of funds must be conducted 
in accordance with applicable OMB Circulars or 13 CFR 143.30. 
Additional guidance on this matter may be included in the annual 
Program Announcement.


Sec. 130.630  Dispute resolution procedures.

    (a) Financial Disputes. (1) A recipient organization wishing to 
resolve a financial Dispute formally must submit a written statement 
describing the subject of the Dispute, together with any relevant 
documents or other evidence bearing on the Dispute, to the Grants 
Management Specialist, with copies to the Project Officer. The Grants 
Management Specialist shall respond in writing to the recipient 
organization within 30 calendar days of receipt of the descriptive 
statement.
    (2) If the recipient organization receives an unfavorable decision 
from the Grants Management Specialist, it may file an appeal with the 
AA/SBDCs within 30 calendar days of issuance of the unfavorable 
decision. The AA/SBDCs shall respond in writing to the recipient 
organization within 15 calendar days of receipt of the appeal.
    (3) If the recipient organization receives an unfavorable decision 
from the AA/SBDCs, it may make a final appeal to the SBA Grants and 
Cooperative Agreements Appeals Committee (the ``Committee'') within 30 
calendar days of the date of issuance of the AA/SBDCs' written 
decision. Copies of the appeal shall also be sent to the Grants 
Management Specialist and the Project Officer.
    (4) Appeals must be in writing. Formal briefs and other technical 
forms of pleading are not required. Requests for a hearing will not be 
granted unless there are material facts substantially in dispute. 
Appeals must contain at least the following:
    (i) Name and address of the recipient organization;
    (ii) The SBA field office;
    (iii) The Cooperative Agreement;
    (iv) A statement of the grounds for appeal, with reasons why the 
appeal should be sustained;
    (v) The specific relief desired on appeal; and
    (vi) If a hearing is requested, a statement of the material facts 
which are substantially in dispute.
    (5) The AA/SBDCs or the Committee may request from the SBDC or the 
District Office additional information or documentation at any stage in 
the proceedings.
    (6) If a request for a hearing is granted, the Committee will 
provide the recipient organization with written instructions, and will 
afford the parties an opportunity to present their positions to the 
Committee.
    (7) The Committee will reach a decision on the merits of the appeal 
within 30 days of the hearing date.
    (8) The Chairperson, with advice from the Office of General 
Counsel, shall prepare and transmit a written final decision to the 
recipient organization with copies to the Grants Management Specialist 
and the Project Officer.
    (9) Expedited Dispute appeal process. By an affirmative vote 
constituting a majority of its total membership, the Committee may 
shorten response times to attain final resolution of a Dispute before 
the issuance date of a new Cooperative Agreement. At any time within 
120 days of the end of the budget period, the recipient organization 
may submit a written request to use an expedited process. If a Dispute 
affects refunding, the Committee must meet to consider the matter prior 
to the end of the budget period, provided that the recipient 
organization has supplied the Committee with all requested 
documentation.
    (b) Programmatic (non-financial) Disputes. (1) If a programmatic 
Dispute is not resolved at the SBA District Office level, the recipient 
organization may request its submission to the next SBA administrative 
level having authority to review such matter. The Project Officer shall 
refer the Dispute in writing, including comments of the SBDC Director, 
within 15 calendar days of receipt of the request.
    (2) If the programmatic Dispute is not resolved at an intermediate 
SBA administrative level within 15 calendar days of receipt thereof, it 
shall be forwarded, in writing, to the AA/SBDCs for final resolution. 
All comments of the SBDC Director must be included in any package 
forwarded to the AA/SBDCs.
    (3) The AA/SBDCs shall transmit a final, written decision to the 
recipient organization, the SBDC Director, the SBA Project Officer and 
other appropriate SBA field office personnel within 30 calendar days of 
receipt of such documentation, unless an extension of time is mutually 
agreed upon by the recipient organization and the AA/SBDCs.


Sec. 130.700  Suspension, termination and non-renewal.

    (a) General. After SBA has entered into a Cooperative Agreement 
with a recipient organization, it shall not suspend, terminate or fail 
to renew the agreement unless SBA gives the recipient organization 
written notice setting forth the reasons and affording the recipient 
organization an opportunity for a hearing. Subject to this requirement 
and the provisions of Sec. 130.700(c) regarding non-renewal procedures 
for non-performance, the applicable general procedures for suspension 
and termination are contained in 13 CFR 143.43 and 143.44, and in OMB 
Circular A-110, Attachment L.
    (b) Causes. Causes which may lead to suspension, termination, or 
failure to renew include non-performance, poor performance, 
unwillingness to implement changes to improve 
[[Page 31062]] performance, or any of the following reasons:
    (1) Disregard or material violation of these regulations;
    (2) A willful or material failure to perform under the Cooperative 
Agreement or under these regulations;
    (3) Conduct reflecting a lack of business integrity or honesty;
    (4) A conflict of interest causing real or perceived detriment to a 
small business concern, a contractor, the SBDC or SBA;
    (5) Improper use of Federal funds;
    (6) Failure of a Lead Center or its subcenters to consent to audits 
or examination or to maintain required documents or records;
    (7) Failure of the SBDC Director to work at the SBDC Lead Center on 
a full-time basis;
    (8) Failure promptly to suspend or terminate the employment of an 
SBDC Director, subcenter Director or other key employee upon receipt of 
knowledge by the recipient organization and/or SBA that such individual 
is engaging in or has engaged in conduct resulting in a criminal 
conviction or civil judgment which would cause the public to question 
the SBDC's business integrity, taking into consideration such factors 
as the magnitude, repetitiveness, harm caused and remoteness in time of 
the activity or activities underlying the conviction or judgment.
    (9) Violation of the SBDC's standards of conduct as specified in 
these rules and as established by the SBDC pursuant to these rules; or
    (10) Any other cause not otherwise specified which materially and 
adversely affects the operation or integrity of an SBDC or the SBDC 
program.
    (c) Non-Renewal Procedure. (1) Subject to Sec. 130.700(a), when an 
SBA District Director believes there is sufficient evidence of SBDC 
nonperformance, poor performance or unwillingness to implement changes 
to improve performance, under the terms of the Cooperative Agreement or 
these regulations, the District Director shall notify the SBDC Director 
and any other appropriate official of the recipient organization of an 
intention not to approve its renewal application.
    (2) Notice can be submitted at any time during the budget period, 
but normally should be sent no later than 3 months prior to the due 
date for renewal applications at the District Office.
    (3) The notice shall specifically cite the reasons for the 
intention not to renew. It must allow the recipient organization 60 
days within which to change its operations to correct the problems 
cited in the notice, and to report to the Project Officer, in writing, 
regarding the results of such changes.
    (4) If the recipient organization is unwilling or unable to address 
the specific problem areas to the satisfaction of the SBA District 
Office within the 60-day period, the SBA Project Officer shall have ten 
(10) calendar days after expiration of the 60 days to submit to the AA/
SBDCs a written description of the unresolved issues, a summary of the 
positions of the District Office on the issues, and any supportive 
documentation.
    (5) The AA/SBDCs shall transmit a written, final decision to the 
recipient organization, the SBDC Director, the SBA Project Officer and 
other appropriate SBA field office personnel within 30 calendar days of 
receipt of such documentation, unless an extension of time is mutually 
agreed upon by the recipient organization and the AA/SBDCs.
    (6) The AA/SBDCs shall consider written documentation of the issues 
to be resolved, including all relevant correspondence between the 
Project Officer, District Director and any other SBA personnel and the 
affected recipient organization. At a minimum, such documentation shall 
commence with the first written notice of issues invoking the non-
renewal procedure. In addition, the AA/SBDCs also may communicate with 
the recipient organization and appropriate SBA personnel.
    (7) If the AA/SBDCs determines that the evidence submitted 
establishes nonperformance, ineffective performance or an unwillingness 
to implement suggested changes to improve performance, the AA/SBDCs 
shall have full discretion to order non-renewal of the SBDC. The SBA 
District Office shall then pursue proposals from other organizations 
interested in applying for SBDC designation. The incumbent SBDC shall 
have until the end of the budget period or 120 days, whichever is 
longer, to conclude operations and to submit close-out documents to the 
SBA District Office. Close-out procedures shall conform with applicable 
OMB Circulars.
    (d) Effect of action on subcenter. If competing applications are 
being accepted, a subcenter of the previously funded recipient 
organization may apply for designation as the recipient organization, 
so long as the subcenter was not involved in the conduct leading to 
non-renewal or termination of the former recipient organization.


Sec. 130.800  Oversight of the SBDC program.

    SBA shall monitor and oversee the Cooperative Agreement and ongoing 
operations of the SBDC network to ensure the effective and efficient 
use of Federal funds for the benefit of the small business community.


Sec. 130.810  SBA review authority.

    (a) Site visits. The AA/SBDCs, or a representative, on notice to 
the SBDC Director, is authorized to make programmatic and financial 
review visits to SBDC service providers to inspect records and client 
files, and to analyze and assess SBDC activities.
    (b) SBA examinations. SBA examiners shall perform a biannual 
programmatic and financial examination of each SBDC.
    (c) Certification program. SBA may provide financial support to the 
Recognized Organization to develop and implement an SBDC certification 
program.
    (d) Audits. The examinations by SBA examiners shall not substitute 
for audits required of Federal grantees under the Single Audit Act of 
1984 or applicable OMB guidelines (see Circulars A-110, A-128 and A-
133), nor shall such internal review substitute for audits to be 
conducted by the SBA Office of Inspector General under authority of the 
Inspector General Act of 1978, as amended (see Sec. 130.830(b)).
Sec. 130.820  Reports and recordkeeping.

    (a) Records. The recipient organization shall maintain the records 
required for a Lead Center audit and SBA reports. Lead Centers and 
other SBDC service providers shall maintain detailed, complete and 
accurate client activity files, specifying counseling, training and 
other assistance provided.
    (b) Reports. The recipient organization shall submit client service 
evaluations and performance and financial reports for SBA review to 
determine the quality of services provided by the SBDC, the 
completeness and accuracy of SBDC records, and actual SBDC network 
accomplishments compared to performance objectives.
    (1) Performance reports. For recipient organizations in the Program 
for more than three years, interim reports shall be due 30 days after 
completion of six months of operation each year; for those recipient 
organizations in the Program three years or less, reports shall be due 
30 days after completion of each of the first three quarters. The 
annual report shall include the second semiannual or the fourth quarter 
report and shall be due December 30 for fiscal year and March 30 for 
calendar year SBDCs. These reports shall reflect accurately the 
activities, accomplishments and deficiencies of the SBDC 
network. [[Page 31063]] 
    (d) Financial reports. The recipient organization shall provide 
three quarterly and one annual financial report to the SBA Project 
Officer as set forth in the Program Announcement and the Cooperative 
Agreement, in compliance with OMB Circulars.
    (e) Availability of records. As required by OMB (see Circular A-
133), all SBDC service provider records shall be made available to SBA 
for review upon request.


Sec. 130.830  Audits and investigations.

    (a) Access to records. Applicable OMB Circulars set forth the 
requirements concerning record access and retention.
    (b) Audits. (1) Pre-award audit. Applicant organizations that 
propose to enter the Program for the first time may be subject to a 
pre-award audit conducted by or coordinated with the SBA Office of 
Inspector General. The purpose of a pre-award audit is to verify the 
adequacy of the accounting system, the suitability of posed costs and 
the nature and source of proposed Matching Funds.
    (2) Interim or final audits. The recipient organization or SBA may 
conduct SBDC network audits. All audits will be conducted according to 
Government Auditing Standards, promulgated by the Comptroller General 
of the United States.
    (i) The recipient organization will conduct its audits as a single 
audit of a recipient organization pursuant to OMB Circulars A-102, A-
110, A-128, and A-133, as applicable.
    (ii) The SBA Office of Inspector General or its agents will 
conduct, supervise, or coordinate SBA's audits, which may, at SBA's 
discretion, be audits of the SBDC network, even though single audits 
may have been performed. In such instances, SBA will conduct such 
audits in compliance with Government Auditing Standards and all 
applicable OMB Circulars.
    (c) Investigations. SBA may conduct investigations as it deems 
necessary to determine whether any person or entity has engaged in acts 
or practices constituting a violation of the Act, any rule, regulation 
or order issued under that Act, or any other applicable Federal law.

    Dated: May 9, 1995.
Philip Lader,
Administrator.
[FR Doc. 95-14371 Filed 6-12-95; 8:45 am]
BILLING CODE 8025-01-M