[Federal Register Volume 65, Number 48 (Friday, March 10, 2000)]
[Proposed Rules]
[Pages 12955-12957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5600]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 124


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

AGENCY: Small Business Administration (SBA).

ACTION: Notice of proposed rulemaking.

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

DATES: Submit comments on or before April 10, 2000.

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

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

SUPPLEMENTARY INFORMATION: On June 30, 1998, in response to and in 
conjunction with the Department of Justice and the Federal Acquisition 
Regulation reform proposals to implement a government-wide SDB program, 
SBA issued a final rule establishing the procedural framework for 
certifying firms as SDBs and for processing protests challenging the 
disadvantaged status of a firm claiming to be an SDB. See 63 FR 35767. 
Under existing regulations, firms seeking SDB certification must meet 
certain citizenship, size, ownership, control and social and economic 
disadvantaged status requirements. Although SBA is responsible for 
determining an applicant's eligibility for SDB certification, the 
Agency has approved certain organizations or business concerns (called 
Private Certifiers) to perform ownership and control determinations.
    When an applicant submits an SDB application to SBA, however, SBA's 
Assistant Administrator for Small Disadvantaged Business Certification 
and Eligibility (AA/SDBCE) determines whether the applicant satisfies 
all of the requirements for certification, and issues a single written 
decision as to whether the applicant qualifies as an

[[Page 12956]]

SDB. The current regulations do not grant SDB applicants a right to 
request that the AA/SDBCE reconsider his or her negative determination 
of SDB eligibility. Instead, existing regulations afford applicants 
declined SDB certification on certain grounds the right to appeal the 
denial to OHA. Further, the regulations provide that once SBA issues a 
final decision finding the applicant ineligible, the applicant is 
precluded from reapplying for 12 months after the date of the final SBA 
decision to decline the application.
    SBA has determined that the absence of an opportunity for firms to 
obtain a reconsideration, coupled with the one year bar on 
reapplications for SDB certification following a final SBA decision, 
deprives applicants of a formal mechanism to immediately correct 
deficiencies in their applications.
    This proposed rule would amend SBA's existing regulations, codified 
at Title 13 Code of Federal Regulation (CFR) part 124, to: (1) Grant 
applicants the opportunity to request reconsideration and (2) Establish 
a reconsideration process. This proposed rule would redesignate 13 CFR 
Sec. 124.1008(f)(3) as 13 CFR Sec. 124.1008(f)(4) and would add a new 
13 CFR Sec. 124.1008(f)(3). The new paragraph (3) Would grant 
applicants denied SDB certification a 45-day period from the date of 
the AA/SDBCE's written decision to request that the AA/SDBCE reconsider 
that decision.
    As part of the request for reconsideration, this proposed rule 
would allow applicants to submit additional evidence to show that they 
have overcome the reason(s) for the AA/SDBCE's denial. If the AA/SDBCE 
once again declines the application solely on grounds that were not 
included in the original denial letter, the AA/SDBCE would be required 
to grant the applicant an additional 45-day period to request that SBA 
reconsider the new basis for denial. If, however, the AA/SDBCE 
determines that the applicant is ineligible for SDB certification for 
one or more of the same reason(s) as addressed in the original decline, 
the applicant would not be entitled to a second reconsideration.
    This proposed rule would not affect an applicant's right under the 
current 13 CFR 124.1008(f)(3) to appeal the AA/SDBCE's decision denying 
eligibility. An applicant denied SDB certification based solely on 
reasons of social disadvantage, economic disadvantage, or disadvantaged 
ownership or control, would continue to have the right to appeal to 
OHA. Under this proposed rule, the applicant would have the option to 
forego the reconsideration process and appeal the AA/SDBCE's initial 
decision to OHA, or to request reconsideration and if declined a second 
time solely on those grounds, to appeal the AA/SDBCE's reconsideration 
decision.
    This proposed rule also does not affect an applicant's right with 
respect to ownership and control determinations of Private Certifiers. 
Unlike determinations by SBA, the current regulations allow applicants 
to reapply at any time following a Private Certifier's negative 
ownership and control determination and therefore obviate the need for 
a formal reconsideration process.
    The proposed reconsideration process under this rule constitutes a 
procedural amendment that is designed to improve the efficiency and 
effectiveness of the certification process. This proposed rule also 
benefits SDB applicants by granting them the right to request that the 
AA/SDBC&E reconsider his or her denial of SDB eligibility. The proposed 
rule in no way deprives the public of any existing rights under SBA 
regulations, nor does it impose any additional burdens on SDB 
applicants or any other member of the public. For those reasons, SBA is 
providing a 30-day comment period to avoid unnecessarily delaying the 
implementation of this rule and to avoid unnecessarily impeding the 
efficient administration of the SDB certification program.

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

    SBA has determined that this rule is not a significant regulatory 
action as defined by Executive Order 12866 in that it is not likely to 
have an annual economic effect of $100 million or more on the economy, 
result in a major increase in costs or prices, or have a significant 
adverse effect on competition or the United States economy. SBA 
certifies that this proposed rule will not have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq, since it would be 
a procedural amendment to the SDB certification process that would not 
impose any mandatory requirements on SDB applicants or deprive them of 
any existing rights under governing SBA regulations.
    For purposes of the Paperwork Reduction Act of 1995 (Public Law 
104-13), SBA certifies that this interim rule imposes no new reporting 
or recordkeeping requirements on firms applying to be certified as an 
SDB. The rule grants certain SDB applicants the right to submit 
evidence to SBA that they are socially and economically disadvantaged, 
that they are citizens of the United States, and that they own and 
control the applicant concern. Once certified as an SDB, this rule does 
not require an SDB to report any other information to SBA or to 
maintain additional records.
    For purposes of Executive Order 13132, SBA has determined that this 
proposed rule does not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment.
    For purposes of Executive Order 12988, SBA certifies that this rule 
is drafted, to the extent practicable, in accordance with the standards 
set forth in Section 3 of that Order.

List of Subjects 13 CFR Part 124

    Government procurement, Hawaiian natives, Minority businesses, 
Reporting and recordkeeping requirements, Technical assistance.

    Accordingly, for the reasons set forth above, SBA proposes to amend 
Title 13, CFR as follows:

PART 124--[AMENDED]

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

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

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


Sec. 124.1008  How does a firm become certified as an SDB?

* * * * *
    (f) * * *
    (3)(i) If the AA/SDBCE declines the firm's application for SDB 
certification, the firm may request that the AA/SDBCE reconsider his or 
her initial decline by submitting a written request to the AA/SDBCE 
within 45 days of the date of the AA/SDBCE's decision. The applicant 
may provide any additional information and documentation pertinent to 
overcoming the reason(s) for the initial decline.
    (ii) The AA/SDBCE will issue a written decision within 30 days of 
receiving the applicant's request for reconsideration, if practicable. 
The AA/SDBCE may either approve the application, deny it on one or more 
of the same grounds as the initial decision, or deny it on other 
grounds. If the application is denied, the AA/SDBCE

[[Page 12957]]

will explain why the applicant is not eligible for SDB certification 
and give specific reasons for the decline. If the AA/SDBCE declines the 
application solely on issues not raised in the initial decline, the 
applicant may request another reconsideration as if it were an initial 
decline. If the AA/SDBCE declines the application for one or more of 
the same reasons as addressed in the initial decline, the applicant is 
not entitled to a second reconsideration.
* * * * *

    Dated: March 1, 2000.
Aida Alvarez,
Administrator.
[FR Doc. 00-5600 Filed 3-9-00; 8:45 am]
BILLING CODE 8025-01-U