[Federal Register Volume 80, Number 63 (Thursday, April 2, 2015)]
[Proposed Rules]
[Pages 17708-17712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06854]

Proposed Rules
                                                Federal Register

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.


Federal Register / Vol. 80, No. 63 / Thursday, April 2, 2015 / 
Proposed Rules

[[Page 17708]]


13 CFR Part 130

RIN 3245-AE05

Small Business Development Center Program Revisions

AGENCY: U.S. Small Business Administration.

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The U.S. Small Business Administration (SBA) is seeking 
comments on this Advance Notice of Proposed Rulemaking (ANPRM) 
regarding the Small Business Development Center (SBDC) Program (the 
Program). Specifically, the SBA is seeking comments on development of 
potential proposed amendments to current regulations governing the 
Program, which is authorized by the Small Business Act. This ANPRM is 
being issued to commence the consultative process with stakeholders to 
examine several issues such as International Trade counselor 
certification requirements, steps to selecting State/Region Directors, 
procedures for international travel, clarifying the use of carryover 
funds and procedures regarding the determination to affect suspension, 
termination or non-renewal of an SBDC's cooperative agreement to name a 
few. This ANPRM also addresses other policy and procedural changes 
necessary for the implementation of the Program.

DATES: Comments must be received by June 1, 2015.

ADDRESSES: You may submit comments, identified by RIN 3245-AE05 by one 
of the following methods (1) Federal Rulemaking Portal: 
www.regulations.gov, following the instructions for submitting 
comments; or (2) Mail/Hand Delivery/Courier: J. Chancy Lyford, Deputy 
Associate Administrator, SBDC Program, 409 Third Street SW., Room 6253, 
Washington, DC 20416. SBA will not accept comments submitted by email 
to this Advance Notice of Proposed Rulemaking.
    SBA will post all comments to this Advance Notice of Proposed 
Rulemaking on www.regulations.gov. If you wish to submit confidential 
business information (CBI) as defined in the User Notice at 
www.regulations.gov, you must submit such information to the U.S. Small 
Business Administration, J. Chancy Lyford, Deputy Associate 
Administrator, SBDC Program, 409 Third Street SW., Room 6253, 
Washington, DC 20416, or send email to [email protected]. Highlight the 
information that you consider to be CBI and explain why you believe SBA 
should hold this information as confidential. SBA will review your 
information and determine whether it will make the information public. 
Requests to redact or remove posted comments cannot be honored and the 
request to redact/remove posted comments will be posted as a new 
comment. See the www.regulations.gov help section for information on 
how to make changes to your comments.

FOR FURTHER INFORMATION CONTACT: J. Chancy Lyford, Deputy Associate 
Administrator for the SBDC Program, at 202-205-6766 or 
[email protected].


A. Statutory Authority

    The Small Business Development Center (SBDC) Program (the Program) 
was established as a pilot program in 1977 and was later officially 
authorized in 1980 by the Small Business Development Center Act of 1980 
(Pub. L. 96-302) now codified in section 21(a) of the Small Business 
Act, 15 U.S.C. 648. According to Section 21(a)(1) the purpose of the 
Program is to assist in establishing small business development centers 
explicitly to provide ``management and technical assistance'' to small 
businesses. Section 21(a)(3)(A) requires the SBA to consult with the 
recognized association of SBDCs in any rulemaking action for the 
Program. The issuance of this ANPRM is for purposes of undertaking the 
consultative process required by this section.

 B. Background

    The SBDC Program provides small businesses and aspiring 
entrepreneurs with a wide array of technical assistance to help support 
and strengthen business performance and sustainability as well as 
assist the U.S. economy by the creation of new business entities. Under 
the statute governing the SBDC Program, the Associate Administrator of 
Office of Small Business Development Centers (AA/OSBDC) holds 
responsibility for the general management and oversight of the SBDC 
Program by means of a cooperative agreement with the Recipient 
    The SBDC rules were last revised in 1995, See 60 FR 31506 (June 13, 
1995). However, statute authorizing the SBDC Program has been amended 
numerous times since the last rulemaking. The annual Program 
Announcement and Notice of Award have become SBA's primary means of 
adjusting SBDC program rules and policies in the wake of statutory and 
other changes. The SBA believes it is time for regulations outlining 
guidance for the policies and procedures for the SBDC Program. It is 
the intention of the SBA that by soliciting public comments through 
this Advanced Notice of Proposed Rulemaking (ANPRM), the SBDC Program 
policies and procedures will be updated to reflect current best 
practices, become more streamlined, and less onerous on the SBDC 
grantees and SBA. SBA would like comment on changes to any of its 
existing policies and procedures as well as any new ideas for how to 
best implement and operate the SBDC Program.
    Because of the amount of information contained within this ANPRM to 
address the necessary modifications, it is SBA's intention that the 
public, especially the recognized association and other stakeholders in 
the Program, be given ample opportunity to submit comments and help 
shape any possible future regulatory proposals.
    This ANPRM solicits public comments on, among other things, 
implementation of statutory amendments, current practices, guidance on 
new grantee applicants, and provisions regarding the collection and use 
of individual SBDC client data. Many of the statutory changes have been 
significant, including amendment to the types of entities that are 
eligible to apply to be an SBDC grantee.

C. Definitions

    The SBA asks for comment on: Whether or not new definitions for 
defining Program requirements are

[[Page 17709]]

needed, if there are other terms that are missing from the list below 
that need defining, and the draft definitions themselves.
    The SBA seeks comment on the possible addition of and content of 
the following new definitions:
     Associate Administrator/OSBDC. The individual who is 
statutorily mandated to manage the SBDC Program.
     Carryover funds. Unobligated federal funds reallocated 
from one funding period to the next for specified purposes through an 
amendment to the Notice of Award.
     District Office. The local SBA office that, among other 
responsibilities, is charged with SBDC grant oversight responsibilities 
by ensuring: compliance with the Notice of Award; the local small 
business market needs are met by the SBDC; the regularly scheduled 
reviews are completed as required; and by collaborating with the SBDC 
to perform joint events and trainings.
     State Director. An individual for whose time and effort is 
100% allocated to overseeing and managing the SBDC grant and other 
grants that provide comparable management and technical assistance to 
the small businesses community in accordance with the cooperative 
     Key personnel. SBDC State/Region Directors and SBDC 
Service Center Directors or managers and International Trade Center 
     Matching Funds. Funds that will be supplied to meet the 
statutory match requirements of the SBA SBDC grant. Matching Funds may 
include cash and non-cash equivalents, provided those forms of matching 
comply with the percentage restrictions on non-cash contributions and 
source restrictions on both forms of funds.
     Notice of Award (NOA). Also known as the Cooperative 
Agreement, the legal agreement between SBA and a Recipient Organization 
containing the terms and conditions under which SBA provides federal 
funds for the performance of SBDC activities.
     Office of Small Business Development Centers (OSBDC). The 
main program office which manages the funding, budget, programmatic 
oversight, and the establishment and maintenance of all program policy 
over the national SBDC network.
     Program funds. Also referred to as Project funds and 
defined as all funds authorized under the Cooperative Agreement 
including, but not limited to, federal funds, cash match, non-cash 
match from indirect costs, in-kind contributions, program income 
revenues, and funds authorized or reported as carryover.
     Project Officer. The individual in the SBA District Office 
appointed by SBA as the primary local contact for the SBDC. This person 
conducts regular compliance oversight as required by OSBDC working in 
conjunction with the Program Manager as well as other responsibilities.
     Proposal. Also known as the Application, this is the 
written submission by a new Applicant Organization or an existing 
Recipient Organization describing its projected SBDC activities for the 
upcoming Budget Period and requesting federal funding for use in its 
     Prior Approval. The written concurrence from the 
appropriate SBA official for a proposed action or amendment to the SBDC 
Cooperative Agreement.
     Recognized Association. The association established by 
statute whose members are SBDCs for the purpose of representing the 
SBDC's interests.
     SBDC Service Center Director. The individual responsible 
for SBDC program implementation and management at a Service Center 
within an SBDC network.
     Specialized Services. SBDC services other than counseling 
or training, e.g., extensive research, hiring outside consultants for a 
particular client, translation services, etc.
     Sub-recipient Organization/Subcenters. An entity, 
identified in the Cooperative Agreement, having a written agreement 
with the Recipient Organization that (1) receives federal financial 
assistance; and/or (2) administers matching resources for purposes of 
conducting SBDC activities.

D. General

    SBA also seeks comment on any other information that should be 
considered for possible future regulatory proposals, including whether 
the addition of a general description of the authority establishing 
SBDCs, the governing documentation (Program Announcement), and the 
administration of the Program (Notice of Award) should be included in a 
future rulemaking.

E. Applications

    By statute, any Women's Business Center operating pursuant to 
section 29 of the Small Business Act (15 U.S.C. 656) is now eligible to 
apply to be a new SBDC Recipient Organization. This ANPRM seeks 
comments on how to address statutory requirements for an SBDC Network 
to primarily utilize institutions of higher education and Women's 
Business Centers as new Service Centers.
    SBA invites comments on the following:
    Regarding the application procedures, how should SBA instruct all 
SBDC applicants to comply with the annual Program Announcement? 
Possible topics to comment on could include program integrity, 
allowable costs, conflicts of interests as well as format, conditions, 
submission requirements and due dates, for their new or renewal 
application to receive consideration.
    Regarding new applications, how should the SBA clarify which 
Applicants within the State or Region of service are eligible to be an 
SBDC Recipient Organization? SBA believes a clarification is advisable 
regarding its standard policy of recruiting and selecting New SBDC 
Recipient Organizations using a fair and open competitive process, 
including an objective review and on-site sufficiency review before the 
Associate Administrator (AA) of the OSBDC makes a final selection.
    Regarding renewal applications, what should SBA propose to describe 
the procedure when a Recipient is not renewed, either by SBA's or the 
Recipient's choice? Does any other aspect of renewal need to be 
considered for program regulatory proposals? Comments are requested as 
how best to update the process, including details on the negotiations 
with the District Office and how the Recipient Organization must submit 
the renewal application to the SBA.

 F. Operating Requirements

    This ANPRM requests comments on how to incorporate these statutory 
requirements in a future rulemaking.
    The SBA seeks comments on the following:
    Comments are requested on how each SBDC could comply with the 
requirement to maintain export and trade certified counselors on staff? 
Should there be a minimum number of export and trade certified 
counselors on staff? If so, what should be the minimum? Comments are 
requested on how the AA/OSBDC should set policy development and program 
administration, in consultation, to the extent practicable, with the 
Recognized Association.
    Comments are requested on how to clarify the specific 
identification of a ``Small Business Development Center'' and whether 
that name should be a part of the official name of every SBDC Lead 
Center and Service Center within the SBDC network? How should SBA 
consider other names, such as those grandfathered in or subsequently 
waived by the AA/OSBDC? SBA

[[Page 17710]]

welcomes comments on any other information needed to be considered for 
program regulatory proposals at this time.
    Currently, there are SBDC Networks with other identifying 
characteristics, such as ``Small Business Technology Development 
Centers.'' How should an SBDC Network seeking the designation as a 
``Small Business Technology Development Center'' operate in accordance 
with SBA policies and procedures? Should there be different rules for 
Small Business Technology Development Centers? If so, what should they 
    Comments are requested on how the selection and retention of the 
SBDC State/Region Director should be accomplished. How should the 
policy guidelines already contained in the current Program Announcement 
and Notice of Award be incorporated? In particular, how should SBA 
mandate a Recipient Organization to have a State/Regional Director from 
another SBDC as a member of a selection panel? How much time should a 
State Director devote specifically to the SBDC grant? In addition, how 
much time should pass before any vacancy is reported to SBA? What 
percentage of their time and efforts should an Interim State/Region 
Director allocate to the SBDC program? What length of time should the 
appointment period for such Interim State/Region Director be? Should 
more time be needed for the Recipient Organization to hire a permanent 
State/Regional Director, how should it obtain prior approval from the 
    The responsibilities of SBDC State/Region Directors are currently 
set forth in policy in the Program Announcement and Notice of Award. 
What percentage of time should the Director dedicate to the SBDC? How 
much of the Director's time should be devoted to other projects which 
complement the SBDC mission? Can the position be held by a company or 
contractor or other choice? What should be the minimum direct reporting 
authority that a State Director should have? Should it be to that of a 
college dean in a university setting or the third level of management 
or administration within a State Agency or should some other level 
within the organization be considered? If so, what should that level 
    Should SBA consider an amendment stating the names, addresses and 
phone numbers of small businesses or individuals receiving counseling 
assistance from an SBDC Network cannot be released to any person or 
entity outside of the SBDC without the consent of the client? Should a 
possible exemption be made if: SBA believes it necessary for grant 
oversight activities; SBA wants to conduct allowable client surveys or; 
the SBA Administrator is ordered to make such a disclosure by a court?
    How should a SBDC Lead Center or a Sub-recipient Organization enter 
into a contract or grant with a Federal department or agency to provide 
specific assistance to small business concerns? Prior to bidding on a 
non-SBA federal award or contract, how should potential conflict of 
interest situations be handled by the SBDC Lead Center or Service 
Center? What should the SBDC Lead Center or Service Center be required 
to obtain from the AA/OSBDC regarding the subject and general scope of 
the award or contract to ensure that there is no conflict of interest 
with the SBA? How should the notification procedure indicate to SBA how 
the additional award will not conflict with the Cooperative Agreement 
and identify how the additional funding will be tracked to ensure 
separate sources and uses of funds?

G. Notice of Awards/Cooperative Agreements

    Section 21(k)(3)(A) of the Small Business Act (15 U.S.C. 
648(k)(3)(A)) states that in extending or renewing a cooperative 
agreement of a Small Business Development Center, the Administration 
shall consider the results of the examinations and accreditation 
reviews. In addition, 15 U.S.C. 648(k)(3)(B) states the Administration 
cannot renew or extend any cooperative agreement with a small business 
development center unless the center has been approved under the 
accreditation program conducted pursuant to this subsection, except 
that the AA/OSBDC can waive such accreditation requirement, at his or 
her discretion, upon a showing that the center is making a good faith 
effort to obtain accreditation. SBA seeks comment on how best to 
incorporate these statutory changes into a proposed rulemaking.
    The SBA seeks comments on the following:
    What language should SBA propose regarding cooperative agreements 
and contracts, including the incorporation of a common set of 
performance measures for SBDC Networks established by the SBA? What 
should the District Office, in conjunction with OSBDC, negotiate with 
the Lead Center? Some ideas include annual goals, milestones, 
activities for the cooperative agreement, or other information needed 
to be considered for the program?
    For procurement/contracting policies and procedures, what should 
Recipient Organizations and Sub-Recipient Organizations have in the way 
of written procurement and contracting procedures in order to comply 
with the applicable federal procurement standards, the procurement 
procedures of the Recipient Organization, and openly compete their 
procurements? Are there any other issues regarding procurement/
contracting that should be considered for program regulatory proposals 
at this time? While this and many other references are already 
established policy in the Program Announcement and Notice of Award, the 
SBA welcomes comments on new ideas, procedures and policies.
    In the event of a Disaster, the AA/OSBDC can amend one or more 
cooperative agreements to authorize unanticipated out-of-state travel 
by SBDC personnel responding to a need for services in a 
Presidentially-Declared Major Disaster Area. How should notification of 
this type of authorization be accomplished? Some possible ideas are 
either through the publication of an SBA procedural or policy notice or 
through a Lead Center individual approval approach? Are there other or 
issues related to any program travel information that should be 
considered for program regulatory proposals at this time? What 
compliance standards should proposed and actual travel costs incurred 
under an emergency authorization use? Should they comply with the 
established rule, Program Announcement and OMB guidelines?
    How should SBA clarify the conditions and procedures for effecting 
a suspension, termination or non-renewal of an SBDC's cooperative 
agreement? How should SBA set forth the administrative review 
procedures? Are there any other issues related to renewal needed to be 
considered for program regulatory proposals at this time? What should 
SBA consider in developing a new Administrative Procedure for 
Suspension, Termination and Non-Renewal? Should SBA include processes 
for taking action; notice requirements; relationship to government-wide 
suspension; and debarment? Also, what standards should SBA consider for 
administrative review of suspension, termination and non-renewal 
actions? Should SBA include details on a prescribed format; service; 
timeliness; standard of review; conduct of the proceeding; evidence; 
and decision? SBA seeks comments on the following.
    (1) Termination. How should SBA consider whether a recipient 
organization can incur further obligations under the Cooperative 
Agreement after the date of termination

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without express authorization to do so in the Notice of Termination? 
Are there other issues related to termination for program regulatory 
proposals? Should award funds be available for obligations incurred 
after the effective date of termination unless expressly authorized 
under the Notice of Termination or are there other ways to handle 
obligations incurred after termination? When a Cooperative Agreement 
has been terminated, how many days should the Recipient Organization 
have to submit final closeout documents to SBA? Can extenuating 
circumstances be considered and how should they be handled?
    (2) Non-Renewal. How can SBA elect not to renew a Cooperative 
Agreement with a Recipient Organization? In undertaking a non-renewal 
action, how should SBA either choose not to accept or consider any 
application for renewal from the Recipient Organization? Under what 
circumstances could the Agency choose not to exercise option years 
remaining under the Cooperative Agreement? When would a Cooperative 
Agreement not be renewed? Should the Recipient Organization continue to 
conduct project activities and incur allowable expenses until the end 
of the current budget period? If a Recipient Organization decides to 
not renew its grant, must it notify the District Director and send a 
letter of intent to withdraw to the AA/OSBDC no less than 180 days 
before the end of its performance period or would there be another time 
period that would be more acceptable?
    (3) Suspension. When should the suspension of a Recipient 
Organization begin? Should it begin on the date the Notice of 
Suspension is issued? How long should the period of suspension last? 
Should it last no longer than 6 months? At the end of the period of 
suspension, or any point during that period, how should the SBA either 
reinstate the cooperative agreement or commence an action for 
termination or non-renewal?
    Why should the SBA be obligated to reimburse any expenses incurred 
by a Recipient Organization while its cooperative agreement is under 
suspension? Where SBA decides to lift a suspension and reinstate a 
Recipient Organization's cooperative agreement, under what 
circumstances should the Agency consider reimbursing a Recipient 
Organization for some or all of the expenses it incurred in carrying 
out project objectives during the suspension period? Should SBA state 
that there is no guarantee that the Agency will accept expenses 
incurred in furtherance of project objectives during the period of 
suspension or is there some other way this should be handled?
    SBA seeks comment on whether, or not to add the following to the 
list of causes for suspension actions and if there are other causes not 
listed that should be considered:
     Poor performance;
     Unwillingness or inability to implement changes to improve 
     Failure to implement recommendations from programmatic 
reviews and/or examinations within the time frame established by the 
     Failure to implement recommendations from accreditation 
reviews within the time frame established by the accreditation 
committee and by the AA/OSBDC;
     Failure to maintain adequate client service facilities or 
service hours;
     Failure to maintain and enforce a conflict of interest 
     Failure to provide records to the SBA or the SBA OIG on 
     Failure to maintain records and;
     Failure to maintain and enforce a procurement policy.
    How should SBA define the closeout procedures to be followed when 
an SBDC Lead or Service Center has left the program, either voluntarily 
or involuntarily to ensure that Program funds and property acquired or 
developed under the SBDC Cooperative Agreement are fully reconciled and 
transferred seamlessly between Recipient Organizations, sub-recipients, 
or other federal programs? How should the responsibility for conducting 
closeout procedures be vested with the Recipient Organization whose 
cooperative agreement is not being renewed? How should the procedures 
be documented and accomplished in accordance with the applicable 
property standards and the provisions of the SBDC Program regulations? 
Although stipulated in Subpart D of 2 CFR part 215, the SBA welcomes 
comments regarding this matter.

H. Financial Requirements

    SBA seeks comments on the following:
    How can SBA clarify the policy for carryover requests? Should a 
Recipient Organization request that SBA reauthorize any remaining 
unexpended and unobligated federal funds from their cooperative 
agreement for use in the ensuing Program/Budget Year or is there other 
information that needs to be considered when considering how to 
obligate the unexpended program funds? Should carryover requests not 
submitted within the timeframe designated by the AA/OSBDC be considered 
or are there other issues that need to be considered in extending the 
timeframe? Should carryover requests adhere to the format stipulated in 
the Program Announcement for renewal applications and contain the 
appropriate budget and narrative information along with a justification 
for the carryover? How should the AA/OSBDC determine whether good cause 
exists for funds remaining unobligated? If planned obligations could 
not be carried out because of a bona fide reason, how should the AA/
OSBDC determine program objectives would be better served by deferring 
obligation of the funds to the following year or is there other 
information that needs to be considered? Should repeated requests for 
Carryovers (for more than two consecutive years) require substantial 
justification, and without this justification should they not be 
approved or is there other information that needs to be considered?
    In addition, cash match should equal at least 50% of the SBA funds 
used by the SBDC. The remaining 50% of matching funds may be provided 
through allowable combinations of cash, in-kind contributions, or 
authorized indirect costs. Should costs or the values of third party 
in-kind contributions count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal Procurement Contract, or any 
other award of Federal funds or is there other information that needs 
to be considered? Should in-Kind services performed during the current 
Budget Period not be carried over to a subsequent Budget Period even if 
they were not previously claimed as match or is there other information 
that needs to be considered?
    Should SBA require all foreign travel requests to be submitted to 
the appropriate District Director/Project Officer and to the OSBDC 
Program Manager for review and dispatch to the AA/OSBDC for final 
approval in accordance with the Program Announcement or is there other 
information that needs to be considered? Should foreign travel charged 
to the SBDC cooperative agreement or performed by SBDC staff while on 
duty for the Recipient Organization be approved in advance in 
accordance with the Program Announcement or is there other information 
that needs to be considered? Should planned foreign

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travel costs allocable to the SBDC cooperative agreement for SBDC 
Network staff be approved by the SBA through the annual proposal 
process and should such planned costs be fully disclosed and justified 
in the budget narrative for Agency review or is there other information 
that needs to be considered? Should unanticipated foreign travel be 
approved in advance in accordance with the Program Announcement or is 
there other information that needs to be considered?
    The SBA prohibits the use of Program Funds for purposes identified 
as unallowable following OMB guidance, including a Recipient 
Organization cannot use such funds to provide financial assistance, 
including subgrants, seed money for venture capital, or fund-raising 
activities and costs, including financial or capital campaigns, the 
solicitation of gifts and bequests, and similar activities intended to 
raise capital or obtain contributions. Should SBA identify further 
restrictions and prohibitions on expenditures that can be reimbursed 
from this grant or is there other information that needs to be 
    SBA also welcomes comments on any other issues that the agency 
should address in a proposed rulemaking related to the SBDC Programs.

Maria Contreras-Sweet,
[FR Doc. 2015-06854 Filed 4-1-15; 8:45 am]