[Federal Register Volume 84, Number 227 (Monday, November 25, 2019)]
[Rules and Regulations]
[Pages 64707-64723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24239]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 131

RIN 3245-AG02


Office of Women's Business Ownership: Women's Business Center 
Program

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is codifying 
regulations for the Women's Business Center (WBC) Program as directed 
in section 29 of the Small Business Act (the Act). This final rule also 
codifies policy and procedural changes included in the WBC Program 
Announcement and Notice of Award (NOA). These changes include, but are 
not limited to, the following: Language on risk assessment, as required 
by the Uniform Grant Guidance; limitations on carryovers; a reduction 
in reporting requirements; and eligibility criteria for selection as a 
WBC. Implementing these regulations will result in greater 
standardization and transparency in the delivery of the WBC Program.

DATES: This rule is effective January 24, 2020.

FOR FURTHER INFORMATION CONTACT: Donald Smith, Deputy Assistant 
Administrator, U.S. Small Business Administration, 409 3rd Street SW, 
Washington, DC 20416, telephone number (202) 205-7279 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Women's Business Center Program (WBC Program) was created under 
the authority of Title II of the Women's Business Ownership Act of 1988 
(Pub. L. 100-533). The WBC Program authority is now codified in the 
Small Business Act (Act), 15 U.S.C. 656. The initial Demonstration 
Training Program, later renamed the WBC Program, was created with the 
Congressional intent to remove barriers to the creation and development 
of small businesses owned and controlled by women and to stimulate the 
economy by aiding and encouraging the growth and development of such 
businesses. The specific objectives of the Demonstration Training 
Program were to provide long-term training and counseling to potential 
and current women business owners, including those who are Socially and 
Economically Disadvantaged as defined in 13 CFR 124.103 and 124.104.
    Since its creation, the WBC Program has transformed through a 
number of public laws from a Demonstration Training Program into a 
permanent program. The laws that have impacted the WBC Program include 
the following: The Women's Business Development Act of 1991 (Pub. L. 
102-191); the Women's Business Centers Sustainability Act of 1999 (Pub. 
L. 106-165); the U.S. Troop Readiness, Veterans' Care, Katrina 
Recovery, and Iraq Accountability Appropriations Act of 2007 (Pub. L. 
110-28); and the Small Business Jobs Act of 2010 (Pub. L. 111-240).
    Section 29 of the Act, 15 U.S.C. 656, authorizes the SBA to provide 
financial assistance, in the form of grants, to private nonprofit 
organizations to conduct five-year projects for the benefit of small 
business concerns owned and controlled by women. The Act further 
authorizes the SBA to renew a grant for additional three-year periods 
and provides that there are no limitations on the number of times a 
grant may be renewed.
    On November 22, 2016, the SBA published a proposed rule with a 
request for public comment in the Federal Register to outline program 
requirements and standardize the delivery of the WBC Program (81 FR 
83718). The information proposed by the SBA included clarification of 
terms and definitions as well as overall program policies.
    This final rule codifies the SBA's oversight responsibilities of 
the WBC Program into a newly created Part 131 of the SBA's regulations 
by incorporating the following: (A) Standard definitions for the 
program (13 CFR 131.110); (B) program-participation requirements and 
application procedures (13 CFR 131.210, 13 CFR 131.300, 13 CFR 
131.400); (C) financial-management and grant-administration 
requirements (13 CFR 131.500); (D) oversight and programmatic and 
financial-examination provisions (13 CFR 131.700 and 13 CFR 131.720); 
(E) procedures for the suspension, termination, and non-renewal of a 
grant (13 CFR 131.830); and (F) procedures for dispute resolution (13 
CFR 131.840).

II. Summary of Comments Received

    The comment period was open from November 22, 2016, to January 23, 
2017, and the SBA received 46 comments. Of the 46 comments received, 36 
were from individuals or groups that concurred with the comments 
submitted by the Association of Women's Business Centers (AWBC). This 
preamble includes the SBA's response to all of the comments received.
    One of the comments received referenced the intended use of the 
Women's Business Center (WBC or Center) regulations. The commenter 
indicated that while the SBA's intent of the proposed rule is to 
outline policies and procedures for the WBC Program and streamline both 
the program announcement and the notice of award, it continually 
references both of the aforementioned program documents for additional 
guidance. The commenter suggested that program applicants and/or 
participants should not have to refer to multiple documents for 
guidance. While the proposed rule references both

[[Page 64708]]

the program announcement and the notice of award (NOA), the Office of 
Women's Business Ownership (OWBO) anticipates that both documents will 
include references to the regulations, resulting in consistency for the 
program. The regulations will continue to reference the program 
announcement and NOA, which outline the period of performance and is 
the legally binding agreement signed annually by the host organization 
and an authorized staff person at the SBA. In addition, any changes to 
the grant, including award amounts, SBA targeted/specialized services, 
initiatives or populations will continue to appear in the annual 
program announcement(s) and/or NOA.
    There were three comments to the Advanced Notice of Proposed 
Rulemaking (ANPRM) (80 FR 22434, April 22, 2015) that a commenter 
indicated were not fully addressed in the Notice of Proposed Rulemaking 
(NPRM). The comments were: (1) Training--The commenter stated that the 
training provided by OWBO is limited, only addresses compliance, and 
does not include training on best practices. OWBO shares best practices 
through regular outreach to the network of WBCs. Best practices are 
also shared at the annual WBC training conference held by the AWBC. 
Historically, the compliance training coordinated by OWBO has included 
instruction on the preparation of effective funding applications, 
budgets, and modifications. OWBO has also paired new WBCs or new WBC 
staff with experienced, effective centers or staff for discussions that 
included, but were not limited to, the pros and cons of using certain 
training curriculums, what and how to charge fees for services, and 
marketing strategies. (2) Data Collection System--Several commenters 
identified the need for the SBA to update the current data collection 
system. As an Agency priority, the SBA recently improved the 
Entrepreneurial Development Management Information System (EDMIS) to 
reduce system errors related to data uploading. The Agency continues to 
identify ways to improve or replace EDMIS. We appreciate the ongoing 
feedback from our stakeholders. (3) Repository of Information--A 
commenter requested that the SBA outline its plan to develop a 
repository of information for WBCs. The commenter further stated that 
the repository should include information on best practices, program 
materials, and documents that can be shared among WBCs. It should also 
include a forum for questions and answers, an up-to-date map of current 
WBCs, their managers, and program profiles that include a description 
of their services, outputs, and outcomes. Additionally, the commenter 
envisioned the clearinghouse/repository as a forum for WBCs to ask 
questions and solicit advice. Currently, some of the information 
identified by the commenter (program materials and reporting documents) 
can be accessed at the SBA's public website for the program, 
www.sba.gov/wbc. The locations and contact information for all WBCs are 
included in the local SBA assistance tool at https://www.sba.gov/tools/local-assistance/wbc. OWBO is continuing to identify new opportunities 
for sharing relevant information across the WBC network.
    As stated in the preamble of the proposed rule, the SBA intends to 
work with women's organizations to develop an information repository; 
however, this rulemaking action is not the proper forum to include an 
outline of such repository. The creation and management of a 
repository, as part of this rule, would necessitate frequent 
modifications to its governing documents. As the repository develops 
and evolves, it would become extremely burdensome and ineffective for 
the SBA to continually revise the program regulations. The commenter 
further suggested that the SBA provide funds to the AWBC to develop a 
clearinghouse if the SBA is unable to develop one. However, there are 
currently no resources available to the SBA to develop and manage a 
clearinghouse or to direct and fund another entity to carry out such a 
function.
    One public comment addressed concerns with the Women-Owned Small 
Business Procurement Program (WOSB), 13 CFR part 127. However, the WOSB 
Program is outside the scope of this rule.

131.110 Definitions.

    This section defines 57 words and phrases used in the management 
and oversight of the WBC Program. These definitions have been 
consolidated from existing documents, including program announcements 
and cooperative agreements, to ensure consistency and clarity within 
the WBC Program.
    Several commenters suggested that the definition for counseling be 
revised. Specifically, a commenter questioned why resource partners and 
SBA district office personnel are included in the definitions, as WBCs 
do not require assistance from other resource partners or SBA district 
office personnel to provide counseling services. Based on the public 
comments received, the SBA has determined that it will remove the 
definitions related to district office personnel as well as to resource 
partners.
    Commenters recommended that the definition for full-time be 
clarified and that the ``full-time'' executive director or program 
manager of a given WBC be able to have responsibilities for associated 
programs that support and extend the impact of the SBA-funded WBC 
Program. This rule does not prohibit the Executive Director or WBC 
Program Director from performing tasks associated with activities that 
support the WBC project. Rather, the proposed rule defines a full-time 
employee as one who should not engage in activities that do not pertain 
to the WBC project. Activities in support of the WBC project are 
therefore allowable. Additionally, part-time staff paid through the WBC 
budget are allowed to complete any task(s) associated with the WBC 
project. The SBA has determined that the definition will remain as 
originally proposed.
    The proposed rule limited the term of an Interim Program Director 
to no more than 60 days. The SBA received several comments suggesting 
60 days did not allow the center sufficient time to identify a new WBC 
Program Director. In light of the comments and upon further 
consideration, the SBA has decided to increase the time allowed for an 
Interim Director to remain in position on an interim basis from 60 days 
to 90 days. The language in this final rule has been revised.
    The proposed rule defined socially and economically disadvantaged 
women as, ``women who have been subjected to racial or ethnic prejudice 
or cultural bias within American society because of their identities as 
members of groups and without regard to their individual qualities. It 
also includes women whose ability to compete in the free enterprise 
system has been impaired due to diminished capital and credit 
opportunities as compared to others in the same or similar line of 
business.'' A commenter suggested that the word gender be added just 
before the word racial in this definition. It is the SBA's position 
that women have been recognized as socially disadvantaged on a case-by-
case basis under the SBA's contracting programs on the grounds that 
they have experienced cultural bias on the basis of gender. There is 
not a gender-based presumed group for women as there are for race-based 
groups or members of minority groups, but individual women have been 
recognized by the SBA as being socially disadvantaged. The SBA would 
like to avoid conflicting definitions of socially and economically

[[Page 64709]]

disadvantaged. Furthermore, 13 CFR 124.103 expressly references the 
fact that social disadvantage can be based on gender in 13 CFR 
124.103(c)(2)(i). Additionally, all of the examples included under 
Sec.  124.103(c)(3) involve cases of women establishing social 
disadvantage. Given the aforementioned information, the SBA has 
determined that the definition will remain as originally proposed.
    A commenter suggested that the SBA change the terms ``counseling 
records'' and ``training records'' to ``client records.'' The SBA 
agrees with the recommendation and included revised language in this 
final rule.

131.300 Women's Business Centers (WBCs)

    As part of the negotiation process for the cooperative agreement, 
the ANPRM required that each Center do the following: (1) Collaborate 
with its local SBA district office and OWBO to develop annual goals, 
and (2) receive written concurrence on annual goals from its SBA 
district office for inclusion in the application submission. However, a 
public commenter reported that many district offices do not have staff 
equipped to provide this support. The commenter also stated that 
receiving written concurrence from the SBA district office for 
inclusion in the application submission places the burden of 
coordination on the WBC. Lastly, the commenter included an example from 
the previous year of one SBA district office that was reluctant to 
provide concurrence at the WBC's request because they felt it was 
providing ``preferential treatment.'' The SBA agrees with the 
commenter. Therefore, this provision will be removed from the final 
rule.

131.310 Operating Requirements

    Paragraph (e) requires that all new applicants accepted into the 
WBC Program after the effective date of this rule be required to 
include the specific identification ``Women's Business Center'' as part 
of their WBC's official name. The proposed rule similarly required that 
any WBC applying for a renewal grant after the effective date of this 
rule also include the specific identification ``Women's Business 
Center'' as part of its official name. The rule further proposes that 
any existing WBC that does not include ``Women's Business Center'' in 
its name (until such time that a renewal application is submitted) must 
include the following language prominently on its website and 
promotional documents: ``The Women's Business Center is funded in part 
by the U.S. Small Business Administration.'' A commenter wrote that the 
two sentences seemed contradictory. In the first sentence, ``must'' is 
used. In the second sentence, it seems inclusion of ``Women's Business 
Center'' in the official name is optional as long as ``funded in part 
by the SBA'' is prominently displayed on websites and promotional 
documents. The commenter recommended that the language be clarified. 
The SBA agrees with the commenter and has revised the language for 
clarification.
    A commenter requested that the SBA define ``official'' name and 
explain how it differs from ``legal name.'' The SBA's intention is that 
the official name is the name assigned to the WBC by its host 
organization. The legal name is the name of the host organization and 
is the name usually listed in the Application for Federal Assistance, 
SF 424. For clarification, the language in this final rule has been 
revised.
    The SBA received several comments regarding whether the costs 
incurred to change the official name of the WBC to comply with the rule 
are allowable. As this rule only applies to the official name of the 
WBC and not the host organization, costs associated with the name 
change should be minimal and are allowable.
    Paragraph (g) addresses conflict of interest. A commenter suggested 
that it was reasonable to require employees, contractors, and 
consultants to sign a conflict-of-interest statement, but thought the 
requirement to have volunteers sign a conflict-of-interest statement 
was burdensome. The SBA has revised this section of the proposed rule 
and the submission of conflict-of-interest policy statements is no 
longer required. However, the WBC must implement conflict-of-interest 
policies consistent with 2 CFR 2701.112.

131.330 Services and Restrictions on Services

    Paragraph (a) of Sec.  131.330 requires WBCs to create and update 
client records to document each time services are provided to a client. 
A comment was received stating that this language focuses on 
documentation of counseling services and does not document the 
provision of training services, despite the fact that 85% of the WBC's 
clients receive training. SBA agrees that this regulatory provision was 
unclear, and the Agency has revised the rule to refer to services 
generally and removed references to any specific category of services.
    Paragraph (b)(5) of the proposed rule prohibited WBCs from 
intervening in loan decisions, servicing loans, making credit 
recommendations, or influencing decisions regarding the award of any 
loans or lines of credit on behalf of the WBC's clients, unless the WBC 
operates as an SBA Microloan Intermediary and is awarding an individual 
or small business concern an SBA microloan. A comment was received that 
recommended the SBA expand the exception, since not all WBCs who are 
lenders are microlenders, if they make small business loans above the 
microloan definition. The commenter further explained that not all WBCs 
who are microlenders are SBA microlenders. The SBA does not agree with 
the commenter to expand the exception related to the WBCs' involvement 
in loan activities. The SBA loan programs include restrictions and 
protections against self-dealing that may not be present in other non-
SBA lending programs. As such, other lending programs may present 
greater risk of conflicts of interest. The language in paragraphs 
(b)(5) and (6) of the rule remains the same to ensure compliance 
regarding WBC loan activities.
    A comment was received regarding the WBC Program Director's 
participation in the loan process. The commenter suggested that the 
policies governing WBCs should exempt Certified Development Financial 
Institutions (CDFIs) in addition to SBA microlenders. The commenter 
also stated that the relationship between the WBC Director and the loan 
client is critical to the growth and success of the client's business 
and that the WBC Director maintains an ongoing relationship with 
clients through site visits and check-ins. This commenter further 
stated that the involvement of the WBC Program Director was critical to 
the loan process, not only for the SBA microlenders but also for the 
CDFIs. The SBA agrees that the role of the WBC Program Director is 
important in supporting access to capital. However, the WBC staff must 
limit their interaction in the loan process to loan packaging 
activities. The language in sections (b)(5) and (b)(6) of this rule 
remains the same to ensure compliance regarding WBC loan activities.
    One commenter suggested that WBC Program Directors be allowed as 
much time as possible for fundraising activities. This rule does not 
propose restrictions on fundraising activities or the time allowed for 
fundraising. However, fundraising activities require prior approval 
from the Assistant Administrator of OWBO and must comply with 2 CFR 
200.442.

[[Page 64710]]

131.340 SpecificWBC Program Responsibilities

    In paragraph (c)(2), the WBC Program Director is required to have 
the necessary authority from the host organization to control all WBC 
budgets and expenditures. A commenter wrote that, while they support 
the requirement, many WBCs do not have this authority from the host 
organization. The commenter suggested that the regulations be revised 
to include guidelines on how the SBA will properly enforce this 
requirement. Because SBA's guidance in this area may develop over time 
based on practical experience, lessons learned, and changing 
circumstances, SBA believes that this guidance could be flexible and 
more effectively provided through annual program announcements rather 
than via regulation. Therefore, as a result of the comment received, 
this provision of the proposed rule has been removed.

131.350 Selection and Retention of the WBC Program Director

    To ensure effective management of the WBC project, paragraph (a)(2) 
outlines the actions a WBC must take if there is a vacancy in the WBC 
Program Director position. Several commenters indicated that the 90-day 
timeframe included in the proposed rule did not allow sufficient time 
to recruit and hire a permanent WBC Program Director. While the SBA 
will uphold the 90-day requirement, the rule's language has been 
revised to allow the approved Interim WBC Program Director to remain in 
the position past 90 days upon obtaining the prior written approval 
from the Assistant Administrator of OWBO or designee.
    Paragraph (a)(3) of the proposed rule requires an Interim Program 
Director to allocate his/her time and effort solely to the WBC Program 
until a permanent WBC Program Director is in position. A commenter 
suggested that an Interim Program Director may have other 
responsibilities within the recipient organization. The commenter also 
stated that while the Interim Program Director should allocate a large 
percentage of his/her time and effort to the WBC, it may not be 
possible or necessary to allocate all of his/her time and effort solely 
to the WBC Program. The SBA agrees with the commenter and has revised 
the language in this final rule.
    Paragraph (b) outlines the SBA's process to ensure that candidates 
for the WBC Program Director position are qualified to manage the day-
to-day operations of the WBC project. A comment was submitted stating 
that the SBA's involvement in the hiring of the WBC Program Director 
should be limited to reviewing legal issues such as conflict of 
interest, disbarment (sic), and payment of taxes. Additionally, the 
commenter stated that since the SBA grant represents partial funding 
for the WBC, not the entire funding, personnel decisions should be left 
to the discretion of the recipient organization. The SBA has determined 
that it is important to review a candidate's resume to ensure that the 
candidate has the core competencies outlined in paragraph (a)(1) of 
this rule. It should be noted that all funds (Federal, non-Federal cash 
match, and program income) included in the WBC budget are considered 
WBC project funds and constitute full funding for the project. Further, 
in adherence to 2 CFR 200.201(b)(5) and 2 CFR 200.308, changes in the 
project leader or key person require the prior written approval of the 
Federal awarding agency. Therefore, provisions of the proposed rule 
remain unchanged.

131.400 Application Procedures

    Several commenters noted that the application process, especially 
for existing WBCs, is onerous and gives no deference to past 
performance. Further, several commenters recommended for the process to 
be streamlined. SBA concurs with those comments and has removed the 
sections related to application procedures (e.g., new applications, 
renewals, and decisions) from the rule. This approach will afford SBA 
the flexibility to innovate and refine the application process based on 
practical experience as well as current Office of Management and Budget 
regulations. Subsequent sections of this rule have been renumbered 
reflecting this deletion.
    Paragraph (b)(1) outlines application selection criteria, including 
the applicant organization's expertise in providing long-term and 
short-term training and counseling programs, and, most specifically, 
experience in providing targeted business development services to a 
distinct population.
    A commenter suggested that the term ``distinct population'' be 
replaced with ``women.'' The commenter further stated that the 
selection criteria should be focused on the applicant's experience and 
commitment to helping women. The SBA agrees with the commenter that the 
focus of the program is women but will maintain the use of the term 
``distinct population'' in this section of the rule, as the definition 
for ``distinct population'' specifically references women. However, the 
language has been revised to reference the definition for ``distinct 
population,'' which is included in the Definitions section of this 
rule.

131.520 Carryover of Federal Funds

    This section limits the option to carry over any unexpended Federal 
funds to the next funding period to WBCs within the first or second 
year of an initial phase project only. Several commenters suggested 
that more flexibility is needed as there may be some circumstances that 
impact a Center's ability to expend funds. WBCs are responsible for 
matching all carryover funds. It has been the SBA's experience that 
when unexpended Federal funds are carried over to the next funding 
period, WBCs often have difficulty raising matching funds for both the 
carryover funds and the option year funds. This creates a situation in 
which the organization will match and spend the carryover funding but 
is then not able to spend the current year funding, thus creating a 
cycle where it must request carryover funding the following year. While 
there is never a penalty for requesting less funding, carryover funding 
represents an underutilization of the Federal funds provided. Also, 
elimination of the carryover does not preclude a Center from requesting 
the maximum amount of available funding the following year.
    The SBA has given the issue of carryover funds further 
consideration and determined that based on the public comments 
received, it would be more efficient to address this issue via policy. 
Therefore, the language in this final rule has been revised 
accordingly.

131.530 Matching Funds

    Paragraph (i)(l) outlines items that cannot be considered as 
sources of matching funds, including uncompensated student labor. A 
commenter requested that the prohibition of student labor for matching 
funds be clarified. The commenter explained that some WBCs, including 
those whose recipient organizations are universities, utilize 
university undergraduate and graduate students for substantive work. 
These students receive school credit for their work instead of monetary 
compensation. Lastly, the commenter suggested that the services 
provided by these students be allowed as matching funds. The SBA 
reviewed the issue and determined that a WBC can claim student 
volunteer time as an in-kind contribution, provided the WBC can 
document adequate valuation for the services. However, if a WBC is 
providing some form of tuition remission to the student volunteers and 
claiming that as a direct cost under its

[[Page 64711]]

grant (or including it in its indirect cost rate), then it cannot also 
claim that time as an in-kind contribution. If the WBC will not claim 
the student's time under the grant in some way, and if the WBC can 
adequately document the value of the services provided, then the WBC 
should be able to claim student volunteer time as an in-kind 
contribution. The SBA removed the language in the proposed rule that 
prohibited the use of student volunteer time as in-kind match. 
Relatedly, a commenter raised the notion of using the in-kind criteria 
established by the IRS and referenced in FASB FAS 116 which describes 
how volunteer service hours can used as match. OWBO disagrees with this 
comment and concludes that 2 CFR 200.96 and 2 CFR 200.306 is sufficient 
in this area and would also cover special circumstances such as 
allowing donated salaries to be used as cash match.
    The SBA also received a comment that described the process used to 
validate match as tedious and burdensome. The commenter suggested that 
the match requirement be decreased significantly or eliminated 
entirely. Based on the public comments received regarding the match 
requirements, the Agency has determined to address this issue via 
policy and has removed paragraphs (d) through (h) of this section from 
the final rule.

131.570 Payments and Reimbursements

    This section detailed the process through which advances and 
reimbursements were disbursed. Several commenters noted that the 
program had accumulated administratively burdensome requirements over 
its existence and where appropriate should be curtailed. Section 
131.570 was removed as its provisions should implemented via policy.

131.600 Reports

    This section lists the types and frequencies of reports required 
for submission. One commenter suggested that, while the SBA/OWBO has 
streamlined many of its reporting requirements, additional improvements 
could be made to eliminate duplication of time and effort. The 
commenter also indicated that the renewal application process could be 
shortened by simply updating the information that was included in the 
initial application. The requirement to submit a renewal application 
every three years is consistent with the Act. While this section of the 
rule does not provide information on the renewal application process 
(See Sec.  131.420), the SBA has and will continue to streamline its 
application processes. For example, OWBO established a 10-page limit 
for the narrative response for renewal applications. Additionally, some 
of the forms previously required (e.g., Cost Sharing (SBA 1224) and 
Certification Regarding Debarment, Suspension and Other Responsibility 
Matters--Primary Covered Transactions (SBA 1623)) are no longer 
required. Several commenters highlighted the need for the Agency to 
revamp its reporting processes. Based on the public comments, the 
Agency undertook a comprehensive review of its reporting requirements. 
Redundant and ineffective processes were identified and eliminated. As 
a result, the Agency identified a need for continuous improvement in 
this area and will remove this section from the final rule. This will 
allow the Agency flexibility to address reporting via policy and to 
modify those requirements as needed in order to make the WBC program 
more effective and efficient and to improve the delivery of its 
services. Subsequent sections of this rule have been renumbered 
accordingly reflecting this deletion.

131.900 Client Privacy

    Several commenters noted that OWBO should provide clarity on the 
means, methods, and purpose of data collected by the program and should 
collect additional performance and demographic data. This desire for 
more data is hindered by Sec.  131.900 and therefore the section has 
been removed from the final rule.

Compliance With Executive Orders 12866, 13563, 12988, 13132, and 13771, 
the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35)

Executive Order 12866

    The Office of Management and Budget has determined that this rule 
constitutes a ``significant regulatory action'' under Executive Order 
12866. However, this is not a major rule under the Congressional Review 
Act, 5 U.S.C. 800.
    The SBA provides a detailed Regulatory Impact Analysis for this 
final rule below.

Regulatory Impact Analysis

1. Is there a need for this regulatory action?
    The WBC Program was established in 1988 as a pilot program and 
became permanent in 2007. Regulations for the WBC Program had not been 
previously promulgated. The SBA had used the program announcement and 
the notice of award to incorporate statutory requirements to implement 
the WBC Program. The annual program announcement and the notice of 
award have become, for all practical purposes, documents that interpret 
the statute. The SBA believes it is past time for regulations outlining 
guidance of the policies and procedures for the WBC Program. This 
regulation incorporates the changes required by 2 CFR part 200. The 
Office of Management and Budget (``OMB'') issued the ``Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards, Final Rule (Uniform Guidance) on December 26, 
2013'', which is referred to as OMB ``Super Circular'' or ``Omni 
Circular'' and is codified at 2 CFR part 200. The Super Circular 
supersedes and streamlines requirements applicable to the 
administration, use and audit of federal grant funds by non-profit 
organizations, state, local and tribal governments, and colleges and 
universities. This regulation also encompasses other program changes 
that have taken place since the WBC Program was initially established. 
Additionally, the AWBC has supported implementing regulations to 
streamline and standardize processes.
2. What are the potential benefits and costs of this regulatory action?
    In fiscal year 2016, the WBC Program received $17 million in 
Federal funds, which it provided to over 100 WBCs. The SBA also 
received $18 million in Federal funds for WBCs in fiscal year 2017. 
Grantees are required to supply a one-to-one match of those funds, 
except in the program's initial two years, during which time the 
required match is two-to-one (Federal to match). The benefit of this 
requirement is that the grantee is as invested as the Federal 
Government in ensuring the success of the WBC Program, while small 
businesses benefit from the no- or low-cost counseling and training.
    The counseling and training services that the WBCs provide help 
educate small businesses to promote growth, expansion, innovation, 
increased productivity and management improvement. In 2017, the WBC 
Program assisted 148,106 clients. These clients benefitted from 
technical advice on topics like how to obtain loans, how to create a 
business plan, how to promote their business, and other areas. 
According to a 2016 WBC survey, clients of the WBC Program created 
17,438 new business starts and received over $582,000,000 in capital 
infusion. Further, the potential benefits of this rule are based on 
both incorporating all of the changes that have occurred with the 
publication of 2 CFR 200 and a

[[Page 64712]]

streamlining of the program announcement and the notice of award. The 
new regulations further clarify the program announcement(s) issued by 
OWBO.
    The costs to the SBA in making this revision are minimal, as most 
of the requirements of this rule are currently implemented and 
followed. The estimated annual cost to the Federal Government for 
oversight of the WBC Program is currently provided for in the existing 
SBA infrastructure.
    The annual cost to the WBCs includes the burden at the time of 
application and the annual financial reporting required of WBCs. Over 
the past five years, there were a total of 133 new applications for the 
WBC Program, averaging 27 applications per year. The SF 424 
(Application for Federal Assistance) on grants.gov does not include a 
field for revenue size; however, given that the majority of entities 
are small, the SBA can presume that the majority of applicant 
organizations are also small. It is projected that a grants writer 
would require approximately 20 hours to complete and submit the 
required application forms through grants.gov. Using the loaded wage 
for an accountant at $44.06 per hour (BLS does not publish a wage for 
grants writers so an accountant wage is used as a proxy; the 2018 
hourly wage rate for an accountant is $33.89 and adding 30% for 
benefits totals $44.06 per hour), this would cost the applicant 
organization approximately $881 or a total cost of $23,787 to all 
applicants of the WBC program annually.
    A participant in the WBC Program submits a Federal Financial Report 
and attachments twice a year, the estimated burden of which is two 
hours twice a year. The annual submission of a work plan requires 
substantially less time than the renewal application, as its purpose is 
to update the initial application to reflect any changes. The estimate 
for completion of the work plan and attachments on an annual basis is 
approximately 14 hours. Using the loaded wage for an accountant at 
$44.06 per hour, the estimated annual cost for a WBC would be $617. 
There are currently 113 entities that participate in the WBC Program 
for a total cost of $69,721.
    Considering the cost to new applicants and the annual preparation 
of a work plan and attachments for participants, the annual cost of 
this rule is $93,508. The annualized cost of this rule in 2016 dollars 
is $89,740.
    Comments were submitted regarding the costs considered in this 
rule. The commenters indicated that the section of the proposed rule 
describing the regulatory flexibility analysis minimizes the scope of 
WBC reporting requirements and grossly underestimates the cost and 
amount of time required. One commenter also suggested that, in addition 
to the cost and time required to submit an application, WBCs are 
required to submit a work plan each year. The commenter also identified 
the multiple reporting requirements (e.g., EDMIS quarterly reports, 
semi-annual or quarterly narrative and financial reports) as burdensome 
to the WBCs. While the commenter did not provide an estimate of time or 
cost for the tasks referenced in this section, the proposed rule 
estimated a burden to complete the required forms and reports annually 
at 14 hours of work. The estimate of 14 hours refers only to the time 
it would take on average to complete WBC application documents. Also, 
contrary to the statement provided by the commenter, WBCs are not 
required to submit an application and a work plan each year. Centers 
are required to submit either an application (if in a renewal phase) or 
a work plan (if in an option year) annually. Furthermore, there are no 
additional costs for the submission of budgetary and performance 
reports as the cost for these activities is already included as part of 
the funds provided to the WBC to manage the program. This rule serves 
to codify existing requirements. Further, the work plan submissions 
require narratives that do not exceed five pages. The SBA will, 
however, continue to explore ways to further reduce and simplify 
reporting requirements.
3. What alternatives have been considered?
    After publishing the ANPRM on April 22, 2015, the NPRM on November 
22, 2016, and reviewing the comments submitted, the SBA believes that 
publishing regulations for the WBC Program would be the best way to 
create long-lasting consistency in the implementation of the WBC 
Program. The alternative would be to not publish regulations and 
instead continue to rely on grant documents to implement the WBC 
Program. However, 15 U.S.C. 656(n)(3) requires the SBA to issue 
regulations establishing standards for financial audit disclosures. 
Because the SBA is required to issue regulations for part of the WBC 
Program, the Agency believes it would be more beneficial to grantees 
and the public to issue regulations establishing one set of rules for 
the program as a whole rather than relying upon a piecemeal approach 
utilizing a mix of regulations and grant documents to govern the 
program.

Executive Order 13563

    Prior to developing this final rule, the SBA issued an ANPRM on 
April 22, 2015, to solicit comments. Additionally, public comments were 
solicited as part of the NPRM issued on November 22, 2016. Further, the 
OWBO staff attended the annual WBC training conferences to discuss 
policy, procedures, and the proposed regulations.
    Comments for both the ANPRM and NPRM can be found at: https://www.regulations.gov/docketBrowser?rpp=50&so=DESC&sb=postedDate&po=0&dct=PS&D=SBA-2015-0007.
    The SBA did not receive any comments from other Federal Agencies.

Executive Order 12988

    For the purposes of Executive Order 12988, Civil Justice Reform, 
the SBA has determined that this final rule is drafted, to the extent 
practicable, in accordance with the standards set forth in Sec. 3(a) 
and 3(b)(2), to minimize litigation, eliminate ambiguity, and reduce 
burden. The regulations provide for WBC Program participants' rights of 
appeal in the event they are aggrieved by an Agency decision, thereby 
limiting the possibility of litigation. This final rule does not have 
retroactive or pre-emptive effect.

Executive Order 13132

    For the purposes of Executive Order 13132, the SBA has determined 
that this rule has no federalism implications warranting preparation of 
a federalism assessment.

Executive Order 13771

    This final rule is an Executive Order 13771 regulatory action with 
an annualized cost in 2016 dollars of $89,740 and a net present value 
of $1,281,998. There are several unquantifiable benefits of the WBC 
program for small businesses including new business starts and capital 
infusion. Details on the estimated costs and a discussion of the 
benefits of this final rule can be found in the rule's regulatory 
impact analysis.

Compliance With the Regulatory Flexibility Act, 5 U.S.C. 601-612

    When an agency issues a rule, the Regulatory Flexibility Act (RFA) 
requires the agency to prepare a final regulatory flexibility analysis 
(FRFA), which describes whether the rule will have a significant 
economic impact on a substantial number of small entities. However, 
Section 605 of the RFA allows an agency to certify a rule, in lieu of

[[Page 64713]]

preparing a FRFA, if the rulemaking is not expected to have a 
significant economic impact on a substantial number of small entities.
    The counseling and training services that the WBCs provide help 
educate small businesses to promote growth, expansion, innovation, 
increased productivity and management improvement. In 2017, the WBC 
Program assisted 148,106 clients. These clients benefitted from 
technical advice on topics like how to obtain loans, how to create a 
business plan, how to promote their business, and other areas. 
According to a 2016 WBC survey, clients of the WBC Program created 
17,438 new business starts and received over $582,000,000 in capital 
infusion.
    Further, the potential benefits of this rule are based on both 
incorporating all of the changes that have occurred with the 
publication of 2 CFR part 200 and a streamlining of the program 
announcement and the notice of award. The new regulations further 
clarify the program announcement(s) issued by OWBO.
    This rule covers both the application process to become funded as a 
WBC and the on-going operations for currently funded WBCs. As these 
populations are different, the analysis is included for each.
    This final rule could theoretically affect all nonprofit entities, 
as the statute requires that an entity be organized as a nonprofit in 
order to participate. According to the IRS, for tax year 2010 there 
were over 269,000 entities that filed returns as a 501(c)(3). The North 
American Industry Classification System (NAICS) codes that are most 
relevant to participation in the WBC program are 541611, Administrative 
Management and General Management Consulting Services and 541990, All 
Other Professional, Scientific and Technical Services. The size 
standard for both of these NAICs codes is $15 million in average annual 
receipts. According to the IRS, 92 percent of all 501(c)(3) filers had 
total revenue greater than $10 million. The majority of the 501(c) 
entities would fall under the threshold as a small entity. In addition, 
as the application process is voluntary and does not require a 
nonprofit entity to apply, the vast majority of nonprofits would not be 
affected. Over the past five years, there were a total of 133 new 
applications for the WBC Program, averaging between 25 and 35 
applications per year. The SF 424 (Application for Federal Assistance) 
on grants.gov does not include a field for revenue size; however, given 
that the majority of entities are small, the SBA can presume that the 
majority of applicant organizations are also small. It is projected 
that a grants writer would require approximately 20 hours to complete 
and submit the required application forms through grants.gov. Using the 
loaded wage for an accountant at $44.06 per hour, this would cost the 
applicant organization approximately $881. These estimates are based on 
burden statements associated with the grants.gov application forms and 
anecdotal information supplied by applicant organizations to the WBC 
Program. Therefore, the SBA has determined that the application section 
of the final rule would not have a significant impact on a substantial 
number of small entities.
    There are currently 113 entities that participate in the WBC 
Program, all of which are small entities. A participant in the WBC 
Program submits a Federal Financial Report and attachments twice a 
year, the estimated burden of which is two hours twice a year. The 
annual submission of a work plan requires substantially less time than 
the renewal application, as its purpose is to update the initial 
application to reflect any changes. The estimate for completion of the 
work plan and attachments on an annual basis is approximately 14 hours. 
Using the loaded wage for an accountant at $44.06 per hour, the 
estimated annual cost would be $617. Therefore, the SBA has determined 
that the financial reporting section of the final rule would not have a 
significant impact on a substantial number of small entities.
    Comments were submitted regarding the SBA's compliance with the 
Regulatory Flexibility Act (RFA). The commenters indicated that the 
section of the proposed rule describing the regulatory flexibility 
analysis minimizes the scope of WBC reporting requirements and grossly 
underestimates the cost and amount of time required. One commenter also 
suggested that, in addition to the cost and time required to submit an 
application, WBCs are required to submit a work plan each year. The 
commenter also identified the multiple reporting requirements (e.g., 
EDMIS quarterly reports, semi-annual or quarterly narrative and 
financial reports) as burdensome to the WBCs. While the commenter did 
not provide an estimate of time or cost for the tasks referenced in 
this section, the proposed rule estimated a burden to complete the 
required forms and reports annually at 14 hours of work. The estimate 
of 14 hours refers only to the time it would take on average to 
complete WBC application documents. Also, contrary to the statement 
provided by the commenter, WBCs are not required to submit an 
application and a work plan each year. Centers are required to submit 
either an application (if in a renewal phase) or a work plan (if in an 
option year) annually. Furthermore, there are no additional costs for 
the submission of budgetary and performance reports as the cost for 
these activities is already included as part of the funds provided to 
the WBC to manage the program. This rule serves to codify existing 
requirements. Further, the work plan submissions require narratives 
that do not exceed five pages. The SBA will, however, continue to 
explore ways to further reduce and simplify reporting requirements.
    Accordingly, the Administrator of the SBA hereby certifies that 
this rule will not have a significant economic impact on a substantial 
number of small entities.

Paperwork Reduction Act, 44 U.S.C., Ch. 35

    The SBA has determined that this final rule will not impose 
additional reporting and recordkeeping requirements under the Paperwork 
Reduction Act (PRA), 44 U.S.C. Chapter 35. Currently, the following 
eight PRA submissions are associated specifically with the WBC Program: 
(1) OMB control number 3245-0140, Notice of Award and Cooperative 
Agreement; (2) OMB control number 3245-0169, Federal Cash Transaction 
Report, Financial Status Report, Program Income Report, and Narrative 
Program Report; (3) OMB control number 3245-0324, EDMIS data collection 
(Forms 641 and 888); (4) OMB control number 4040-0004, SF 424, 
Application for Financial Assistance; (5) OMB control number 4040-0006, 
SF 424A, Budget Summary for Non-Construction Projects; (6) OMB control 
number 4040-0007, SF 424B, Assurances for Non-Construction Projects; 
(7) OMB control number 4040-0013, SF-LLL, Disclosure of Lobbying 
Activities; and (8) 4040-0014SF-425, Federal Financial Report. These 
reports will not change and no new reports are required in this final 
rule.

List of Subjects in 13 CFR Part 131

    Entrepreneurship, Grant programs--business, Minority businesses--
women, Reporting and recordkeeping requirements, Small businesses.

0
For the reasons stated in the preamble, SBA adds 13 CFR part 131 to 
read as follows:

PART 131--WOMEN'S BUSINESS CENTER PROGRAM

Sec.

[[Page 64714]]

131.100 Introduction.
131.110 Definitions.
131.200 Eligible entities.
131.300 Women's Business Centers (WBCs).
131.310 Operating requirements.
131.320 Area of service.
131.330 WBC services and restrictions on service.
131.340 Specific WBC program responsibilities.
131.350 Selection and retention of the WBC Program Director.
131.400 Grant administration and cost principles.
131.410 Maximum grant.
131.420 Carryover of Federal funds.
131.430 Matching funds.
131.440 Program income and fees.
131.450 Budget justification.
131.460 Restricted and prohibited costs.
131.470 Payments and reimbursements.
131.500 Oversight of the WBC program.
131.510 SBA review authority.
131.520 Audits, examinations, and investigations.
131.600 Cooperative agreement and contracts.
131.610 Other Federal grants.
131.620 Revisions and amendments to cooperative agreements.
131.630 Suspension, termination, and non-renewal.
131.640 Dispute procedures.
131.650 Closeout procedures.

    Authority: 15 U.S.C. 656.


Sec.  131.100  Introduction.

    (a) The Women's Business Centers (WBC) program has grown and 
evolved to provide a variety of services to many entrepreneurs ranging 
from those interested in starting businesses to those looking to expand 
an existing business.
    (b) The U.S. Small Business Administration (SBA), through the 
Office of Women's Business Ownership (OWBO), is responsible for the 
general management and oversight of the WBC program. The SBA issues an 
annual cooperative agreement to recipient organizations for the 
delivery of assistance to individuals and small businesses. The WBC 
program acts as a catalyst for providing in-depth, substantive, 
outcome-oriented business services, including training, counseling, and 
technical assistance, to women entrepreneurs and both nascent and 
established businesses, a representative number of whom are socially 
and economically disadvantaged. By providing training and counseling on 
a wide variety of topics through WBCs, the SBA meets the needs of the 
individual client in the local marketplace.
    (c) Unless otherwise indicated, all deadlines referred to in this 
Part are measured in terms of calendar days.


Sec.  131.110  Definitions.

    Advisory board. A group established to confer with and provide 
recommendations to the WBC Program Director on matters pertaining to 
the operation of the WBC. The advisory board will also act as a 
catalyst to raise funds for the WBC.
    Applicant organization. An entity that applies for Federal 
financial assistance to establish, administer, and operate a WBC under 
a new or renewed cooperative agreement.
    Application (also known as the proposal). The written submission by 
a new applicant organization or an existing recipient organization 
describing its projected WBC activities for the upcoming budget period 
and requesting SBA funding for use in its operations.
    Annual work plan. See option year work plan and budget.
    Area of service. The State or U.S. Territory, or a regional portion 
of a State or U.S. Territory, in which the SBA approves a WBC to 
provide services.
    Assistant Administrator of the Office of Women's Business 
Ownership. (AA/OWBO). The AA/OWBO is statutorily responsible for 
management of the WBC program. The AA/OWBO may elect to designate staff 
to complete tasks assigned to the AA/OWBO position. When AA/OWBO is 
referenced, it includes the designee.
    Associate Administrator for the Office of Entrepreneurial 
Development. (AA/OED). The AA/OED is responsible for enhancing the 
nationwide network of offices, business executives, and mentors that 
support current and aspiring business owners as they start, grow, and 
expand in today's global market. This nationwide network includes the 
following Resource Partners: Women's Business Centers (WBCs), Small 
Business Development Centers (SBDCs), and SCORE.
    Authorized official. A person who has the legal authority to sign 
for and/or speak on behalf of an organization.
    Budget period. The period of performance in which expenditures and 
obligations are incurred by a WBC, consistent with 2 CFR 200.77.
    Carryover funds (carryover). Unobligated Federal funds reallocated 
from one budget period to the next through an amendment to the current 
year's cooperative agreement.
    Cash match. Non-Federal funds specifically budgeted and expended by 
the recipient organization for the operation of a WBC project. Cash 
match must be in the form of cash and/or program income.
    Client. An entrepreneur or existing small business seeking services 
provided by a WBC.
    Client record. A record that provides individual client contact 
information, client/business demographics, and documentation of the 
services provided. Additionally, the record provides aggregate data 
about a training event, including topic, date, attendance, format, and 
evaluation.
    Cognizant agency for audit. The Federal agency designated to carry 
out the responsibilities as described in 2 CFR 200.513(a).
    Cognizant agency for indirect costs. The Federal agency responsible 
for reviewing, negotiating, and approving cost allocation plans or 
indirect cost proposals developed under 2 CFR 200.19.
    Conditional approval. An approval granted when an application has 
been determined to meet eligibility requirements and has been 
recommended for funding, but requiring special conditions, such as 
submitting certifications, assurances, or other documentation.
    Cooperative agreement (also known as notice of award). A legal 
instrument of financial assistance between the SBA and a recipient 
organization that is consistent with 31 U.S.C. 6302-6305 and provides 
for substantial involvement between the SBA and the recipient 
organization in carrying out the proposed activities.
    Counseling. Services provided to an individual and/or small 
business owner that are substantive in nature, require assistance from 
a resource partner or SBA district office personnel regarding the 
formation, management, financing, and/or operation of a small business 
enterprise, and are specific to the needs of the business or 
individual.
    Direct costs. Costs as defined in 2 CFR 200.413.
    Dispute. A programmatic or financial disagreement that the 
recipient organization requests be handled according to the dispute 
resolution procedures under Sec.  131.840.
    Distinct population. A specific targeted group. For the purpose of 
the WBC program, the targeted group is women entrepreneurs.
    District office. The local SBA office charged, in collaboration 
with the WBCs, with meeting the needs of women entrepreneurs in the 
community.
    Financial examiner. An SBA employee, or designee, charged with 
conducting financial examinations.
    Full-time. An employee all of whose time and effort (minimum of 30 
hours per week, as defined by the Internal Revenue Service, Sec.  
4980H(c)(4)) is allocated to the WBC project. An employee who is full-
time under the WBC should not engage in activities that do not pertain 
to the WBC project.

[[Page 64715]]

    Grants and Cooperative Agreement Appeals Committee. The SBA 
committee, appointed by the SBA Administrator, to resolve appeals 
arising from disputes between a recipient organization and the SBA.
    Grants Management Officer. An SBA employee who meets the Office of 
Management and Budget standards and certifications to obligate Federal 
funds by signing a notice of award.
    Grants management specialist. An SBA employee responsible for the 
budgetary review and financial oversight of WBC agreements.
    Indirect costs. Costs as defined in 2 CFR 200.56.
    In-kind contributions (third party). Costs incurred as described in 
2 CFR 200.96.
    Interim Program Director. An individual temporarily assigned by the 
recipient organization to fulfill the responsibilities of a vacant WBC 
Program Director position for no more than 90 days.
    Key personnel/key employee. For the purposes of the WBC program, 
the WBC Program Director is identified as the key employee.
    Loan packaging. Includes any activity done in support of a client 
or in preparation of the client's credit application to a lender for a 
loan, line of credit, or other financial instrument.
    Matching funds. For all Federal awards, any shared costs or 
matching funds and all contributions, as defined in 2 CFR 200.306.
    Microloan. A loan as specified in 13 CFR 120.701.
    Non-Federal entity. An organization as defined in 2 CFR 200.69.
    Nonprofit organization. Any corporation, trust, association, 
cooperative, or other organization as defined in 2 CFR 200.70.
    Notice of award (NOA). See cooperative agreement.
    Office of Women's Business Ownership Program Analyst. An SBA 
employee designated by the AA/OWBO who oversees and monitors WBC 
operations.
    Option year. Additional 12-month budget period awarded after the 
first budget year (base year) as determined by the period of 
performance identified in the cooperative agreement.
    Option year work plan and budget. The written submission by an 
existing WBC applying for an additional year of grant funding. This 
submission is required to ensure the recipient organization's continued 
alignment with the WBC program and to update its description of 
projected WBC activities for the upcoming option year budget period.
    Overmatch. Any non-Federal contribution applied to the WBC award in 
excess of the minimum amount of match required. See Sec.  131.530 for 
specific details on match requirements.
    Period of performance. The period of time as specified in 2 CFR 
200.77.
    Principal investigator. The individual primarily responsible for 
achieving the technical success of a project, while also complying with 
the financial and administrative policies and regulations associated 
with the grant.
    Prior approval. The written concurrence from the appropriate Office 
of Women's Business Ownership official for a proposed action or 
amendment to a WBC cooperative agreement. Specific guidelines governing 
the prior approval process, including the documentation required, are 
outlined in the cooperative agreement.
    Program announcement. The SBA's annual publication of requirements, 
to which an applicant organization must respond in its five-year 
initial or three-year renewal application.
    Program income. Gross income earned by a non-Federal entity, as 
described in 2 CFR 200.80.
    Project funds. All funds authorized under the cooperative agreement 
including Federal funds, non-Federal cash, in-kind contributions (third 
party), and program income, as well as any Federal funds and/or non-
Federal match authorized or reported as carryover funds.
    Project period. The period of time specified in the notice of 
award, which identifies the start and end date of a recipient 
organization's five-year or three-year project.
    Recipient organization. An applicant organization selected to 
receive Federal funding to deliver WBC services under a cooperative 
agreement. By statute, only private, nonprofit organizations certified 
under Sec.  501(c) of the Internal Revenue Code of 1986 can be 
recipient organizations.
    Socially and economically disadvantaged women. As defined by 13 CFR 
124.103 and 124.104, respectively.
    Specialized services. WBC services other than basic counseling and 
training. The services can include, but are not limited to, assistance 
with disaster readiness; assistance to home-based businesses; 
assistance to agribusinesses; and assistance to construction, 
childcare, elder care, manufacturing or procurement businesses.
    State or U.S. Territory. For the purpose of these regulations, the 
50 United States, and the U.S. Territories of Guam, the U.S. Virgin 
Islands, American Samoa, the Northern Mariana Islands, the Commonwealth 
of Puerto Rico and the District of Columbia.
    Training. A qualified activity or event, presented or cosponsored 
by a WBC, that delivers a structured program of knowledge, information, 
or experience on an entrepreneurial or business-related subject.
    WBC Program Director. An individual whose time and effort is 
allocated solely to the WBC program. The WBC Program Director position 
is the only position that requires approval from the Office of Women's 
Business Ownership prior to hiring.
    Women's Business Centers (WBCs). WBCs represent a national network 
of educational centers throughout the United States and its territories 
that assist women in starting and growing small businesses.
    Women-owned businesses. A business concern that is not less than 51 
percent owned by one or more women; additionally, its management and 
daily operations are controlled by one or more women.


Sec.  131.200  Eligible entities.

    (a) Eligible organizations. By statute, only a nonprofit 
organization with active 501(c) certification from the United States 
Department of the Treasury/Internal Revenue Service is eligible to 
apply for Federal funding to operate a WBC project.
    (b) Ineligible organizations. Organizations ineligible to receive 
Federal funds to manage a WBC project include, but are not limited to, 
the following:
    (1) Any organization that owes an outstanding and unresolved 
financial obligation to the Federal Government;
    (2) Any organization, employee, or principal investigator of an 
organization that is currently suspended, debarred, or otherwise 
prohibited from receiving awards, contracts, or grants from the Federal 
Government;
    (3) Any organization with an outstanding and unresolved material 
deficiency reported under the requirements of the Single Audit Act 
within the past three years, consistent with 2 CFR 200.501;
    (4) Any organization that has had a grant or cooperative agreement 
involuntarily terminated or non-renewed by the SBA for cause/material 
non-compliance;
    (5) Any organization that has filed for bankruptcy within the past 
five years;
    (6) Any organization that does not propose to hire and employ a 
full-time WBC Program Director whose time is solely dedicated to 
managing the day-to-day operation of the WBC and staff;
    (7) Any organization that proposes to serve as a pass-through and 
permit

[[Page 64716]]

another organization to manage the day-to-day operations of the 
project;
    (8) Any organization that had an officer or agent acting on its 
behalf convicted of a felony criminal violation under any Federal law 
within the preceding 24 months; or
    (9) Any other organization the SBA reasonably determines to be 
ineligible to receive Federal funds to manage a WBC project.


Sec.  131.300  Women's Business Centers (WBCs).

    Women's Business Centers (WBCs) are established under the statutory 
authority of the SBA through cooperative agreements with nonprofit 
recipient organizations. WBC program announcements and requests for 
work plans and budgets establish the operating and performance 
parameters, initiatives, and strategies for each project period.
    (a) Program announcements. (1) The SBA will issue a program 
announcement each fiscal year to fund those recipient organizations 
already operating successful WBC projects. The program announcement 
will detail the goals, objectives, and other terms and conditions for 
renewable projects entering a three-year phase of the program. The 
issuance of the program announcement is contingent upon SBA's approved 
budget and funding availability.
    (2) At any time during the current fiscal year, and based on the 
availability of funds, the SBA may, at its discretion, also issue a 
program announcement for the upcoming fiscal year, detailing the goals, 
objectives, and other terms and conditions for new WBC projects. New 
WBC projects may be awarded a maximum of one base year and 4 additional 
option years of funding.
    (3) The SBA reserves the right to cancel a program announcement, in 
whole or in part, at the agency's discretion.
    (b) Option year work plans and budgets. (1) Each year, the SBA will 
issue instructions for the submission of the option year work plan and 
budget for those WBCs currently in (and wishing to continue in) the 
SBA's WBC program that will have successfully completed year one, two, 
three or four of an initial project, or year one or two of a renewal 
project. In order to be considered for renewal, submissions for option 
year work plans and budget must be received by OWBO by the deadline 
specified in the annual instructions for the submission of each work 
plan.
    (2) The SBA reserves the right to revise the submission 
requirements, in whole or in part, at the Agency's discretion.
    (3) Awarding option year funding is at the sole discretion of the 
SBA and is subject to continuing program authority, the availability of 
funds, and satisfactory performance by the recipient organization.
    (c) Cooperative agreement. (1) The terms and conditions must 
include, but are not limited to, Office of Management and Budget 
guidelines for grant administration and cost principles, regulations 
and laws governing the WBC project and federally sponsored programs, 
and current year guidelines from the program announcement.
    (2) The SBA will issue a notice of award annually to each eligible 
WBC participant, based on the acceptance of the organization's annual 
proposal or work plan.
    (d) Negotiating the cooperative agreement. The WBC's participation 
in negotiations should include, but is not limited to, the following:
    (1) Proposing services and an appropriate delivery structure to 
meet the needs of the local small business community, specifically 
targeting women, including a representative number of women who are 
socially and economically disadvantaged; and
    (2) Proposing adequate technical and managerial resources for the 
WBC to achieve its performance goals and program objectives, as set 
forth in the cooperative agreement.
    (e) Women's Business Center (WBC) funds. Budgeted WBC funds 
(including match) must be used solely for the WBC project.


Sec.  131.310  Operating requirements.

    (a) The recipient organization has contractual responsibility for 
the duties of the WBC project, which must be a separate and distinct 
entity within the recipient organization, having its own budget, staff, 
and full-time WBC Program Director.
    (b) The WBC must establish an advisory board that is representative 
of the community it will serve and that will confer with and provide 
recommendations to the WBC Program Director on matters pertaining to 
the operation of the WBC. The advisory board will also assist the WBC 
in meeting the match requirements of the program.
    (c) An employee who is full-time under the WBC program should not 
engage in activities that do not pertain to the WBC project. The WBC is 
not prohibited from operating other Federal programs that focus on 
women or other underserved small business concerns if doing so does not 
hinder its ability to deliver the services of the WBC program.
    (d) The WBC must have facilities and administrative infrastructure 
sufficient for its operations, including program development, program 
management, financial management, reports management, promotion and 
public relations, program assessment, program evaluation, and internal 
quality control. The WBC must document annual financial and 
programmatic reviews and evaluations of its center(s) consistent with 
Agency policy.
    (e) Any new applicant that is accepted into the WBC program after 
January 24, 2020 must include as part of its official name the specific 
identification ``Women's Business Center.'' For the purpose of the WBC 
program, the official name used is the name assigned to the WBC by the 
host organization. The legal name of the organization is the name of 
the host organization and is the name usually listed on line 7a of the 
Application for Federal Assistance, SF 424. Any WBC that is applying 
for a renewal grant after January 24, 2020 must also include the 
specific identification ``Women's Business Center'' as part of its 
official name. Until such time that any existing WBC has to submit a 
renewal application to the SBA for funding, and does not currently 
include ``Women's Business Center'' in its official name, it must 
include the following language prominently on its website and 
promotional documents: ``The Women's Business Center is funded in part 
by the U.S. Small Business Administration.'' However, at the time of 
submission of its renewal application, it must include WBC as part of 
its official name.
    (f) The WBC must maintain adequate staff to operate the WBC, 
including the WBC Program Director and at least one other person, 
preferably a business counselor.
    (g) The WBC must use an enforceable conflict-of-interest policy 
that is consistent with the requirements of 2 CFR 2701.112.
    (h) The WBC must be open to the public a minimum of 40 hours a week 
(which must include evening and weekend hours) and meet other 
requirements as specified in the program announcement. Emergency 
closures must be reported to the district office and Office of Women's 
Business Ownership Program Analyst as soon as is feasible.
    (i) The WBC must comply with 13 CFR parts 112, 113, 117, and 136 
requiring that no person be excluded from participation in, be denied 
the benefits of, or otherwise be subjected to discrimination under any 
program or

[[Page 64717]]

activity conducted by the WBC. However, all WBC marketing programs and 
services must target women.
    (j) The WBC project must not be listed in the organizational 
structure under any other Federal grant.


Sec.  131.320  Area of service.

    (a) Cooperative agreement. The recipient organization will identify 
in its application the geographic area for which it plans to provide 
assistance and should strive to not duplicate services to the same 
client population as an existing WBC. Once approved, the AA/OWBO will 
codify, in writing, the geographic area of service of each recipient 
organization. More than one recipient organization may be located in a 
State, Territory, or other geographic area. Once the SBA has entered 
into a cooperative agreement with a recipient organization, the area of 
service cannot be changed without prior approval by the AA/OWBO. A 
subsequent decision by the recipient organization to change the area of 
service in the cooperative agreement without prior approval by OWBO may 
constitute grounds for suspension, non-renewal, and/or termination as 
set forth in Sec.  131.830.
    (b) Location of WBC projects. An applicant organization responding 
to a program announcement and within proximity of an existing WBC 
project shall provide in its written narrative a justification for 
placing another WBC in the proximity of an existing WBC, including the 
number of socially and economically disadvantaged persons within the 
proposed service area, relevant census data, and information on 
population density. The information provided must clearly justify the 
necessity for an additional WBC project within the same area of service 
as the existing WBC project. The SBA will take the narrative and any 
supporting documentation into consideration when reviewing, ranking, 
and scoring the applicant organization's proposal.
    (c) Resources. An applicant organization's plan for the commitment 
and allocation of resources, including the site from which the WBC 
plans to provide services, will be reviewed as part of the application 
review process for each budget period to ensure adequate coverage in 
the area of service.


Sec.  131.330  WBC services and restrictions on services.

    (a) Services. The WBC must provide prospective entrepreneurs and 
existing small businesses, known as clients, with training, counseling, 
and specialized services. The services provided must relate to the 
formation, financing, management, and operation of small business 
enterprises. The WBC must create and update client records to document 
each time that services are provided to a client. The WBC must provide 
services that meet local needs as determined through periodic needs 
assessments; additionally, services must be adjusted over time to meet 
changing small business needs. Any changes to the scope of services 
must be in accordance with Sec.  131.820.
    (b) Access to capital. (1) WBCs must provide training and 
counseling services that enhance a small business concern's ability to 
access capital, such as business plan development, financial statement 
preparation/analysis, and cash flow preparation/analysis.
    (2) WBCs may provide loan packaging services and other related 
services to WBC clients and may charge a fee for such assistance (see 
Sec.  131.540). Any fees so generated will constitute program income. 
The WBC must ensure that these services are not credited to both the 
WBC program and any other Federally-funded program, thereby double 
counting the efforts.
    (3) WBCs shall prepare their clients to represent themselves to 
lending institutions. WBC personnel may attend meetings with lenders to 
assist clients in preparing financial packages; however, neither WBC 
staff nor their agents may take a direct or indirect role in 
representing clients in any loan negotiations.
    (4) WBCs shall disclose to their clients that financial counseling 
assistance, including loan packaging, will not guarantee receipt or 
imply approval of a loan or loan guarantee.
    (5) WBCs must not intervene in loan decisions, service loans, make 
credit recommendations, or otherwise influence decisions regarding the 
award of any loans or lines of credit on behalf of the WBC's clients, 
unless the WBC operates as an SBA Microloan Intermediary and is 
awarding an individual or small business concern an SBA microloan.
    (6) When the recipient organization operates both a WBC and a 
separate loan program, the WBC must disclose to the client other 
financing options that may be available besides the one offered by the 
recipient organization to ensure that the client has the opportunity to 
seek financing outside of the recipient organization. If the recipient 
organization operates an SBA loan program, it must comply with Sec.  
120.140 of this chapter.
    (7) WBCs must disclose to loan packaging clients any financial 
relationships between the WBC and a lender or the sale of their credit 
products.
    (8) With respect to loan programs, allowable activities include the 
following: assisting clients in formulating a business plan, preparing 
financial statements, completing forms that are part of a loan 
application, and accompanying an applicant appearing before the SBA or 
other lenders. See paragraph (b)(5) of this section for further 
limitations.
    (9) WBCs are to collaborate with state, local, and Federal 
government agencies to identify other resources that may be available 
to its clients and to facilitate interactions deriving from these 
collaborations.
    (c) Special emphasis initiatives. In addition to requiring WBCs to 
assist women entrepreneurs, including a representative number of women 
who are socially and economically disadvantaged, the SBA may identify 
and include in the cooperative agreement other portions of the general 
population that WBCs must target for assistance.


Sec.  131.340  Specific WBC program responsibilities.

    (a) Policy development. The AA/OWBO will establish and modify WBC 
program policies and procedures to improve the delivery of services by 
WBCs to the small business community and to enhance compliance with 
applicable laws, regulations, Office of Management and Budget 
guidelines, and Executive Orders.
    (b) Program administration. The AA/OWBO will recommend the annual 
program budget, establish appropriate funding levels in compliance with 
the statute, and review the annual budgets submitted by each 
organization.
    (c) Responsibilities of WBC Program Director. (1) The WBC Program 
Director must be a full-time employee of the recipient organization and 
not a contractor, consultant, or company. The WBC Program Director will 
direct and monitor all program activities and all financial affairs of 
the WBC to ensure effective delivery of services to the small business 
community and compliance with applicable laws, regulations, Office of 
Management and Budget circulars, Executive Orders, and the terms and 
conditions of the cooperative agreement.
    (2) The WBC Program Director may not manage any other programs 
under the recipient organization.
    (3) The WBC Program Director will serve as the SBA's principal 
contact for all matters involving the WBC.
    (d) Principal investigator. The principal investigator is primarily 
responsible for achieving the technical success of the project while 
also

[[Page 64718]]

complying with the financial and administrative policies and 
regulations associated with the grant. Although principal investigators 
may have administrative staff to assist them with the management of the 
project, the ultimate responsibility for the management of the project 
rests with the principal investigator. The principal investigator of a 
recipient organization could also fill the role of Executive Director, 
WBC Program Director, President/CEO, or another key position.


Sec.  131.350  Selection and retention of the WBC Program Director.

    (a) General. (1) The WBC Program Director selected to manage the 
daily operations of the WBC shall possess core competencies in the 
areas of business and/or entrepreneurship training, project and/or 
small business management, effective communication, and collaboration.
    (2)(i) The recipient organization must provide written notification 
to the AA/OWBO or his/her designee within five business days following 
a vacancy in a WBC Program Director position. The notification must 
include the date the former WBC Program Director vacated the position, 
as well as the name, resume, salary, date of appointment, and contact 
information for the person assigned the role of the WBC Interim Program 
Director. If the WBC Program Director temporarily vacates the position, 
the notification must include the projected date of return. The 
placement of an Interim Program Director does not require the 
submission of a key personnel change request; however, the information 
outlined in this section must be submitted to the OWBO Program Analyst, 
via email, consistent with the required timeframe.
    (ii) The Interim Director may not remain in the position more than 
90 calendar days from the date of the vacancy without written approval 
from the AA/OWBO. The recipient organization must document the 
appointment of the Interim Program Director in accordance with its 
policies and procedures and the cooperative agreement.
    (3) An Interim Program Director must allocate a sufficient amount 
of his/her time and effort to management of the daily operations of the 
WBC program until a permanent WBC Program Director is in position.
    (4) Within 30 days from the date of the vacancy, the recipient 
organization must provide OWBO with its plan of how it will ensure that 
a full-time WBC Program Director is hired within the 90 day timeframe 
allocated.
    (5) If it is anticipated that the Interim Program Director will be 
in the position for more than 90 days, prior to the end of the 90 day 
period, the recipient organization must submit a written request to the 
OWBO Program Analyst for approval of an extension. OWBO is not required 
to reimburse personnel costs for any WBC Interim Program Director that 
remains in the position for more than 90 days without prior written 
approval.
    (b) SBA involvement. The AA/OWBO will review the selection of the 
new WBC Program Director submitted by the recipient organization to 
ensure the candidate selected is qualified and their hiring would not 
present a conflict of interest or similar concern that would negatively 
affect the WBC's ability to carry out project and program objectives.
    (c) Recruitment activity and associated costs. Allocable personnel 
compensation and benefits costs are as provided in 2 CFR 200.463.


Sec.  131.400  Grant administration and cost principles.

    Upon approval of a WBC's initial or renewal application, the SBA 
will enter into a cooperative agreement with the recipient 
organization, setting forth the programmatic and fiscal 
responsibilities of the recipient organization and the SBA, the scope 
of the project to be funded, and the budget for the period covered by 
the cooperative agreement. The WBC program adopts and implements Office 
of Management and Budget regulations as published and amended in 2 CFR 
part 200. Additional qualifications or clarifications may be 
promulgated through the program announcement, a revised notice of 
award, or the regulatory process.


Sec.  131.410  Maximum grant.

    No individual WBC project will receive a WBC grant in any fiscal 
year under a cooperative agreement in excess of the amount authorized 
by statute. While an individual WBC project cannot exceed the statutory 
limit, a recipient organization is not limited from establishing 
multiple WBC projects as long as the projects are distinct from each 
other and are serving distinct populations that would not otherwise be 
served.


Sec.  131.420  Carryover of Federal funds.

    The AA/OWBO will approve requests for carryover on a case-by-case 
basis. In doing so, the AA/OWBO will take into account the amount of 
carryover requested, whether the WBC currently has any funds carried 
over from prior years, the WBC's record of utilizing all of its awarded 
funding or providing the required level of match, and any factors 
beyond the WBC's control that impeded its ability to conduct project 
activities as originally proposed.


Sec.  131.430  Matching funds.

    (a) The recipient organization must provide matching funds equal to 
one-half of the Federal funding received for the first two years of its 
initial award (a statutory match ratio of 2:1 Federal to non-Federal 
funding). For the remainder of the time the recipient organization is 
in the WBC program, it must provide matching funds of one dollar for 
every dollar of its annual Federal award amount (a statutory match 
ratio of 1:1 Federal to non-Federal funding). At least 50 percent of 
the matching funds must be in cash (the sum of non-Federal cash and 
program income). The remaining 50 percent may be provided through 
allowable combinations of cash, in-kind contributions (third party), or 
authorized indirect costs.
    (b) Once the cash match and total match requirements have been met, 
any additional matching funds are considered overmatch. WBCs may 
provide overmatch if they choose to do so; however, if they have used 
Federal funds to raise match above the required amount, the funds must 
only be used to meet the Federal objective of the WBC program and must 
be verifiable from the non-Federal entity's records. All funds 
allocated to a WBC project through a budget proposal are subject to 
Federal rules and regulations, consistent with 2 CFR part 200. The 
funds must also be used solely for the WBC project. However, this does 
not prohibit WBC recipient organizations from raising funds separately 
and apart from the WBC program. Those funds that are not raised with 
WBC funds and are not used as match are not subject to the same 
recordkeeping requirements as they are not tied to the WBC program.
    (c) If the recipient organization indicates difficulty in meeting 
the match requirement, it can request a reduction of the Federal award. 
For specific guidance regarding the allowability, valuation, and 
documentation of match please see 2 CFR 200.306.


Sec.  131.440  Program income and fees.

    (a) Program income, including any interest earned on program 
income, may only be used for authorized purposes and in accordance with 
the cooperative agreement. Program income may be used as matching funds 
and, when expended, is counted towards the cash match requirement of 
the award. Program income must be used to expand

[[Page 64719]]

the quantity or quality of services and for resources or outreach 
provided by the WBC project.
    (b) Unused program income may be carried over to the subsequent 
budget period by a WBC. The WBC must report the consolidated program 
income sources and uses.
    (c) A WBC may charge clients a reasonable fee for services, 
including training and counseling provided by the WBC (sponsored or 
cosponsored), the sale of books, or the rental of equipment or space. 
Any fees so generated will constitute program income, and such fees 
must not restrict access to any services for economically disadvantaged 
entrepreneurs.


Sec.  131.450  Budget justification.

    General. The WBC Program Director or finance person of the non-
Federal entity will prepare and submit the budget justification for the 
upcoming program/budget period for review by the SBA as part of the 
WBC's application package pursuant to the applicable program 
announcement. Worksheets are provided by OWBO for this purpose.


Sec.  131.460  Restricted and prohibited costs.

    SBA prohibitions are consistent with those set forth in 2 CFR part 
200.
    (a) A WBC may not use project funds as collateral for a loan, 
assign an interest in them, or use them for any other such monetary 
purpose.
    (b) Use of project funds in violation of these restrictions may be 
cause for termination, suspension, or non-renewal of the cooperative 
agreement.


Sec.  131.500  Oversight of the WBC program.

    (a) The AA/OWBO will monitor the WBC's performance and its ongoing 
operations under the cooperative agreement to determine if the WBC is 
making effective and efficient use of program funds, in compliance with 
applicable law and other requirements, for the benefit of the small 
business community.
    (b) The AA/OWBO may revoke delegated authority of oversight 
responsibilities at any time it is deemed necessary and will notify the 
recipient organization of such a change in a timely manner.


Sec.  131.510  SBA review authority.

    To ensure compliance and the effectiveness of WBCs, OWBO staff will 
coordinate with SBA district offices to provide periodic programmatic 
site visits on behalf of OWBO. Prior to conducting such visits, SBA 
district office personnel will coordinate with and provide written 
notice to the WBC Program Director. The SBA's district office personnel 
may inspect WBC records and client files to analyze and assess WBC 
activities, and, if necessary, make recommendations for improved 
service delivery to the OWBO Program Analyst. Periodic district office 
site visits do not supersede or replace OWBO site visits.


Sec.  131.520  Audits, examinations, and investigations.

    (a) General audits. The SBA may conduct WBC audits.
    (1) Audits of a recipient organization will be conducted pursuant 
to the Single Audit Act of 1984 (if applicable) and applicable Office 
of Management and Budget circulars.
    (2) The SBA's Office of Inspector General (OIG) or its agents may 
inspect, audit, investigate, or otherwise review the WBC as the 
Inspector General deems appropriate.
    (b) Financial examinations. The WBC will have periodic financial 
examinations conducted by either the SBA or an independent contracted 
firm. WBCs, in accordance with the program announcement and the 
cooperative agreement, must comply with all requirements set forth for 
such purposes.
    (1) Applicant organizations proposing to enter the WBC program for 
the first time shall be subject to a post-award examination or 
sufficiency review conducted by or coordinated with the SBA or its 
designee. As part of the financial examination, the financial examiner 
will verify the adequacy of the accounting system, the suitability of 
proposed costs, and the nature and sources of proposed matching funds.
    (2) Examinations by the SBA will not serve as a substitute for 
audits required of Federal recipients under the Single Audit Act of 
1984, 31 U.S.C. Chapter 75 or applicable Office of Management and 
Budget guidelines (see 2 CFR part 200), nor will such internal reviews 
serve as a substitute for audits to be conducted by the SBA's Office of 
the Inspector General under authority of the Inspector General Act of 
1978, as amended.
    (c) Investigations. The SBA may conduct investigations to determine 
whether any person or entity has engaged in acts or practices 
constituting a violation of the Small Business Act, 15 U.S.C. 656; any 
rule, order, or regulation; or any other applicable Federal law.


Sec.  131.600  Cooperative agreement and contracts.

    (a) General. A recipient organization will incorporate into its WBC 
the applicable provisions of the cooperative agreement.
    (b) Goals and milestones. (1) OWBO will work in conjunction with 
WBC participants to establish program goals for the cooperative 
agreement annually. Agency loan goals may not be negotiated or 
incorporated into the cooperative agreement without the prior written 
approval of the AA/OWBO.
    (2) Failing to meet the goals and milestones of the cooperative 
agreement may result in suspension, termination, or non-renewal in 
accordance with Sec.  131.830.
    (c) Procurement policies and procedures. (1) The WBC may contract 
out for certain functions as permitted by the terms and conditions of 
the cooperative agreement but may not expend more than 49 percent of 
the total project funds on contractors and consultants.
    (2) The SBA may direct or otherwise approve any obligations or 
expenditures by recipient organizations, including those related to 
vendors or contractors, as deemed appropriate by the Agency.


Sec.  131.610  Other Federal grants.

    (a) Grants from other agencies. A recipient organization may enter 
into a contract or grant with another Federal department or agency to 
provide specific assistance to small business concerns in accordance 
with the following conditions:
    (1) Any additional contract or grant funds obtained from a Federal 
source may not be used as matching funds for the WBC project, with the 
exception of Community Development Block Grant (CDBG) funds.
    (2) Federal funds from the SBA and match expenditures reported to 
the SBA under the cooperative agreement may not be used or reported as 
match for another Federal program.
    (3) The SBA does not impose any requirements for additional 
matching funds for those recipient organizations managing other Federal 
contracts.
    (4) The WBC must report these other Federal funds and any 
associated matching funds separately to the SBA.
    (b) RISE After Disaster grants. In accordance with 15 U.S.C. 
636(b)(12), the SBA may provide financial assistance to a WBC, SBDC 
(under 13 CFR part 130), SCORE, or any proposed consortium of such 
individuals or entities to spur disaster recovery and growth of small 
business concerns located in an area for which the President has 
declared a major disaster.
    (1) The Administrator, in cooperation with the recipients of 
financial assistance under this paragraph, shall establish metrics and 
goals for performance of grants, contracts, and cooperative agreements 
under this

[[Page 64720]]

paragraph, which shall include recovery of sales, recovery of 
employment, reestablishment of business premises, and establishment of 
new small business concerns.
    (2) Matching funds are not required for any grant, contract, or 
cooperative agreement under this paragraph (see section 7(b) of the 
Small Business Act 15 U.S.C. 636 (b)).


Sec.  131.620  Revisions and amendments to cooperative agreements.

    During a project period, the WBC may request, in writing, one or 
more revisions to the cooperative agreement. The request must be 
submitted by the recipient organization's authorized official. 
Revisions will normally relate to changes in scope, work, or funding 
during the specified budget period. No proposed revision will be 
implemented without the prior approval from the OWBO Program Analyst. 
Revisions that require an amendment include the prior approval items 
set forth in 2 CFR 200.308 and 200.407.


Sec.  131.630  Suspension, termination, and non-renewal.

    (a) General. After entering into a cooperative agreement with a 
recipient organization, the AA/OWBO may take, as appropriate, any of 
the following enforcement actions based upon one or more of the 
circumstances set forth in paragraph (b) of this section:
    (1) Suspension. (i) The AA/OWBO may suspend a cooperative agreement 
with a recipient organization at any point. The decision to suspend a 
cooperative agreement with a recipient organization is effective 
immediately as of the date of the notice of suspension. The period of 
suspension will begin on the date of the notice of suspension and will 
last no longer than six months. At the end of the period of suspension, 
or at any point during that period, the AA/OWBO will either reinstate 
the cooperative agreement or commence an action for termination or non-
renewal.
    (ii) The notice of suspension will recommend that the recipient 
organization cease work on the WBC project immediately. The AA/OWBO is 
under no obligation to reimburse any expenses incurred by a recipient 
organization while its cooperative agreement is under suspension. Where 
the AA/OWBO decides to lift a suspension and reinstate a recipient 
organization's cooperative agreement, the Agency may, at its 
discretion, choose to make funds available to reimburse a recipient 
organization for some or all of the expenses it incurred in furtherance 
of project objectives during the period of suspension. However, there 
is no guarantee that the Agency will elect to accept such expenses and 
recipient organizations incurring expenses while under suspension do so 
at their own risk.
    (2) Termination. (i) The AA/OWBO may terminate a cooperative 
agreement with a recipient organization at any point. A decision to 
terminate a cooperative agreement is effective immediately as of the 
date of the notice of termination. A recipient organization may not 
incur further obligations under the cooperative agreement after the 
date of termination unless it has been expressly authorized to do so in 
the notice of termination.
    (ii) Funds remaining under the cooperative agreement may be made 
available by the AA/OWBO to satisfy financial obligations properly 
incurred by the recipient organization prior to the date of 
termination. Award funds will not be available for obligations incurred 
subsequent to the effective date of termination unless expressly 
authorized under the notice of termination. A recipient organization 
that has had its cooperative agreement terminated will have 90 days to 
submit final closeout documents as instructed by the SBA.
    (3) Non-renewal. (i) The AA/OWBO may elect not to renew a 
cooperative agreement with a recipient organization at any point. In 
undertaking a non-renewal action, the SBA may either decline to accept 
or consider any application for renewal the organization submits, or 
the agency may decline to exercise any option years remaining under the 
cooperative agreement. A recipient organization that has had its 
cooperative agreement non-renewed may continue to conduct project 
activities and incur allowable expenses until the end of the current 
budget period.
    (ii) Funds remaining under a non-renewed cooperative agreement may 
be utilized to satisfy financial obligations the recipient organization 
properly incurred prior to the end of the budget period. Award funds 
will not be available for obligations incurred subsequent to the end of 
the current budget period. A recipient organization that has had its 
cooperative agreement non-renewed will have until the end of the 
current budget period or 120 days, whichever is longer, to conclude its 
operations and submit closeout documents as instructed by the SBA.
    (b) Material non-compliance. The AA/OWBO may suspend, terminate, or 
not renew a cooperative agreement, in whole or in part, with a 
recipient organization for material non-compliance (frequently referred 
to as for cause). Material non-compliance may include, but is not 
limited to, the following:
    (1) Non-performance;
    (2) Poor performance;
    (3) Unwillingness or inability to implement changes to improve 
performance;
    (4) Willful or material failure to comply with the terms and 
conditions of the cooperative agreement, including relevant Office of 
Management and Budget circulars;
    (5) Conduct reflecting a lack of business integrity or honesty on 
the part of the recipient organization, the WBC Program Director, or 
other significant employee(s), which has not been properly addressed;
    (6) A conflict of interest on the part of the recipient 
organization, the WBC Program Director, or other significant employees 
causing real or perceived detriment to a small business concern, a 
contractor, the WBC, or the SBA;
    (7) Improper management or use of Federal funds;
    (8) Failure of a WBC to consent to audits or examinations, or to 
maintain required documents or records;
    (9) Failure to implement recommendations from the audits or 
examinations within 30 days of their receipt;
    (10) Failure of the WBC Program Director to work at the WBC on a 
100 percent full-time basis on the WBC project;
    (11) Failure to promptly suspend or terminate the employment of a 
WBC Program Director, or other significant employee, upon receipt of 
knowledge or written information by the recipient organization and/or 
the SBA indicating that such individual has engaged in conduct, which 
may result or has resulted in a criminal conviction or civil judgment 
which would cause the public to question the WBC's integrity. In making 
the decision to suspend or terminate such an employee, the recipient 
organization must consider such factors as the magnitude and 
repetitiveness of the harm caused and the remoteness in time of the 
behavior underlying any conviction or judgment;
    (12) Failure to maintain adequate client service facilities or 
service hours;
    (13) Fraud, waste, abuse, mismanagement or criminal activity on the 
part of the recipient organization and/or its staff/employees; or
    (14) Any other action that the AA/OWBO believes materially and 
adversely affects the operation or integrity of a WBC or the WBC 
program.
    (c) Procedures. The same procedures will apply regardless of 
whether a cooperative agreement with a recipient

[[Page 64721]]

organization is being suspended, terminated, or non-renewed by the SBA.
    (1) Taking action. When the AA/OWBO has reason to believe there is 
cause to suspend, terminate, or non-renew a cooperative agreement with 
a recipient organization (either based on its own knowledge or upon 
information provided to it by other parties), the AA/OWBO may undertake 
such an enforcement action by issuing a written notice of suspension, 
termination, or non-renewal to the recipient organization.
    (2) Notice requirements. Each notice of suspension, termination, or 
non-renewal will set forth the specific facts and reasons for the AA/
OWBO decision and will include reference to the appropriate legal 
authority. The notice will also advise the recipient organization that 
it has the right to request an administrative review of the decision to 
suspend, terminate, or non-renew its cooperative agreement in 
accordance with the procedures set forth in paragraph (d) of this 
section. The notice will be transmitted to the recipient organization 
on the same date it is issued by both U.S. Mail and facsimile or as an 
email attachment.
    (3) Relationship to government-wide suspension and debarment. A 
decision by the AA/OWBO to suspend, terminate, or non-renew a WBC 
cooperative agreement does not constitute a nonprocurement suspension 
or debarment of a recipient organization under Executive Order 12549 
and SBA's implementing regulations (2 CFR part 2700). However, a 
decision by the AA/OWBO to undertake a suspension, termination, or non-
renewal enforcement action with regard to a particular WBC cooperative 
agreement does not preclude or preempt the Agency from also taking 
action to suspend or debar a recipient organization for purposes of all 
Federal procurement and/or nonprocurement opportunities.
    (d) Administrative review. Any recipient organization that has had 
its cooperative agreement suspended, terminated, or non-renewed has the 
right to request an administrative review of the AA/OWBO's enforcement 
action. Administrative review of WBC enforcement actions will be 
conducted by the AA/OED.
    (1) Format. There is no prescribed format for a request for 
administrative review of an SBA enforcement action. While a recipient 
organization has the right to retain legal counsel to represent its 
interests in connection with an administrative review, it is under no 
obligation to do so. Formal briefs and other technical forms of 
pleading are not required. However, a request for administrative review 
of an SBA enforcement action must be in writing, should be concise and 
logically arranged, and must at a minimum include the following 
information:
    (i) Name and address of the recipient organization;
    (ii) Identification of the relevant SBA office/program (i.e., OWBO/
WBC Program);
    (iii) Cooperative agreement number;
    (iv) Copy of the notice of suspension, termination, or non-renewal;
    (v) Statement regarding why the recipient organization believes the 
SBA's actions were arbitrary, capricious, an abuse of discretion, and/
or otherwise not in accordance with the law;
    (vi) Identification of the specific relief being sought (e.g., 
lifting of the suspension);
    (vii) Statement as to whether the recipient organization is 
requesting a hearing and, if so, the reasons why it believes a hearing 
is necessary; and
    (viii) Copies of any documents or other evidence the recipient 
organization believes support its position.
    (2) Service. Any recipient organization requesting administrative 
review of an SBA enforcement action must submit copies of its request 
(including any attachments) to all of the following parties:
    (i) Associate Administrator for the Office of Entrepreneurial 
Development, U.S. Small Business Administration;
    (ii) Assistant Administrator for the Office of Women's Business 
Ownership U.S. Small Business Administration;
    (iii) Associate General Counsel for Procurement Law, U.S. Small 
Business Administration.
    (e) Timeliness. (i) In order to be considered timely, the AA/OED 
must receive a recipient organization's request for administrative 
review within 30 days of the date of the notice of suspension, 
termination, or non-renewal. Any request for administrative review 
received by the AA/OED more than 30 days after the date of the notice 
of suspension, termination, or non-renewal will be considered untimely 
and will automatically be rejected without being considered.
    (ii) In addition, if the AA/OED does not receive a request for 
administrative review within the 30-day deadline, then the decision by 
the AA/OWBO to suspend, terminate, or non-renew a recipient 
organization's cooperative agreement will automatically become the 
final Agency decision on the matter.
    (f) Standard of review. In order to have the suspension, 
termination, or non-renewal of a cooperative agreement reversed on 
administrative review, a recipient organization must successfully 
demonstrate that the SBA enforcement action was arbitrary, capricious, 
an abuse of discretion, and/or otherwise not in accordance with the 
law.
    (g) Conduct of the proceeding. (1) Each party must serve the 
opposing party with copies of all requests, arguments, evidence, and 
any other filings it submits pursuant to the administrative review. 
Within 30 days of the AA/OED receiving a request for administrative 
review, the AA/OED must also receive the SBA's arguments and evidence 
in defense of its decision to suspend, terminate, or non-renew a 
recipient organization's cooperative agreement. If the SBA fails to 
provide its arguments and evidence in a timely manner, the 
administrative review will be conducted solely on the basis of the 
information provided by the recipient organization.
    (2) After receiving the SBA's response to the request for 
administrative review or the passage of the 30-day deadline for filing 
such a response, the AA/OED will take one or more of the following 
actions, as applicable:
    (i) Notify the parties whether she/he has decided to grant a 
request for a hearing;
    (ii) Direct the parties to submit further arguments and/or evidence 
on any issues which she/he believes require clarification; and/or
    (iii) Notify the parties that she/he has declared the record to be 
closed and therefore she/he will refuse to admit any further evidence 
or argument.
    (3) The AA/OED will only grant a request for a hearing if she/he 
concludes that there is a genuine dispute as to a material fact that 
cannot be resolved except by the taking of testimony and the 
confrontation of witnesses. If the AA/OED grants a request for a 
hearing, she/he will set the time and place for the hearing, determine 
whether the hearing will be conducted in person or via telephone, and 
identify which witnesses will be permitted to give testimony.
    (4) Within 10 calendar days of declaring the record to be closed, 
the AA/OED will provide all parties with a copy of her/his written 
decision on the merits of the administrative review.
    (h) Evidence. The recipient organization and the SBA each have the 
right to submit whatever evidence they believe is relevant to the 
matter in dispute. No form of discovery will be permitted unless a 
party has made a substantial showing, based upon credible evidence and 
not mere allegation that the other party has acted

[[Page 64722]]

in bad faith or engaged in improper behavior.
    (i) Decision. (1) The decision of the AA/OED will be effective 
immediately as of the date it is issued. The decision of the AA/OED 
will represent the final Agency decision on all matters in dispute on 
administrative review. No further relief may be sought from or granted 
by the Agency. If the AA/OED determines that the SBA's decision to 
suspend, terminate, or non-renew a cooperative agreement was arbitrary, 
capricious, an abuse of discretion, and/or otherwise not in accordance 
with the law, she/he will reverse the Agency's enforcement action and 
direct the SBA to reinstate the recipient organization's cooperative 
agreement.
    (2) Where an enforcement action has been reversed on administrative 
review, the SBA will have no more than 10 calendar days to implement 
the AA/OED's decision. However, to the extent permitted under the 
applicable Office of Management and Budget circulars, the SBA reserves 
the right to impose such special conditions in the recipient 
organization's cooperative agreement as it deems necessary to protect 
the government's interests.


Sec.  131.640  Dispute procedures.

    (a) Financial and Programmatic disputes. (1) A recipient 
organization wishing to resolve a dispute regarding a financial or 
programmatic matter other than suspension, termination, or non-renewal 
of its award must submit a written appeal petition describing the 
subject of the dispute, along with any relevant documentation, to the 
Chairman of the grant appeals committee (the Committee).
    (2) The appeal petition must be received by the Committee within 30 
calendar days of the date of SBA's decision. A copy of the appeal 
petition must also be provided to the AA/OWBO.
    (3) There is no prescribed format for the submission of an appeal 
petition. Formal briefs and other technical forms of pleading are not 
required, nor is the grantee required to obtain civil representation. 
However, the appeal petition must be in writing and must be concise, 
factual, and logically arranged. In addition, the appeal petition must 
contain the following:
    (i) Name and address of organization; (ii) Name and address of the 
appropriate local SBA district office;
    (iii) Identification of the appropriate SBA program office and the 
award number;
    (iv) A statement of the material which are substantially in 
dispute;
    (v) Copies of any documents or other evidence supporting the 
appeal;
    (vi) A request for the specific relief desired on appeal: and
    (vii) A statement as to whether an oral hearing is being requested 
and, if so, the reason for the hearing.
    (4) The Committee will first rule on a request for an oral hearing 
before proceeding to consider the merits of an appeal petition. Within 
60 calendar days of receiving the appeal petition, the Committee will 
present its decision in writing to the recipient organization and the 
AA/OWBO. The Committee's ruling will represent the final Agency 
decision on the subject of the dispute and will not be further 
appealable within SBA.
    (5) Requests for an appeal before the Committee will not be granted 
unless the Agency determines there are substantial material facts in 
dispute.
    (6) The Committee may request additional information or 
documentation from the recipient organization at any stage in the 
proceedings. The recipient organization's response to the Committee's 
request for additional information or documentation must be submitted, 
in writing, to the Committee within 15 calendar days of receipt of the 
request. In the event that the recipient organization fails to follow 
the procedures specified in paragraph (a)(3) of this section, the 
Committee may dismiss the appeal by a written order.
    (7) If a request for an appeal 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 in writing.
    (8) The chairperson of the Committee, with advice from the SBA's 
Office of General Counsel, will issue a final written decision within 
30 calendar days of receipt of all information or inform the recipient 
organization that additional time to issue a decision is necessary. A 
copy of the decision will be transmitted to the recipient organization, 
with copies to the AA/OWBO.
    (9) 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 dispute appeal process. The Committee, by an affirmative vote 
of a majority of its total membership, may expedite the appeals process 
to attain final resolution of a dispute before the issuance date of a 
new cooperative agreement.
    (b) [Reserved]


Sec.  131.650  Closeout procedures.

    (a) General. Closeout procedures are used to ensure that the WBC 
program funds and property acquired or developed under the WBC 
cooperative agreement are fully reconciled and transferred seamlessly 
between the recipient organization and other Federal programs. The 
responsibility of conducting closeout procedures is vested with the 
recipient organization whose cooperative agreement is being 
relinquished, terminated, non-renewed, or suspended.
    (b) Responsibilities--(1) Recipient organizations. When a WBC 
cooperative agreement is not being renewed or a WBC is terminated, 
regardless of cause, the recipient organization will address the 
following in its closeout process and perform the necessary inventories 
and reconciliations prior to submitting the final annual financial 
report.
    (i) An inventory of WBC property must be compiled, evaluated, and 
all property and the aggregate of usable supplies and materials 
accounted for in this inventory.
    (ii) Program income balances will be reconciled and unused WBC 
program income which is not used as match or cannot otherwise be used 
to offset legitimate expenditures of the WBC must be returned to the 
SBA.
    (iii) Client records, paper and electronic, will be compiled to 
facilitate an SBA program closeout review.
    (iv) Financial records will be compiled to facilitate a closeout of 
the SBA financial examination.
    (2) SBA. Upon receipt of the final annual financial report from a 
non-renewing or terminated recipient organization, the AA/OWBO will 
issue disposition instructions to the former recipient organization.
    (c) Final disposition. (1) The final financial status report from 
the recipient organization must include the information identified in 
the inventory process and identify any WBC program income collected for 
services provided.
    (2) The AA/OWBO will issue written disposition instructions to the 
recipient organization providing the following:
    (i) The name and address of the entity or agency to which property 
and program income must be transferred;
    (ii) The date by which the transfer must be completed;
    (iii) Actions to be taken regarding property and WBC program 
income;
    (iv) Actions to be taken regarding WBC program records such as 
client and training files; and
    (v) Authorization to incur costs for accomplishing the transfer. 
Such costs may, when authorized, be applied to

[[Page 64723]]

residual WBC program income or Federal or matching funds.

Christopher M. Pilkerton,
Acting Administrator.
[FR Doc. 2019-24239 Filed 11-22-19; 8:45 am]
 BILLING CODE 8026-03-P