[Federal Register Volume 88, Number 68 (Monday, April 10, 2023)]
[Rules and Regulations]
[Pages 21086-21090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07460]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 126 and 134

RIN 3245-AH88


HUBZone Appeal Process

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is amending its 
regulations to implement a provision of the National Defense 
Authorization Act for Fiscal Year 2022. This final rule provides 
procedures for SBA's Office of Hearings and Appeals to hear appeals 
from protest determinations regarding the status of a concern as a 
certified HUBZone small business concern.

DATES: This rule is effective on May 10, 2023. It applies to all 
appeals filed on or after that date.

FOR FURTHER INFORMATION CONTACT: Laura Maas, HUBZone Program, 
[email protected], 202-205-7341. This phone number may also be reached 
by individuals who are deaf or hard of hearing, or who have speech 
disabilities, through the Federal Communications Commission's TTY-Based 
Telecommunications Relay Service teletype service at 711.

SUPPLEMENTARY INFORMATION: Section 864 of the National Defense 
Authorization Act for Fiscal Year 2022 (NDAA 2022) authorized the U.S. 
Small Business Administration's (SBA) Office of Hearings and Appeals 
(OHA) to decide all appeals from HUBZone status

[[Page 21087]]

protest determinations, which are currently decided by SBA's Associate 
Administrator of Government Contracting and Business Development. 
Section 864 also required SBA to publish a rule implementing this 
authority. SBA published a proposed rule on December 15, 2022. 87 FR 
76585. SBA did not receive any comments on the proposed rule. 
Accordingly, this final rule implements the changes as proposed.
    The final rule revises the HUBZone regulations at 13 CFR 126.805 to 
specify that HUBZone appeals are processed by OHA in accordance with 
the procedures in part 134. The final rule also amends the regulations 
pertaining to OHA's jurisdiction at subparts A and B of 13 CFR part 134 
to include appeals from HUBZone status protest determinations. Finally, 
the final rule creates a new subpart M in 13 CFR part 134 to set out 
the rules of practice for appeals from HUBZone status protest 
determinations.

Section-by-Section Analysis

A. Section 126.103

    This final rule amends the HUBZone regulations at Sec.  126.103 by 
deleting the definition for ``AA/GC&BD'' which is the Associate 
Administrator for Government Contracting and Business Development. The 
only references to this role in the HUBZone regulations are in relation 
to deciding appeals of HUBZone status protest determinations, and the 
Associate Administrator for Government Contracting and Business 
Development will no longer have this responsibility. SBA notes that 
``AA/GCBD'' also appears several times in the regulations, and this 
final rule removes all references to both ``AA/GC&BD'' and ``AA/GCBD'' 
in Part 126. This final rule also deletes the definition for ``DAA/
GC&BD'' because this term does not appear anywhere else in Part 126.

B. Sections 126.309, 126.803(e)

    This final rule amends the Sec. Sec.  126.309 and 126.803(e) to 
reference appeal decisions made by OHA rather than appeal decisions 
made by the AA/GCBD.

C. Section 126.805

    The final rule revises Sec.  126.805, which addresses the 
procedures for appeals of HUBZone status protest determinations, to 
provide that such appeals may be filed in accordance with part 134 of 
title 13 of the Code of Federal Regulations.

D. Sections 134.102, 134.201(b)

    The final rule amends Sec.  134.102 by adding a new paragraph (x), 
to add appeals from HUBZone status protest determinations, as a new 
type of proceeding over which OHA has jurisdiction.
    The final rule amends Sec.  134.201(b) by adding a new paragraph 
(10) to include appeals from HUBZone status protest determinations. As 
a result of this new paragraph, existing Sec.  134.201(b)(10) has been 
redesignated as Sec.  134.201(b)(11).

E. Part 134 Subpart M

    The final rule creates a new subpart M to cover the procedures for 
filing appeals of HUBZone status protest determinations.
    Section 134.1301 provides that appeals under this new subpart 
include any of the grounds for a HUBZone status protest specified in 
Sec.  126.801 of this chapter, as well as appeals from dismissals of 
HUBZone status protests by the D/HUB based on a finding that the 
protest was premature, untimely, nonspecific, not based upon 
protestable allegations, moot, or not filed by an interested party. 
This section also provides that the provisions of subparts A and B of 
part 134 apply to appeals of HUBZone status protest determinations. 
Finally, this section provides that appeals from HUBZone status protest 
determinations are separate from appeals from size determinations.
    Section 134.1302 establishes standing to file an appeal from a 
HUBZone status protest determination.
    Section 134.1303 provides that an appeal from a HUBZone status 
protest determination must be filed within ten (10) business days after 
the appellant receives the protest determination.
    Section 134.1304 provides that if a timely appeal of a HUBZone 
status protest determination is filed after contract award, the 
contracting officer must consider whether performance can be suspended 
until an appellate decision is rendered. This section also provides 
that where an appeal is filed before contract award, the contracting 
officer must withhold award until the appellate decision is rendered, 
unless the contracting officer has determined that award and 
performance of the contract is in the best interests of the government.
    Section 134.1305 provides that an appeal petition must include the 
following: a copy of the protest determination; the date the appellant 
received the protest determination; a statement that the petitioner is 
appealing a HUBZone status protest determination issued by the D/HUB; a 
full and specific statement as to why the HUBZone status protest 
determination is alleged to be based on a clear error of fact or law, 
together with argument supporting such allegation; the solicitation 
number, the contract number (if applicable), and the name, address, and 
telephone number of the contracting officer; and the name, address, 
telephone number, facsimile number, and signature of the appellant or 
its attorney. This section also provides that the appellant must serve 
copies of the appeal upon the D/HUB, the contracting officer, protested 
concern or the protester, and SBA's Associate General Counsel for 
Procurement Law, and that all appeal petitions must include a 
certificate of service. OHA may dismiss appeal petitions that do not 
meet all the requirements of Sec.  134.1305.
    Section 134.1306 states that the provisions in Sec.  134.204, 
regarding the service and filing requirements of all pleadings and 
submissions, apply to appeals from HUBZone status protest 
determinations unless otherwise indicated.
    Section 134.1307 requires the D/HUB to send OHA the entire case 
file relating to the protest decision upon receipt of an appeal 
petition.
    Section 134.1308 provides that the standard of review for an appeal 
of a HUBZone status protest determination is whether the D/HUB's 
determination was based on clear error of fact or law. This section 
also provides that the appellant bears the burden of proof by a 
preponderance of the evidence.
    Section 134.1309 provides that an appeal from a HUBZone status 
protest determination will be dismissed if the appeal is untimely under 
Sec.  134.1303, or if the matter has been decided or is the subject of 
adjudication before a court of competent jurisdiction over such 
matters.
    Section 134.1310 states that responses to an appeal are to be filed 
within fifteen (15) business days after service of the appeal petition.
    Section 134.1311 states that there will not be discovery or oral 
hearings in appeals from HUBZone status protest determinations.
    Section 134.1312 prohibits new evidence in appeals from HUBZone 
status protest determinations.
    Section 134.1313 provides that the record for a HUBZone status 
protest appeal will close when the time to file a response to an appeal 
petition expires.
    Section 134.1314 provides that OHA will decide an appeal within 
forty-five (45) calendar days after the close of record.
    Section 134.1315 provides that OHA's decision in an appeal from a 
HUBZone status protest determination is the final agency decision and 
provides that the effects of the decision on the

[[Page 21088]]

procurement at issue are explained in 13 CFR 126.803(e).
    Section 134.1316 provides that OHA may reconsider an appeal 
decision within twenty (20) calendar days after the decision is issued, 
or OHA may remand a proceeding to the D/HUB for a new HUBZone status 
protest determination.

Compliance With Executive Orders 12866, 12988, 13132, and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35), the Regulatory Flexibility Act (5 
U.S.C. 601-612), the Congressional Review Act (5 U.S.C. 801-808)

Executive Order 12866

    The Office of Management and Budget has determined that this rule 
is not a ``significant regulatory action'' under Executive Order No. 
12866. This rule amends the rules of practice for the SBA's OHA to 
implement procedures for appeals from HUBZone status protest 
determinations. As such, the rule has no effect on the amount or dollar 
value of any federal contract requirements or of any financial 
assistance provided through SBA. Therefore, the rule is not likely to 
have an annual economic effect of $100 million or more, result in a 
major increase in costs or prices, or have a significant adverse effect 
on competition or the United States economy. In addition, this rule 
does not create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency, materially alter the 
budgetary impact of entitlements, grants, user fees, loan programs or 
the rights and obligations of such recipients, nor raise novel legal or 
policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.

Executive Order 12988

    This action meets applicable standards set forth in section 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    This rule does not have Federalism implications as defined in 
Executive Order 13132. It does not have substantial direct effects on 
the States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in the Executive Order. As 
such, it does not warrant the preparation of a Federalism Assessment.

Paperwork Reduction Act

    The SBA has determined that this rule does not impose additional 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act, 44 U.S.C. Chapter 35.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980, as amended (RFA), 5 U.S.C. 
601-612, requires federal agencies to prepare an initial regulatory 
flexibility analysis (IRFA) to consider the potential impact of the 
regulations on small entities. Small entities include small businesses, 
small not-for-profit organizations, and small governmental 
jurisdictions. Section 605 of the RFA allows an agency to certify a 
rule, in lieu of preparing an IRFA, if the rulemaking is not expected 
to have a significant economic impact on a substantial number of small 
entities.
    This rule revises the regulations governing cases before SBA's OHA, 
SBA's administrative tribunal. These regulations are procedural by 
nature. Specifically, the rule establishes rules of practice for the 
SBA's OHA to hear appeals from HUBZone status protest determinations. 
While did not receive any comments from any small business indicating 
that they would be affected by it economically. Therefore, the 
Administrator of SBA certifies under 5 U.S.C. 605(b) that this rule 
will not have a significant economic impact on a substantial number of 
small entities.

Congressional Review Act, 5 U.S.C. Ch. 8

    Subtitle E of the Small Business Regulatory Enforcement Fairness 
Act of 1996, also known as the Congressional Review Act or CRA, 
generally provides that before a rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to each House of the Congress and to the Comptroller 
General of the United States. SBA will submit a report containing this 
rule and other required information to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the CRA cannot take effect until sixty (60) days after 
it is published in the Federal Register. The Office of Information and 
Regulatory Affairs has determined that this rule is not a ``major 
rule'' as defined by 5 U.S.C. 804(2). Therefore, this rule is not 
subject to the 60-day restriction.

List of Subjects

13 CFR Part 126

    Administrative practice and procedure, Government procurement, 
Penalties, Reporting and recordkeeping requirements, Small businesses.

13 CFR Part 134

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers, Organization and function (Government agencies).

    For the reasons set forth in the preamble, SBA amends parts 126 and 
134 of title 13 of the Code of Federal Regulations as follows:

PART 126--HUBZONE PROGRAM

0
1. The authority citation for part 126 is revised to read as follows:

    Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.


Sec.  126.103  [Amended]

0
2. Amend Sec.  126.103 by removing the definitions of ``AA/GC&BD'' and 
``DAA/GC&BD''.


Sec.  126.309  [Amended]

0
3. Amend Sec.  126.309 by removing ``(the D/HUB's decision if no appeal 
is filed or the decision of the AA/GCBD)'' and adding in its place 
``(i.e., the D/HUB's decision if the protest determination is not 
appealed, or OHA's decision if the protest determination is 
appealed)''.

0
4. Amend Sec.  126.803 by:
0
a. Revising paragraph (e) introductory text;
0
b. Removing ``the AA/GCBD'' and adding in its place ``OHA'' in 
paragraph (e)(1)(ii)(B);
0
c. Removing ``(i.e., the D/HUB's decision if no appeal is filed, or the 
decision of the AA/GCBD if the protest is appealed)'' and adding in its 
place ``(i.e., the D/HUB's decision if the protest determination is not 
appealed, or OHA's decision if the protest determination is appealed)'' 
in paragraph (e)(1)(iii);
0
d. Removing ``the AA/GCBD'' and adding in its place ``OHA'' In 
paragraph (e)(2)(ii); and
0
e. Removing ``(the D/HUB's decision if no appeal is filed, or the 
decision of the AA/GCBD if the protest is appealed)'' and adding in its 
place ``(i.e., the D/HUB's decision if the protest determination is not 
appealed, or OHA's decision if the protest determination is appealed)'' 
in paragraph (e)(3).
    The revision reads as follows:


Sec.  126.803  How will SBA process a HUBZone status protest and what 
are the possible outcomes?

* * * * *

[[Page 21089]]

    (e) Effective of determination. The determination is effective 
immediately and is final, unless overturned on appeal by SBA's Office 
of Hearings and Appeals (OHA) pursuant to part 134 of this chapter.
* * * * *

0
5. Revise Sec.  126.805 to read as follows:


Sec.  126.805  What are the procedures for appeals of HUBZone status 
protest determinations?

    The protested concern, the protester, or the contracting officer 
may file an appeal of a HUBZone status protest determination with SBA's 
Office of Hearings and Appeals (OHA) in accordance with part 134 of 
this chapter.

PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF 
HEARINGS AND APPEALS

0
6. The authority citation for part 134 is revised to read as follows:

    Authority: 5 U.S.C. 504; 15 U.S.C. 632, 634(b)(6), 634(i), 
637(a), 648(l), 656(i), 657a, 657t and 687(c); 38 U.S.C. 8127(f); 
E.O. 12549, 51 FR 6370, 3 CFR, 1986 Comp., p. 189.
    Subpart J issued under 38 U.S.C. 8127(f)(8)(B).
    Subpart K issued under 38 U.S.C. 8127(f)(8)(A).
    Subpart L issued under 15 U.S.C. 636(a)(36); Pub. L. 116-136; 
Pub. L. 116-139; 116-142; 116-147.
    Subpart M issued under 15 U.S.C. 657a; Pub. L. 117-81.

0
7. Amend Sec.  134.102 by:
0
a. Removing the word ``and'' at the end of paragraph (v);
0
b. Removing the period at the end of paragraph (w) and adding ``; and'' 
in its place; and
0
c. Adding paragraph (x).
    The addition to read as follows:


Sec.  134.102  Jurisdiction of OHA.

* * * * *
    (x) Appeals from HUBZone status protest determinations under part 
126 of this chapter.

0
8. Amend Sec.  134.201 by:
0
a. Removing the word ``and'' at the end of paragraph (b)(9);
0
b. Redesignating paragraph (b)(10) as paragraph (b)(11); and
0
c. Adding a new paragraph (b)(10).
    The addition reads as follows:


Sec.  134.201  Scope of the rules in this subpart.

* * * * *
    (b) * * *
    (10) For appeals of protest determinations regarding the status of 
a concern as a certified HUBZone small business concern, in subpart M 
of this part; and
* * * * *

0
9. Add subpart M to read as follows:
Subpart M--Rules of Practice for Appeals of Protest Determinations 
Regarding the Status of a Concern as a Certified HUBZone Small Business 
Concern
Sec.
134.1301 What is the scope of the rules in this subpart?
134.1302 Who may appeal a HUBZone status protest determination?
134.1303 What time limits apply to filing an appeal from a HUBZone 
status protest determination?
134.1304 What are the effects of the filing of an appeal on the 
procurement at issue?
134.1305 What are the requirements for an appeal petition?
134.1306 What are the service and filing requirements?
134.1307 What are the requirements for transmitting the protest 
file?
134.1308 What is the standard of review?
134.1309 When will a Judge dismiss an appeal?
134.1310 Who can file a response to an appeal petition and when must 
such a response be filed?
134.1311 Will the Judge permit discovery and oral hearings?
134.1312 What are the limitations on the introduction of new 
evidence?
134.1313 When is the record closed?
134.1314 When must the Judge issue the decision?
134.1315 What are the effects of the Judge's decision on the 
procurement at issue?
134.1316 Can a Judge reconsider an appeal decision?

Subpart M--Rules of Practice for Appeals of Protest Determinations 
Regarding the Status of a Concern as a Certified HUBZone Small 
Business Concern


Sec.  134.1301  What is the scope of the rules in this subpart?

    (a) The rules of practice in this subpart apply to all appeals to 
OHA from formal protest determinations made by the Director of SBA's 
Office of HUBZone (D/HUB) in connection with a HUBZone status protest. 
Appeals under this subpart include any of the grounds for a HUBZone 
status protest specified in Sec.  126.801 of this chapter, as well as 
appeals from dismissals of HUBZone status protests by the D/HUB based 
on a finding that the protest was premature, untimely, nonspecific, not 
based upon protestable allegations, moot, or not filed by an interested 
party.
    (b) Except where inconsistent with this subpart, the provisions of 
subparts A and B of this part apply to appeals listed in paragraph (a) 
of this section.
    (c) Appeals relating to formal size determinations and NAICS Code 
designations are governed by subpart C of this part.


Sec.  134.1302  Who may appeal a HUBZone status protest determination?

    Appeals from HUBZone status protest determinations may be filed 
with OHA by the protested concern, the protester, or the contracting 
officer responsible for the procurement affected by the protest 
determination.


Sec.  134.1303  What time limits apply to filing an appeal from a 
HUBZone status protest determination?

    Appeals from a HUBZone status protest determination must be 
commenced by filing and serving an appeal petition within ten (10) 
business days after the appellant receives the HUBZone status protest 
determination (see Sec.  134.204 for filing and service requirements). 
OHA shall dismiss any untimely appeal.


Sec.  134.1304  What are the effects of the filing of an appeal on the 
procurement at issue?

    (a) If a timely appeal is filed after contract award, the 
contracting officer must consider whether performance can be suspended 
until an appellate decision is rendered.
    (b) If a timely appeal is filed before contract award, the 
contracting officer must withhold award until the appellate decision is 
rendered, unless the contracting officer has determined that award and 
performance of the contract is in the best interests of the government.


Sec.  134.1305  What are the requirements for an appeal petition?

    (a) Format. An appeal from a HUBZone status protest determination 
must be in writing. There is no required format for an appeal petition. 
However, it must include the following information:
    (1) A copy of the protest determination;
    (2) The date the appellant received the protest determination;
    (3) A statement that the petitioner is appealing a HUBZone status 
protest determination issued by the D/HUB;
    (4) A full and specific statement as to why the HUBZone status 
protest determination is alleged to be based on a clear error of fact 
or law, together with argument supporting such allegation;
    (5) The solicitation number, the contract number (if applicable), 
and the name, address, and telephone number of the contracting officer; 
and
    (6) The name, address, telephone number, facsimile number, and 
signature of the appellant or its attorney.
    (b) Service of appeal. Concurrent with filing the appeal with OHA

[[Page 21090]]

([email protected]), the appellant must serve copies of the entire 
appeal petition upon each of the following:
    (1) The D/HUB at [email protected];
    (2) The contracting officer responsible for the procurement 
affected by a HUBZone determination;
    (3) The protested concern (the business concern whose HUBZone 
status is at issue) or the protester; and
    (4) SBA's Office of General Counsel, Associate General Counsel for 
Procurement Law at [email protected].
    (c) Certificate of service. The appellant must attach to the appeal 
petition a signed certificate of service meeting the requirements of 
Sec.  134.204(d).
    (d) Dismissal. An appeal petition that does not meet all the 
requirements of this section may be dismissed by the Judge on the 
Judge's own initiative or upon motion of a respondent.


Sec.  134.1306  What are the service and filing requirements?

    The provisions of Sec.  134.204 apply to the service and filing of 
all pleadings and other submissions permitted under this subpart, 
unless otherwise indicated in this subpart.


Sec.  134.1307  What are the requirements for transmitting the protest 
file?

    Upon receipt of an appeal petition, the D/HUB will send to OHA a 
copy of the protest file relating to that determination. The D/HUB will 
certify and authenticate that the protest file, to the best of the D/
HUB's knowledge, is a true and correct copy of the protest file.


Sec.  134.1308  What is the standard of review?

    The standard of review for an appeal of a HUBZone status protest 
determination is whether the D/HUB's determination was based on clear 
error of fact or law. The appellant has the burden of proof, by a 
preponderance of the evidence.


Sec.  134.1309  When will a Judge dismiss an appeal?

    The presiding Judge must dismiss the appeal if:
    (a) The appeal is untimely filed under Sec.  134.1303;
    (b) The appeal does not, on its face, allege facts that if proven 
to be true, warrant reversal or modification of the determination; or
    (c) The matter has been decided or is the subject of adjudication 
before a court of competent jurisdiction over such matters; however, 
once an appeal has been filed, initiation of litigation of the matter 
in a court of competent jurisdiction will not preclude the Judge from 
rendering a final decision on the matter.


Sec.  134.1310  Who can file a response to an appeal petition and when 
must such a response be filed?

    (a) Who may respond. Although not required, any person served with 
an appeal petition may file and serve a response supporting or opposing 
the appeal if he or she wishes to do so. The response should present 
arguments related to the issues presented on appeal.
    (b) Time limits. If a person decides to file a response, the 
response must be filed within fifteen (15) business days after service 
of the appeal petition.
    (c) Service. The respondent must serve its response upon the 
appellant and upon each of the persons identified in the certificate of 
service attached to the appeal petition pursuant to Sec.  134.1305.
    (d) Reply to a response. No reply to a response will be permitted 
unless the Judge directs otherwise.


Sec.  134.1311  Will the Judge permit discovery and oral hearings?

    Discovery will not be permitted, and oral hearings will not be 
held.


Sec.  134.1312  What are the limitations on the introduction of new 
evidence?

    The Judge may not admit evidence beyond the written protest file 
nor permit any form of discovery. All appeals under this subpart will 
be decided solely on a review of the evidence in the written protest 
file, arguments made in the appeal petition, and response(s) filed 
thereto.


Sec.  134.1313  When is the record closed?

    The record will close when the time to file a response to an appeal 
petition expires pursuant to Sec.  134.1310.


Sec.  134.1314  When must the Judge issue the decision?

    The Judge shall issue a decision, insofar as practicable, within 
forty-five (45) calendar days after close of the record.


Sec.  134.1315  What are the effects of the Judge's decision on the 
procurement at issue?

    The Judge's decision is the final agency decision and becomes 
effective upon issuance. For the effects of the decision on the 
procurement at issue, see Sec.  126.803(e) of this chapter.


Sec.  134.1316  Can a Judge reconsider an appeal decision?

    (a) Any party who has appeared in the proceeding, or SBA, may 
request reconsideration of the OHA appeal decision by filing with the 
Judge and serving a petition for reconsideration on all the parties to 
the appeal within twenty (20) calendar days after service of the 
written decision. The request for reconsideration must clearly show an 
error of fact or law material to the decision. The Judge may also 
reconsider a decision on the Judge's own initiative, within twenty (20) 
calendar days after issuance of the written decision.
    (b) The Judge may remand a proceeding to the D/HUB for a new 
HUBZone status protest determination if the D/HUB fails to address 
issues of decisional significance sufficiently, does not address all 
the relevant evidence, or does not identify specifically the evidence 
upon which it relied. Once remanded, OHA no longer has jurisdiction 
over the matter, unless a new appeal is filed as a result of the new 
HUBZone status protest determination.

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2023-07460 Filed 4-7-23; 8:45 am]
BILLING CODE 8026-09-P