[Federal Register Volume 88, Number 214 (Tuesday, November 7, 2023)]
[Rules and Regulations]
[Pages 76625-76652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22164]



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 Rules and Regulations
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  Federal Register / Vol. 88 , No. 214 / Tuesday, November 7, 2023 / 
Rules and Regulations  

[[Page 76625]]



SMALL BUSINESS ADMINISTRATION

13 CFR Part 130

[Docket No. SBA-2015-0005]
RIN 3245-AE05


Small Business Development Centers

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA or the Agency) 
issues this final rule to update its regulations for the Small Business 
Development Centers Program (the SBDC Program or the Program). The 
Office of Small Business Development Centers has not comprehensively 
updated its regulations since 1995. This final rule updates and 
clarifies the regulations, making them more efficient, effective, 
transparent, and comprehensive, and puts them in alignment with current 
SBA policy and guidance. This final rule also includes policy and 
procedural changes identified by the Agency as necessary to preserve 
the integrity and legislative intent of the Program. Finally, it 
incorporates updates to conform with administrative requirements, cost 
principles, and audit requirements for Federal awards (Uniform 
Guidance).

DATES: Effective date: December 7, 2023.

FOR FURTHER INFORMATION CONTACT: Rachel Karton, Program Manager for the 
SBDC Program, at 202-205-6766 or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

A. Statutory

    The SBDC Program was authorized in 1980 by the Small Business 
Development Centers Act of 1980 (Pub. L. 96-302, 94 Stat. 833) and is 
currently codified in section 21 of the Small Business Act, 15 U.S.C. 
648 (the Act). According to the Act, the purpose of the Program is to 
assist in establishing SBDCs explicitly to provide ``management and 
technical assistance'' to small businesses. Section 21(a)(3)(A) 
requires SBA to consult with the recognized association of SBDCs in any 
rulemaking action for the Program.

B. History

    Title II of the Small Business Development Act of 1980 authorized 
the SBDC Program at an initial annual funding level of $8.5 million. 
The new law specifically provided for Federal funding to be matched 
one-for-one with non-Federal funds and required an evaluation of the 
Program to be submitted to Congress by January 31, 1983.
    SBA's Associate Administrator, Small Business Development Centers 
(AA/SBDC) holds statutory responsibility for the general management and 
oversight of the SBDC Program by means of a cooperative agreement with 
each recipient organization. A recipient organization is an institution 
of higher education or a state agency which receive Federal funds to 
operate an SBDC. Recipient organizations administer the SBDC Program to 
provide small businesses and aspiring entrepreneurs with a wide array 
of technical assistance, help strengthen business performance and 
sustainability, and enable the creation of new business entities.
    The SBDC Program regulations were revised in 1995, see 60 FR 31504 
(June 13, 1995). The statute authorizing the SBDC Program has since 
been amended numerous times. The annual notice of funding opportunity 
has become, for all practical purposes, the document which interprets 
statutory requirements of the Program and aligns them with current 
policies and procedures. To maintain consistency in Program 
administration and implementation, it is necessary to revise the 
regulations to outline current policies and procedures. Many of the 
proposed changes are enforced through the current notice of funding 
opportunity. Therefore, SBA revised Program regulations to incorporate 
those changes for efficiency and transparency of the SBDC Program.
1. Summary of Advanced Notice of Proposed Rulemaking
    SBA published an advanced notice of proposed rulemaking (ANPRM) on 
April 2, 2015, at 80 FR 17708, seeking comments on the development of 
new definitions, clarification of existing program requirements, and 
the renewal or termination of the notice of award. The ANPRM also 
solicited comments on international trade counselor certification 
requirements, required steps for the selection of Lead Center 
Directors, procedures for international travel, and procedures 
regarding the determination to effect suspension, termination or 
nonrenewal of an SBDC's cooperative agreement.
    SBA received 133 comments on this ANPRM, which were considered 
during the development of the proposed rule. Comments received 
generally fell into four categories: the role of the District Office, 
definitions/clarifications, client confidentiality, and the Lead Center 
Director hiring process. SBA took these comments under advisement when 
writing the proposed rule.
2. Summary of the Notice of Proposed Rulemaking
    The notice of proposed rulemaking was published on December 13, 
2022, at 87 FR 76127, with a comment period of 60 days. Following the 
publication of the NPRM, SBA received approximately 350 comments from a 
broad range of stakeholders on a diversity of issues relating to the 
proposed rule. These included comments from the Association of Small 
Business Development Centers, several Small Business Development 
Centers, Chambers of Commerce, banking and lending institutions and 
other economic development organizations.
    First, SBA proposed to clarify and define the role of the District 
Office regarding grant oversight activities by proposing new 
definitions and procedures throughout program regulations. Second, SBA 
proposed the addition of 23 new definitions and the revision of 
existing definitions to explicitly define and clarify the various 
roles, procedures, documents, and categories of funding. Third, a new 
section was proposed to codify SBDC client confidentiality requirements 
under the Act. Finally, the proposed rule added the current process of 
hiring a Lead Center Director, as outlined in the cooperative 
agreement. The intent of the proposed rule changes was to make Program 
operations more streamlined and less onerous for recipient 
organizations and the Agency and to

[[Page 76626]]

align with current practices in the notice of funding opportunity and 
cooperative agreement. Many of the proposed changes made, which were 
discussed in comments received through the ANPRM are already required 
and implemented by the SBDCs; however, these final regulations will 
codify existing requirements to ensure consistency in Program 
regulations.
    Through the NPRM, the Agency also sought feedback on its existing 
collection and use of individual SBDC client data.
3. Summary of Final Rule
    In this final rule SBA incorporates the Uniform Guidance at 2 CFR 
part 200, which streamlined and consolidated government requirements 
for receiving and using Federal awards to reduce administrative burden 
and improve outcomes; makes various revisions to align the regulations 
with the text of the SBDC statute; and adopts the proposed rule with 
changes from the comments received from the publication of the NPRM.

C. Discussion of Comments

    SBA received approximately 350 comments on the proposed rule, 50 of 
which pertained to SBA's new section regarding client confidentiality; 
12 regarding the new definition of the accreditation process; 31 
comments on the definition of program income; 13 comments on the 
definition of SBDC Director; 30 comments on new Sec.  130.310(c), Area 
of service; 20 comments on new Sec.  130.320(e), Operating 
requirements; 34 comments on Sec.  130.330(b)(5), SBDC services and 
restrictions on services; 14 comments on revised Sec.  130.350(a)(3) 
and 6 comments on Sec.  130.350(a)(6) regarding SBDC advisory boards; 
15 comments regarding new Sec.  130.370(b), Contracts with other 
Federal agencies; 11 comments regarding new Sec.  130.460(g)(1) 
regarding the salaries of the State Directors; and other as stated 
below. SBA also received comments from The National Center for American 
Indian Enterprise Development requesting (1) to include ``tribal'' in 
Sec.  130.100, Introduction, which SBA has accepted and (2) changes to 
Sec.  130.200, Eligible entities, to include tribal communities and to 
add a new paragraph which states, ``including a recipient organization 
that teams with a tribal government, Native American private or non-
profit business assistance center or Native American community 
development financial institution that provides entrepreneurial 
development counseling to small businesses and entrepreneurs in native 
communities.'' SBA is unable to change this request as eligible 
entities are outlined in the Small Business Act, 15 U.S.C. 656 and 648. 
However, SBA supports tribal governments and entities to collaborate 
with SBDC Lead Center Directors and their networks of Service Centers.
Comments Opposing SBA's Proposed Changes to Various Definitions in 
Sec.  130.110
    a. SBA received 12 comments on the proposed definition of 
accreditation process. The commenters expressed that the accreditation 
process evaluates SBDC programs based on standards derived from the 
Baldrige Performance Excellence Program. The commenters further stated 
that the accreditation process focuses on overall program improvement 
that is consistent with the standards providing conditions and 
recommendations on how to work toward continuous improvement based on 
observations during the review. The commenters request that SBA revise 
the definition of accreditation process to include such information.
    SBA Response: SBA revised the definition of accreditation process 
that reflects the commenters suggestions and current use of the term. 
The new definition states that it's the process by which evaluation and 
assessment occurs to assist an SBDC with assessing its processes and 
outlining areas needing improvement by providing recommendations to 
strengthen delivery of services and assistance.
    b. SBA received three comments on the definition of application. 
The commenters stated that this definition needs to include the term 
``renewal application.''
    SBA Response: SBA took these comments under consideration and 
revised the definition of application to include the term ``renewal 
application.''
    c. SBA received one comment on the definition of cash match 
requesting to include waived indirect costs (IDC) in the definition. 
The commenter further stated that when it states that IDC is not 
allowed as cash match, adding the verbiage of the waived IDC may be 
important to include here. Currently, waived indirect costs are 
included as cash match after 50 percent of actual cash are acknowledged 
in the agreement.
    SBA Response: SBA rejects this comment. As defined in 2 CFR part 
200, waived indirect cost is the difference between the total amount of 
indirect costs charged to a Federal award and the total amount of 
indirect costs that could have been charged to a Federal award. The 
regulation in 2 CFR part 200 refers to this as unrecovered indirect 
costs.
    d. SBA received six comments on the new proposed definition of 
clearinghouse. The comments state that the definition should be 
reflected as a collection of management information and a source of 
market and industrial information that all SBDC programs have access to 
assist clients. It also collects management information for SBDC 
networks.
    SBA Response: SBA revised the definition of clearinghouse to define 
the term more clearly and accurately as requested by the commenters. 
The definition now states that the clearinghouse is a source of market 
and industry information made available to all SBDC networks to assist 
clients and supports the exchange of information between SBDCs.
    e. SBA received eight comments on the definition of client. The 
commenters state that there should be a qualifier before the word 
``entrepreneur'' such as ``nascent'' or ``emerging'' or ``developing'' 
to clarify that this applies to both established business owners and 
those who plan to start a business.
    SBA Response: SBA revised the definition of client to include the 
word ``nascent'' before the word ``entrepreneur.''
    f. SBA received 31 comments on the definition of program income. 
Commenters stated that this revised definition would make almost all 
funds and not just training registration fees into program income funds 
and ineligible for use as match. Commenters also stated that if the 
intent of ``sponsorship agreement'' was meant to be a co-sponsorship 
agreement that has been traditionally used with SBDC resource partners 
when hosting a training event, the language would need to be changed to 
define ``sponsorship agreement.''
    SBA Response: SBA accepts the comments and refers the reader to the 
definition of program income as defined in 2 CFR part 200.
    g. SBA received 13 comments on the definition of SBDC Director. 
Commenters stated that the definition should read ``at least 75 percent 
of whose time is allocated to'' or at least ``100 percent of the 
individual's time and effort is allocated to the SBDC grant OR other 
grant programs . . .'' An alternative definition that was suggested was 
a minor grammar change ``100 percent of the individual's time and 
effort is allocated to the SBDC grant or other grant programs . . .''
    SBA Response: SBA agrees with the commenters and revised the 
definition of SBDC Director to state that no less

[[Page 76627]]

than 75 percent of the individual's time and effort is allocated to the 
SBDC grant.
    h. SBA received three comments on the definition of specialized 
services. The commenters stated that this is a vague definition and 
that it seems to imply that the SBDC must hire an outside consultant 
for a client which makes no sense.
    SBA Response: SBA agrees with the commenters and deleted the words 
``hiring outside consultants for a client'' from the definition.
Comments Opposing SBA's Proposed Changes to Eligible Entities in Sec.  
130.200
    a. SBA received one comment opposing the proposed change to the 
eligible entities' requirements of the recipient organization in Sec.  
130.200(2)(c). The commenters stated that currently SBDC hosts are 
colleges or state offices. Instead of restricting SBDC hosts, it would 
be better to expand hosts to non-governmental entities such as Economic 
Development offices that may not be a state office. Colleges may not be 
a good fit for SBDC since they have different missions, and some 
colleges believe the SBDC they host to conflict with the college's need 
to increase student enrollment for state funding by head count.
    SBA Response: SBA is unable to change this requirement as it 
required in the Small Business Act, 15 U.S.C. 656 and 648(a)(1), which 
states, in part, that after December 31, 1990, the Administration shall 
not make a grant to any applicant other than an institution of higher 
education or a women's business center operating pursuant to section 
656 of the title as a Small Business Development Center unless the 
applicant was receiving a grant (including a contract or cooperative 
agreement) on such date. The previous sentence shall not apply to an 
applicant that has its principal office located in the Commonwealth of 
the Northern Mariana Islands. Therefore, SBA is rejecting this comment.
    b. SBA received five comments on new proposed paragraphs (e) and 
(f) stating that there is a concern that this new requirement will 
inherently restrict the ability of the SBDC Lead Center to engage 
partners that are not housed within higher education and that this will 
limit the ability of the SBDC to reach and serve rural and under-
represented populations.
    SBA Response: SBA is unable to change this requirement as it 
required in the Small Business Act, 15 U.S.C. 656 and 648(a)(1), which 
states, in part, that after December 31, 1990, the Administration shall 
not make a grant to any applicant other than an institution of higher 
education or a women's business center operating pursuant to section 
656 of the title as a Small Business Development Center unless the 
applicant was receiving a grant (including a contract or cooperative 
agreement) on such date. The previous sentence shall not apply to an 
applicant that has its principal office located in the Commonwealth of 
the Northern Mariana Islands. Therefore, SBA rejected this comment.
Comments Opposed to Sec.  130.310--Area of Service
    SBA received 30 comments regarding the new proposed paragraph (c) 
stating that there is a concern that this new requirement will 
inherently restrict the ability of the SBDC Lead Center to engage 
partners that are not housed within higher education and that this will 
limit the ability of the SBDC to reach and serve rural and under-
represented populations.
    SBA Response: SBA accepts these comments and revised the paragraph 
to provide that for any applicant commencing after January 1, 1992, the 
recipient organization must ensure that any new SBDC service centers 
established within its area of service, to the extent practicable, are 
primarily housed within institutions of higher education or a Women's 
Business Center (WBC), operating pursuant to section 29 of the Small 
Business Act (15 U.S.C. 656) as stated in section 21(a)(1) of the Small 
Business Act (15 U.S.C. 648(a)(1)).
Comments Opposing SBA's Proposed Changes to Sec.  130.320--SBDC 
Operating Requirements (Formerly Sec.  130.330)
    a. There is one comment opposing the proposed revision to paragraph 
(a) which states that full time is more than 75 percent. The proposed 
paragraph states that the Lead Center must be an independent department 
within the recipient organization, having its own staff, including a 
full-time SBDC Director.
    SBA Response: SBA accepts this comment and revises the paragraph to 
delete the reference to ``full-time.''
    b. SBA received 20 comments opposing the proposed new paragraph (e) 
stating that this new paragraph will severely limit the ability of 
SBDCs to coordinate and collaborate with outside entities. If ``any 
type of organization'' can be considered an ``SBDC service center'' 
then literally anybody SBDCs work with becomes an SBDC service centers. 
If the point is to track SBDC performance than this will lead to 
overcounting, double-counting and taking credit for other people's 
efforts. Also, ``any funds'' could lead to serious problems with 
outside organizations that have no wish to submit to SBA scrutiny.
    SBA Response: SBA accepts this comment and revised the paragraph to 
narrow the scope of the requirement to read as follows: ``Any entity 
that is using the term `Small Business Development Center' and under 
contract with the Lead Center and receiving program funds, whether . . 
.'' and at the end of the paragraph replaces the word ``entity'' with 
the words ``Service Center.''
    c. SBA received one comment opposing new paragraph (f) which refers 
to the technology designation for an SBDC stating that the America's 
Small Business Development Centers (ASBDC) voted to and did delete the 
Technology Development Center Designation under the accreditation 
program in 2022 in response to the growth and availability of 
technology services in all SBDCs.
    SBA Response: SBA deleted paragraph (f) since the new accreditation 
standards no longer address the technology designation.
Comments Opposing SBA's Proposed Revisions to Sec.  130.330--SBDC 
Services and Restrictions on Services (Formerly Sec.  130.340)
    a. SBA received six comments on newly revised paragraph (a) stating 
that not all SBDCs provide either training or specialized services. 
This should be corrected to read ``with counseling, and whenever 
practicable, training and specialized services.'' An SBDC Lead Center 
should use and compensate qualified small business vendors as one of 
its resources. Another commenter stated that this language is unclear 
and probably a holdover from old statutory language.
    SBA Response: SBA accepts the comments and revised the paragraph to 
include, ``to the extent practicable.''
    b. SBA received one comment on new Sec.  130.330(b)(4) stating that 
this would be a new requirement and that should the Agency consider 
this a priority, the Agency should include this information on SBA Form 
641.
    SBA Response: SBA deleted this paragraph. The remaining paragraphs 
are redesignated from paragraphs (b)(5) and (6) to paragraphs (b)(4) 
and (5) in this final rule.
    c. SBA received one comment on newly revised Sec.  130.330(b)(3) 
requesting that SBA define ``direct or indirect role.''
    SBA Response: SBA agrees that an SBDC should not act as an agent 
for the client. SBA inserted after ``however'' ``SBDCs may not attest 
to a client's

[[Page 76628]]

readiness or creditworthiness to the lending institution either 
verbally or in writing''. Further SBA deleted ``neither SBDC staff nor 
their agents may take a direct or indirect role in representing clients 
in loan negotiations.''
    d. SBA received 34 comments on newly revised Sec.  130.330(b)(5) 
(now Sec.  130.330(b)(4)) stating first, that currently SBDC personnel 
are asked to participate in many panels that provide input concerning 
loan applicants. In some states, the State Economic Development 
Departments rely on SBDC personnel to assist them in evaluating 
numerous applicants for state assistance. Second, why is one SBA 
Resource Partner allowed to make loans (Women's Business Centers) while 
the others are not. According to several studies the biggest challenge 
faced by minority entrepreneurs is access to capital. Eighty-three 
percent of minority entrepreneurs have difficulties accessing capital 
and 76 percent rely on personal and family savings. By servings on 
panels or board that review loan applications, SBDC personnel become 
more knowledgeable about the financing trends in their communities and 
better understand the advising needs of minority owned business. 
Finally, some SBDC counselors have been members of loan committees of 
Black and Latino associations and instrumental in widening access to 
capital for minority entrepreneurs and learning of their technical 
assistance (advising) needs.
    Another commenter stated that SBDC personnel participate on Loan 
Evaluation Boards where SBDC personnel routinely serve on boards, 
panels, etc. and that SBDC personnel are covered by SBA's conflict of 
interest codified at 2 CFR 200.112.
    SBA Response: SBA agrees with the commenters and revised the 
language to state ``SBDCs may participate on boards and panels of 
financial institutions and with outside organizations but may not be 
involved in any final credit decisions involving SBDC clients or in 
making or servicing loans.''
    e. SBA received one comment regarding newly revised Sec.  
130.330(b)(6) (now Sec.  130.330(b)(5)) requesting that SBA define the 
word ``advocate,'' noting the current rules also mention the words 
``may not advocate'' but fails to define it for better universal 
understanding.
    SBA Response: SBA agrees with the commenter and revises the 
language to include ``. . . but may not advocate for, promote, 
recommend approval . . .'' to the paragraph.
    f. SBA received seven comments on revised Sec.  130.340(c). Some 
comments requested that SBA not codify specific focus areas which are 
likely to change, and other commenters requested that specific focus 
areas, such as the ``employee-owned business concern, be included in 
this paragraph.
    SBA Response: SBA agrees not to include specific focus areas in the 
regulations as they could change which is now reflected in the 
regulation. Focus areas will be included in the notice of funding 
opportunity (NOFO) each year.
Comments Opposing Sec.  130.340--Specific Program Responsibilities 
(Formerly Sec.  130.350)
    SBA received two comments on the proposed language stating that not 
all service centers provide training. The District Office and/or 
program manager may construe this to mean that all centers must provide 
training and that this would be a new requirement and could place a 
substantial financial burden on individual service centers.
    SBA Response: SBA agrees with the commenters and revises the 
language in new Sec.  130.340(c)(5) to state that service centers 
should provide access to training.
Comments Opposing Sec.  130.350--SBDC Advisory Boards (Formerly Sec.  
130.360)
    a. SBA received 14 comments on proposed Sec.  130.350(a)(3) stating 
that the proposed language is not supported by sec. 21(j)(1) of the 
Small Business Act, and may restrict advisory board membership from 
including local leaders, non-profit organization supporting underserved 
communities, etc. Further, these advisory boards should consist 
primarily of representatives from small businesses or associations 
representing small businesses, as well as local economic development 
and community organizations. Some SBDCs have small business champions, 
community development experts, and others with expert skills and 
experience that the SBDC would like to include as members. The 
commenters stated that it seems that SBDCs should have the flexibility 
to make this decision if they do indeed ensure that most of our members 
are from small businesses or associations representing small 
businesses.
    SBA Response: SBA accepts these comments and did not revise this 
paragraph.
    b. SBA received six comments on proposed Sec.  130.350(a)(6) 
stating that this language precludes the possibility of advisory boards 
paying their own costs. Advisory board members are volunteers and often 
pay their own costs.
    SBA Response: SBA accepts this comment and agrees that the proposed 
language should be changed so that the Board members can pay for their 
own costs if they choose to do so. The paragraph now states that the 
reasonable cost of travel of any Board member for official Board 
activities may be paid out of the SBDC's budget funds, and Federal and 
program funds are not to be used to compensate advisory board members 
for non-travel related expenses such as time and effort.
Comments Opposed to Sec.  130.370--Contracts With Other Federal 
Agencies
    SBA received 15 comments regarding proposed new Sec.  130.370(b) 
stating that this requirement does not provide any responsibility for 
SBA to respond. The commenter requests that a five business-day 
response time from SBA be incorporated into the rule so that SBDCs are 
not precluded from participating in grant opportunities consistent with 
their mission.
    SBA Response: SBA accepts these comments and adds language to the 
end of the paragraph with a five-business day response timeframe.
Comments Opposed to Sec.  130.380--Client Privacy
    SBA received 50 comments regarding this new section stating they 
believe that this section compromises the intent of the privacy 
guidelines currently in practice without outlining specific practices 
the Agency must comply with to ensure that client data is not unduly 
disregarded. The commenters want to know who is responsible for the 
data. Currently, the SBDC controls the client identifying data and 
submits downloads that contain anonymized information for program 
performance monitoring. The commenter raises several questions 
regarding broadening access to the data including how it will impact 
client privacy and who will be responsible for the making these 
decisions. Further, the commenter has questions regarding 
responsibility for granting access to the client data.
    Finally, the commenter states that it seems as though Congress 
included a catch-all provision in the Small Business Act (section 
21(a)(7)(C)(ii)) requiring that regulations regarding client privacy 
``shall, to the extent practicable, provide for the maximum amount of 
privacy protection.'' Therefore, any lessening of that amount of 
privacy requires the SBA to take significant steps to limit disclosure. 
The proposed rule works in the opposite direction--towards more 
exposure, not less. The SBA might consider prescribing steps to protect 
that privacy.
    SBA response: SBA rejects these comments. The SBA complies with the 
statute protecting client privacy. First,

[[Page 76629]]

SBA allows clients to opt-in to obtain their contact data for the 
purpose of communication and surveys. SBDCs cannot refuse service for 
those who do not opt in; therefore, the client has the right to not 
disclose the information in most cases excluding the three exceptions. 
With regards to surveys, SBA will consult with the Recognized 
Organization prior to implementing a survey to coordinate any timing, 
minimizing duplicating any surveys that are currently being done, and 
protect the client's privacy to the maximum extent possible.
    SBA believes that the language in the regulation does not 
compromise the intent of the privacy guidelines currently in place.
    The language states that the 641 has an opt-in clause for clients. 
Clients do not have to provide their information on the form.
Comments Opposed to Sec.  130.410--New Applications
    SBA received three comments regarding Sec.  130.410(b) stating that 
while this paragraph only applies to new applicants to the SBDC 
program, it does raise issues surrounding foreign campuses, and 
relationships with other institutions outside the area of operation.
    SBA Response: SBA agrees with the comments received and removed the 
word ``region'' from the paragraph.
Comments Opposed to Sec.  130.420--Renewal Applications
    a. SBA received two comments on Sec.  130.420(c)(2) stating that 
this appears to be a subjective measure. The commenters asked how will 
the Agency define how quality is evaluated, or is the intent of this 
statement that the Agency will review the performance of a program 
relative to programmatic goals, and relative to prevailing economic 
conditions during that prior performance period? How will the Agency 
measure and assess quality of prior performance?
    SBA Response: SBA agrees with the commenters and added language to 
the paragraph that incorporates client satisfaction rates as a deciding 
factor.
    b. SBA received three comments on proposed new Sec.  130.420(c)(5) 
stating that accreditation recommendations do not require action, they 
are simply recommendations for consideration and suggests this 
paragraph be rephrased to cite the current accreditation report, rather 
than recommendations.
    SBA Response: SBA accepts the comment. SBA replaces the word 
``recommendations'' with the word ``conditions.''
Comments Opposing Sec.  130.450--Matching Funds
    a. SBA received three comments on the revision of Sec.  130.450(a) 
stating that the new language appears to contradict the funding 
requirement defined in the statute.
    SBA Response: SBA accepts this comment and revised the language in 
this paragraph to state that no more than 50 percent of cash match may 
be provided through any allowable combination of additional cash, in-
kind contributions, or indirect costs.
    b. SBA received seven comments regarding revised Sec.  130.450(b) 
stating that this appears to be an overstep by the Agency that 
increases the reporting burden of the SBDC, with no discernable benefit 
to the Agency or the SBDC. Further, different hosts and partners have 
different requirements and expectations, and it is the responsibility 
of the SBDC to ensure that these needs are in alignment with the 
mission and vision of the program and to ensure that the needs are 
being met, should they wish to continue to receive that match funding.
    SBA Response: SBA rejects this comment but clarified the language 
by adding that only the additional requirements from SBA will need to 
be identified. Further, SBA requests this information to ensure that 
the Non-Federal Entity's (NFE) cost sharing and matching are not paid 
by Federal Government under another Federal award or by other Federal 
sources. Additionally, the SF424 requires the sources of match. 
Further, if match sources are not known, SBA could unknowingly approve 
those funds through the Notice of Award.
    c. SBA received one comment on proposed Sec.  130.450(e) stating 
that matching funds includes in-kind which by definition is not under 
the direct management of the State Director.
    SBA Response: SBA rejects this comment as all funds are and should 
be under the authority of the State Director. When the SBDC accepts an 
in-kind donation the management of the SBDC is accountable for accurate 
reporting. SBA added the following sentence for clarity: ``If in-kind 
contributions are utilized by the SBDC, the State Director or an SBDC 
Service Center Director is then considered to be in control of those 
contributions.''
    d. SBA received one comment on new proposed Sec.  130.450(f) 
stating that this paragraph is objective and questioning why SBA is 
vesting special authority in the Grants Management Specialist (GMS). A 
program either meets the cash match or not. There is no determination 
to be made by the GMS or others.
    SBA Response: SBA rejects this comment. SBA needs to determine if 
there is sufficient cash match and has oversight responsibility of that 
match amount. Additionally, the GMS must determine and evaluate the 
proposal that proper cash match has been provided.
    e. SBA received five comments regarding proposed new Sec.  
130.450(g) stating that identifying overmatched funds is problematic. 
The policy of the university is to not report overmatch so that these 
funds can be used for leveraging other grants and opportunities. There 
are also concerns as to how this funding may be spent. This is 
problematic to the university and the SBDC organization. A benefit of 
the current SBDC model is that innovative and additional business 
services complement base SBDC services. Since SBA's funds are limited, 
SBDCs must seek other sources of capital and should not be limited by 
this proposed requirement.
    SBA Response: SBA accepts this comment and revises the language to 
include that overmatching expenditures are those which are derived from 
eligible matching sources; are reasonable, allowable, and allocable to 
the SBDC program; are over and above the minimum match required to the 
Federal expenditures; and are included on the required SBDC financial 
reporting to SBA for the project period.
Comments Opposed to Sec.  130.460--Budget Justification
    a. SBA received seven comments regarding new proposed Sec.  
130.460(f) about lobbying. The commenter stated that the new paragraph 
seems to be a gratuitous restatement of current Office of Management 
and Budget (OMB) guidance. It is also confusing as state lobbying 
efforts are permitted as the purpose is to ``reduce program costs'' by 
obtaining matching funds. Another commenter states that this creates a 
problem with hosts, regarding state activities. There is an OMB 
exception regarding state activities ``to reduce the cost or avoid 
material impairment''. Also, this violates section 21(a)(3)(B) of Small 
Business Act (``Circulars shall be incorporated by reference and shall 
not be set forth in summary or other form in regulations.''). The 
commenter requests that the first sentence should be stricken. Also, 
lobbying definition is far more complex than this which gives a false 
impression of ``any legislative contact.'' Finally, another commenter 
suggests that this section should clearly state, as permitted by OMB, 
that SBDCs

[[Page 76630]]

can engage in lobbying in order to secure adequate public match 
funding. This will reduce ambiguity among Federal and state 
stakeholders.
    SBA Response: SBA accepts these comments and deleted the paragraph.
    b. SBA received 11 comments on revised proposed new Sec.  
130.460(f) regarding salaries of the State Directors. The commenters 
state that this language hasn't been useful in the past when examining 
host institutions' human resources departments on pay equality issues. 
The section is neither helpful nor enforceable and should be removed. 
Basing Center Director salaries on professor salaries does not make 
sense, particularly for Centers that are not based in higher education 
institutions. Furthermore, Centers and their Hosts must be able to stay 
competitive in the marketplace to hire top quality employees. Another 
commenter stated that if a recipient organization is not an educational 
institution, the salaries of the SBDC Lead Center Director and the 
subcenter Directors must approximate the average salaries of parallel 
positions within the recipient organization. In both cases, the 
recipient organization should consider the Director's longevity in the 
Program, the number of subcenters, the size of the SBDC budget, the 
number of service centers, and the individual's experience and 
background.
    SBA Response: SBA accepts these comments and deleted the reference 
to the salary but is keeping the rank in the organization and revising 
the text to state that where the recipient organization is an 
educational institution, the SBDC Lead Center Director and the SBDC 
Service Center Director at a minimum must be equivalent to a full 
professor and an assistant professor, respectively, in the school or 
department in which the SBDC is located.
    c. SBA received two comments on revised Sec.  130.460(i) regarding 
travel. The commenter states that this entire section is covered by the 
omni-circular; the organizations and institutions that host SBDC 
programs have very clear guidelines on allowable versus unallowable 
travel expenses.
    SBA Response: SBA accepts these comments and will reference 2 CFR 
200.475 and NOFO for out-of-state and international travel.
    d. SBA received two comments on revised Sec.  130.460(i)(2) 
regarding coach class travel. The commenter questions what is meant by 
coach class and how is this different than the omni-circular.
    SBA Response: SBA accepts these comments and deleted this 
paragraph.
    e. SBA received one comment on revised Sec.  130.460(j) regarding 
dues stating that 2 CFR 200.454(a) Costs of the non-Federal entity's 
membership in business, technical, and professional organizations are 
allowable.
    SBA Response: SBA accepts this comment and deleted this paragraph.
Comments Opposing 13 CFR 130.480--Program Income
    a. SBA received one comment on revised paragraph (b) regarding the 
use of program income. The commenter stated that this is a legacy rule 
that should be reviewed by the Agency and that the CFR sets forth no 
such limitations. Given the Agency's historical backlog for issuing 
notices of award along with the difficult Federal budget process, 
program income can be a valuable resource to provide services to 
clients during shutdowns or during the time when programs do not have 
an active Notice of Award due to Agency delays.
    SBA Response: SBA rejects this comment based on the Small Business 
Act section 21(a)(4)(A) which requires the recipient to match 100 
percent Federal grant funding not less than 50 percent cash and not 
more than 50 percent of indirect costs and in-kind contributions. SBA 
interprets this paragraph to mean that program income, which are fees 
collected from recipients of assistance, is excluded to be used as 
matching funds. Further, SBA requests the sources of match to ensure 
that the NFE's cost sharing and matching are not paid by the Federal 
Government under another Federal award or by other Federal sources. 
Additionally, forms submitted to the SBA require the NFE to provide the 
source of the matching funds. If the funding sources are not provided 
to the SBA, SBA could unknowingly approve an award with unallowable 
sources of matching funds.
    b. SBA received one comment on proposed new paragraph (e) regarding 
program income and SBDC sponsored activities. The commenter stated that 
they do not believe that funds received under a sponsorship agreement 
should be considered program income and that the requirement is not in 
2 CFR 200.80.
    SBA Response: SBA accepts this comment and deleted this paragraph.
Comments Opposing 13 CFR 130.490--Property Standard
    SBA received one comment opposing this section as it repeats 
guidelines outlined in 2 CFR part 200.
    SBA Response: SBA agrees with this comment and will delete this 
section from the regulation.
Comments Opposing 13 CFR 130.500--Advances and Reimbursements
    SBA received one comment regarding this section stating that this 
is a restatement of what is in 2 CFR part 200.
    SBA Response: SBA accepts this comment and removed the section as 
it is a restatement of what is in 2 CFR part 200.
Comments Opposing 13 CFR 130.600--Cooperative Agreement
    a. SBA received one comment opposing proposed paragraph (b) stating 
that it is in direct conflict with the Agency's requirement to grant 
prior approval for contracts in Sec.  130.620.
    SBA Response: SBA agrees with the commenter and revised the 
paragraph to state that SBA reserves the right to disapprove any sub-
agreement entered into the by recipient organization with SBDC service 
center organizations, vendors, or contractors.
    b. SBA received one comment opposing proposed paragraph (d) stating 
that this paragraph is already covered by 2 CFR part 200.
    SBA Response: SBA agree with the commenter and deleted this 
paragraph.
Comments Opposing 13 CFR 130.610--Grant Administration and Cost 
Principles
    a. SBA received one comment regarding the new proposed paragraph 
(b) stating that this paragraph is already covered by 2 CFR part 200.
    SBA Response: SBA agree with the commenter and deleted this 
paragraph.
    b. SBA received one comment regarding the new proposed paragraph 
(c) stating that there is nothing to preclude SBA to propose additional 
requirements beyond 2 CFR part 200.
    SBA Response: SBA accepts the comments and deleted this paragraph.
Comments Opposing 13 CFR 130.620--Revisions and Amendment to 
Cooperative Agreements
    a. SBA received two comments regarding revised paragraph (a)(2) 
questioning whether this paragraph is regarding sub-awards or 
contracts. Additionally, the comments state that this requirement is 
already covered by 2 CFR part 200.
    SBA Response: SBA agrees with the commenters and deleted paragraph 
(a)(2).
    b. SBA received two comments on proposed new paragraph (a)(3) 
stating that they encourage the regulations to include language 
describing how SBA will publicize and distribute any supplemental funds 
it may have and to seek input from SBDCs regarding

[[Page 76631]]

distribution of these funds in a way that supports the overall program 
and/or individual SBDCs. The summary mentions supplemental funds but 
there is no language regarding those funds and how they would be 
distributed.
    SBA Response: SBA accepts this comment and revises the paragraph to 
add the following language, ``If supplemental funds are available for 
distribution, SBA will publish a notice of funding opportunity in 
consultation with the Recognized Organization.''
    c. SBA received two comments regarding new paragraph (b) asking if 
SBA will amend a cooperative agreement with one SBDC decreasing its 
award in order to increase another SBDC's cooperative agreement award 
to authorize unanticipated out-of-state travel?
    SBA Response: SBA accepts this comment and adds the following 
language at the beginning of paragraph (b)(1), ``In consultation with 
the Recognized Organization . . .''
Comments Opposed to Sec.  130.630--Dispute Resolution Procedures
    SBA received three comments regarding revised paragraph (a)(1). The 
comments question why the District Office needs to be involved in the 
process of a financial dispute resolution since the District Office in 
not involved in the financial oversight process.
    SBA Response: SBA accepts this comment and replaces the District 
Office reference with the Grants Management Officer.
Comments Opposed to Sec.  130.700--Suspension, Termination, and Non-
Renewal
    a. SBA received two comments regarding paragraph (a)(1) stating 
that this paragraph vests broad authority to terminate and contradicts 
guidance in the renewal application section and that this is concerning 
as it gives the Agency authority to terminate without cause.
    SBA Response: SBA accepts these comments and is removing this 
paragraph. Further, the SBA acknowledges that the causes for 
termination are outlined in 2 CFR 200.340.
    b. SBA received three comments regarding revised paragraph (b) 
stating that this paragraph does not accurately reflect the 
accreditation process. The recommendations are for continuous 
improvement of the program and are at the discretion of the Lead Center 
to act upon.
    SBA Response: SBA accepts the comments and is replacing the word 
``recommendations'' with the word ``conditions.''
Comments Opposed to Sec.  130.800--Oversight of the SBDC Program
    SBA received one comment regarding new paragraph (c) regarding a 
change in the SBA primary contact and notification of the recipient 
organization. The commenter is questioning why this included in the 
regulations and if it is final.
    SBA Response: SBA rejects this comment and believes that it is 
necessary to keep this paragraph for notification purposes.
Comments Opposing Sec.  130.810--SBA Review Authority
    SBA received one comment regarding paragraph (a), Site visits. The 
commenter states that this paragraph is repeating what is already 
stated in 2 CFR part 200.
    SBA Response: SBA is rejecting this comment. SBA believes that more 
information is needed to provide to the recipient organization 
regarding site visits. Additionally, section 21 (k)(2) of the Small 
Business Act states that the Administration will develop and implement 
a biennial programmatic and financial examination of each small 
business development center established pursuant to this section.
Comments Opposed to Sec.  130.820--Records and Recordkeeping
    SBA received four comments stating that annual physical site visits 
are not necessary to conduct required subrecipient monitoring. Lead 
centers should be allowed flexibility in determining whether a physical 
or virtual visit will meet the needs of its required subrecipient 
monitoring. In cases where there have been no changes in leadership at 
the subrecipient and no problems exist, a virtual visit may suffice. 
Further, the comments state that this appears to unnecessarily restrict 
the method (in-person vs virtual) by which centers are reviewed and it 
is in contradiction to any risk-based approach that a Lead Center may 
deploy.
    SBA Response: SBA accepts the comments. However, SBA revised 
paragraph (a)(2)(ii) to include: (1) that a physical on-site visit must 
be conducted at least once every four years by the recipient 
organization; (2) or when SBA deems it necessary, such as, when there 
is a change in leadership, either at the Service Center or the Lead 
Center, or the SBA has or receives concerns regarding a Service Center.
Comments Opposed to Sec.  130.825--Reports
    a. SBA received two comments on new paragraph (b)(3) requesting 
that SBA provide a timeline for delivering final reports in the 
regulations rather than referring to the NOFO.
    SBA Response: SBA rejects this comment as the dates and times may 
change. Additionally, the Agency should have the flexibility to do this 
in the NOFO.
    b. SBA received two comments regarding newly revised paragraph (d) 
stating that including specific reporting formats in the regulations 
limits ongoing improvements to narrative reporting and that simplified 
reporting may make the content more useful for the Agency.
    SBA Response: SBA accepts the comments and revises paragraph (b) to 
add an introductory sentence which states, ``Performance reports must 
include the data specified below, along with any other information the 
SBDC feels may be relevant to a full appraisal of its performance.''
    c. SBA received one comment on newly revised paragraph (e) stating 
that this paragraph does not vest any new authority within the Agency 
nor does it further the Agency's stated goal of providing more specific 
and clear instructions. The Uniform Guidance provides for a 
certification statement to be included. This is redundant to existing 
guidance provided by the Uniform Guidance.
    SBA Response: SBA accepts that comments and deleted this paragraph.
Comments Opposed to Sec.  130.830--Audits and Investigations
    SBA received one comment stating that this section does not vest 
any new authority within the Agency nor does further the Agency's 
stated goal of providing more specific and clear instructions.
    SBA Response: SBA accepts this comment and revises this section to 
reference 2 CFR part 200.
g. Section-By-Section Analysis
Section 130.100--Introduction
    SBA proposed to add a paragraph providing a broad overview of the 
Program and purpose. SBA believes that this will provide clarity. SBA 
did not receive any comments on this section and is moving forward with 
the paragraph as proposed.
Section 130.110--Definitions
    This section proposed adding 23 new definitions to clarify and 
codify current District Office responsibilities, State/Lead Center 
Director responsibilities, and define other terms already in use in the 
notice of funding opportunity. If the revised or new definition is not 
listed below, SBA did not receive any

[[Page 76632]]

comments for them and moves forward with those definitions as proposed.
    a. Due to the comments received, SBA revised the definition of 
accreditation process that reflects the commenters suggestions and 
current use of the term. The new definition states that it's the 
process by which evaluation and assessment occurs to assist an SBDC 
with assessing its processes and outlining areas needing improvement by 
providing recommendations to strengthen delivery of services and 
assistance.
    b. Due to comments received, SBA revised the definition of 
application to include the term ``renewal application.''
    c. After reviewing the comments, SBA will not change the definition 
of cash match. As defined in 2 CFR part 200, waived indirect cost is 
the difference between the total amount of indirect costs charged to a 
Federal award and the total amount of indirect costs that could have 
been charged to a Federal award. The regulation at 2 CFR part 200 
refers to this as unrecovered indirect costs.
    d. SBA took the comments under consideration and revised the 
definition of clearinghouse to define the term more clearly and 
accurately as requested by the commenters. The definition now states 
that the clearinghouse is a source of market and industry information 
made available to all SBDC networks to assist clients and supports the 
exchange of information between SBDCs.
    e. SBA took the comments submitted under consideration and revised 
the definition of client to include the word ``nascent'' before the 
word ``entrepreneur.''
    f. SBA accepts the comments submitted and refers the reader to the 
definition of program income as defined in 2 CFR part 200.
    g. After some consideration, SBA agrees with the commenters and 
revised the definition of SBDC Director to state that at least 75 
percent of the individual's time and effort is allocated to the SBDC 
grant.
    h. SBA agrees with the comments submitted and deleted the words 
``hiring outside consultants for a client'' from the definition.
Section 130.200--Eligible Entities
    As required in the Small Business Act, 15 U.S.C. 656 and 648(a)(1), 
this section adds a Women's Business Center operating pursuant to 
section 29 of the Small Business Act as an entity eligible to apply to 
be a Lead Center SBDC. This section also proposed to add eligibility 
criteria for the Commonwealth of the Northern Mariana Islands. SBA is 
unable to change this requirement, as the Small Business Act, 15 U.S.C. 
656 and 648(a)(1) states, in part, that after December 31, 1990, the 
Administration shall not make a grant to any applicant other than an 
institution of higher education or a women's business center operating 
pursuant to section 656 of the title as a Small Business Development 
Center unless the applicant was receiving a grant (including a contract 
or cooperative agreement) on such date. The previous sentence shall not 
apply to an applicant that has its principal office located in the 
Commonwealth of the Northern Mariana Islands.
Section 130.300--Small Business Development Centers (SBDCs)
    This section codifies the statutory authority for the Administrator 
to operate and administer the SBDC Program through cooperative 
agreements issued to recipient organizations, as established under the 
Small Business Act. SBA did not receive any comments on this section 
and is moving forward with the rule as proposed.
Section 130.310--Area of Service
    This section requires service centers to be primarily housed within 
institutions of higher education or a Women's Business Center operating 
pursuant to section 29 of the Small Business Act, under paragraph (c). 
SBA is revising the paragraph to provide that for any applicant 
commencing after January 1, 1992, the recipient organization must 
ensure that any new SBDC service centers established within its area of 
service, to the extent practicable, are primarily housed within 
institutions of higher education or a WBC, operating pursuant to 
section 29 of the Small Business Act (15 U.S.C. 656) as stated in 
section 21(a)(1) of the Small Business Act (15 U.S.C. 648(a)(1)).
Section 130.320--Operating Requirements
    This section adds five requirements already in use in the notice of 
funding opportunity as paragraphs (d) through (g) of the section to 
standardize SBDC naming/branding nationwide and enhance the current 
conflict of interest policy as follows:
     The name of the Lead SBDC must contain the official 
identification of ``Small Business Development Center'' and that, 
unless waived by the AA/SBDC, the SBDC has one year from the date of 
promulgation to make any necessary changes.
     Any entity operating as an SBDC service center, whether 
receiving Federal funding or not, is now considered a part of the 
recipient organization's network and is required to report its goals, 
achievements, etc. as any other service center.
     The process to obtain the minimum number of required staff 
members for international trade assistance as required by the Act.
     The requirement for every SBDC to annually sign the 
conflict-of-interest form and to have a policy, which addresses how the 
recipient organization will deal with competing and conflicting issues.
    a. SBA accepts a comment and revises the paragraph (a) to delete 
the reference to ``full-time.''
    b. SBA accepts the comments regarding new paragraph (e) stating 
that this is new and revises the paragraph to narrow the scope of the 
requirement to read as follows: ``Any entity that is using the term 
`Small Business Development Center' and under contract with the Lead 
Center and receiving program funds, whether . . .'' and at the end of 
the paragraph will replace the word ``entity'' with the words ``Service 
Center.''
    c. SBA deleted paragraph (f) since the new accreditation standards 
no longer address the technology designation.
Section 130.330--SBDC Services and Restrictions on Services
    SBA provides an overview of the services that an SBDC must provide 
to prospective entrepreneurs and existing small businesses and the 
related reporting requirements. Further,
    SBA requires the SBDC network to collaborate with other state and 
local government programs providing assistance to small businesses and 
potential small business. This change will provide clarity and 
transparency to the regulations and is consistent with the notice of 
funding opportunity.
    a. SBA accepts the comments and revised paragraph (a) to include, 
``to the extent practicable.''
    b. SBA agrees with the comment received and deleted Sec.  
130.330(b)(4). The remaining paragraphs are redesignated from 
paragraphs (b)(5) and (6) to paragraphs (b)(4) and (5) in this final 
rule.
    c. SBA addresses a comment on newly revised Sec.  130.330(b)(3) and 
agrees that an SBDC counselor should not act as an agent for the 
client. SBA inserted after ``however'' ``SBDCs may not attest to a 
client's readiness or creditworthiness to the lending institution 
either verbally or in writing''. Further SBA deleted ``neither SBDC 
staff nor their agents may take a direct or indirect role in 
representing clients in loan negotiations.''

[[Page 76633]]

    d. SBA revised the language in Sec.  130.330(b)(5) (now Sec.  
130.330(b)(4)) to state ``SBDCs may participate on boards and panels of 
financial institutions and with outside organizations but may not be 
involved in any final credit decisions involving SBDC clients or in 
making or servicing loans.''
    e. SBA revises the language in Sec.  130.330(b)(6) (now Sec.  
133.330(b)(5)) to include ``. . . but may not advocate for, promote, 
recommend approval. . .'' to the paragraph.
    f. SBA revises Sec.  130.340(c) to not include specific focus areas 
in the regulations as they could change and revised the language in the 
regulation to reflect this change. The focus areas will be included in 
the NOFO each year.
Section 130.340--Specific Program Responsibilities
    This section clarifies the responsibilities of the AA/SBDC and the 
SBDC Lead Center Director (Lead Center Director). Currently, this 
section refers to SBA as the entity making decisions or determinations. 
The final rule distinguishes between AA/SBDC and the District Director 
to provide for more transparent identification of roles and 
responsibilities for the public. SBA revises the language in new Sec.  
130.340(c)(5) to state that service centers should provide access to 
training.
Section 130.350--SBDC Advisory Boards
    This section would replace the words ``shall'' and ``may'' with 
``must'' and ``will'' and imposes term limits and language to provide 
guidance to the boards, consistent with the cooperative agreement.
    a. After reviewing comments submitted from the public, SBA will no 
longer revise Sec.  130.350(a)(3).
    b. SBA revised Sec.  130.350(a)(6) stating that the Board members 
can pay for their own costs if they choose to do so.
Section 130.360--Selection of the SBDC Lead Center Director
    This section codifies the current selection process, for SBDC Lead 
Center Director utilized by SBDCs. SBA did not receive any comments on 
this section and is moving forward with the rule as proposed.
Section 130.370--Contracts With Other Federal Agencies
    This section codifies the requirements process for an SBDC to enter 
a contract with another Federal agency and adds language to the end of 
the paragraph with a five-business day response timeframe for SBA.
Section 130.380--Client Privacy
    Section 21(a)(7) of the Act requires SBDCs and the Administration 
to protect the privacy of any individual or small business receiving 
assistance in the Program. Under this final rule, an SBDC, including 
its contractors and other agents, would not be permitted to disclose to 
an entity outside the individual SBDC, the name, address, email 
address, or telephone number, referred to as ``client contact data'' of 
any individual or small business without the consent of such individual 
or small business, unless such disclosure meets on the three exceptions 
discussed below.
    The three exceptions, as authorized by the Act, would permit 
disclosure if: (1) A court orders the Administrator to disclose the 
information in any civil or criminal enforcement action initiated by a 
Federal or state agency; or (2) the Administrator considers such a 
disclosure to be necessary for the purpose of conducting a financial 
audit of a center, not including those required under Sec.  130.830, as 
determined on a case-by-case basis when formal requests are made by a 
Federal or state agency. Such formal requests must justify and document 
the need for individual client contact and/or Program activity data to 
the satisfaction of the Administrator; or (3) SBA requires client 
contact data to directly survey SBDC clients.
    This rule would require SBDCs to provide an opportunity for clients 
to opt in to allow SBA to obtain their contact data. SBA's use of 
client contact data would be restricted only to conduct survey and 
studies that help stakeholders better understand how the services the 
client received affect their business outcomes over time. These surveys 
or studies would include, but are not limited to, program evaluation 
and performance management studies.
    Under this final rule, the Agency would not allow use of client 
contact data for any other purpose beyond program surveys or studies.
    This final rule prohibits the denial of services to clients solely 
based on a client's refusal to provide consent to use their contact 
data for study purposes.
    Section 21(a)(7)(C) of the Act directs the Agency to publish 
standards for requiring disclosures of client information during a 
financial audit. Other Federal or state agencies making such disclosure 
requests are required to submit formal requests, in writing, including 
a justification for the need for individual client contact and/or 
Program activity data for the Administrator's review on a case-by-case 
basis.
    This final rule codifies the current privacy protections in place 
in the Program employed by the Agency. Any reports on the Program 
produced by an SBDC, including its contractors and other agents, and 
the Agency, could not disclose individual client information without 
consent from the client. Any such reports could only report activity 
data in the aggregate, unless given consent, to protect the individual 
privacy of clients.
    SBA believes that the language in the regulation does not 
compromise the intent of the privacy guidelines currently in place. The 
language states that the 641 has an opt-in clause for clients. Clients 
do not have to provide their information on the form.
Section 130.400--Application Procedure
    Currently, this section is not used. This section requires all SBDC 
applicants to comply with the current annual notice of funding 
opportunity procedures for their new or renewal applications to receive 
consideration. This final rule reinforces that an SBDC applicant must 
follow procedures for submitting a new or renewal application, and to 
clarify the application procedures. SBA did not receive any comments on 
this section and is moving forward with the rule as proposed.
Section 130.410--New Applications
    Currently, this section outlines outdated procedures that are no 
longer enforced. This final rule codifies the current new application 
procedures utilized by SBDCs, which require applicants to be located in 
the same state/region where the SBDC is located. This section also 
codifies new recruitment and selection procedures for new recipient 
organizations. As a result of submitted comments, SBA will remove the 
word ``region'' from the Sec.  130.410(b).
Section 130.420--Renewal Applications
    Currently, this section outlines outdated procedures that are no 
longer enforced. This final rule revises the existing renewal and 
nonrenewal process to reflect the process currently utilized by SBDCs. 
Factors of consideration in the renewal application under paragraph (c) 
are expanded to include corrective measures implemented as a result of 
examinations conducted; and the accreditation provision of Sec.  
130.810(c), including any conditions from the accreditation report, and 
corrective measures implemented, affecting the recipient organization 
and the SBDC network.

[[Page 76634]]

    SBA added language to Sec.  130.420(c)(2) which incorporates client 
satisfaction rates as a deciding factor.
    Additionally, SBA revised Sec.  130.420(c)(5) citing the current 
accreditation report, rather than recommendations.
Section 130.430--Application Decisions
    This final rule clarifies and makes transparent the existing 
approval process of an application by outlining the options to grant 
approval, conditional approval, or denial of an application. SBA did 
not receive any comments on this section and is moving forward with the 
rule as proposed.
Section 130.440--Maximum Grant
    This final rule codifies the limitations on grant funding set forth 
in section 21(a)(6)(C) of the Act and the exceptions set forth under 
paragraph (b). The legislative language was revised in this 
codification to be clear and transparent. SBA did not receive any 
comments on this section and is moving forward with the rule as 
proposed.
Section 130.450--Matching Funds
    This final rule expands and clarifies the requirements on matching 
funds for cash, in-kind, or authorized indirect funds so that it is 
clearer and more transparent.
    As a result of comments received, SBA revised the language Sec.  
130.450(a) to state that cash match must be equal to or greater than 50 
percent of the SBA funds used by the SBDC.
    Further, because of comments received, SBA revises Sec.  130.450(b) 
by adding that only the additional requirements from SBA will need to 
be identified.
    Under this final rule, paragraph (c) is added to clarify matching 
requirements for insular territories.
    Paragraph (d) codifies the requirement for all applicants to submit 
a certification of cash match and program income, currently required by 
the notice of funding opportunity.
    Paragraph (e) requires all matching funds, in addition to the 
Federal and program income funds, to be under the direct management of 
the SBDC State/Region Director. As a result of comments received, SBA 
adds the following sentence to Sec.  130.450(e) for clarity: ``If in-
kind contributions are utilized by the SBDC, the State Director or an 
SBDC Service Center Director is then considered to be in control of 
those contributions.''
    Paragraph (g) expands the list of unallowable sources of matching 
funds and as a result of comments received to the proposed rule, SBA 
revises the language in Sec.  130.450(g) to include language that 
defines overmatching expenditures as those that are derived from 
eligible matching sources; are reasonable, allowable, and allocable to 
the SBDC program; are over and above the minimum match required to the 
Federal expenditures; and are included on the required SBDC financial 
reporting to SBA for the project period.
Section 130.460--Budget Justification
    This section codifies current budget justification procedures used 
by SBDCs, as required by the notice of funding opportunity. In 
accordance with 2 CFR part 200, the SBDC is required to have the prior 
approval from the Agency for the purchase of equipment, either through 
a specific disclosure in an annual cost proposal or through an approved 
amendment to an existing cooperative agreement.
    This final rule outlines procedures for foreign travel requests. 
Specifically, all foreign travel requests are required to be submitted 
to the appropriate District Director and the Office of Small Business 
Development Centers (OSBDCs) Program Manager for review and then to the 
AA/SBDC for final approval.
    Paragraph (i) is revised to allow dues to the recognized 
organization to be charged to the cooperative agreement.
    As a result of comments received, SBA deleted proposed Sec.  
130.460(f).
    As a result of the comments received on proposed Sec.  130.460(g) 
(now Sec.  130.460(f)) SBA revised the language by deleting the 
reference to the salary but keeping the rank in the organization. SBA 
received two comments on proposed Sec.  130.460(i) (now Sec.  
130.460(h)) regarding travel stating that this entire section is 
covered by the omni-circular. However, SBA will keep this paragraph as 
stated in the proposed rule because it includes details and information 
not found in 2 CFR part 200.
    As a result of comments received, SBA deleted proposed Sec.  
130.460(i)(2). Proposed paragraph (i) was redesignated as paragraph (h) 
in this rule, so proposed paragraphs (i)(3) through (5) are 
redesignated as paragraphs (h)(2) through (4).
    As a result of comments received, SBA deleted proposed Sec.  
130.460(j).
Section 130.465--Restricted and Prohibited Costs
    Under this final rule, this new section prohibits the use of 
Federal funds, matching funds and program income as required under the 
cooperative agreement for the purposes identified as unallowable in 
applicable sections of 2 CFR part 200. Currently regulations do not 
restrict the use of these above cited funds. These changes, in 
accordance with 2 CFR part 200, ensure that program funds are not used 
by recipient organizations for the purpose of sub-grants, or as seed 
money for venture capital, or for other purposes outside the scope of 
authorized SBDC activities. SBA did not receive any comments on this 
section and is moving forward with the rule as proposed.
Section 130.470--Fees
    This section prohibits SBDC network entities, staff, consultants, 
or volunteers to solicit or accept fees or other compensation for 
counseling services, including, but not limited to, business or 
marketing plan development, loan packaging or credit application 
assistance, or other advisory services described in the Act. SBA adds a 
second paragraph to codify, clarify and make more transparent the 
intent of the section. SBA did not receive any comments on this section 
and is moving forward with the rule as proposed.
Section 130.480--Program Income
    This section codifies the existing requirement that SBDCs may not 
report program income as a matching resource. Additionally, unused 
program income is permitted to be carried over to the subsequent budget 
period by the SBDC network; however, the aggregate amount of network 
program income cannot exceed 25 percent of the total SBDC budget 
(Federal and matching expenditures). The intent of the section remains 
the same; however, it is revised to make it clearer and more 
transparent.
    Based upon comments received, SBA will not revise or change 
paragraph (b) regarding the use of program income based on the Small 
Business Act section 21(a)(4)(A) which requires the recipient to match 
100 percent Federal grant funding not less than 50 percent cash and not 
more than 50 percent of indirect costs and in-kind contributions. SBA 
interprets this paragraph to mean that program income, which are fees 
collected from recipients of assistance, is excluded to be used as 
matching funds. Further, SBA requests the sources of match to ensure 
that the NFE's cost sharing and matching are not paid by the Federal 
Government under another Federal award or by other Federal sources. 
Additionally, forms submitted to the SBA require the NFE to provide the 
source of the matching funds. If the funding sources are not provided 
to the SBA, SBA could unknowingly approve an award with unallowable 
sources of matching funds. However, SBA deleted new paragraph

[[Page 76635]]

(e) regarding program income and SBDC sponsored activities based upon 
comments received.
Section 130.490--Property Standard
    The proposed rule created a new section to require the SBDCs to 
adopt and implement the respective Office of Management and Budget 
(OMB) guidelines for property standards. SBA received one comment 
opposing this section as it repeats guidelines outlined in 2 CFR part 
200. Based upon the comment received, SBA deleted this section from the 
final rule.
Section 130.500--Advances and Reimbursements.
    Current regulations outline the process for SBDC submission of 
reimbursement requests and advancements. Based upon comments received, 
SBA will delete this section.
Section 130.600--Cooperative Agreement
    Currently, this section is not used. This section codifies program 
requirements currently enforced through the notice of funding 
opportunity and followed by the SBDCs. Under this final rule, paragraph 
(a) requires a recipient organization to incorporate the cooperative 
agreement into its SBDC sub-agreements and contracts, which is already 
being done by the SBDCs.
    As a result of comments, paragraph (b) now states that SBA reserves 
the right to disapprove any sub-agreement entered into the by recipient 
organization with SBDC service center organizations, vendors, or 
contractors.
    Paragraph (c) outlines procedures for developing performance goals 
and measurements, negotiating the goals and measurements, and 
consequences of not meeting those goals and measurements. Also, SBA 
loan goals are not negotiated or incorporated into the cooperative 
agreement without the written approval of the AA/SBDC.
    As a result of comments submitted, paragraph (d) is deleted.

Section 130.610--Grant Administration and Cost Principles

    As a result of comments received, SBA will delete both the last 
sentence in the current paragraph and newly designated paragraphs (b) 
and (c).
Section 130.620--Revisions and Amendment to Cooperative Agreements
    This section revises paragraph (a) by outlining required prior 
approval requests by SBDCs for revisions to the cooperative agreement. 
However, due to comments received, SBA will delete paragraph (a)(2). 
Additionally, due to comments received, SBA revised paragraph (a)(3) to 
add the following language, ``If supplemental funds are available for 
distribution, SBA will publish a notice of funding opportunity in 
consultation with the Recognized Organization.''
    SBA will also add new paragraph (b) for clarity and transparency. 
As is current practice, paragraph (b) would authorize the AA/SBDC to 
amend one or more cooperative agreements to authorize unanticipated 
out-of-state travel by SBDC personnel responding to a need for services 
in a Presidentially Declared Major Disaster Area and to address how 
travel costs are to be handled. Paragraph (b) authorizes SBA to provide 
financial assistance to SBDCs, 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 or SBA 
Administrator has declared a major disaster.
    Due to comments received, SBA added the following language at the 
beginning of paragraph (b)(1), ``In consultation with the Recognized 
Organization . . .''
Section 130.630--Dispute Resolution Procedures
    This section clarifies the existing procedures for a financial 
dispute or a programmatic or nonfinancial dispute for clarity and 
transparency. The intent of this section remains the same. As a result 
of comments received, SBA replaces the District Office reference with 
the Grants Management Officer.
Section 130.700--Suspension, Termination, and Non-Renewal
    This section revises and clarifies the procedures for suspension, 
termination or non-renewal for clarity and transparency.
    Proposed paragraph (a)(1) is deleted in this final rule due to 
comments received and SBA acknowledges that the causes for termination 
are outlined in 2 CFR 200.340. Proposed paragraph (a)(2) (now paragraph 
(a)(1)) allows the recipient organization to continue to conduct 
project activities and incur allowable expenses until the end of the 
current budget period in instances when the SBA has elected to not to 
renew a cooperative agreement. Under this final rule, if a recipient 
organization does not seek to renew the grant, it must notify the 
District Office and send a letter of intent to withdraw to the AA/SBDC.
    Paragraph (a)(2) of this final rule (proposed paragraph (a)(3)) 
adds the sentence, ``A decision to suspend a cooperative agreement is 
effective immediately.'' Additionally, the notice of suspension 
recommends that the recipient organization cease work on the project 
immediately and places SBA under no obligation to reimburse any 
expenses incurred by a recipient organization while it is under 
suspension.
    Under this final rule, paragraphs (b)(11) through (15) would be 
added for clarity and transparency on the causes for termination or 
suspension.
    Currently, the administrative procedures for suspension, 
termination, and non-renewal are found in the cooperative agreement. 
Under this final rule, the new administrative procedures are outlined 
under paragraph (c) as well as the responsibilities of the AA/SBDC in 
these circumstances.
    Under this final rule, paragraph (d) is added to outline the 
administrative review of suspension, termination, and non-renewal 
actions as well as the required process for SBDCs to submit the request 
for administrative review. Further, due to comments received on the 
proposed rule, SBA is revising paragraph (d) by replacing the word 
``recommendations'' with the word ``conditions.''
Section 130.800--Oversight of the SBDC Program
    This section is revised to clarify the existing broad language used 
to outline program oversight requirements by adding three new 
paragraphs. SBA received one comment concerning new paragraph (c) 
regarding a change in the SBA primary contact and notification of the 
recipient organization. The commenter is questioning why this included 
in the regulations and if it is final. SBA is not changing this 
paragraph and believes that it is necessary to keep this paragraph for 
notification purposes.
Section 130.810--SBA Review Authority
    This final rule revises paragraph (c) to reiterate 15 U.S.C. 
648(k)(2) of the Small Business Act and to state that SBA may not renew 
or extend any cooperative agreement with an SBDC unless the center has 
been approved under the accreditation program, except that the AA/SBDC 
may waive such accreditation requirement, at their discretion, upon 
showing that the center is making a good faith effort to obtain 
accreditation. This section clarifies and provides more detail on the 
review authority provided to SBA regarding the SBDC Program. SBA 
received one comment regarding paragraph (a) (Site visits). However, 
SBA is keeping the paragraph in this

[[Page 76636]]

final rule as the SBA believes that more information is needed to 
provide to the recipient organization regarding site visits. Section 
21(k)(2) of the Small Business Act states that the Administration will 
develop and implement a biennial programmatic and financial examination 
of each small business development center established pursuant to this 
section.
Section 130.820--Records and Recordkeeping
    This final rule revises the existing broad instructions on records 
and recordkeeping requirements for an SBDC to provide clarity and 
transparency. The revisions include more narrow instructions to clarify 
each required step in the current process.
    SBA received four comments stating that annual physical site visits 
are not necessary to conduct required subrecipient monitoring. Lead 
centers should be allowed flexibility in determining whether a physical 
or virtual visit will meet the needs of its required subrecipient 
monitoring. In cases where there have been no changes in leadership at 
the subrecipient and no problems exist, a virtual visit may suffice. 
Further, the comments state that this appears to unnecessarily restrict 
the method (in-person vs virtual) by which centers are reviewed and it 
is in contradiction to any risk-based approach that a Lead Center may 
deploy.
    SBA Response: SBA accepts these comments and revises the paragraph 
to state that the Lead Center must annually conduct monitoring of its 
Service Centers either in-person or virtually. Moreover, a physical on-
site visit must be conducted at least once every four years by the 
recipient organization; or when SBA deems it necessary, such as, when 
there is a change in leadership, either at the Service Center or the 
Lead Center, or the SBA has or receives concerns regarding a Service 
Center.
Section 130.825--Reports
    This final rule requires SBDCs to submit performance and financial 
reports to SBA for review, as currently required by the notice of 
funding opportunity. The proposed revisions outline the frequency of 
the reporting, electronic data reporting which includes counseling and 
training records, and specific details for each of the performance 
reports and financial reports. SBA is not changing paragraph (b)(3) as 
the dates and times may change and the Agency should have the 
flexibility to do put the dates and times in the NOFO.
    Due to comments received on the proposed rule, SBA revises 
paragraph (d) in this final rule to add an introductory sentence which 
states, ``Performance reports must include the data specified below, 
along with any other information the SBDC feels may be relevant to a 
full appraisal of its performance.''
    Further, SBA deletes paragraph (e) due to comments received on the 
proposed rule.
Section 130.830--Audits and Investigations
    Current regulations provide general but outdated, compliance 
instructions to the SBDCs regarding audits and investigations performed 
by SBA's Office of Inspector General. This section would be updated and 
revised with more specific and clear instructions. However, due to 
comments received on this proposed section, SBA refers to 2 CFR part 
200.
Section 130.840--Closeout Procedures
    Current regulations do not include closeout procedures; rather, 
these are found in the cooperative agreement. Under this final rule, 
this new section outlines closeout procedures for the recipient 
organization to ensure that program funds and property acquired or 
developed under the SBDC cooperative agreement are fully reconciled and 
transferred seamlessly between recipient organizations, service 
centers, or other Federal programs. SBA did not receive any comments on 
this section and is moving forward with the rule as proposed.
Compliance With Executive Orders 12866, 12988, 13132, and 13563, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35), the Congressional Review 
Act (5 U.S.C. 801-808), and the Regulatory Flexibility Act (5 U.S.C. 
601-612)
Executive Order 12866
    The Office of Management and Budget (OMB) has determined that this 
rule is a ``significant'' regulatory action for the purposes of 
Executive Order (E.O.) 12866. Accordingly, the next section contains 
SBA's Regulatory Impact Analysis.
Regulatory Impact Analysis
1. Is there a need for this regulatory action?
    The SBDC rules were last revised in 1995 (see 60 FR 31504) (June 
13, 1995). However, the statute authorizing the SBDC Program has been 
amended numerous times since the last rulemaking (for a full listing of 
amending legislation, see the history notes at 15 U.S.C. 648). For 
example, SBA updates the regulation as required by section 21(a)(7) of 
the Small Business Act to protect the privacy of any individual or 
small business receiving assistance in the Program.
    SBA believes it is now necessary to revise the regulations to 
outline current policies and procedures for the SBDC Program for 
consistency. This regulation also incorporates the changes required by 
the 2 CFR part 200 and other grant changes that have taken place over 
the last 25 years. Additionally, the America's Small Business 
Development Centers (ASBDC), the recognized association as established 
in section 21(a)(3)(A), has requested changes that are consistent with 
the revisions made in the notice of funding opportunity and cooperative 
agreement. Furthermore, the SBA received 133 comments to the ANPRM that 
was published on April 2, 2015, some of which are incorporated in this 
rule.
    In the absence of this rule, there are discrepancies between the 
regulations and Program governing documents, including the notice of 
funding opportunity and the cooperative agreement. Currently, SBA and 
the SBDCs reference three or more documents to find guidance on the 
Program, and the annual notice of funding opportunity and cooperative 
agreement have become, for all practical purposes, documents which 
interpret the statute. Also, SBA has limited authority to hold SBDCs 
accountable for low or non-performance. While low or non-performance is 
a rare occurrence, SBA's only current recourse is to write conditions 
into the SBDC notice of award. The rule strengthens SBA's oversight and 
accountability, as intended by Congress, and reduces burden by 
consolidating programmatic guidance to one document.
2. What are the potential benefits and costs of this regulatory action?
    The benefits of this rule are based on incorporating all the 
changes that have been made with the publication of 2 CFR part 200, 
other grant changes over the past 20 years, and a streamlining of both 
the notice of funding opportunity and the cooperative agreement. 
Specifically, the rule provides guidance on:
     The determination of the official name of the SBDC.
     Directing minimum reporting for, and hiring of, State 
Directors.
     Applying for other grants/other sources of funds.
     Clarifying Project Officer responsibilities.

[[Page 76637]]

     Clarifying matching funds, such as in-kind funds, funding 
expenditures, and eligible entities budget justification.
     The collection and use of individual SBDC client data.
     Adding new sections regarding suspension, termination, and 
non-renewal, payments and reimbursements, property standards, 
confidential information--among others.
    The new regulations will simplify and streamline notice of funding 
opportunity language to contain only that information that the 
applicant organization must submit and not all the other information 
that will now be written into the regulations. Moreover, having the 
regulations in one document would make administering the Program by the 
SBDCs much easier by not having to reference three or more different 
documents. The estimated reduction in burden hours to this 
consolidation is presented in the table below:

                                      Table 1--Estimate of Savings to SBDCs
----------------------------------------------------------------------------------------------------------------
                                         Number of  expected       Average time or money
              Outcomes                   occurrence per year       saved per occurrence    Total annual  savings
                                     (A)........................  (B)...................  (A x B)
----------------------------------------------------------------------------------------------------------------
Provision of better information      63 SBDCs...................  4 hours at $120.22 \1\/ 252 hours; $30,295.44.
 leading to better choices.                                        hr = $480.88.
Increased efficiency from clarity    63 SBDCs...................  2 hours at $120.22 \1\/ 126 hours; $15,147.72.
 and agreement with other related                                  hr = $240.44.
 documents.
                                    ----------------------------------------------------------------------------
    Total Savings..................  ...........................  ......................  378 hours; $45,443.16.
----------------------------------------------------------------------------------------------------------------
\1\ Based on the most recently available data, from 2019 Salary Survey of America's SBDC, hourly wage of a State
  Director ($60.11) plus 100% for benefits. Salary Survey (americassbdc.org), p. 3.

    There are currently 63 SBDCs that benefit from this new regulation. 
We estimate the changes to the rule will create a four-hour benefit per 
SBDC from better information leading to better SBDC choices because the 
revisions will clarify definitions and provide guidance on various 
issues. We estimate a two-hour increase in efficiency per SBDC due to 
the clarity that the revisions to the rule will provide because the 
rule will align with the notice of funding opportunity and the 
cooperative agreement. Using the average hourly wage of an SBDC State 
Director, the total annual benefit of these revisions comes to 
$45,443.16 for all the 63 SBDCs. We anticipate that these benefits will 
be realized over perpetuity in that SBDCs will continue to experience 
better decision-making from the clarification and additional guidance 
provided and increased efficiency from only having to reference one 
document.
    There are also several benefits that cannot be quantified. One of 
these benefits is the increased security that the rule provides SBDCs 
through its requirements to protect the privacy of an individual or 
small business receiving assistance in the Program. Another benefit to 
revising and updating the regulations is that it would give SBA more 
authority to enforce the requirements as written in the regulations 
which is something currently lacking in the Program.
    There are some costs incurred by the SBDCs in initially reading and 
interpreting the new regulation. There is an additional requirement for 
application procedures which currently only exists in the notice of 
funding opportunity. We estimate that this will add approximately two 
hours of burden for SBDCs. The SBDCs also must provide a certification 
of cash match and program income for which a requirement currently 
exists only in the notice of funding opportunity. Additionally, the 
rule would require SBDCs to submit performance and financial reports to 
SBA for review, as currently required by the notice of funding 
opportunity. These requirements are reflected in the most recent 
Information Collection Requests for the reporting requirements for 
SBDCs, so while reflected here, these requirements do not change the 
Paperwork Reduction Act cost burden. SBA staff must review these 
reporting requirements which we estimate will take SBA staff 30 minutes 
twice a year to review. These costs are summarized below:

                                                         Table 2--Estimate of Costs to SBDCs/SBA
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Amount of time                                   Frequency    Number of businesses or
                                        required hours           Value of time            per year      individuals affected        Total annual cost
                                                   (A)  (B)...........................          (C)  (D)......................  (A x B x C x D)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Read and interpret the regulation.....               2  $120.22 \1\/hr................            1  63 SBDCs.................  126 hours; $15,147.72.
Reporting.............................               2  $58.90 \2\/hr.................            2  63 SBDCs.................  252 hours; $14,842.80.
Reviewing Reports (SBA)...............             0.5  $137.10 \3\/hr................            2  For 63 SBDCs.............  63 hours; $8,637.30.
                                       -----------------------------------------------------------------------------------------------------------------
    Total Administrative Costs........  ..............  ..............................  ...........  .........................  441 hours; $38,627.82.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\2\ Based on the most recently available data, from 2019 Salary Survey of America's SBDC, hourly wage of an Accounting, Grants, and Finance Position of
  ($29.45) plus 100 percent for benefits. Salary Survey (americassbdc.org), p. 12.
\3\ Based on the 2022 salary of a GS-14 step 5 analyst in the DC area plus 100 percent for benefits. SALARY TABLE 2022-DCB (opm.gov).


[[Page 76638]]

    The undiscounted schedule of benefits and costs over the first 
three years of the rule (with the values in year three to continue in 
perpetuity) are presented in the following table:

        Table 3--Schedule of Costs/(Savings) Over 3-Year Horizon
------------------------------------------------------------------------
                                       Benefits              Costs
------------------------------------------------------------------------
Year 1..........................  378 hours;          441 hours;
                                   $45,443.16.         $38,627.82.
Year 2..........................  378 hours;          310 hours;
                                   $45,443.16.         $23,107.
Year 3..........................  378 hours;          310 hours;
                                   $45,443.16.         $23,107.
------------------------------------------------------------------------

    The annualized net savings of this rule is $20,640 with a seven 
percent discount rate, assuming annual savings of $44,722 in perpetuity 
and costs in the first year of $38,015 and afterwards costs of $23,107, 
in perpetuity.
3. What alternatives have been considered?
    SBA considered two alternatives to this rulemaking. First would be 
using internal SBA guidance, such as Standard Operating Procedures 
(SOPs), to interpret existing rules. SBA also considered continued 
interpretation of program requirements through the cooperative 
agreement negotiation process. However, under the applicable statute, 
SBA must consult with the ASBDC when developing documents as set forth 
in the statute (15 U.S.C. 648(a)(3)(A)).
    In addition to this consolidation requirement, SBA values the input 
of the public. The rulemaking process would provide an opportunity for 
both the ASBDC and the public to comment on changes made to the 
Program. SBA also identified a need to streamline changes made to the 
notice of funding opportunity and cooperative agreement, and any 
changes in Federal grant procedures, since the Program regulations were 
last revised. Since this rule is an all-encompassing revision of the 
current regulations, SBA does not believe that more extreme changes 
could be made at this time. Also, this statute specifically includes a 
direction for SBA to develop regulations for the SBDC Program with the 
ASBDC and SBDCs. For these reasons, SBA believes that proceeding with a 
rulemaking is the best approach to revise SBDC Program requirements 
currently.
Summary
    The changes proposed for this rule will not negatively affect 
access to the Program for small businesses or nascent entrepreneurs. 
Each small business and nascent entrepreneur will continue to have 
access to the full array of services provided by the SBDCs. In fact, 
there will be a de minimis cost savings realized by SBDCs because they 
will not have to reference multiple documents for guidance. There are 
also some non-quantifiable benefits such as increased privacy and the 
ability for SBA to enforce the requirements laid out in the rule.
Executive Orders 12866 and 13563
    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
It is anticipated that this rule will not be a significant regulatory 
action and, therefore, was not subject to review under section 6(b) of 
E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
Congressional Review Act
    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, Department of Defense 
(DoD), General Services Administration (GSA), and National Aeronautics 
and Space Administration (NASA) will send the rule and the ``Submission 
of Federal Rules Under the Congressional Review Act'' form to each 
House of the Congress and to the Comptroller General of the United 
States. A major rule cannot take effect until 60 days after it is 
published in the Federal Register. This rule is not anticipated to be a 
major rule under 5 U.S.C. 804.
Executive Order 12988
    This action meets applicable standards set forth in sections 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
    Seven recipients (States) are grantees of SBDC Programs hosted by 
State economic development organizations. They are Colorado, Illinois, 
Indiana, Minnesota, Montana, Ohio, and West Virginia. All other 
grantees are hosted by institutions of higher education. This rule 
imposes no additional or special burdens on the State-based SBDCs. As 
mentioned above the grantees are currently abiding by these regulations 
and 2 CFR part 200 as the requirements are already in the notice of 
funding opportunity and cooperative agreement. The recipient 
organizations apply or volunteer to participate in the Program and can 
withdraw at any time.
    SBA determined that this rule will not have substantial direct 
effects on the States, on the relationship between the Federal 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, for 
the purposes of Executive Order 13132, SBA has determined that this 
rule has no federalism implications warranting preparation of a 
federalism assessment. However, SBA invites comments on issues relating 
to the federalism aspects of this rule.
Paperwork Reduction Act, 44 U.S.C. Ch. 35
    SBA determined that this rule would not impose additional reporting 
and recordkeeping requirements under the Paperwork Reduction Act (PRA). 
Currently, there are two PRA submissions associated specifically with 
the SBDC Program: (1) OMB control number 3245-0140 Cooperative 
Agreement; and (2) OMB control number 3245-0169, Federal Cash 
Transaction Report, Financial Status Report, Program Income Report, and 
Narrative Program Report. These will not change, and no new 
requirements are required in the rule.
Regulatory Flexibility Act, 5 U.S.C. 601-612
    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (RFA) requires the Agency to prepare an

[[Page 76639]]

Initial Regulatory Flexibility Analysis (IRFA) describing the economic 
impact that the rulemaking may have on small entities. Section 605 of 
the RFA allows an agency to certify a rule, in lieu of preparing an 
analysis, if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities.
    The rule revises regulations to outline current policies and 
procedures for the SBDC Program. Specifically, the rule clarifies and 
defines the role of the District Office regarding cooperative agreement 
oversight activities by adding definitions and procedures throughout 
the regulations. Second, SBA adds 23 definitions that refine and 
explain various roles, procedures, documents, and categories of funding 
and revises other definitions for clarification. Third, a section is 
added to codify SBDC client confidentiality. Finally, the current 
process of hiring a State/Region Director is outlined in an SBA policy 
notice; however, the regulation codifies and refines this process. Most 
of these changes are already implemented by the SBDCs, and these 
regulations are codifying them.
    The rule impacts 62 SBDCs that primarily fall into the North 
American Industry Classification System (NAICS) codes 611210 (junior 
colleges) and 611310 (colleges, universities, and professional 
schools). In addition, seven SBDCs are hosted by state economic 
development organizations, such as state Departments of Trade or 
Commerce.
    A junior college is considered small if its annual receipts are 
$28.5 million \4\ or less while colleges, universities, and 
professional schools are considered small if annual receipts are $30.5 
million or less. As shown in Table 2, only one SBDC can be considered 
small under both size standards. Note that these size standards do not 
apply to the seven SBDCs hosted by state organizations. However, state 
organizations under NAICS 92 (public administration) do not have 
applicable small business size standards but would not be considered 
small using the standards of NAICS codes 611210 or 611310.
---------------------------------------------------------------------------

    \4\ SBA Table of Size Standards.

                Table 5--SBDC Size Standard by NAICS Code
------------------------------------------------------------------------
                                 SBA Small business size
           NAICS code                standard: annual          Count
                                    Receipts threshold
------------------------------------------------------------------------
Junior Colleges (611210).......  Less than or equal to                 1
                                  $28.5 million.                       7
                                 Greater than $28.5
                                  million.
Colleges, Universities, and      Less than or equal to                 0
 Professional Schools (611310).   $30.5 million.                      47
                                 Greater than $30.5
                                  million.
Public Administration (92).....  No standard established               7
                                                         ---------------
    Total......................  .......................              62
------------------------------------------------------------------------

    The purpose of the rule is to codify existing practices and to 
provide consistency between regulations and the Program's governing 
documents and practices. The Regulatory Impact Analysis presented 
earlier describes the costs and savings of the rule and the small net 
savings relative to the number of entities. Accordingly, the 
Administrator of the SBA, hereby certifies to the Chief Counsel of 
Advocacy of SBA that this rule will not have a significant economic 
impact on a substantial number of small entities. SBA invites comment 
from the public on this certification.
RISE Act (Research Investment To Spark the Economy Act of 2021, H.R. 
7308)
    The Administrator may authorize an SBDC to provide advice, 
information, and assistance, as described in subsection (c) of the 
Small Business Act, to a small business concern located outside of the 
state, without regard to geographic proximity to the small business 
development center, if the small business concern is located in an area 
for which the President has declared a major disaster.
    The Administrator may provide financial assistance to an SBDC, a 
Women's Business Center described in section 29 of the Small Business 
Act, 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.

List of Subjects in 13 CFR Part 130

    Grant programs-business, Small businesses, Technical assistance.

    For the reasons stated in the preamble, the Small Business 
Administration amends 13 CFR part 130 as follows:

PART 130--SMALL BUSINESS DEVELOPMENT CENTERS

0
1. The authority citation for part 130 is revised to read as follows:

    Authority:  15 U.S.C. 634(b)(6), 648, and 648 note.


0
2. Revise Sec.  130.100 to read as follows:


Sec.  130.100  Introduction.

    (a) Objective. The Small Business Development Centers (SBDC) 
Program creates a broad-based system of assistance for the small 
business community by linking the resources of Federal, state, tribal, 
and local governments with the resources of the educational community 
and the private sector. The Program provides small businesses and 
aspiring entrepreneurs with a wide array of technical assistance and 
support to strengthen performance and sustainability of existing small 
businesses, and to enable the creation of new business entities. The 
Small Business Administration (SBA or the Agency) articulates its 
responsibilities for the general management and oversight of the SBDC 
Program by means of a cooperative agreement with the recipient 
organization.
    (b) Adoption of amended references. All references in this part to 
Standard Operating Procedures, SBA official policies and procedures, 
and award documents adopt all ensuing changes or amendments to such 
sources.

0
3. Amend Sec.  130.110 by:
0
a. Adding the definition ``Accreditation process'' in alphabetical 
order;
0
b. Revising the definitions ``Applicant organization'' and 
``Application'';
0
c. Removing the definition ``Area of Service'' and adding the 
definition ``Area of service'' in its place;
0
d. Adding the definitions ``Associate Administrator/Entrepreneurial 
Development (AA/ED)'' and ``Associate Administrator/Small Business 
Development Centers (AA/SBDC)'' in alphabetical order;

[[Page 76640]]

0
e. Removing the definition ``Cash Match'' and adding the definition 
``Cash match'' in its place;
0
f. Adding the definitions ``Clearinghouse'' and ``Client'' in 
alphabetical order;
0
g. Removing the definitions ``Cognizant Agency'' and ``Cooperative 
Agreement'' and adding the definitions ``Cognizant agency'' and 
``Cooperative agreement'' in their places, respectively;
0
h. Revising the definition of ``Counseling'';
0
i. Adding the definition ``Counseling record'' in alphabetical order;
0
j. Revising the definitions ``Direct costs'' and ``Dispute'';
0
k. Adding the definition ``District Office'' in alphabetical order;
0
l. Revising the definitions ``Grants Management Specialist'', ``In-kind 
contributions'', and ``Indirect costs'';
0
m. Adding the definitions ``Insular areas'' and ``Key personnel'' in 
alphabetical order;
0
n. Revising the definitions ``Lead Center'' and ``Lobbying'';
0
o. Adding the definitions ``Matching funds'', ``Notice of funding 
opportunity'', ``Notice of non-renewal'', ``Notice of suspension'', 
``Notice of termination'', and ``Office of Small Business Development 
Centers (OSBDC)'' in alphabetical order;
0
p. Removing the definition ``Overmatched Amount'' and adding the 
definition ``Overmatched amount'' in its place;
0
q. Adding the definitions ``Prior approval'' and ``Program funds'' in 
alphabetical order;
0
r. Revising the definition ``Program income'';
0
s. Removing the definition ``Program manager'' and adding ``Program 
Manager'' in its place;
0
t. Adding the definition ``Program performance data'' in alphabetical 
order;
0
u. Removing the definition ``Project officer'' and adding the 
definition ``Project Officer'' in its place;
0
v. Revising the definition ``Project period'';
0
w. Adding the definition ``Proposal'' in alphabetical order;
0
x. Revising the definition ``Recipient organization'';
0
y. Adding the definition ``SBDC Lead Center Director'' in alphabetical 
order;
0
z. Revising the definition ``SBDC network'';
0
aa. Adding the definitions ``SBDC satellite location'', ``SBDC service 
center'', and ``SBDC Service Center Director'' in alphabetical order;
0
bb. Removing the definition ``Specialized Services'' and adding the 
definition ``Specialized services'' in its place;
0
cc. Revising the definition ``Training''; and
0
dd. Adding the definition ``Training record'' in alphabetical order.
    The additions and revisions read as follows:


Sec.  130.110  Definitions.

    Accreditation process. An evaluation process to assist an SBDC with 
assessing its processes and outlining areas needing improvement by 
providing recommendations to strengthen delivery of services and 
assistance.
    Applicant organization. A qualified eligible entity that applies 
for Federal financial assistance to establish, administer, and operate 
an SBDC network under a new or renewed cooperative agreement.
    Application. Also referred to as the proposal or the renewal 
application, the written submission by a new applicant organization or 
an existing recipient organization describing its projected SBDC 
activities for the upcoming budget period and requesting SBA funding 
for use in its operations.
    Area of service. As designated in the cooperative agreement, the 
state or region in which an applicant organization proposes to provide 
services, or in which a recipient organization currently provides 
services.
    Associate Administrator/Entrepreneurial Development (AA/ED). The 
individual who is appointed by the SBA Administrator to oversee the 
Office of Entrepreneurial Development (OED), where the SBDC Program is 
located.
    Associate Administrator/Small Business Development Centers (AA/
SBDC). The individual who is statutorily mandated to administer the 
SBDC Program.
* * * * *
    Cash match. Non-Federal funds budgeted and expended by the 
recipient organization and/or sponsoring SBDC organization for direct 
costs of the project. Cash match excludes indirect costs, overhead 
costs, in-kind contributions, and program income. See 2 CFR 200.306.
    Clearinghouse. A source of market and industry information made 
available to all SBDC networks to assist clients and supports the 
exchange of information between SBDCs.
    Client. A nascent entrepreneur or existing small business seeking 
services provided by the SBDC.
    Cognizant agency. The Federal awarding agency that provides the 
predominant amount of direct funding to a recipient. See 29 CFR 99.105.
    Cooperative agreement. A legal instrument of financial assistance 
between a Federal awarding agency or pass-through entity and a non-
Federal entity that, consistent with 31 U.S.C. 6302-6305:
    (1) Is used to enter into a relationship the principal purpose of 
which is to transfer anything of value from the Federal awarding agency 
or passthrough entity to the non-Federal entity to carry out a public 
purpose authorized by a law of the United States (see 31 U.S.C. 
6101(3)); and not to acquire property or services for the Federal 
Government or pass-through entity's direct benefit or use.
    (2) Is distinguished from a grant in that it provides for 
substantial involvement between the Federal awarding agency or pass-
through entity and the non-Federal entity in carrying out the activity 
contemplated by the Federal award.
    (3) The term does not include:
    (i) A cooperative research and development agreement as defined in 
15 U.S.C. 3710a; or
    (ii) An agreement that provides only:
    (A) Direct United States Government cash assistance to an 
individual;
    (B) A subsidy;
    (C) A loan;
    (D) A loan guarantee; or
    (E) Insurance.
    (4) Is a negotiated legal agreement between SBA and a recipient 
organization containing the terms and conditions under which SBA 
provides Federal funds for the performance of SBDC activities.
* * * * *
    Counseling. Qualifying technical or management assistance, as 
defined in the cooperative agreement, provided through the SBDC Program 
to clients on an individual basis, as established by policy.
    Counseling record. A record that provides individual client contact 
information, demographics about the client/business and data on the 
counseling provided.
    Direct costs. Expenditures that can be identified specifically with 
a final cost objective and are further defined in 2 CFR part 200.
    Dispute. A programmatic or financial disagreement that the 
recipient organization requests be handled in accordance with the 
dispute resolution procedures set forth at Sec.  130.630.
    District Office. The local SBA office, in collaboration with the 
OSBDC, is charged with: ensuring that small business market needs are 
met by the SBDC; conducting the regularly scheduled compliance reviews; 
monitoring statements as required; and

[[Page 76641]]

collaborating with the SBDC to perform joint events and trainings.
* * * * *
    Grants Management Specialist. An SBA employee within the Office of 
SBDC, designated by the AA/SBDC, who meets the Office of Management and 
Budget (OMB) standards and certifications and is responsible for the 
budgetary review, award, and administration of one or more SBDC 
cooperative agreements.
    In-kind contributions. Property, facilities, services, or other 
nonmonetary contributions from non-Federal sources. See 2 CFR part 215 
(OMB Circular A-110) and part 143 of this chapter, as applicable.
    Indirect costs. Costs generally incurred for a common or joint 
purpose. See 2 CFR part 220 (OMB Circular A- 21), 225 (OMB Circular A- 
87), and/or 230 (OMB Circular A-122).
    Insular areas. Territories include the Virgin Islands, Guam, 
American Samoa, the Trust Territory of the Pacific Islands, and the 
Government of the Northern Mariana Islands. See 48 U.S.C. 1469a.
    Key personnel. Principal staff of the Lead Center and SBDC service 
centers, including SBDC Lead Center Directors, SBDC Service Center 
Directors, or managers of International Trade Centers, Technology 
Program Centers, and directors of other SBDC specialty programs and any 
other leadership positions identified by the SBDC network.
    Lead Center. The administrative office of the recipient 
organization that operates and manages an SBDC network.
    Lobbying. ``Lobbying'' as described in 2 CFR parts 220 (OMB 
Circular A-21), 225 (OMB Circular A-87), and 230 (OMB Circular A-122) 
and Public Law 101-121, section 319, which discuss the limitations on 
use of appropriated funds to influence decisions of certain of Federal 
officials, including Members of Congress, Federal contracting, and 
financial transactions.
    Matching funds. The combined amounts of non-Federal cash and 
noncash resources proposed for the cooperative agreement or claimed to 
fulfill statutory match requirements.
    Notice of funding opportunity. The annual solicitation that an 
applicant organization or recipient organization must respond to in its 
initial or renewal application.
    Notice of non-renewal. A notice provided to an SBDC stating that 
the SBA will not renew the cooperative agreement with the current 
recipient organization.
    Notice of suspension. A notice provided to an SBDC stating that the 
SBDC is under suspension.
    Notice of termination. A notice provided to an SBDC stating that 
the SBDC is terminated.
    Office of Small Business Development Centers (OSBDC). The SBA 
program office providing leadership and program oversight, managing the 
funding formula, program budget, and the establishment and maintenance 
of all program policy over the national SBDC network.
    Overmatched amount. Contributions of non-Federal cash and of non-
cash resources for authorized SBDC activities in excess of the 
statutorily required match.
    Prior approval. The written concurrence from the appropriate SBA 
AA/SBDC, Deputy Associate Administrator for the Office of Small 
Business Development Centers, Grants Management Officer, Grants 
Management Specialist, or Program Manager for a proposed action or 
amendment to the SBDC cooperative agreement.
* * * * *
    Program funds. Also referred to as project funds and defined as all 
funds authorized under the cooperative agreement including, but not 
limited to, Federal funds, cash match, non-cash match from indirect 
costs, in-kind contributions, and program income revenues.
    Program income. Gross income earned as a result of the Federal 
award during the period of performance, including funds received under 
a sponsorship agreement, as defined in 2 CFR 200.80.
    Program Manager. An SBA employee designated by the AA/SBDC who 
oversees and monitors the SBDC network operations, including meeting 
the statutorily required programmatic reviews.
    Program performance data. Any anonymous data or information that 
captures the outputs of the SBDC service center and outcomes of 
services provided to clients.
    Project Officer. The individual who serves as the primary local 
contact for the SBDC, conducts regular compliance oversight as required 
by AA/SBDC, and works in conjunction with the Program Manager.
    Project period. The total annual period of performance for an award 
made under the notice of funding opportunity.
    Proposal. Also known as the application, the written submission by 
a new applicant organization or an existing recipient organization 
describing its projected SBDC activities for the upcoming budget period 
and requesting Federal funding for use in its operations.
    Recipient organization. The selected applicant organization 
receiving Federal funding to deliver SBDC services under a cooperative 
agreement.
* * * * *
    SBDC Lead Center Director. Also referred to as the State/Region 
Director, an individual or position whose time is allocated to the SBDC 
grant program or other related small business grant programs that 
provide comparable management and technical assistance to the small 
business community in accordance with the cooperative agreement. For 
the purposes of meeting the Program requirements, no less than 75 
percent of the SBDC Lead Center Director's time and effort must be 
devoted specifically to the SBDC grant. The SBDC Lead Center Director 
has clear and complete control of all SBDC Program funds.
    SBDC network. The Lead Center, SBDC service centers, and SBDC 
satellite locations funded and affiliated by sub-agreements and 
comprising a single service delivery network administered by a 
recipient organization.
    SBDC satellite location. A geographic point of service delivery 
that operates on a full- or part-time basis under direct management of 
an SBDC Lead Center Director or SBDC Service Center Director.
    SBDC service center. An entity operating full-time authorized by 
the Lead Center to perform SBDC counseling and training services. Any 
applicant commencing after January 1, 1992, establishing service 
centers within its area of service, to the extent practicable, should 
be primarily housed within institutions of higher education or a 
Women's Business Center (WBC) operating pursuant to section 29 of the 
Small Business Act (15 U.S.C. 656) as stated in section 21(a)(1) of the 
Small Business Act (15 U.S.C. 648(a)(1)).
    SBDC Service Center Director. The individual responsible for SBDC 
Program implementation and management at an SBDC service center within 
an SBDC network.
* * * * *
    Specialized services. SBDC services other than counseling or 
training, e.g., extensive research, hiring outside consultants for a 
client, translation services, etc.
* * * * *
    Training. An educational activity or event presented by an SBDC 
that

[[Page 76642]]

delivers a structured program of knowledge on an entrepreneurial or 
business-related subject, as established in the cooperative agreement.
    Training record. A record that provides aggregate data about a 
training event to include training topic and program format.

0
4. Amend Sec.  130.200 by:
0
a. Removing the paragraph designation and heading from paragraph (a) 
introductory text;
0
b. Removing paragraph (b);
0
c. Redesignating paragraphs (1) through (4) as paragraphs (a) through 
(d);
0
d. Redesignating paragraphs (5) and (6) as paragraph (h) and (g), 
respectively;
0
e. Adding paragraphs (e) and (f);
0
f. In newly redesignated paragraph (g), removing the period and adding 
``; or'' in its place; and
0
g. Revising newly redesignated paragraph (h).
    The additions and revision read as follows:


Sec.  130.200  Eligible entities.

* * * * *
    (e) A Women's Business Center operating pursuant to section 29 of 
the Small Business Act (15 U.S.C. 656);
    (f) The Commonwealth of the Northern Mariana Islands SBDC must have 
its principal office located in the Commonwealth of the Northern 
Mariana Islands (CNMI) and must:
    (1) Be a CNMI government or agency;
    (2) Be a regional entity;
    (3) Be a CNMI-chartered development, credit, or finance 
corporation;
    (4) Be an institution of higher education (including but not 
limited to any land-grant college or university, any college or school 
of business, engineering, commerce, or agriculture, community college 
or junior college);
    (5) Be a current SBA Women's Business Center (WBC); or
    (6) Be any entity formed by two or more of the entities in 
paragraphs (f)(1) through (5) of this section;
* * * * *
    (h) Any entity operating continually as a recipient organization on 
or before December 31, 1990.

0
5. Revise Sec.  130.300 to read as follows:


Sec.  130.300  Small Business Development Centers (SBDCs).

    The Small Business Development Center Program is established under 
the statutory authority of the Small Business Act (15 U.S.C. 648) and 
administered through cooperative agreements issued to recipient 
organizations.

0
6. Revise Sec.  130.310 to read as follows:


Sec.  130.310  Area of service.

    (a) The AA/SBDC will designate, in the cooperative agreement, the 
geographic area of service of each recipient organization. Generally, 
no more than one recipient organization may be located in a state.
    (1) The AA/SBDC may determine that making awards to multiple 
recipient organizations in a state is necessary to more effectively 
implement the Program and provide services to all interested small 
businesses.
    (2) Once the Administration has entered into a cooperative 
agreement, a subsequent decision to change the recipient organization's 
area of service will be considered a non-renewal or termination. This 
decision will be subject to the procedures outlined in Sec.  130.700.
    (b) The recipient organization must locate its Lead Center and SBDC 
service centers in the designated area of service to ensure that 
services are readily accessible to all small businesses within the 
designated area of service.
    (c) Any applicant commencing after January 1, 1992, must ensure 
that any new SBDC service centers established within its area of 
service, to the extent practicable, are primarily housed within 
institutions of higher education or a WBC operating pursuant to section 
29 of the Small Business Act (15 U.S.C. 656) as stated in section 
21(a)(1) of the Small Business Act (15 U.S.C. 648(a)(1)).
    (d) The allocation of resources, including site locations of the 
Lead Center and the SBDC service centers, will be reviewed for adequacy 
of coverage by SBA as part of the application review process for each 
budget period.


Sec.  130.320  [Removed]

0
7. Remove Sec.  130.320.


Sec. Sec.  130.330, 130.340, 130.350, and 130.360  [Redesignated as 
Sec. Sec.  130.320, 130.330, 130.340, and 130.350]

0
8. Redesignate Sec. Sec.  130.330, 130.340, 130.350, and 130.360 as 
Sec. Sec.  130.320, 130.330, 130.340, and 130.350.


0
9. Amend newly redesignated Sec.  130.320 by:
0
a. Revising paragraph (a);
0
b. Adding a sentence at the end of paragraph (b);
0
c. Revising paragraph (c);
0
d. Redesignating paragraphs (d) and (e) as paragraphs (g) and (h);
0
e. Adding new paragraphs (d) and (e) and paragraph (f); and
0
f. Revising newly redesignated paragraphs (g) and (h).
    The revisions and additions read as follows:


Sec.  130.320  Operating requirements.

    (a) The recipient organization has the contractual responsibility 
for performing the duties of the Lead Center in accordance with the 
cooperative agreement. The Lead Center must be an independent 
department within the recipient organization, having its own staff, 
including a full-time SBDC Director.
    (b) * * * The Lead Center must conduct and document annual 
financial and programmatic reviews and evaluations of its SBDC service 
centers consistent with Sec.  130.820(a).
    (c) The Lead Center's and SBDC service center's services will be 
available to the public throughout the year during the normal hours of 
the business community. In addition, every effort should be made to 
provide assistance, including during nonbusiness hours, both in-person 
and virtually, as appropriate, to meet local community business demands 
and needs. Variations from these schedules or other anticipated 
closures will be included in the new or annual renewal application. 
Emergency closures will be reported to the SBA District Office as soon 
as is feasible.
    (d) The specific identification ``Small Business Development 
Center'' must be a part of the official name of every SBDC Lead Center 
and SBDC service center within the SBDC network, unless waived by the 
AA/SBDC.
    (e) Any entity that is using the term ``Small Business Development 
Center'' and under contract with the Lead Center and receiving program 
funds, whether receiving Federal funding or not, is considered a part 
of the recipient organization's network and as such the recipient 
organization is required to report to the OSBDC each SBDC service 
center's performance as well as any funds or program income generated 
by the activities of that Service Center.
    (f) Each SBDC must maintain a minimum number of export and trade 
certified counselors to assist clients develop export and international 
trade opportunities. The standard for establishing the number of 
counselors required to have this certification is based on the total 
number of full-time equivalent (FTE) counseling employees in an SBDC's 
network. The minimum number of certified counselors for an SBDC network 
is the lesser of:
    (1) Five counselors; or
    (2) Ten percent of the total number of FTE counselors in the 
network.
    (g) The Lead Center and all its SBDC service centers must implement 
and have in effect at all times, a uniform and enforceable conflict of 
interest policy applicable to all SBDC employees,

[[Page 76643]]

contractors, consultants, and volunteers and must be signed annually. 
At a minimum, this policy must be consistent with the conflict of 
interest principles set forth in 2 CFR 2701.112.
    (h) The SBDC network will comply with 13 CFR parts 112, 113, 117, 
and 136 requiring that no person, on the grounds of race, color, 
handicap, marital status, national origin, race, religion, or gender, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the SBDC network.


0
10. Amend newly redesignated Sec.  130.330 by:
0
a. Revising paragraph (a);
0
b. Removing the words ``are encouraged to'' from paragraph (b)(1) and 
adding in their place the word ``must'';
0
c. Revising paragraphs (b)(2) through (5) and (c);
0
d. Adding paragraph (d).
    The revisions and addition read as follows:


Sec.  130.330  SBDC services and restrictions on service.

    (a) Services. The SBDC network, to the extent practicable, must 
provide prospective entrepreneurs and existing small businesses, known 
as clients, with counseling, access to training, and specialized 
services. The SBDC must create counseling records for clients when 
required by the cooperative agreement. The services provided must 
relate to the formation, financing, management, and operation of small 
business enterprises. The network must provide services that meet local 
needs as determined through periodic needs assessments, which are 
continually improved to keep pace with changing local small business 
needs. It is the responsibility of the recipient organization to change 
local SBDC service centers, as necessary, to meet the needs of the 
communities it serves in accordance with Sec. Sec.  130.310 and 
130.620. See section 21(c)(3) of the Small Business Act (15 U.S.C. 
648(c)(36)) for the full list of compulsory services. To the extent 
possible, SBDCs will work in collaboration with other Federal, state, 
tribal, and local government programs that assist small businesses and 
will coordinate and cooperate, to the extent practicable, with other 
local public and private providers of small business assistance. An 
SBDC Lead Center should use and compensate qualified small business 
vendors as one of its resources.
    (b) * * *
    (2) SBDCs may provide assistance and guidance with the necessary 
documentation required for applications for capital assistance; 
including assistance for SBA loan products and services, including 
small dollar loans, free of charge as stated in Sec.  130.470.
    (3) SBDCs should prepare their clients to represent themselves to 
lending institutions. SBDCs may attend meetings with lenders to assist 
clients in preparing financial packages; however, SBDCs may not attest 
to a client's readiness or creditworthiness to the lending institution 
either verbally or in writing.
    (4) SBDCs may participate on boards and panels of financial 
institutions and with outside organizations but may not be involved in 
any final credit decisions involving SBDC clients or in making or 
servicing loans.
    (5) With respect to SBA loan guaranty programs, SBDCs may accompany 
an applicant organization appearing before SBA or a lender but may not 
advocate for, promote, recommend approval or otherwise attempt in any 
manner to influence SBA or a lender to provide financial assistance to 
any of its clients.
    (c) Special emphasis initiatives. Periodically, SBA may identify, 
and include in the cooperative agreement, portions of the general 
population to be targeted for assistance by SBDCs and specific focus 
areas including, but not limited to: base closure assistance; 
cybersecurity and preparedness; employee ownership program; and 
intellectual property protections. (Refer to current cooperative 
agreement.)
    (d) Portable assistance. The current cooperative agreement is a 
startup and sustainability non-matching program to be conducted by 
eligible SBDCs in communities that are economically challenged as a 
result of a business or government facility downsizing or closing, 
which has resulted in the loss of jobs or small business instability. 
The funds will be used for small business development center personnel 
expenses and related small business programs and services.


0
11. Revise newly redesignated Sec.  130.340 to read as follows:


Sec.  130.340  Specific program responsibilities.

    (a) Policy development. The AA/SBDC will establish program policies 
and procedures to improve the delivery of services by SBDCs to the 
small business community, and to enhance compliance with applicable 
laws, regulations, OMB guidelines, and Executive orders. The AA/SBDC 
will, to the extent practicable, consult with the recognized 
association.
    (b) Program administration. The AA/SBDC or designee will recommend 
the annual program budget, establish appropriate funding levels in 
compliance with the statute, and review the annual budgets submitted by 
each applicant. The AA/SBDC will also select applicants to participate 
in the Program, to maintain a clearinghouse to provide for the 
dissemination and exchange of information between SBDCs, and to conduct 
audits of recipients of SBDC grants.
    (c) Responsibilities of SBDC Lead Center Directors. (1) The SBDC 
Lead Center Director must be an individual dedicating not less than 75 
percent of their time to the supervision and control of the SBDC on 
behalf of the recipient organization. The position may not be held by a 
company or contractor.
    (2) The SBDC Lead Center Director position must have direct 
reporting authority, at a minimum, equivalent to that of a college dean 
in a university setting or the third level of management or 
administration within a state agency.
    (3) The Lead Center Director will direct and monitor program 
activities and financial affairs of the SBDC network to ensure 
effective delivery of services to the small business community, and 
compliance with applicable laws, regulations, 2 CFR part 200, and the 
terms and conditions of the cooperative agreement.
    (4) The SBDC Lead Center Director must have the authority necessary 
to control all personnel, budgets, and expenditures under the 
cooperative agreement.
    (5) The SBDC Lead Center Director will serve as the SBA's principal 
contact for all matters involving the SBDC network including, but not 
limited to, ensuring that state and local needs are addressed; 
financial and programmatic reporting are submitted; service centers are 
providing access to training; employees have experience necessary to 
conduct meaningful counseling; etc.


0
12. Amend newly redesignated Sec.  130.350 by:
0
a. Removing the word ``must'' from paragraph (a)(1) and adding in its 
place the word ``will'';
0
b. Revising paragraph (a)(2);
0
c. Removing ``Area of Service'' from paragraph (a)(3) and adding in its 
place ``area of service'';
0
d. Revising paragraphs (a)(4) and (6) and (b)(1); and
0
e. Adding paragraphs (b)(3) through (5).
    The revisions and additions read as follows:


Sec.  130.350  SBDC advisory boards.

    (a) * * *

[[Page 76644]]

    (2) This advisory board will be referred to as a State SBDC 
Advisory Board in a state/territory having only one recipient 
organization, and a Regional SBDC Advisory Board in a state having more 
than one recipient organization.
* * * * *
    (4) New Lead Centers must establish a State or Regional SBDC 
Advisory Board by the beginning of the second project period.
* * * * *
    (6) The reasonable cost of travel of any Board member for official 
Board activities may be paid out of the SBDC's budgeted funds. Federal 
and program funds are not to be used to compensate advisory board 
members for non-travel related expenses such as time and effort.
    (b) * * *
    (1) The SBA will establish a National SBDC Advisory Board, 
appointed by the SBA Administrator, and comprised of members who are 
not Federal employees. The Board will elect a chairperson. Three 
members of the Board will be from universities, or their affiliates and 
the remainder will be from small businesses or associations 
representing small businesses. Board members will serve staggered 
three-year terms. The SBA Administrator may appoint successors to fill 
unexpired terms.
* * * * *
    (3) The reasonable cost of travel of any National SBDC Advisory 
Board member for official Board activities will be paid by SBA out of 
SBDC line-item program funds.
    (4) Each member of the Board will be entitled to be reimbursed for 
expenses as a member of the Board.
    (5) The Board will meet at least semiannually and at the call of 
the Chairman of the Board.


0
13. Add a new Sec.  130.360 to read as follows:


Sec.  130.360  Selection of the SBDC Lead Center Director.

    (a) Selection. Selection of an SBDC Lead Center Director must be 
accomplished in accordance with the guidelines set forth in the notice 
of funding opportunity and cooperative agreement.
    (b) Vacancy. (1) The recipient organization must notify the 
appropriate SBA District Director (DD), Regional Administrator, and AA/
SBDC within ten business days of either:
    (i) Being notified by the incumbent SBDC Lead Center Director of 
their intent to vacate the position; or
    (ii) Its formal decision to remove the incumbent SBDC Lead Center 
Director.
    (2) If the position will be vacated prior to the selection of a 
replacement, the recipient organization must appoint an interim SBDC 
Lead Center Director, prior to the vacancy, who will serve in that 
capacity until a permanent SBDC Lead Center Director is in position.
    (3) The recipient organization must inform the SBA District 
Director, Regional Administrator, and the AA/SBDC within ten business 
days of the appointment of the interim SBDC Lead Center Director and 
provide that individual's contact information.
    (4) An interim Lead Center Director must allocate at least 75 
percent of their time and effort to the SBDC Program until a permanent 
SBDC Lead Center Director is in position. This must be documented in 
accordance with the policies of the recipient organization. An interim 
SBDC Lead Center Director must be knowledgeable about sponsored 
programs. The appointment period for such interim SBDC Lead Center 
Director will not exceed 120 days. Should more time be needed the 
recipient organization must obtain prior approval from the AA/SBDC for 
an extension.


0
14. Add Sec.  130.370 to read as follows:


Sec.  130.370  Contracts with other Federal agencies.

    (a) An SBDC Lead Center or SBDC service center organization may 
enter into a contract or grant with a Federal department or agency to 
provide specific assistance to small business concerns in accordance 
with paragraphs (b) and (c) of this section.
    (b) Prior to bidding on a non-SBA Federal award or contract, the 
SBDC Lead Center or service center must obtain written consent from the 
AA/SBDC or designee regarding the subject and general scope of the 
award or contract to ensure that performance under the award or 
contract does not represent a conflict with the SBA's cooperative 
agreement. The AA/OSBDC or designee shall respond to any written 
request within five business days.
    (c) Federal funds from other Federal programs (except for certain 
Community Development Block Grant program funds) may not be counted as 
match for purposes of the SBDC Program. In addition, match expenditures 
reported to the SBA under the cooperative agreement may not be used or 
reported as match for another Federal program.


0
15. Add Sec.  130.380 to read as follows:


Sec.  130.380  Client privacy.

    (a) SBDCs, including their contractors and other agents, are not 
permitted to disclose the Client's name, address, email address, or 
telephone number, hereafter referred to as ``client contact data,'' of 
individuals or small businesses that obtain any type of assistance from 
the Program to any person or entity other than the SBDC, without the 
consent of the client, except in instances where:
    (1) Court orders require the SBA Administrator to do so in any 
civil or criminal enforcement action initiated by a Federal or state 
agency; or
    (2) The Administrator considers such a disclosure to be necessary 
for the purpose of conducting a financial audit of a center, not 
including those required under Sec.  130.830, as determined on a case-
by-case basis when formal requests are made by a Federal or state 
agency. Such formal requests must justify and document the need for 
individual client contact and/or program activity data to the 
satisfaction of the Administrator; or
    (3) SBA requires client contact data to directly survey SBDC 
clients.
    (b) SBDCs must provide an opportunity for a client to opt-in to 
allow the SBA to obtain client contact data. The SBA may use the 
permitted client contact data only to conduct surveys or studies that 
help stakeholders better understand how the services the client 
received affect their business outcomes over time. These surveys or 
studies would include, but not be limited to:
    (1) Studying evaluation and performance management;
    (2) Measuring the effect and economic or other impact of Agency 
programs;
    (3) Assessing public and SBDC partner needs;
    (4) Measuring customer satisfaction;
    (5) Guiding program policy development;
    (6) Improving grant-making processes; and
    (7) Other areas SBA determines would be valuable to strengthen the 
SBDC Programs and/or enhance support for SBDC clients.
    (c) SBDCs may not deny access to services to clients solely based 
on their refusal to provide consent as referenced in this section.
    (d) Any reports or studies on program activity produced by SBDC 
and/or the Administrator, including their contractors and other agents, 
may not disseminate client contact data and must only report data in 
the aggregate. Individual client contact data will not be disclosed in 
any way that could individually identify a client.
    (e) SBDCs and the Administrator, including their contractors and 
other agents, must obtain consent from the client prior to publishing 
media or reports that identify an individual client.

[[Page 76645]]

    (f) This section does not restrict the Agency in any way from 
access and use of program performance data.


0
16. Revise Sec.  130.400 to read as follows:


Sec.  130.400  Application procedures.

    All SBDC applicants must comply with the annual notice of funding 
opportunity, including format, conditions, submission requirements, and 
due dates, for their new or renewal application to receive 
consideration.


0
17. Revise Sec.  130.410 to read as follows:


Sec.  130.410  New applications.

    (a) New applicants. New applicants must comply with the 
requirements set forth in the applicable notice of funding opportunity, 
including format, conditions, and due dates for their applications to 
receive consideration.
    (b) Consideration. Except in cases involving insular areas, only 
those applicants operating under Sec.  130.200 and incorporated solely 
within the state where the new SBDC is to be located will receive 
consideration.
    (c) Recruiting and selecting new recipient organizations. (1) SBA 
will use a fair, open and competitive procurement process to solicit 
proposals for new SBDC Program awards.
    (2) After completion of an objective review process, the AA/SBDC 
will make the final selection and notify the successful applicant.
    (3) The newly selected recipient organization may, with prior 
written approval from the SBA, incur qualified pre-award matching 
expenditures for the establishment of the Lead Center office, to 
recruit Lead Center staff, and to cover other related start-up 
expenditures to the extent permitted under 2 CFR 215.25(e)(1).


0
18. Revise Sec.  130.420 to read as follows:


Sec.  130.420  Renewal applications.

    (a) The recipient organization will submit the renewal application 
to the OSBDC using the submission process outlined in the annual notice 
of funding opportunity.
    (b) If the OSBDC chooses to not renew the award of an existing 
recipient organization or the recipient organization elects not to 
reapply, the OSBDC will award a cooperative agreement for the conduct 
of an SBDC project to a new recipient organization in the same area of 
service using a competitive process. If the OSBDC has initiated a non-
renewal or termination action, the Agency will not issue the new award 
until all administrative remedies have been exhausted. For further 
information regarding the termination and non-renewal procedures, see 
Sec.  130.700.
    (c) Significant factors considered in the renewal application 
review will include:
    (1) The applicant's ability to obtain matching funds;
    (2) The quality of prior performance under the cooperative 
agreement as measured by client satisfaction rate;
    (3) The results of any examination conducted pursuant to Sec.  
130.810(b);
    (4) Corrective measures implemented as a result of examinations 
conducted; and
    (5) The accreditation provisions of Sec.  130.810(c) including any 
conditions, the most current accreditation report, and corrective 
measures implemented, affecting the recipient organization and the SBDC 
network.
    (d) The OSBDC will review the renewal application for conformity 
with the notice of funding opportunity. The AA/SBDC may request 
additional information and documentation prior to issuing the 
cooperative agreement.


0
19. Revise Sec.  130.430 to read as follows:


Sec.  130.430  Application decisions.

    (a) New applications will either be accepted or rejected in 
accordance with the evaluation criteria set forth in the applicable 
notice of funding opportunity. The AA/SBDC may approve, or 
conditionally approve, or deny any new application. The AA/SBDC may 
approve or conditionally approve or deny a renewal application. The AA/
SBDC may also reject a renewal application after following due process 
in accordance with the procedures set forth in Sec.  130.700. If a 
renewal application is conditionally approved, the requirements that 
the recipient organization must meet in order to obtain full and 
unconditional approval, will be specified as special terms and 
conditions in the cooperative agreement.
    (b) In the event of a conditional approval, the SBA may fund a 
recipient organization for one or more specified periods of time up to 
a maximum of one budget period. If the recipient organization fails to 
comply with the special terms and conditions of the award to the 
satisfaction of the AA/SBDC within the allotted time period, the AA/
SBDC may suspend, non-renew, or terminate the cooperative agreement 
with the SBDC, in accordance with the procedures set forth in Sec.  
130.700.


0
20. Revise Sec.  130.440 to read as follows:


Sec.  130.440  Maximum grant.

    (a) No recipient organization will receive an SBDC grant, in any 
fiscal year under a cooperative agreement, exceeding the greater of the 
minimum statutory amount, or its pro rata share of all SBDC grants as 
determined by the statutory formula set forth in section 21(a)(4)(C) of 
the Small Business Act (15 U.S.C. 648(a)(4)(C)). This limit does not 
apply to the distribution of supplemental funds, or to grants provided 
pursuant to sections 21(a)(4)(C)(viii) and 21(a)(6) of the Small 
Business Act (15 U.S.C. 648(a)(6)).
    (b) Additional grants are subject to the limitations set forth in 
section 21(a)(6) of the Small Business Act unless the statute providing 
for the additional grant states otherwise.


0
21. Amend Sec.  130.450 by:
0
a. Revising the second and third sentences of paragraph (a);
0
b. In paragraph (b):
0
i. Revising the third sentence and removing the fourth sentence; and
0
ii. Removing ``Cooperative Agreement'' and adding in its place 
``cooperative agreement'';
0
c. Revising paragraphs (c) through (e); and
0
d. Adding new paragraphs (f) through (h).
    The additions and revisions read as follows:


Sec.  130.450  Matching funds.

    (a) * * * Cash match must be equal to or greater than 50 percent of 
the SBA funds used by the SBDC. The remaining match required to equal 
the one-to-one match requirement may be provided through any allowable 
combination of additional cash, in-kind contributions or indirect 
costs.
    (b) * * * Any additional SBA requirements, specifications, or 
deliverables must be clearly identified in the budget narrative. * * *
    (c) Under the authority of 48 U.S.C. 1469a(d), the AA/SBDC may, at 
his/her discretion, waive any requirement of matching funds for an 
insular territory otherwise required by law to be provided. 
Notwithstanding any other provision of law, in the case of American 
Samoa, Guam, the Virgin Islands, and the Commonwealth of the Northern 
Mariana Islands, any department or agency shall waive any requirements 
for local matching funds under $200,000, including in-kind 
contributions, required by law to be provided by American Samoa, Guam, 
the Virgin Islands, and the Commonwealth of the Northern Mariana 
Islands.
    (d) All applicants must submit a certification of cash match and 
program

[[Page 76646]]

income. This certification must be executed by an authorized official 
of the recipient organization and must identify any SBDC service center 
organization(s) providing cash match under a subcontract or other 
agreement.
    (e) In addition to the Federal and program income funds, all 
matching funds must be under the direct management of either the SBDC 
Lead Center Director or an SBDC Service Center Director, when budgeted 
under an SBDC service center organization. If in-kind contributions are 
utilized by the SBDC, the State Director or an SBDC Service Center 
Director is then considered to be in control of those contributions.
    (f) The Grants Management Specialist will determine whether 
matching funds and cash match set forth in the budget proposal are 
sufficient to issue the cooperative agreement.
    (g) Recipient organizations are not required but encouraged to 
identify overmatched amounts as part of the cooperative agreement. 
Overmatching expenditures are those which are derived from eligible 
matching sources; are reasonable, allowable, and allocable to the SBDC 
program; are over and above the minimum match required to the Federal 
expenditures; and are included on the required SBDC financial reporting 
to SBA for the project period.
    (1) Recipient organizations are encouraged to identify overmatched 
amounts as part of the cooperative agreement. The recipient 
organization must fully identify the amount and sources of claimed 
overmatched amounts. If overmatched amounts are reported, they are 
subject to the provisions of the cooperative agreement and SBA biennial 
programmatic and financial examinations.
    (2) An overmatched amount can be applied as matching funds for any 
funding increase (i.e., supplemental funds) received by the SBDC during 
the budget period, as long as the total cash match contributed by the 
SBDC is 50 percent or more of the total SBA funds tendered during the 
budget period and provided that the total match is still 100 percent.
    (3) Allowable overmatched amounts which have not been used in the 
manner described in this section may, with the approval of the AA/SBDC, 
be used as a credit to offset any confirmed audit disallowances 
applicable only to the budget period in which the overmatched amount 
exists and the two previous budget periods. Such offsetting funds will 
be considered matching funds.
    (h) The following sources cannot be used as matching funds for the 
SBDC network:
    (1) Uncompensated student labor;
    (2) SCORE, SBA, Women's Business Centers, or other SBA resource 
partners;
    (3) Program income or fees collected from individuals or small 
businesses receiving assistance;
    (4) Federal funds other than Community Development Block Grant 
(CDBG) funds;
    (5) In-kind contributions, or indirect costs not solely dedicated 
to the SBDC Program, or under its control;
    (6) Any resource allocated and claimed as a matching cost to 
another federally funded program; or
    (7) Funds or other resources provided for an agreed upon scope of 
work inconsistent with the authorized activities of the SBDC Program.


0
22. Revise Sec.  130.460 to read as follows:


Sec.  130.460  Budget justification.

    (a) General. The SBDC Lead Center Director, as a part of the annual 
renewal proposal, or the applicant organization's authorized 
representative, in the case of a new SBDC application, shall prepare 
and submit to the SBA Project Officer the budget justification for the 
upcoming budget period. The budget will be reviewed annually upon 
submission of a renewal application.
    (b) Direct costs. At least 80 percent of SBA funding must be 
allocated to the direct cost of program delivery.
    (c) Indirect costs. If the applicant organization or recipient 
organization waives all indirect costs, then 100 percent of SBA funding 
must be allocated to program delivery. If the reimbursements of some, 
but not all, indirect costs are waived to meet the matching funds 
requirement, the lesser of the following may be allocated as reimbursed 
indirect costs of the Program and charged against the Federal 
contribution:
    (1) Twenty percent of Federal contribution; or
    (2) The amount remaining after the waived portion of indirect costs 
is deducted from the total indirect costs allowed by the SBA.
    (d) Separate SBDC service provider budgets. The applicant 
organization shall include separate budgets for all SBDC service 
providers in conformity with 2 CFR part 220, appendix A. Applicable 
direct cost categories and indirect cost base/rate agreements will be 
included for the Lead Center and all SBDC service providers, using a 
rate equal to or less than the negotiated predetermined rate. If no 
such rate exists, the sponsoring SBDC organization or SBDC service 
provider will negotiate a rate with its cognizant agency. In the event 
the sponsoring SBDC organization or SBDC service provider does not have 
a cognizant agency, the rate shall be, in accordance with OMB 
guidelines:
    (1) Negotiated with the SBA Project Officer; or
    (2) Apply the OMB de minimis rate.
    (e) Cost principles. Principles for determining allowable costs are 
contained in 2 CFR part 200, subpart E.
    (f) Salaries. (1) Where the recipient organization is an 
educational institution, the salaries of the SBDC Lead Center Director 
and the SBDC Service Center Director at a minimum must approximate the 
average annualized salary of a full professor and an assistant 
professor, respectively, in the school or department in which the SBDC 
is located. If a recipient organization is not an educational 
institution, the salaries of the SBDC Lead Center Director and the 
subcenter Directors must approximate the average salaries of parallel 
positions within the recipient organization. In both cases, the 
recipient organization should consider the Director's longevity in the 
Program, the number of subcenters, the size of the SBDC budget, the 
number of service centers, and the individual's experience and 
background when determining the salary.
    (2) Salaries for Lead Center Directors should be comparable to 
salaries paid Lead Center Directors in other states or regions with 
comparably sized programs, responsibilities, and authority.
    (3) Salaries for all other positions within the SBDC should be 
based upon level of responsibility and be comparable to salaries for 
similar positions in the area served by the SBDC.
    (g) Equipment. In accordance with 2 CFR part 200, capital 
expenditures for equipment must have the prior approval of the Program 
Manager of the OSBDC, either through a specific disclosure in an annual 
cost proposal or through an approved amendment to an existing 
cooperative agreement.
    (h) Travel. (1) All travel must be separately identified in the 
proposed budget under the categories of: planned in-state/region, 
planned out-of-state/region, unanticipated in-state/region, or 
unanticipated out-of-state/region. Unplanned travel estimates may be 
based on the SBDC's experience.
    (2) Transportation costs must be justified in writing, including 
the estimated cost, number of persons traveling, and the benefit to be 
derived

[[Page 76647]]

by the small business community from the proposed travel.
    (3) Any proposed unplanned out-of-state/region travel exceeding the 
approved amount budgeted for this category must be submitted to the SBA 
for approval on a case-by-case basis prior to traveling.
    (4) All foreign travel requests must be submitted to the 
appropriate District Director and the SBDC Program Manager for review 
and provided to the AA/SBDC for final approval in accordance with the 
notice of funding opportunity. Foreign travel charged to the SBDC 
cooperative agreement or performed by SBDC staff, while on duty for the 
recipient organization, must be approved in advance.
    (i) Planned foreign travel costs allocable to the SBDC cooperative 
agreement for SBDC network staff may be approved by AA/SBDC through the 
annual proposal process, but such planned costs must be fully disclosed 
and justified in the budget narrative for Agency review. Prior approval 
should be obtained from the AA/SBDC prior to travel in accordance with 
2 CFR part 200.
    (ii) Unanticipated foreign travel must be approved using the 
process set forth in this paragraph (h).


0
23. Add Sec.  130.465 to read as follows:


Sec.  130.465  Restricted and prohibited costs.

    (a) SBA prohibitions are consistent with those outlined in 2 CFR 
part 200.
    (b) An SBDC must not use project funds as collateral for a loan or 
other such monetary purpose.
    (c) An SBDC must not use project funds for memorabilia, gifts, 
prizes, souvenirs, entertainment, alcoholic beverages, amusement, 
social activities, or any other such costs.
    (d) Prior written approval from the AA/SBDC is need for SBDC 
project funds to be used for the purpose of fundraising activities and 
costs. SBDCs may include in initial applications and renewal 
applications proposed fundraising activities. After issuance of an 
approved cooperative agreement, an SBDC wishing to seek prior approval 
for new fundraising activities not already approved should follow the 
prior approval guidance in the cooperative agreement. Prohibited 
fundraising activities include, but are not limited to:
    (1) Costs of organized fundraising, endowment drives;
    (2) Financial or capital campaigns; or
    (3) Solicitation of gifts and bequests.
    (e) Project funds found to be used in violation of the restrictions 
in this section may be cause for termination, suspension, or non-
renewal of the cooperative agreement.


0
24. Revise Sec.  130.470 to read as follows:


Sec.  130.470  Fees.

    (a) An SBDC may charge clients a reasonable fee to cover the costs 
of training (sponsored or cosponsored) by the SBDC, the sale of books, 
the rental of equipment or space, research work, hiring outside 
consultants for a particular client, or other specialized services.
    (b) SBDC network entities, staff, consultants, or volunteers must 
not solicit or accept fees or other compensation for counseling 
services, including, but not limited to, business or marketing plan 
development, loan packaging or credit application assistance, or other 
advisory services described in section 21 of the Small Business Act.


0
25. Revise Sec.  130.480 to read as follows:


Sec.  130.480  Program income.

    (a) Program income and interest earned on program income, may only 
be used for authorized purposes, in accordance with 2 CFR 200.307 and 
the cooperative agreement, such as to expand the quantity or quality of 
services, resources or outreach provided by the SBDC network.
    (b) Program income may not be reported or used as a matching 
resource. Unused program income must be carried over to the subsequent 
budget period by the SBDC network; however, the aggregate amount of 
network program income cannot exceed 25 percent of the total SBDC 
budget (Federal and matching expenditures).
    (c) Program income exceeding 25 percent of the total approved SBDC 
budget must be expended by the SBDC network prior to the end of the 
budget/project period in which the excess occurs.
    (d) The Lead Center must report the consolidated program income 
sources and uses as an attachment to the financial status report for 
the SBDC network during the budget period. The SBDC must provide a 
narrative describing how program income was used to further program 
objectives.


0
26. Add Sec.  130.490 to read as follows:


Sec.  130.490  Property standard.

    See 2 CFR part 200, subpart D.


0
27. Revise Sec.  130.500 to read as follows:


Sec.  130.500  Funding.

    See 2 CFR 200.305.


0
28. Revise Sec.  130.600 to read as follows:


Sec.  130.600  Cooperative agreement.

    (a) Cooperative agreement provisions. A recipient organization will 
incorporate into its SBDC sub-agreements and contracts the provisions 
of the cooperative agreement.
    (b) Sub-agreements. SBA reserves the right to disapprove any sub-
agreement entered into by recipient organizations with SBDC service 
center organizations, vendors, or contractors.
    (c) Goals and milestones. (1) The AA/SBDC or designee will develop 
performance measurements for SBDC networks and include provisions for 
their achievement in the cooperative agreement.
    (2) The AA/SBDC or designee will negotiate with the designated 
association and Lead Center to establish the annual goals, milestones, 
and activities for the cooperative agreement.
    (3) Failure to meet the goals and milestones of the cooperative 
agreement may be considered in part of the determination for 
suspension, termination, or non-renewal in accordance with the dispute 
resolution procedures set forth in Sec.  130.630.
    (4) Agency loan goals may not be negotiated or incorporated into 
the cooperative agreement without the prior written approval of the AA/
SBDC.
    (d) Procurement policies and procedures. (1) Contracts and sub-
agreements supported with funds provided under the cooperative 
agreement must comply with the procurement procedures of the recipient 
organization.
    (2) Contracting procedures must encourage open competition among 
qualified vendors and promote the effective, efficient, and responsible 
use of program resources and OMB guidance.
    (3) Contracting procedures should provide for domestic sourcing 
preferences to the greatest extent practicable, showing preference for 
the purchase, acquisition, or use of goods, products, or materials 
produced in the United States.


Sec.  130.610  [Amended]

0
29. Amend Sec.  130.610 by:
0
a. Removing ``Cooperative Agreement'' and adding ``cooperative 
agreement'' in its place; and
0
b. Removing the last sentence in the paragraph.


0
30. Revise Sec.  130.620 to read as follows:


Sec.  130.620  Revisions and amendments to cooperative agreements.

    (a) Requests for revisions. The cooperative agreement may not be

[[Page 76648]]

unilaterally amended, modified, or revised by the recipient 
organization. Rather, a recipient organization must submit a written 
request to AA/SBDC along with a copy to the appropriate District Office 
when it wants to make one or more revisions to the cooperative 
agreement. Written approval from the AA/SBDC is required prior to the 
implementation of a proposed revision. Revisions that require amendment 
of the cooperative agreement include:
    (1) Any change in project scope or objectives that will 
substantially change outcomes described in the cooperative agreement;
    (2) Budget revisions exceeding the limit established in the 
cooperative agreement; and
    (3) Any proposed sole-source or one-bid contracts exceeding the 
limits established by applicable administrative regulations or OMB.
    (b) Emergency authorizations. (1) In consultation with the 
Recognized Organization, the AA/SBDC may amend one or more cooperative 
agreements to authorize unanticipated out-of-state travel by SBDC 
personnel responding to a need for services in a presidentially or SBA 
Administrator declared major disaster area. Notification of this type 
of authorization will be accomplished through the publication of an SBA 
Notice in the Federal Register.
    (2) Proposed and actual travel costs incurred under an emergency 
authorization must comply with the requirements of Sec.  130.460(h), as 
well as the relevant notice of funding opportunity and OMB guidelines.
    (c) Supplemental funding. If supplemental funds are available for 
distribution, SBA will publish a notice of funding opportunity in 
consultation with the Recognized Organization.


0
31. Revise Sec.  130.630 to read as follows:


Sec.  130.630  Dispute resolution procedures.

    (a) Financial disputes. (1) A recipient organization wishing to 
resolve a financial dispute must submit a written statement to the 
appropriate Grants Management Officer with copies to the Project 
Officer describing the subject of the dispute, along with any relevant 
documentation. The Grants Management Officer will respond in writing to 
the recipient organization within 30 calendar days of receipt of the 
descriptive statement.
    (2) If the recipient organization receives an unfavorable decision 
from the SBA, it may file an appeal with the AA/SBDC within 30 calendar 
days of the date of receipt of the unfavorable decision.
    (3) The AA/SBDC may request additional information or documentation 
from the recipient organization at any stage of the proceedings. The 
response to the request for additional information must be provided in 
writing to the AA/SBDC within 15 calendar days of receipt of the 
request. The AA/SBDC will transmit a written decision to the recipient 
organization within 15 calendar days of receipt of the appeal or within 
15 calendar days of receipt of additional information requested.
    (4) If the recipient organization receives an unfavorable decision 
from the AA/SBDC, it may make a final appeal to the SBA Grants and 
cooperative agreements Appeals Committee (the ``Committee''). The final 
appeal to the Committee must be filed within 30 calendar days of the 
date of receipt of the AA/SBDC's written decision. Copies of the appeal 
must also be sent to the Grants Management Specialist and the Program 
Manager. If the recipient organization elects not to file an appeal 
with the Committee, the decision of the AA/SBDC becomes the final 
Agency decision on the matter.
    (5) A recipient organization may request a hearing before the 
Committee, but such requests will not be granted, unless material facts 
are substantially in dispute. Legal briefs and other technical forms of 
pleading are not required. However, appeals to the Committee must be in 
writing and contain at least the following information and supporting 
documentation:
    (i) Name and address of the recipient organization;
    (ii) Name and address of the appropriate SBA District Office(s);
    (iii) A copy of the underlying cooperative agreement, including all 
amendments;
    (iv) A statement of the grounds for appeal, with reasons why the 
appeal should be sustained;
    (v) A statement of the specific relief desired on appeal; and
    (vi) If a hearing is requested, a statement of the material facts 
the recipient organization believes are substantially in dispute. In 
the event a recipient organization fails to provide any of the 
information specified in paragraphs (a)(5)(i) through (v) of this 
section, the Committee may dismiss the appeal.
    (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 
must be submitted, in writing, within 15 calendar days of receipt of 
the request.
    (7) If a request for a hearing is granted, the Committee will 
provide the recipient organization with written instructions and will 
afford the parties the opportunity to present their respective 
positions to the Committee.
    (8) The Chairperson of the Committee, with the advice of the SBA's 
Office of General Counsel (OGC), will issue a final written decision 
within 30 calendar days of receipt of all information or within 30 
calendar days of the completion of the hearing. Copies of the decision 
will be provided to the recipient organization, the AA/SBDC, the Grants 
Management Specialist, and the SBA Project Officer.
    (9) Where a recipient organization's appeal to the Committee 
commences or is pending within 120 days of the end of the current 
budget period, the recipient organization has the right to request, in 
writing, that the matter be handled under an expedited appeal process. 
In such circumstances, the Committee, by an affirmative vote of its 
membership, may expedite the appeals process to attain final resolution 
of a dispute before the anticipated issuance date of a new cooperative 
agreement.
    (b) Programmatic (non-financial) disputes. (1) The SBDC Lead Center 
and the SBA District Office must make every effort to resolve any 
disputes that arise between the SBDC network and SBA involving non-
financial, programmatic issues. If the recipient organization is not 
satisfied with the resolution, it may, by written request to the AA/
SBDC, seek reconsideration of the programmatic dispute within 30 
calendar days. When a recipient organization requests reconsideration 
of a programmatic dispute, the appropriate Program Manager will forward 
a written summary of the dispute, including comments from the SBDC Lead 
Center Director, the SBA District Office, and all other pertinent 
background information to the AA/SBDC within 15 calendar days of SBA's 
receipt of the request.
    (2) The AA/SBDC will transmit a final, written decision to the 
recipient organization, the Lead Center Director, the SBA Project 
Officer, and the SBA District Office within 30 calendar days of the 
receipt of such documentation, unless the recipient organization agrees 
to an extension of time.


0
32. Revise Sec.  130.700 to read as follows:


Sec.  130.700  Suspension, termination, and non-renewal.

    (a) General. After entering into a cooperative agreement with a 
recipient organization, the SBA may take, as it

[[Page 76649]]

determines appropriate, any of the following actions based upon one or 
more of the circumstances listed in paragraph (b) of this section.
    (1) Non-renewal. The AA/SBDC may elect not to renew a cooperative 
agreement with a recipient organization at any point. In undertaking a 
nonrenewal action, the AA/SBDC may either choose not to accept or 
consider any application for renewal from the recipient organization or 
the Agency may choose not to exercise option years remaining under the 
cooperative agreement. When a cooperative agreement is not renewed, the 
recipient organization may continue to conduct project activities and 
incur allowable expenses until the end of the current budget period. If 
a recipient organization decides to not seek to renew its grant, it 
must notify the District Office and send a letter of intent to withdraw 
to the AA/SBDC as soon as it is feasible.
    (2) Suspension. (i) The AA/SBDC may suspend a cooperative agreement 
with a recipient organization at any point. A decision to suspend a 
cooperative agreement is effective immediately. The suspension of a 
recipient organization begins on the date the notice of suspension is 
issued, and the period of suspension will last no longer than six 
months. At the end of the period of suspension or at any point during 
that period, the AA/SBDC 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 project immediately. The SBA is under no 
obligation to reimburse any expenses incurred by a recipient 
organization while its cooperative agreement is under suspension. Where 
AA/SBDC decides to lift a suspension and reinstate a recipient 
organization's cooperative agreement, the Agency may, at its 
discretion, choose 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.
    (b) Cause. The AA/SBDC may terminate, elect not to renew, or 
suspend a cooperative agreement with a recipient organization for 
cause. The cause 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) Disregard or material violation of regulations;
    (5) Willful or material failure to comply with the terms of the 
cooperative agreement, including relevant OMB Circulars;
    (6) Conduct of the SBDC Lead Center Director or other key 
personnel, reflecting a lack of business integrity or honesty, which is 
not properly addressed on the part of the recipient organization or 
sponsoring SBDC organizations;
    (7) A conflict of interest on the part of the recipient 
organization, the SBDC service centers, the SBDC Lead Center Director, 
other key personnel, contractors or volunteers that causes a real or 
perceived detriment to a small business concern, a contractor, the SBDC 
network, including but not limited to, SBDC service centers, or SBA;
    (8) Improper use of Federal funds;
    (9) Failure of a Lead Center or its service centers to consent to 
audits, examinations, certification reviews, or to maintain required 
documents or records;
    (10) Failure to implement recommendations from the audits or 
examinations within one year of notification of deficiencies;
    (11) Failure to implement conditions from accreditation reviews 
within the time frame recommended by the accreditation committee and 
established by the AA/SBDC;
    (12) Failure of the SBDC Lead Center Director to work at the SBDC 
Lead Center on a full-time basis;
    (13) Failure to promptly suspend or terminate the employment of an 
SBDC Lead Center Director, Service Center Director, or other key 
personnel, contractors, or volunteers upon receipt of knowledge or 
written information by the recipient organization and/or SBA indicating 
that such individual has engaged in conduct which may result or has 
resulted in a criminal conviction or civil judgment that would cause 
the public to question the SBDC's integrity. The SBDC Lead Center 
Director (or other appropriate official in the SBDC network), when 
making the decision to suspend or terminate such an employee, must 
consider the magnitude of the behavior, the repetitiveness of the 
conduct, and the remoteness in time of the behavior underlying any 
conviction or judgment;
    (14) Failure to maintain adequate client service facilities or 
service hours; and
    (15) Any other action that materially and adversely affects the 
operation or integrity of an SBDC or the SBDC Program.
    (c) Administrative procedure for suspension, termination, and 
nonrenewal. These procedures apply to termination, non-renewal, and 
suspension of cooperative agreements with recipient organizations.
    (1) Taking action. When the Program Manager has reason to believe 
that there is cause to suspend, terminate, or non-renew a cooperative 
agreement with a recipient organization, either based on their own 
knowledge or upon information provided by other parties, the AA/SBDC 
may undertake an enforcement action by issuing a written notice of 
suspension, termination, or non-renewal to the recipient organization. 
The effects of such notice are addressed in paragraph (a) of this 
section.
    (2) Notice requirements. Each notice of suspension, termination, or 
non-renewal will set forth the specific facts and reasons for the AA/
SBDC's 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 electronically, via email, to 
the recipient organization on the same date it is issued by mail.
    (3) Relationship to Government-wide suspension and debarment. A 
decision by the AA/SBDC to suspend, terminate, or not renew an SBDC 
cooperative agreement does not constitute a non-procurement suspension 
or debarment of a recipient organization under Executive Order 12549, 
Debarment and Suspension, and SBA's implementation of OMB regulations 
at 2 CFR part 2700. However, a decision by the AA/SBDC to undertake a 
suspension, termination, or non-renewal enforcement action with regard 
to a particular SBDC 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 non-
procurement opportunities.
    (d) Administrative review of suspension, termination and nonrenewal 
actions. When the AA/SBDC has suspended, terminated, or elected not to 
renew a cooperative agreement, the recipient organization has the right 
to request an administrative review of the

[[Page 76650]]

enforcement action. Administrative review of the AA/SBDC's enforcement 
actions will be conducted by the Associate Administrator for 
Entrepreneurial Development (AA/ED).
    (1) Format. There is no prescribed format for a request for an 
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 an 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., 
Office of Small Business Development Centers/Small Business Development 
Center Program);
    (iii) Cooperative agreement number;
    (iv) Copy of the notice of suspension, termination, or non-renewal;
    (v) Statement discussing 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 or governing 
regulations;
    (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 an 
administrative review of an SBA enforcement action must submit copies 
of its request (including any attachments) to:
    (i) AA/SBDC; and
    (ii) the Associate General Counsel for Procurement Law.
    (3) Timeliness. To be considered timely, the AA/ED must receive a 
request for an administrative review from the recipient organization 
within 30 days of the date of the notice of termination, non-renewal, 
or suspension. Any request for administrative review received by the 
AA/ED more than 30 days after the date of the notice of suspension, 
termination, or non-renewal will be considered untimely and will be 
rejected without being considered.
    (i) In addition, if the AA/ED does not receive a request for an 
administrative review within the 30-day deadline, then the decision by 
the AA/SBDC to suspend, terminate, or non-renew a recipient 
organization's cooperative agreement will become the final Agency 
decision on the matter.
    (ii) [Reserved]
    (4) Standard of review. In order to have the suspension, 
termination, or non-renewal of a cooperative agreement reversed on an 
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 
or governing regulations.
    (5) Conduct of the proceeding. 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/ED receiving a request for an administrative review, the 
AA/ED 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. After receiving the SBA's response to the 
request for an administrative review or after the passage of the 30-day 
deadline for filing such a response, the AA/ED will take one or more of 
the following actions, as applicable:
    (i) Notify the parties whether the AA/ED has decided to grant a 
request for a hearing.
    (ii) Direct the parties to submit further arguments and/or evidence 
on any issues, that she/he believes require clarification.
    (iii) Notify the parties that the AA/ED has declared the record to 
be closed and therefore will refuse to admit any further evidence or 
argument.
    (iv) Within ten calendar days of declaring the record to be closed, 
provide all parties with a copy of the AA/ED's written decision on the 
merits of the administrative review.
    (6) Request for hearing. The AA/ED 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/ED grants a request for a 
hearing, they will set the time and place for the hearing, determine 
whether the hearing will be conducted in person, via telephone or 
virtually, and identify which witnesses will be permitted to give 
testimony.
    (7) Evidence. The recipient organization and SBA each have the 
right to submit whatever evidence they believe is relevant to the 
matter in dispute. No form of evidence 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 in bad faith or engaged 
in improper behavior.
    (8) Decision. The decision of the AA/ED will be effective 
immediately as of the date it is issued. The decision of the AA/ED 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/ED 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.
    (i) Where an enforcement action has been reversed on administrative 
review, the SBA will have no more than ten calendar days to implement 
the AA/ED's decision. However, to the extent permitted under the 
applicable OMB 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.
    (ii) [Reserved]


0
33. Revise Sec.  130.800 to read as follows:


Sec.  130.800  Oversight of the SBDC Program.

    (a) The AA/SBDC and designees will monitor the SBDC's performance 
and its ongoing operations under the cooperative agreement to determine 
if the SBDC is making effective and efficient use of program funds for 
the benefit of the small business community.
    (b) The District Office is the primary contact for the coordination 
of the delivery of services to the small businesses in each area of 
service.
    (c) The AA/SBDC may change the primary contact for coordination at 
any time and will notify the recipient organization of such a change in 
a timely manner.


0
34. Revise Sec.  130.810 to read as follows:


Sec.  130.810  SBA review authority.

    (a) Site visits. The AA/SBDC and designees will coordinate with, 
and

[[Page 76651]]

provide written advance notice to, the SBDC Lead Center Director when 
conducting periodic programmatic visits to the recipient organization, 
Lead Center, SBDC service center organizations, and other service 
locations.
    (1) The programmatic reviews will incorporate District Office 
oversight which will include conducting yearly reviews.
    (2) Site visits may be incorporated into oversight and monitoring 
activities of the SBA program office or the SBA District Office.
    (b) SBA examinations. The SBA designees shall perform a biennial 
programmatic and financial examination of each SBDC network. The 
purpose of these visits is to verify compliance with the cooperative 
agreement, analyze, assess, and evaluate performance management 
regarding its SBDC activities, and if necessary, make recommendations 
for improved service delivery. See 15 U.S.C. 648(k)(1).
    (c) Accreditation program. (1) When extending or renewing a 
cooperative agreement of an SBDC, SBA shall consider the results of the 
examinations and accreditation reviews. See 15 U.S.C. 648(k)(3)(A).
    (i) The Small Business Act provides that the Administration may 
provide financial support, by contract or otherwise, to the association 
for the purpose of developing a SBDCs accreditation program. See 15 
U.S.C. 648(k)(2).
    (ii) SBDC networks must be reviewed for accreditation purposes and 
receive accreditation periodically, as negotiated between the AA/SBDC 
and the accreditation committee of the recognized association.
    (iii) If an SBDC does not receive accreditation, the SBA may 
initiate the non-renewal or termination procedure pursuant to Sec.  
130.700.
    (iv) The statue at 15 U.S.C. 648(k)(3)(B) states the SBA may not 
renew or extend any cooperative agreement with a SBDC unless the center 
has been approved under the accreditation program conducted pursuant to 
this section, except that the AA/SBDC may waive such accreditation 
requirement, at their discretion, upon a showing that the center is 
making a good faith effort to obtain accreditation.
    (2) The AA/SBDC and/or designee will participate in the 
deliberations of the accreditation committee.
    (d) Audits. The 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. 7501) or applicable OMB guidelines (see 2 
CFR part 200, subpart F) nor will such internal review substitute for 
investigations conducted by the SBA Office of Inspector General under 
the authority of the Inspector General Act of 1978 (Pub. L. 95-452, 92 
Stat. 1101) as amended (see Sec.  130.830).


0
35. Revise Sec.  130.820 to read as follows:


Sec.  130.820  Records and recordkeeping.

    (a) Records. (1) The recipient organization will ensure that all 
financial and programmatic records, whether prepared by itself or 
another entity, are adequately maintained in accordance with Federal 
regulations in order to corroborate its performance and financial 
reports to the SBA, as well as to support SBA examinations or other 
audits. These records must include adequate documentation to support 
the expenditures claimed and activities performed under the cooperative 
agreement. The documentation should provide the means to verify proper 
separation of costs among various Federal awards and non-Federal 
spending. See also 2 CFR 200.333 through 200.337.
    (2) The recipient organization will ensure complete and accurate 
detailed financial and programmatic documentation by all SBDC service 
center organizations and service centers. The recipient organization 
will monitor and oversee its SBDC service center organizations and SBDC 
service centers each budget period to ensure compliance with the OMB 
guidelines and regulations. See 2 CFR part 200, subpart D.
    (i) The recipient organization and Lead Center will ensure that:
    (A) All funds received throughout the SBDC network, both Federal 
and non-Federal, including program income, are properly accounted for, 
adequately safeguarded, accurately reported, and properly used to 
further program objectives.
    (B) Each SBDC service center organization has reviewed all charges 
made to its SBDC accounts, including program income, to ensure that 
they are allowable.
    (ii) The recipient organization's Lead Center monitoring and 
oversight activities must include annual on-site or virtual visits to 
all its SBDC service center organizations.
    (A) These review procedures must ensure that SBDCs are in 
compliance with the terms and conditions of the cooperative agreement.
    (B) The Lead Center will document the results of annual reviews of 
the financial and program records of its SBDC service center 
organizations.
    (C) An in-person monitoring review must be conducted the same year 
that there is a change in leadership or a record of problems in that 
year and must be conducted not less than every 4 years.
    (3) The recipient organization must keep records on the amount, 
source, and purpose of all funding under the overall management of the 
SBDC network, including Federal programs.
    (b) Availability of records. (1) All SBDC network records must be 
made available to the SBA for review upon request.
    (2) All SBDC network records, financial and programmatic, must be 
maintained for a period of three years following the date SBA accepted 
the annual performance report and final financial status report from 
the recipient organization.
    (3) The recipient organization will maintain sufficiently detailed 
program and financial documentation to facilitate transition and 
provide continuous SBDC services when changes occur in SBDC service 
center organizations, as well as to support reviews and audits 
authorized by the SBA.


0
36. Add Sec.  130.825 to read as follows:


Sec.  130.825  Reports.

    (a) General. The recipient organization will submit consolidated 
performance and financial reports for the SBDC network to the SBA for 
review. These reports will reflect actual SBDC network activity and 
accomplishments pertinent to the funding periods. Report formats will 
be specified in the annual notice of funding opportunity. See also 2 
CFR 200.327 through 200.329.
    (b) Frequency. (1) Recipient organizations that have been in the 
Program for more than three years must submit financial and 
programmatic performance reports 30 calendar days after completion of 
six months of operation each budget year.
    (2) Recipient organizations that have been in the Program for fewer 
than three years must submit financial and programmatic performance 
reports 30 calendar days after completion of each quarter for the first 
three years.
    (3) The final report from recipient organizations must be submitted 
in accordance with the notice of funding opportunity and terms and 
conditions.
    (c) Electronic data reports. Lead Centers are responsible for 
reporting their consolidated network performance data quarterly to the 
SBA. The format of the reports will be designated in the notice of 
funding opportunity. Lead

[[Page 76652]]

Centers must ensure that the data is submitted to the SBA within the 
timeframe stipulated and that the data is accurate and complete.
    (d) Performance reports. Performance reports must include the data 
specified in paragraphs (d)(1) and (2) of this section, along with any 
other information the SBDC feels may be relevant to a full appraisal of 
its performance.
    (1) The quarterly and semiannual performance reports will address, 
in a brief narrative, the SBDC's major activities and objectives. The 
reports should include a discussion on the progress toward achieving 
those objectives.
    (2) Final performance reports should include an overall summary of 
effort expended to deliver the core services described in the 
cooperative agreement for the full budget period. A discussion of 
performance measurements achieved and an explanation of those 
objectives or measurements not met should be included. Performance 
reports should be a summary of the activities, events or achievements 
by reportable category with an accompanying management analysis.

0
37. Revise Sec.  130.830 to read as follows:


Sec.  130.830  Audits and investigations.

    See 2 CFR part 200, subpart F.

0
38. Add Sec.  130.840 to read as follows:


Sec.  130.840  Closeout procedures.

    (a) General. The purpose of closeout procedures is to ensure that 
the program funds and property acquired or developed under the SBDC 
cooperative agreement are fully reconciled and transferred seamlessly 
between recipient organizations, SBDC service center organizations, or 
other Federal programs. The responsibility of conducting closeout 
procedures is vested with the recipient organization whose cooperative 
agreement is not being renewed. The procedures should be documented and 
accomplished in accordance with the applicable property standards and 
the provisions of this part.
    (b) Supplies and equipment. Supplies and equipment acquired with 
funds under the cooperative agreement must be accounted for at 
closeout.
    (c) Intellectual property. (1) In accordance with 2 CFR part 200, 
subpart D, intangible property and items subject to copyright that are 
purchased or developed under the cooperative agreement must be 
accounted for at closeout.
    (2) Inventory and documentation of intellectual property must be 
collected by the Lead Center for close out. In circumstances where SBA 
is not renewing the cooperative agreement, the recipient organization 
must provide an intellectual property inventory and the support 
documentation to the SBDC clearinghouse and to the District Office for 
disposition instructions.
    (d) Responsibilities--(1) Recipient organizations. When an SBDC 
cooperative agreement is not being renewed, regardless of cause, the 
recipient organization will ensure the following steps are taken in 
their closeout process and perform the necessary inventories and 
reconciliations prior to submitting the final annual financial report.
    (i) An inventory of the SBDC property must be compiled and 
evaluated. An asset evaluation final report accounting for the 
property, equipment, and the aggregate of usable supplies and materials 
must be provided to the Program Manager.
    (ii) Program income balances must be reconciled, and unused program 
income transferred to the Lead Center from SBDC service center 
organization accounts.
    (iii) Client counseling and training records, paper and electronic, 
must be compiled to facilitate an SBA program closeout review.
    (iv) Financial records will be compiled to facilitate an SBA 
closeout financial examination.
    (2) Close out actions. Recipient organizations that terminate SBDC 
service center organization agreements will perform the close out 
actions in paragraphs (d)(1)(i) through (iv) of this section to ensure 
the safeguard of program resources under the cooperative agreement.
    (3) SBA. Upon receipt of the final financial report from a non-
renewing recipient organization, the AA/SBDC will issue disposition 
instructions to the former recipient organization as described in 
paragraph (e) of this section.
    (e) Final disposition. (1) The final financial status report from 
the recipient organization must include the information identified in 
the inventory process and identify any program income collected from 
the SBDC network.
    (2) The AA/SBDC will issue written disposition instructions to the 
recipient organization providing:
    (i) The name and address of the entity or agency to which property 
and program income must be transferred;
    (ii) A date by which the transfer must be completed;
    (iii) Actions to be taken regarding property and program income;
    (iv) Actions to be taken regarding 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 residual program income 
or Federal or matching funds.

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2023-22164 Filed 11-6-23; 8:45 am]
BILLING CODE 8026-09-P