[Senate Report 114-418]
[From the U.S. Government Publishing Office]
Calendar No. 482
114th Congress } { Report
SENATE
2d Session } { 114-418
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SMALL BUSINESS TRANSFORMING AMERICA'S REGIONS ACT OF 2016
_______
December 20, 2016.--Ordered to be printed
Filed, under authority of the order of the Senate of December 10
(legislative day, December 9), 2016
_______
Mr. Vitter, from the Committee on Small Business and Entrepreneurship,
submitted the following
R E P O R T
[To accompany S. 2838]
The Committee on Small Business and Entrepreneurship, to
which was referred the bill (S. 2838) to improve the HUBZone
program, having considered the same, reports favorably thereon
with amendments and recommends that the bill, as amended, do
pass.
I. INTRODUCTION
The Small Business Transforming America's Regions Act of
2016 was introduced by Senator David Vitter on April 21, 2016,
with Senators Gary Peters and Jeanne Shaheen as cosponsors. The
Act would improve the HUBZone program. During the markup of the
bill, the bill was approved by roll call vote.
II. HISTORY (PURPOSE & NEED FOR LEGISLATION)
The SBA's Historically Underutilized Business Zone
(HUBZone) program was authorized by the Small Business
Reauthorization Act of 1997. The program encourages economic
development in historically underutilized business zones--
``HUBZones''--by providing federal contracts to small
businesses in designated HUBZone areas. In administering the
HUBZone program, the SBA: (1) Determines which businesses are
eligible to receive HUBZone contracts; (2) maintains a listing
of qualified HUBZone small businesses that federal agencies can
use to locate vendors; (3) adjudicates protests of eligibility
to receive HUBZone contracts; and (4) reports to the Congress
on the program's impact on employment and investment in HUBZone
areas.
HUBZone designations are based on economic data, and
therefore if the economy improves in a location, the area may
lose its HUBZone status. Currently, if an area loses HUBZone
designation the area is redesignated (i.e., retains its HUBZone
designation) for three years after the date the area ceases to
be so qualified. This bill extends the redesignation period to
7 years to allow firms to make more substantial long-term
investments without fear of losing HUBZone status before the
business has the chance to succeed. This section retains that
thirty-five percent of the firm's employees must still reside
in a HUBZone, which is another important aspect for the
economic well-being of distressed communities.
III. HEARINGS & ROUNDTABLES
In the 109th Congress, the Senate Committee on Small
Business and Entrepreneurship held a hearing entitled ``The
Impact of Hurricane Katrina on Small Business'' on September
22, 2005. The hearing assessed relief programs of various
federal agencies. HUBZones were introduced as a possible use to
help the economic development of areas affected by Hurricane
Katrina.
In the 110th Congress, the Committee held a hearing
entitled ``Increasing Government Accountability and Ensuring
Fairness in Small Business Contracting'' on July 18, 2007. This
hearing discussed using HUBZone businesses as contractors. The
HUBZone program was designed to create jobs where they are
needed the most. At this hearing, witness's testimonies focused
on the benefits of the HUBZone program, and how to improve its
shortcomings.
IV. DESCRIPTION OF BILL
As introduced, this bill amends the Small Business Act to
include in the HUBZone program a qualified area designated by
the SBA in response to a petition by the governor of a state,
the District of Columbia, or a U.S. territory. The bill would
authorize the SBA to designate in response to such a petition
only a tract that: (1) has a median household income less than
70 percent of the state median household income; (2) has an
unemployment rate at least 120 percent of the average U.S. or
state unemployment rate, whichever is less; or (3) meets other
SBA criteria. The bill also would require the SBA to establish
procedures to: ensure that it accepts petitions from all states
each fiscal year, and give an interested governor technical
assistance before a petition is filed.
Between introduction of the bill on April 21 and Committee
passage on May 24, modifications were made to the bill which
were facilitated by its inclusion in a manager's package. As
amended via the manager's package, the following changes were
made:
Expanding the applicability and eligibility
requirements to include nonmetropolitan counties.
Changing the qualifying threshold from
census tracts with a median household income that is
less than 70 percent of the median household income of
the relevant state, to nonmetropolitan counties that
have a median household income that is less than 90
percent of the median household income.
Extending the applicability from the date of
the bill's enactment to three years before the date of
the bill's enactment.
Making changes in how small business concern
size standards are petitioned for reconsideration.
Requiring prime contractors to submit
performance assessments for subcontractors working on
federal contracts.
Adding the SBA Administrator to the Federal
Acquisition Regulatory Committee.
V. COMMITTEE VOTE
In compliance with rule XXVI (7)(b) of the Standing Rules
of the Senate, the following vote was recorded on May 11, 2015.
A motion to adopt the Small Business Transforming America's
Regions Act of 2016, a bill to improve the HUBZone program, was
approved by roll call vote with the following Senators present:
Vitter, Risch, Scott, Ernst, Ayotte, Shaheen, Cantwell, Cardin,
Heitkamp, Markey, Booker, Coons, Hirono, and Peters.
VI. COST ESTIMATE
In compliance with rule XXVI (11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts discussed in the
following letter from the Congressional Budget Office:
July 11, 2016.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2838, the Small
Business Transforming America's Regions Act of 2016.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall.
Enclosure.
S. 2838--Small Business Transforming America's Regions Act of 2016
Summary: S. 2838 would add the Small Business
Administration (SBA) to the Federal Acquisition Regulatory
(FAR) Council, and make several changes to the Historically
Underutilized Business Zone (HUBZone) program. CBO estimates
that implementing S. 2838 would cost $7 million over the 2017-
2021 period. Such spending would be subject to the availability
of appropriated funds
The FAR Council consists of the Department of Defense, the
National Aeronautics and Space Administration, and the General
Services Administration and is overseen by the Office of
Management and Budget. The FAR council manages, coordinates,
monitors, and changes federal acquisition regulations. Each
member agency contributes staff and technical expertise to the
operations of the council. On the basis of information from
current FAR council members, CBO estimates that the SBA's
inclusion on the council would cost around $2 million in 2017
and $1 million in each subsequent year for additional staff and
administrative expenses related to performing the duties
required for membership on the FAR council.
The SBA administers the HUBZone program, which gives
preference to participating small businesses located in areas
with certain economic characteristics when they seek contracts
with the federal government. S. 2838 would permit the governor
of a state to petition the SBA to designate certain counties as
a HUBZone that would not otherwise be eligible for designation,
if they meet criteria specified in the bill. On the basis of
information from the SBA, CBO estimates that implementing this
provision would cost $1 million in 2017, and less than $500,000
in subsequent years, for SBA to evaluate petitions and update
HUBZone maps.
Enacting S. 2838 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply. CBO
estimates that enacting S. 2838 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2027.
S. 2838 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would benefit state governments and some counties in cases
where the governor successfully petitioned the SBA for a county
to be designated as a HUBZone. Any costs to states or counties
would result from complying with conditions of federal
assistance.
The CBO staff contact for this estimate is Stephen Rabent.
The estimate was approved by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
VII. EVALUATION OF REGULATORY IMPACT
In compliance with rule XXVI (11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact on the personal privacy of companies or
individuals who utilize the services provided.
VIII. SECTION-BY-SECTION ANALYSIS
Section 1. Short title
This section designates the bill as the ``Small Business
Transforming America's Regions Act of 2016.''
Section 2. Modification to the HUBZone program
This section amends the Small Business Act so that
qualified areas may be included in the HUBZone program in
response to a petition of the governor of a state. Criteria for
the inclusion of such areas are established in this section.
This section also extends the period for which an area which
ceased to qualify for the HUBZone program may be redesignated
to qualify. This extension shall increase the period from three
years to seven years.
Section 3. Filing of petitions for reconsideration of size standards
This section deals with the processes by which small
businesses concern size standards are petitioned for
reconsideration.
Section 4. Past performance credit for subcontractors
This section requires that prime contractors submit a past
performance rating for any subcontractor used in the process of
completing a federal contract. Federal agencies shall use these
past performance ratings when determining whether to award a
prime contract to a subcontractor.
Section 5. Membership of the administrator of the Small Business
Administration on the Federal Acquisition Regulatory Council
This sections adds the Administrator of the Small Business
Administration of the Federal Acquisition Regulatory Council.
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