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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-939
======================================================================
SMALL BUSINESS RUNWAY EXTENSION ACT OF 2018
_______
September 12, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Chabot, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 6330]
The Committee on Small Business, to whom was referred the
bill (H.R. 6330) to amend the Small Business Act to modify the
method for prescribing size standards for business concerns,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary........................................1
II. Need for Legislation............................................2
III. Hearings........................................................7
IV. Committee Consideration........................................8
V. Committee Votes................................................8
VI. Section-by-Section of H.R. 6330................................10
VII. Congressional Budget Office Cost Estimate......................10
VIII. Unfunded Mandates..............................................10
IX. New Budget Authority, Entitlement Authority, and Tax Expenditur10
X. Oversight Findings.............................................10
XI. Statement of Constitutional Authority..........................10
XII. Congressional Accountability Act...............................10
XIII. Federal Advisory Committee Act Statement.......................11
XIV. Statement of No Earmarks.......................................11
XV. Statement of Duplication of Federal Programs...................11
XVI. Disclosure of Directed Rule Makings............................11
XVII. Performance Goals and Objectives...............................11
XVIII.Changes in Existing Law, Made by the Bill, As Reported.........11
I. Purpose and Bill Summary
The purpose of H.R. 6330, the ``Small Business Runway
Extension Act of 2018,'' is to help advanced-small contractors
successfully navigate the middle market as they reach the upper
limits of their small size standard.
H.R. 6330 lengthens the time in which the Small Business
Administration (SBA) measures size through revenue, from the
average of the past 3 years to the average of the past 5 years.
This modest modification of SBA's size formula is designed to
reduce the impact of rapid-growth years which result in spikes
in revenue that may prematurely eject a small business out of
their small size standard. This legislation will allow small
businesses at every level more time to grow and develop their
competitiveness and infrastructure, before entering the open
marketplace. The bill will also protect federal investment in
SBA's small business programs by promoting greater chances of
success in the middle market for newly-graduated firms,
resulting in enhanced competition against large prime
contractors.
II. Background and Need for Legislation
H.R. 6330 was introduced by Rep. Steve Knight (R-CA) and
Rep. Yvette Clarke (D-NY) on July 11, 2018. Background on each
of these provisions will be provided along with an explanation
of the need for legislation.
A. DEFINING A SMALL BUSINESS--WHY IS THIS IMPORTANT?
Key to understanding the mid-size issue is to first
understand the definition of a small business and the relevance
of this definition to federal procurement. Section 3(a)(1) of
the Small Business Act, 15 U.S.C. 632(a)(1), provides, in
pertinent part: ``[a] small business concern . . . shall be
deemed to be one that is independently owned and operated and
which is not dominant in its field of operation.''\1\ To
calculate the size of a small business, the SBA is authorized
to consider number of employees, dollar volume of business,\2\
net worth,\3\ net income, other factors, or any combination of
those factors. In sum, Congress has granted the Administrator
substantial discretion in calculating the size of a small
business, provided that the business is independently owned and
operated and not dominant in its field.
---------------------------------------------------------------------------
\1\Furthermore, 15 U.S.C. ' 632(a)(2)(A) states that the Small
Business Administration (SBA) is authorized to ``specify detailed
definitions or standards by which a business concern may be determined
to be small for purposes of this Act or any other Act''.
\2\Current SBA size standards use gross revenue as a measure of
dollar volume. Nothing in the Act requires reliance on dollar volume
and other measures could be used.
\3\The net worth standard is used, for among other purposes, to
determine eligibility for investments made by small business investment
companies, loans made pursuant to Title V of the Small Business
Investment Act of 1958, and for participation in the program
established by Sec. 8(a) of the Small Business Act.
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The SBA size standards are important because they establish
eligibility for a variety of small business assistance
programs, including a panoply of government contracting
programs designed to assist small businesses in obtaining
federal government contracts. The federal government spends
trillions of dollars per year,\4\ which includes hundreds of
billions of dollars spent on products and services.\5\ The
volume of dollars involved in federal contracting means that
every firm is looking for a competitive advantage, and the
small business contracting programs are one way to obtain that
advantage. In order to diversify the industrial base, create
jobs, and increase competition, contracting preferences have
been extended to small business participants in the 8(a)
Business Development program, the HUBZone program, the Service
Disabled Veteran-Owned Small Business program, and the Woman-
Owned Small Business Program.\6\
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\4\The federal government spent $3.98 trillion in fiscal year 2017.
USASpending.gov, https://www.usaspending.gov/#/.
\5\The report states that federal agencies procured approximately
$438 billion in products and services in fiscal year 2015. GAO,
Contracting Data Analysis: Assessment of Government-Wide Trends 5 (GAO-
17-244SP) (2017).
\6\15 U.S.C. Sec. 631(a), 644(a).
---------------------------------------------------------------------------
B. THE ``OTHER-THAN-SMALL'' CONUNDRUM
The federal government recognizes two categories of
businesses--``small'' and ``other-than small.'' While the SBA
defines what a ``small'' business is, there is no federal
definition for ``other-than-small.'' Therefore, this category
can encompass firms that barely exceed the SBA's small business
size standards up to the multi-billion dollar household names.
For example, the upper limit of the SBA's small business size
standard for information technology (IT) companies\7\ is $27.5
million. An IT company that barely surpasses that amount, for
example at $28 million, or even significantly surpassing that
amount at $200 million, are considered ``other-than-small'' and
therefore required to compete against each other and the
dominant IT contractors. Leidos and Lockheed Martin Corp. are
among the largest IT government contractors and boast an
average of $6.8 billion in annual revenue each.\8\
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\7\NAICS code 541519, ``Other Computer Related Services'' is an
often used industry code for IT services. Small Bus. Admin., https://
www.sba.gov/sites/default/files/files/Size--Standards--Table.pdf.
\8\Washington Tech., https://washingtontechnology.com/toplists/top-
100-lists/2017.aspx.
---------------------------------------------------------------------------
This creates a dilemma for newly-graduated firms--they no
longer qualify for small business contracts and no longer
eligible for SBA assistance, yet must compete in the open
market against these titans of industry. In many cases, firms
caught in this circumstance face difficult choices. They may
choose to sell, often at a devalued rate than they had
previously held as a small company due to the loss of that
small size status.\9\ If these businesses are not acquired and
subsumed into the supply chain of larger companies, they may
choose to modify their business model, focusing on
subcontracting opportunities with other small or large
companies.\10\ This path negates the firm's ability to gain
critical project management skills needed to continue
growth.\11\ Finally, they may fail or deliberately choose to
impede their own success so that they may remain small and
eligible for small business set-aside contracts.\12\
---------------------------------------------------------------------------
\9\Leaving the Nest: Challenges Facing Advanced Small Businesses:
Roundtable Before the H. Comm. on Small Bus., 115th Cong. (2018)
(statement of multiple roundtable participants), on file with the
Committee.
\10\Tonya Saunders, The mid-tier paradox: too small to compete, too
large to survive, Bloomberg Gov. (May 13, 2016), https://
about.bgov.com/blog/the-mid-tier-paradox-too-small-to-compete-too-
large-to-survive/.
\11\Id.
\12\Supra note 9.
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C. CHALLENGES FACING MID-SIZE BUSINESSES
While there are businesses that have successfully
maintained their mid-size status, many firms venturing into the
middle market face a heavily uncertain future and many threats
to success. The Committee on Small Business examined a number
of these challenges during a roundtable held on November 14,
2018\13\ which are discussed, in brief, in this memorandum.
---------------------------------------------------------------------------
\13\SupraT1K note 9.
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a. Lack of empirical data examining the failure or success rate of
small businesses exceeding their small size
Because there is no federally-recognized definition of
``mid-size,'' there is a lack of empirical data tracking the
trajectory of small firms as they exceed their size
standard.\14\ As such, potentially critical economic indicators
remain uncaptured, such as: the success or failure rate of
small businesses that grow out of their small status, the
number of jobs created by growing small firms, industries that
promote or inhibit middle-market growth, and many other
factors.
---------------------------------------------------------------------------
\14\David J. Berteau, Challenges Facing Advanced Small Businesses,
Prof. Services Council (Dec. 14, 2017), https://www.pscouncil.org/a/
Content/2017/Challenges_Facing_Advanced_
Small_Businesses.aspx.
---------------------------------------------------------------------------
Ultimately, this lack of data limits Congressional insight
into how effective SBA's contracting programs are in meeting
national economic policies geared towards encouraging small
business growth and job creation.\15\ Certain metrics that may
be helpful to track, specifically regarding evaluating the
impact of SBA's contracting programs, may include: the success
rate of newly-graduated firms competing in the open market,
firms that deliberately scale back down to the small size
standard, firms that merge or become acquired, and other
metrics.
---------------------------------------------------------------------------
\15\Id.
---------------------------------------------------------------------------
b. Newly-graduated small businesses are less able to compete against
dominate large companies
The ``other-than-small'' category includes firms that have
just graduated out of their small business size by mere
dollars, through the entire middle-market spectrum, to also
include the large, billion-dollar companies. These large
companies have several competitive advantages over small and
mid-size firms, making true competition illusory. For instance,
large companies have vast past performance qualifications,
strong brand-name recognition and agency ties, as well as a
multitude of professional certifications, clearances, and
greater financial resources.\16\ Small and mid-size businesses
cannot afford to maintain these resources, leaving them at a
considerable disadvantage. These advantages by large firms can
have a chilling effect, potentially freezing out emerging
advanced-small companies.\17\ While larger mid-size firms have
a stronger foothold in the middle market, they still have
limited bid and proposal budgets and many do not have
specialized teams dedicated to business development or
communications and marketing.\18\ Large companies have a solid
infrastructure and can afford teams of personnel dedicated to
proposal development, graphic design, protests, pipeline
development, legal teams, and other specializations.\19\
---------------------------------------------------------------------------
\16\Supra note 10.
\17\Id.
\18\Bloomberg Gov., The Mid-Tier Paradox: Too Small to Compete, Too
Large to Survive? 4 (2016).
\19\Id.
---------------------------------------------------------------------------
Additionally, large businesses, which once competed
primarily for large, high-dollar contracts, are now
increasingly competing for contracts across the spectrum,
including those contracts that are most suitable for mid-sized
and advanced-small businesses.\20\ This puts additional
pressure on mid-size firms, particularly those emergent,
advanced-small businesses.
---------------------------------------------------------------------------
\20\Mark Amtower, Be prepared: GWACS, IDIQs will grow in this age
of uncertainty, Wash. Technology (Mar. 16, 2017), https://
washingtontechnology.com/articles/2017/03/16/insights-amtower-gwac-
idiq-advice.aspx.
---------------------------------------------------------------------------
c. Going from small to other-than-small triggers certain requirements
As contracts grow in scope and size, one large contract
(i.e., a high-dollar value set-aside contract) won by a small
company could catapult that firm out of its small size status.
This growth out of the small size triggers certain requirements
that other-than-small firms must comply with, that small firms
are exempt from. For example, other-than-small firms must
develop detailed subcontracting plans;\21\ however, small
businesses are exempt from this requirement. Thus, a small firm
that saw a spike in revenue due to winning a large contract may
not have the infrastructure and business processes prepared and
in place to take on a whole host of new requirements. This may
result in small business struggling to stay viable in the open
market and may be one of the contributing factors to the
constant shuffling between small/other-than-small status that
is evident between the upper levels of the small size bracket,
and the lower levels of the mid-tier bracket.\22\
---------------------------------------------------------------------------
\21\15 USC Sec. 637(d)(4) and (6).
\22\Supra note 9.
---------------------------------------------------------------------------
d. The federal procurement landscape creates inherent challenges to
growth
Due to evolving federal procurement practices, small and
mid-tier companies are facing a more uncertain climate. One of
the challenges small and mid-size firms face is a shrinking
federal market. As budgets have shrunk,\23\ the use of contract
consolidation and bundling has risen--this is a procurement
strategy that combines several separate, smaller contracts into
one unnecessarily large and complex contract, increasing the
size and scope of the contract.\24\ These contracts become
prohibitive to small or mid-size businesses, and are suitable
mostly for larger companies. This disadvantages emergent, newly
graduated firms and smaller mid-size firms from competing on
these contracts which are now too complex to suit their
internal capabilities. The Federal Strategic Sourcing
Initiative (FSSI), Category Management, and other executive
branch initiatives continue to promote bundling and
consolidation.\25\
---------------------------------------------------------------------------
\23\The federal government has reported decreased spending yearly
from fiscal year 2011 to fiscal year 2016. National Contract Management
Association & Deltek, Annual Review of Government Contracting 2016 7
(2017).
\24\The Committee has a long history of oversight with respect to
contract bundling and consolidation, as well as the initiatives used to
employ these strategies, e.g., FSSI and Category Management. Further
explanation is outside of the scope of this report. Contracting and the
Industrial Base II: Bundling, Goaling, and the Office of Hearings and
Appeals: Hearing Before the Subcomm. on Contracting and Workforce of
the H. Comm. on Small Bus., 114th Cong. (2015).
\25\Id.
---------------------------------------------------------------------------
Additionally, large, government-wide contract vehicles and
indefinite-delivery, indefinite-quantity contracts have
experienced significant growth in utilization the past several
years.\26\ Those small and mid-size businesses fortunate enough
to have been awarded a spot on these highly-competitive, long-
term contracts may still be locked out of key markets or forced
to subcontract by large multiple-award contracts that require
overly extensive past performance requirements, such as Alliant
and OASIS.\27\ The increasing use of strict past performance
quantification as an evaluation tool hinders small mid-tier
companies from competing as prime vendors, essentially blocking
them out of critical growth markets for years.\28\
---------------------------------------------------------------------------
\26\Supra note 20.
\27\Description of these MACs and IDIQs such as Alliant are beyond
the scope of this memorandum. Bloomberg Gov., The Mid-Tier Paradox:
2018 Company Report 6 (2018).
\28\Id. at 6, 11.
---------------------------------------------------------------------------
Furthermore, due to budget constraints and other
interagency pressures, contracting officers are increasingly
expecting vendors to be able to do more with less, and in the
face of uncertainty, the government tends to be risk-averse,
preferring to contract with large, established contractors over
small and mid-tier companies. Because of these and other
changes in the procurement landscape, the diversity of
contractors has drastically declined,\29\ further limiting the
choices contracting officers have. In sum, the shrinking
federal market, increased use of large, government-wide
contracting vehicles, and increasing use of strict past
performance qualifications on these contracting vehicles limits
the government's opportunity to realize a return on its
investment in emergent small firms and mid-size businesses.
---------------------------------------------------------------------------
\29\Section 809 Panel, Report of the Advisory Panel on Streamlining
and Codifying Acquisition Regulations 171 (1 vol. 2018).
---------------------------------------------------------------------------
D. POTENTIAL LEGISLATION EXTENDING DEFINITION OF A SMALL BUSINESS: PROS
AND CONS
The Committee engaged stakeholders in identifying potential
legislation that may assist advanced-small businesses
transitioning into the middle market. Proponents believe that
the size standards the SBA sets for certain industries may fail
to encompass many firms that are small according to statute,
i.e., independently owned and not dominant in its field. Thus,
the suggestion was raised to amend the Small Business Act to
provide a longer time period for which a business may be
qualified as small, arguing that this will improve the health
of the industrial base, increase competition resulting in lower
prices, and create and preserve jobs.
a. Industrial base
Proponents argue that mid-size firms are failing, as small
firms that outgrow the size standards either go out of business
or are acquired by large firms. An earlier study by Bloomberg
Government, examining data from fiscal years 2012-16, predicted
a dire outlook with weaker mid-size prospects, finding that
``average annual prime contract revenue for this segment of the
federal market has declined substantially . . . midsize
contractors are losing market share year after year . . .
pressures from both large and small companies have squeezed the
mid-tier market share, and this trend doesn't show signs of
slowing down in the long-term future.''\30\
---------------------------------------------------------------------------
\30\Bloomberg Gov., The Mid-Tier Challenge 2 (2017).
---------------------------------------------------------------------------
b. Competition and price
Proponents further argue that an increase in mid-size
business presence in the market will increase competition
against the larger competitors, thereby decreasing price. Given
the trend towards increased use of larger, consolidated, multi-
award contracts and the decline of small businesses willing to
work with the federal government as described earlier in this
memorandum, there is a concern that contracts will become
increasingly available for the largest contractors and less so
for smaller contractors. A strong middle market consisting of
emergent, newly-graduated firms up to larger mid-size companies
might increase competition against the biggest federal
contractors and could indeed bring down prices.
c. Creation/preservation of jobs
When mid-size businesses are acquired by large firms, the
large firm normally sheds the administrative side of the
businesses--the human resources, accounting, marketing, legal,
and other functions which are often duplicated at the acquiring
company's office. Thus, these jobs are lost. Proponents argue
that maintaining and growing these businesses would preserve
these jobs. Further, they argue that if the mid-size business
continues to grow, it will also continue to add jobs, pointing
out that these firms are credited with high job creation.\31\
---------------------------------------------------------------------------
\31\For example, the National Center for the Middle Market found
that five years of middle-market data show that the middle market
produces jobs 1.5 to 2 times faster than either big or small
businesses, producing 3 out of 5 net new private-sector jobs. Michael
Evans, Job Creation in the New Political Economy: Small Companies, Not
Big Companies, Create Jobs, Forbes (Feb. 8, 2017), https://
www.forbes.com/sites/allbusiness/2017/02/08/job-creation-in-the-new-
political-economy-small-companies-not-big-companies-create-jobs/
#82a24949e6ec.
---------------------------------------------------------------------------
d. Inhibiting growth of small businesses
Proponents of legislation extending the period of time a
business can be considered small argue that a longer
transitional period would benefit small firms who experience
sudden, rapid growth in revenue, typically by winning a large
contract or task order. A change in the calculation of size
would help these firms sustain revenue levels under the small
size threshold, allowing them the ability to develop their
business plan and infrastructure to transition to mid-size more
successfully, because of the increased lead-time.
III. Hearings
In the 115th Congress, the Committee held one hearing
examining the issues covered in H.R. 6330. On April 26, 2018,
the Committee on Small Business Subcommittee on Contracting and
Workforce met for a hearing titled ``No Man's Land: Middle-
Market Challenges for Small Business Graduates.'' This hearing
examined the challenges to growth and success for businesses as
they approach the upper limits of their small size standard.
Witnesses included a subject matter expert representing the
Montgomery County Chamber of Commerce, two advanced-small
business owners, and a representative of the Federal
Procurement Information Technology Alliance for Public Sector
(ITAPS) Information Technology Industry Council.
IV. Committee Consideration
The Committee on Small Business met in open session, with a
quorum being present, on July 18, 2018 and ordered H.R. 6330
favorably reported to the House. During the markup, no
amendments were offered.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report legislation and amendments
thereto. The Committee voted by voice vote to favorably report
H.R. 6330 to the House at 11:31 am.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
VI. Section-by-Section Analysis of H.R. 6330
Section 1. Short title
This section designates the bill as the ``Small Business
Runway Extension Act of 2018.''
Section 2. Modification to method for prescribing size standards for
business concerns
This section amends Section 15 of the Small Business Act by
changing the size determination of a small business concern
based on the annual average gross receipts of the small
business concern over the past 3 years, to the past 5 years.
VII. Congressional Budget Office Cost Estimate
At the time H.R. 6330 was reported to the House, the
Congressional Budget Office had not provided a cost estimate.
VIII. Unfunded Mandates
H.R. 6330 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act, Public
Law No. 104-4, and would impose no costs on state, local, or
tribal governments.
IX. New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement
authority, and tax expenditures. While the Committee has not
received an estimate of new budget authority contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to 402 of the Congressional Budget Act
of 1974, the Committee does not believe that there will be any
additional costs attributable to this legislation. H.R. 6330
does not direct new spending, but instead reallocates funding
independently authorized and appropriated.
X. Oversight Findings
In accordance with clause 2(b)(1) of rule X of the Rules of
the House, the oversight findings and recommendations of the
Committee on Small Business with respect to the subject matter
contained in H.R. 6330 are incorporated into the descriptive
portions of this report.
XI. Statement of Constitutional Authority
Pursuant to clause 7 of rule XII of the Rules of the House,
the Committee finds that the authority for this legislation in
Art. I, 8, cl.1.
XII. Congressional Accountability Act
H.R. 6330 does not relate to the terms and conditions of
employment or access to public services or accommodations
within the meaning of 102(b)(3) of Public Law No. 104-1.
XIII. Federal Advisory Committee Act Statement
H.R. 6330 does not establish or authorize the establishment
of any new advisory committees as that term is defined in the
Federal Advisory Committee Act, 5 U.S.C. App.2.
XIV. Statement of No Earmarks
Pursuant to clause 9 of rule XXI, H.R. 6330 does not
contain any congressional earmarks, limited tax benefits, or
limited tariff benefits as defined in subsections (d), (e), or
(f) of clause 9 of Rule XXI of the Rules of the House.
XV. Statement of Duplication of Federal Programs
Pursuant to clause 3 of the rule XIII of the Rules of the
House, no provision of H.R. 6330 establishes or reauthorizes a
program of the federal government known to be duplicative of
another federal program, a program that was included in any
report from the United States Government Accountability Office
pursuant to 21 of Pub. L. No. 111-139, or a program related to
a program identified in the most recent catalog of federal
domestic assistance.
XVI. Disclosure of Directed Rulemakings
Pursuant to clause 3 of the rule XIII of the Rules of the
House, H.R. 6330 does not direct any rulemaking.
XVII. Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House, the Committee establishes the following performance-
related goals and objectives for this legislation:
H.R. 6330 extends the time in which a business can be
considered small as measured by SBA's size standard by
modifying the calculation used to determine size. The
objective is to allow the small firm additional time to
build its competitiveness in order to succeed once it
exceeds its small size and must enter the open
marketplace, competing against much larger firms.
XVIII. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause (E) of rule XIII of the rules of
the House, changes in existing law made by the bill, as
reported, are shown as follows: existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
SEC. 3. DEFINITIONS.
(a) Small Business Concerns.--
(1) In general.--For the purposes of this Act, a
small-business concern, including but not limited to
enterprises that are engaged in the business of
production of food and fiber, ranching and raising of
livestock, aquaculture, and all other farming and
agricultural related industries, shall be deemed to be
one which is independently owned and operated and which
is not dominant in its field of operation.
(2) Establishment of size standards.--
(A) In general.--In addition to the criteria
specified in paragraph (1), the Administrator
may specify detailed definitions or standards
by which a business concern may be determined
to be a small business concern for the purposes
of this Act or any other Act.
(B) Additional criteria.--The standards
described in paragraph (1) may utilize number
of employees, dollar volume of business, net
worth, net income, a combination thereof, or
other appropriate factors.
(C) Requirements.--Unless specifically
authorized by statute, no Federal department or
agency may prescribe a size standard for
categorizing a business concern as a small
business concern, unless such proposed size
standard--
(i) is proposed after an opportunity
for public notice and comment;
(ii) provides for determining--
(I) the size of a
manufacturing concern as
measured by the manufacturing
concern's average employment
based upon employment during
each of the manufacturing
concern's pay periods for the
preceding 12 months;
(II) the size of a business
concern providing services on
the basis of the annual average
gross receipts of the business
concern over a period of not
less than [3 years] 5 years;
(III) the size of other
business concerns on the basis
of data over a period of not
less than 3 years; or
(IV) other appropriate
factors; and
(iii) is approved by the
Administrator.
(3) Variation by industry and consideration of other
factors.--When establishing or approving any size
standard pursuant to paragraph (2), the Administrator
shall ensure that the size standard varies from
industry to industry to the extent necessary to reflect
the differing characteristics of the various industries
and consider other factors deemed to be relevant by the
Administrator.
(4) Exclusion of certain security expenses from
consideration for purpose of small business size
standards.--
(A) Determination required.--Not later than
30 days after the date of enactment of this
paragraph, the Administrator shall review the
application of size standards established
pursuant to paragraph (2) to small business
concerns that are performing contracts in
qualified areas and determine whether it would
be fair and appropriate to exclude from
consideration in the average annual gross
receipts of such small business concerns any
payments made to such small business concerns
by Federal agencies to reimburse such small
business concerns for the cost of subcontracts
entered for the sole purpose of providing
security services in a qualified area.
(B) Action required.--Not later than 60 days
after the date of enactment of this paragraph,
the Administrator shall either--
(i) initiate an adjustment to the
size standards, as described in
subparagraph (A), if the Administrator
determines that such an adjustment
would be fair and appropriate; or
(ii) provide a report to the
Committee on Small Business and
Entrepreneurship of the Senate and the
Committee on Small Business of the
House of Representatives explaining in
detail the basis for the determination
by the Administrator that such an
adjustment would not be fair and
appropriate.
(C) Qualified areas.--In this paragraph, the
term ``qualified area'' means--
(i) Iraq,
(ii) Afghanistan, and
(iii) any foreign country which
included a combat zone, as that term is
defined in section 112(c)(2) of the
Internal Revenue Code of 1986, at the
time of performance of the relevant
Federal contract or subcontract.
(5) Alternative Size Standard.--
(A) In general.--The Administrator shall
establish an alternative size standard for
applicants for business loans under section
7(a) and applicants for development company
loans under title V of the Small Business
Investment Act of 1958 (15 U.S.C. 695 et seq.),
that uses maximum tangible net worth and
average net income as an alternative to the use
of industry standards.
(B) Interim rule.--Until the date on which
the alternative size standard established under
subparagraph (A) is in effect, an applicant for
a business loan under section 7(a) or an
applicant for a development company loan under
title V of the Small Business Investment Act of
1958 may be eligible for such a loan if--
(i) the maximum tangible net worth of
the applicant is not more than
$15,000,000; and
(ii) the average net income after
Federal income taxes (excluding any
carry-over losses) of the applicant for
the 2 full fiscal years before the date
of the application is not more than
$5,000,000.
(6) Proposed rulemaking.--In conducting rulemaking to
revise, modify or establish size standards pursuant to
this section, the Administrator shall consider, and
address, and make publicly available as part of the
notice of proposed rulemaking and notice of final rule
each of the following:
(A) a detailed description of the industry
for which the new size standard is proposed;
(B) an analysis of the competitive
environment for that industry;
(C) the approach the Administrator used to
develop the proposed standard including the
source of all data used to develop the proposed
rule making; and
(D) the anticipated effect of the proposed
rulemaking on the industry, including the
number of concerns not currently considered
small that would be considered small under the
proposed rule making and the number of concerns
currently considered small that would be deemed
other than small under the proposed rulemaking.
(7) Common size standards.--In carrying out this
subsection, the Administrator may establish or approve
a single size standard for a grouping of 4-digit North
American Industry Classification System codes only if
the Administrator makes publicly available, not later
than the date on which such size standard is
established or approved, a justification demonstrating
that such size standard is appropriate for each
individual industry classification included in the
grouping.
(8) Number of size standards.--The Administrator
shall not limit the number of size standards
established pursuant to paragraph (2), and shall assign
the appropriate size standard to each North American
Industry Classification System Code.
(9) Petitions for reconsideration of size
standards.--
(A) In general.--A person may file a petition
for reconsideration with the Office of Hearings
and Appeals (as established under section 5(i))
of a size standard revised, modified, or
established by the Administrator pursuant to
this subsection.
(B) Time limit.--A person filing a petition
for reconsideration described in subparagraph
(A) shall file such petition not later than 30
days after the publication in the Federal
Register of the notice of final rule to revise,
modify, or establish size standards described
in paragraph (6).
(C) Process for agency review.--The Office of
Hearings and Appeals shall use the same process
it uses to decide challenges to the size of a
small business concern to decide a petition for
review pursuant to this paragraph.
(D) Judicial review.--The publication of a
final rule in the Federal Register described in
subparagraph (B) shall be considered final
agency action for purposes of seeking judicial
review. Filing a petition for reconsideration
under subparagraph (A) shall not be a condition
precedent to judicial review of any such size
standard.
(E) Rules or guidance.--The Office of
Hearings and Appeals shall begin accepting
petitions for reconsideration described in
subparagraph (A) after the date on which the
Administration issues a rule or other guidance
implementing this paragraph. Notwithstanding
the provisions of subparagraph (B), petitions
for reconsideration of size standards revised,
modified, or established in a Federal Register
final rule published between November 25, 2015,
and the effective date of such rule or other
guidance shall be considered timely if filed
within 30 days of such effective date.
(b) For purposes of this Act, any reference to an agency or
department of the United States, and the term ``Federal
agency,'' shall have the meaning given the term ``agency'' by
section 551(1) of title 5, United States Code, but does not
include the United States Postal Service or the General
Accounting Office.
(c)(1) For purposes of this Act, a qualified employee trust
shall be eligible for any loan guarantee under section 7(a)
with respect to a small business concern on the same basis as
if such trust were the same legal entity as such concern.
(2) For purposes of this Act, the term ``qualified employee
trust'' means, with respect to a small business concern, a
trust--
(A) which forms part of an employee stock ownership
plan (as defined in section 4975(e)(7) of the Internal
Revenue Code of 1954)--
(i) which is maintained by such concern, and
(ii) which provides that each participant in
the plan is entitle to direct the plan as to
the manner in which voting rights under
qualifying employer securities (as defined in
section 4975(e)(8) of such Code) which are
allocated to the account of such participant
are to be exercised with respect to a corporate
matter which (by law or charter) must be
decided by a majority vote of outstanding
common shares voted; and
(B) in the case of any loan guarantee under section
7(a), the trustee of which enters into an agreement
with the Administrator of which enters into an
agreement with the Administrator which is binding on
the trust and no such small business concern and which
provides that--
(i) the loan guaranteed under section 7(a)
shall be used solely for the purchase of
qualifying employer securities of such concern.
(ii) all funds acquired by the concern in
such purchase shall be used by such concern
solely for the purposes for which such loan was
guaranteed,
(iii) such concern will provide such funds as
may be necessary for the timely repayment of
such loan, and the property of such concern
shall be available as security for repayment of
such loan, and
(iv) all qualifying employer securities
acquired by such trust in such purchase shall
be allocated to the accounts of participants in
such plan who are entitled to share in such
allocation, and each participant has a
nonforfeitable right, not later than the date
such loan is repaid, to all such qualifying
employer securities which are so allocated to
the participant's account.
(3) Under regulations which may be prescribed by the
Administrator, a trust may be treated as a qualified employee
trust with respect to a small business concern if--
(A) the trust is maintained by an employee
organization which represents at least 51 percent of
the employee of such concern, and
(B) such concern maintains a plan--
(i) which is an employee benefit plan which
is designed to invest primarily in qualifying
employer securities (as defined in section
4975(e)(8) of the Internal Revenue Code of
1954).
(ii) which provides that each participant in
the plan is entitled to direct the plan as to
the manner in which voting rights under
qualifying employer securities which are
allocated to the account of such participant
are to be exercised with respect to a corporate
matter which (by law or charter) must be
decided by a majority vote of the outstanding
common shares voted,
(iii) which provides that each participant
who is entitled to distribution from the plan
has a right, in the case of qualifying employer
securities which are not readily tradable on an
established market, to require that the concern
repurchase such securities under a fair
valuation formula, and
(iv) which meets such other requirements
(similar to requirements applicable to employee
ownership plans as defined in section
4975(e)(7) of the Internal Revenue Code of
1954) as the Administrator may prescribe, and
(C) in the case of a loan guarantee under section
7(a), such organization enters into an agreement with
the Administration which is described in paragraph
(2)(B).
(d) For purposes of section 7 of this Act, the term
``qualified Indian tribe'' means an Indian tribe as defined in
section 4(a) of the Indian Self-Determination and Education
Assistance Act, which owns and controls 100 per centum of a
small business concern.
(e) For purposes of section 7 of this Act, the term ``public
or private organization for the handicapped'' means one--
(1) which is organized under the laws of the United
States or of any State, operated in the interest of
handicapped individuals, the net income of which does
not insure in whole or in part to the benefit of any
shareholder or other individual;
(2) which complies with any applicable occupational
health and safety standard prescribed by the Secretary
of Labor; and
(3) which, in the production of commodities and in
the provision of services during any fiscal year in
which it received financial assistance under this
subsection, employs handicapped individuals for not
less than 75 per centum of the man-hours required for
the production or provision of the commodities or
services.
(f) For purposes of section 7 of this Act, the term
``handicapped individual'' means an individual--
(1) who has a physical, mental, or emotional
impairment, defect, ailment, disease, or disability of
a permanent nature which in any way limits the
selection of any type of employment for which the
person would otherwise be qualified or qualifiable; or
(2) who is a service-disabled veteran.
(g) For purposes of section 7 of this Act, the term ``energy
measures'' includes--
(1) solar thermal energy equipment which is either of
the active type based upon mechanically forced energy
transfer or of the passive type based on convective,
conductive, or radiant energy transfer or some
combination equipment;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which
is conservation of energy through devices or techniques
which increase the energy through devices or techniques
which increase the energy efficiency of existing
equipment, methods of operation, or systems which use
fossil fuels, and which is on the Energy Conservation
Measures list of the Secretary of Energy or which the
Administrator determines to be consistent with the
intent of this subsection;
(4) equipment the primary purpose of which is
production of energy from wood, biological waste,
grain, or other biomass source of energy;
(5) equipment the primary purpose of which is
industrial cogeneration of energy, district heating, or
production of energy from industrial waste;
(6) hydroelectric power equipment;
(7) wind energy conversion equipment; and
(8) engineering, architectural, consulting, or other
professional services which are necessary or
appropriate to aid citizens in using any of the
measures described in paragraph (1) through (7).
(h) The term ``credit elsewhere'' means--
(1) for the purposes of this Act (except as used in
section 7(b)), the availability of credit on reasonable
terms and conditions to the individual loan applicant
from non-Federal, non-State, or non-local government
sources, considering factors associated with
conventional lending practices, including--
(A) the business industry in which the loan
applicant operates;
(B) whether the loan applicant is an
enterprise that has been in operation for a
period of not more than 2 years;
(C) the adequacy of the collateral available
to secure the requested loan;
(D) the loan term necessary to reasonably
assure the ability of the loan applicant to
repay the debt from the actual or projected
cash flow of the business; and
(E) any other factor relating to the
particular credit application, as documented in
detail by the lender, that cannot be overcome
except through obtaining a Federal loan
guarantee under prudent lending standards; and
(2) for the purposes of section 7(b), the
availability of credit on reasonable terms and
conditions from non-Federal sources taking into
consideration the prevailing rates and terms in the
community in or near where the applicant business
concern transacts business, or the applicant homeowner
resides, for similar purposes and periods of time.
(i) For purposes of section 7 of this Act, the term
``homeowners'' includes owners and lessees of residential
property and also includes personal property.
(j) For the purposes of this Act, the term ``small
agricultural cooperative'' means an association (corporate or
otherwise) acting pursuant to the provisions of the
Agricultural Marketing Act (12 U.S.C. 1141j), whose size does
not exceed the size standard established by the Administration
for other similar agricultural small business concerns. In
determining such size, the Administration shall regard the
association as a business concern and shall not include the
income or employees of any member shareholder of such
cooperative.
(k)(1) For the purposes of this Act, the term ``disaster''
means a sudden event which causes severe damage including, but
not limited to, floods, hurricanes, tornadoes, earthquakes,
fires, explosions, volcanoes, windstorms, landslides or
mudslides, tidal waves, commercial fishery failures or fishery
resource disasters (as determined by the Secretary of Commerce
under section 308(b) of the Interjurisdictional Fisheries Act
of 1986), ocean conditions resulting in the closure of
customary fishing waters, riots, civil disorders or other
catastrophes, except it does not include economic dislocations.
(2) For purposes of section 7(b)(2), the term ``disaster''
includes--
(A) drought;
(B) below average water levels in the Great Lakes, or
on any body of water in the United States that supports
commerce by small business concerns; and
(C) ice storms and blizzards.
(l) For purposes of this Act--
(1) the term ``computer crime'' means''--
(A) any crime committed against a small
business concern by means of the use of a
computer; and
(B) any crime involving the illegal use of,
or tampering with, a computer owned or utilized
by a small business concern.
(m) Definitions Relating to Contracting.--In this Act:
(1) Prime contract.--The term ``prime contract'' has
the meaning given such term in section 8701(4) of title
41, United States Code.
(2) Prime contractor.--The term ``prime contractor''
has the meaning given such term in section 8701(5) of
title 41, United States Code.
(3) Simplified acquisition threshold.--The term
``simplified acquisition threshold'' has the meaning
given such term in section 134 of title 41, United
States Code.
(4) Micro-purchase threshold.--The term ``micro-
purchase threshold'' has the meaning given such term in
section 1902 of title 41, United States Code.
(5) Total purchases and contracts for property and
services.--The term ``total purchases and contracts for
property and services'' shall mean total number and
total dollar amount of contracts and orders for
property and services.
(n) For the purposes of this Act, a small business concern is
a small business concern owned and controlled by women if--
(1) at least 51 percent of small business concern is
owned by one or more women or, in the case of any
publicly owned business, at least 51 percent of the
stock of which is owned by one or more women; and
(2) the management and daily business operations of
the business are controlled by one or more women.
(o) Definitions of Bundling of Contract Requirements and
Related Terms.--In this Act:
(1) Bundled contract.--The term ``bundled contract''
means a contract that is entered into to meet
requirements that are consolidated in a bundling of
contract requirements.
(2) Bundling of contract requirements.--The term
``bundling of contract requirements'' means
consolidating 2 or more procurement requirements for
goods or services previously provided or performed
under separate smaller contracts into a solicitation of
offers for a single contract that is likely to be
unsuitable for award to a small-business concern due
to--
(A) the diversity, size, or specialized
nature of the elements of the performance
specified;
(B) the aggregate dollar value of the
anticipated award;
(C) the geographical dispersion of the
contract performance sites; or
(D) any combination of the factors described
in subparagraphs (A), (B), and (C).
(3) Separate smaller contract.--The term ``separate
smaller contract'', with respect to a bundling of
contract requirements, means a contract that has been
performed by 1 or more small business concerns or was
suitable for award to 1 or more small business
concerns.
(p) Definitions Relating to HUBZones.--In this Act:
(1) Historically underutilized business zone.--The
term ``historically underutilized business zone'' means
any area located within 1 or more--
(A) qualified census tracts;
(B) qualified nonmetropolitan counties;
(C) lands within the external boundaries of
an Indian reservation;
(D) redesignated areas;
(E) base closure areas; or
(F) qualified disaster areas.
(2) HUBZone.--The term ``HUBZone'' means a
historically underutilized business zone.
(3) HUBZone small business concern.--The term
``HUBZone small business concern'' means--
(A) a small business concern that is at least
51 percent owned and controlled by United
States citizens;
(B) a small business concern that is--
(i) an Alaska Native Corporation
owned and controlled by Natives (as
determined pursuant to section 29(e)(1)
of the Alaska Native Claims Settlement
Act (43 U.S.C. 1626(e)(1))); or
(ii) a direct or indirect subsidiary
corporation, joint venture, or
partnership of an Alaska Native
Corporation qualifying pursuant to
section 29(e)(1) of the Alaska Native
Claims Settlement Act (43 U.S.C.
1626(e)(1)), if that subsidiary, joint
venture, or partnership is owned and
controlled by Natives (as determined
pursuant to section 29(e)(2)) of the
Alaska Native Claims Settlement Act (43
U.S.C. 1626(e)(2)));
(C) a small business concern--
(i) that is wholly owned by one or
more Indian tribal governments, or by a
corporation that is wholly owned by one
or more Indian tribal governments; or
(ii) that is owned in part by one or
more Indian tribal governments, or by a
corporation that is wholly owned by one
or more Indian tribal governments, if
all other owners are either United
States citizens or small business
concerns;
(D) a small business concern--
(i) that is wholly owned by one or
more Native Hawaiian Organizations (as
defined in section 8(a)(15)), or by a
corporation that is wholly owned by one
or more Native Hawaiian Organizations;
or
(ii) that is owned in part by one or
more Native Hawaiian Organizations, or
by a corporation that is wholly owned
by one or more Native Hawaiian
Organizations, if all other owners are
either United States citizens or small
business concerns;
(E) a small business concern that is--
(i) wholly owned by a community
development corporation that has
received financial assistance under
part 1 of subchapter A of the Community
Economic Development Act of 1981 (42
U.S.C. 9805 et seq.); or
(ii) owned in part by one or more
community development corporations, if
all other owners are either United
States citizens or small business
concerns; or
(F) a small business concern that is--
(i) a small agricultural cooperative
organized or incorporated in the United
States;
(ii) wholly owned by 1 or more small
agricultural cooperatives organized or
incorporated in the United States; or
(iii) owned in part by 1 or more
small agricultural cooperatives
organized or incorporated in the United
States, if all owners are small
business concerns or United States
citizens.
(4) Qualified areas.--
(A) Qualified census tract.--
(i) In general.--The term ``qualified
census tract'' has the meaning given
that term in section 42(d)(5)(B)(ii) of
the Internal Revenue Code of 1986.
(ii) Exception.--For any metropolitan
statistical area in the Commonwealth of
Puerto Rico, the term ``qualified
census tract'' has the meaning given
that term in section 42(d)(5)(B)(ii) of
the Internal Revenue Code of 1986 as
applied without regard to subclause
(II) of such section, except that this
clause shall only apply--
(I) 10 years after the date
that the Administrator
implements this clause, or
(II) the date on which the
Financial Oversight and
Management Board for the
Commonwealth of Puerto Rico
created by the Puerto Rico
Oversight, Management, and
Economic Stability Act ceases
to exist,
whichever event occurs first.
(B) Qualified nonmetropolitan county.--The
term ``qualified nonmetropolitan county'' means
any county--
(i) that was not located in a
metropolitan statistical area (as
defined in section 143(k)(2)(B) of the
Internal Revenue Code of 1986) at the
time of the most recent census taken
for purposes of selecting qualified
census tracts under section
42(d)(5)(C)(ii) of the Internal Revenue
Code of 1986; and
(ii) in which--
(I) the median household
income is less than 80 percent
of the nonmetropolitan State
median household income, based
on the most recent data
available from the Bureau of
the Census of the Department of
Commerce;
(II) the unemployment rate is
not less than 140 percent of
the average unemployment rate
for the United States or for
the State in which such county
is located, whichever is less,
based on the most recent data
available from the Secretary of
Labor; or
(III) there is located a
difficult development area, as
designated by the Secretary of
Housing and Urban Development
in accordance with section
42(d)(5)(C)(iii) of the
Internal Revenue Code of 1986,
within Alaska, Hawaii, or any
territory or possession of the
United States outside the 48
contiguous States.
(C) Redesignated area.--The term
``redesignated area'' means any census tract
that ceases to be qualified under subparagraph
(A) and any nonmetropolitan county that ceases
to be qualified under subparagraph (B), except
that a census tract or a nonmetropolitan county
may be a ``redesignated area'' only until the
later of--
(i) the date on which the Census
Bureau publicly releases the first
results from the 2010 decennial census;
or
(ii) 3 years after the date on which
the census tract or nonmetropolitan
county ceased to be so qualified.
(D) Base closure area.--
(i) In general.--Subject to clause
(ii), the term ``base closure area''
means--
(I) lands within the external
boundaries of a military
installation that were closed
through a privatization process
under the authority of--
(aa) the Defense Base
Closure and Realignment
Act of 1990 (part A of
title XXIX of division
B of Public Law 101-
510; 10 U.S.C. 2687
note);
(bb) title II of the
Defense Authorization
Amendments and Base
Closure and Realignment
Act (Public Law 100-
526; 10 U.S.C. 2687
note);
(cc) section 2687 of
title 10, United States
Code; or
(dd) any other
provision of law
authorizing or
directing the Secretary
of Defense or the
Secretary of a military
department to dispose
of real property at the
military installation
for purposes relating
to base closures of
redevelopment, while
retaining the authority
to enter into a
leaseback of all or a
portion of the property
for military use;
(II) the census tract or
nonmetropolitan county in which
the lands described in
subclause (I) are wholly
contained;
(III) a census tract or
nonmetropolitan county the
boundaries of which intersect
the area described in subclause
(I); and
(IV) a census tract or
nonmetropolitan county the
boundaries of which are
contiguous to the area
described in subclause (II) or
subclause (III).
(ii) Limitation.--A base closure area
shall be treated as a HUBZone--
(I) with respect to a census
tract or nonmetropolitan county
described in clause (i), for a
period of not less than 8
years, beginning on the date
the military installation
undergoes final closure and
ending on the date the
Administrator makes a final
determination as to whether or
not to implement the applicable
designation described in
subparagraph (A) or (B) in
accordance with the results of
the decennial census conducted
after the area was initially
designated as a base closure
area; and
(II) if such area was treated
as a HUBZone at any time after
2010, until such time as the
Administrator makes a final
determination as to whether or
not to implement the applicable
designation described in
subparagraph (A) or (B), after
the 2020 decennial census.
(iii) Definitions.--In this
subparagraph:
(I) Census tract.--The term
``census tract'' means a census
tract delineated by the United
States Bureau of the Census in
the most recent decennial
census that is not located in a
nonmetropolitan county and does
not otherwise qualify as a
qualified census tract.
(II) Nonmetropolitan
county.--The term
``nonmetropolitan county''
means a county that was not
located in a metropolitan
statistical area (as defined in
section 143(k)(2)(B) of the
Internal Revenue Code of 1986)
at the time of the most recent
census taken for purposes of
selecting qualified census
tracts and does not otherwise
qualify as a qualified
nonmetropolitan county.
(E) Qualified disaster area.--
(i) In general.--Subject to clause
(ii), the term ``qualified disaster
area'' means any census tract or
nonmetropolitan county located in an
area for which the President has
declared a major disaster under section
401 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42
U.S.C. 5170) or located in an area in
which a catastrophic incident has
occurred if such census tract or
nonmetropolitan county ceased to be
qualified under subparagraph (A) or
(B), as applicable, during the period
beginning 5 years before the date on
which the President declared the major
disaster or the catastrophic incident
occurred and ending 2 years after such
date, except that such census tract or
nonmetropolitan county may be a
``qualified disaster area'' only--
(I) in the case of a major
disaster declared by the
President, during the 5-year
period beginning on the date on
which the President declared
the major disaster for the area
in which the census tract or
nonmetropolitan county, as
applicable, is located; and
(II) in the case of a
catastrophic incident, during
the 10-year period beginning on
the date on which the
catastrophic incident occurred
in the area in which the census
tract or nonmetropolitan
county, as applicable, is
located.
(ii) Limitation.--A qualified
disaster area described in clause (i)
shall be treated as a HUBZone for a
period of not less than 8 years,
beginning on the date the Administrator
makes a final determination as to
whether or not to implement the
designations described in subparagraphs
(A) and (B) in accordance with the
results of the decennial census
conducted after the area was initially
designated as a qualified disaster
area.
(5) Qualified hubzone small business concern.--
(A) In general.--A HUBZone small business
concern is ``qualified'', if--
(i) the small business concern has
certified in writing to the
Administrator (or the Administrator
otherwise determines, based on
information submitted to the
Administrator by the small business
concern, or based on certification
procedures, which shall be established
by the Administration by regulation)
that--
(I) it is a HUBZone small
business concern--
(aa) pursuant to
subparagraph (A), (B),
(C), (D), (E), or (F)
of paragraph (3), and
that its principal
office is located in a
HUBZone and not fewer
than 35 percent of its
employees reside in a
HUBZone;
(bb) pursuant to
subparagraph (A), (B),
(C), (D), (E), or (F)
of paragraph (3), that
its principal office is
located within a base
closure area and that
not fewer than 35
percent of its
employees reside in
such base closure area
or in another HUBZone;
or
(cc) pursuant to
paragraph (3)(C), and
not fewer than 35
percent of its
employees engaged in
performing a contract
awarded to the small
business concern on the
basis of a preference
provided under section
31(b) reside within any
Indian reservation
governed by one or more
of the tribal
government owners, or
reside within any
HUBZone adjoining any
such Indian
reservation;
(II) the small business
concern will attempt to
maintain the applicable
employment percentage under
subclause (I) during the
performance of any contract
awarded to the small business
concern on the basis of a
preference provided under
section 31(b); and
(III) with respect to any
subcontract entered into by the
small business concern pursuant
to a contract awarded to the
small business concern under
section 31, the small business
concern will ensure that the
requirements of section 46 are
satisfied; and
(ii) no certification made or
information provided by the small
business concern under clause (i) has
been, in accordance with the procedures
established under section 31(c)(1)--
(I) successfully challenged
by an interested party; or
(II) otherwise determined by
the Administrator to be
materially false.
(B) List of qualified small business
concerns.--The Administrator shall establish
and maintain a list of qualified HUBZone small
business concerns, which list shall, to the
extent practicable--
(i) once the Administrator has made
the certification required by
subparagraph (A)(i) regarding a
qualified HUBZone small business
concern and has determined that
subparagraph (A)(ii) does not apply to
that concern, include the name,
address, and type of business with
respect to each such small business
concern;
(ii) be updated by the Administrator
not less than annually; and
(iii) be provided upon request to any
Federal agency or other entity.
(6) Native american small business concerns.--
(A) Alaska native corporation.--The term
``Alaska Native Corporation'' has the same
meaning as the term ``Native Corporation'' in
section 3 of the Alaska Native Claims
Settlement Act (43 U.S.C. 1602).
(B) Alaska native village.--The term ``Alaska
Native Village'' has the same meaning as the
term ``Native village'' in section 3 of the
Alaska Native Claims Settlement Act (43 U.S.C.
1602).
(C) Indian reservation.--The term ``Indian
reservation''--
(i) has the same meaning as the term
``Indian country'' in section 1151 of
title 18, United States Code, except
that such term does not include--
(I) any lands that are
located within a State in which
a tribe did not exercise
governmental jurisdiction on
the date of the enactment of
this paragraph, unless that
tribe is recognized after that
date of the enactment by either
an Act of Congress or pursuant
to regulations of the Secretary
of the Interior for the
administrative recognition that
an Indian group exists as an
Indian tribe (part 83 of title
25, Code of Federal
Regulations); and
(II) lands taken into trust
or acquired by an Indian tribe
after the date of the enactment
of this paragraph if such lands
are not located within the
external boundaries of an
Indian reservation or former
reservation or are not
contiguous to the lands held in
trust or restricted status on
that date of the enactment; and
(ii) in the State of Oklahoma, means
lands that--
(I) are within the
jurisdictional areas of an
Oklahoma Indian tribe (as
determined by the Secretary of
the Interior); and
(II) are recognized by the
Secretary of the Interior as
eligible for trust land status
under part 151 of title 25,
Code of Federal Regulations (as
in effect on the date of the
enactment of this paragraph).
(7) Agricultural commodity.--The term ``agricultural
commodity'' has the same meaning as in section 102 of
the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
(q) Definitions Relating to Veterans.--In this Act, the
following definitions apply:
(1) Service-disabled veteran.--The term ``service-
disabled veteran'' means a veteran with a disability
that is service-connected (as defined in section
101(16) of title 38, United States Code).
(2) Small business concern owned and controlled by
service-disabled veterans.--The term ``small business
concern owned and controlled by service-disabled
veterans'' means a small business concern--
(A) not less than 51 percent of which is
owned by one or more service-disabled veterans
or, in the case of any publicly owned business,
not less than 51 percent of the stock of which
is owned by one or more service-disabled
veterans; and
(B) the management and daily business
operations of which are controlled by one or
more service-disabled veterans or, in the case
of a veteran with permanent and severe
disability, the spouse or permanent caregiver
of such veteran.
(3) Small business concern owned and controlled by
veterans.--The term ``small business concern owned and
controlled by veterans'' means a small business
concern--
(A) not less than 51 percent of which is
owned by one or more veterans or, in the case
of any publicly owned business, not less than
51 percent of the stock of which is owned by
one or more veterans; and
(B) the management and daily business
operations of which are controlled by one or
more veterans.
(4) Veteran.--The term ``veteran'' has the meaning
given the term in section 101(2) of title 38, United
States Code.
(5) Relief from time limitations.--
(A) In general.--Any time limitation on any
qualification, certification, or period of
participation imposed under this Act on any
program that is available to small business
concerns shall be extended for a small business
concern that--
(i) is owned and controlled by--
(I) a veteran who was called
or ordered to active duty under
a provision of law specified in
section 101(a)(13)(B) of title
10, United States Code, on or
after September 11, 2001; or
(II) a service-disabled
veteran who became such a
veteran due to an injury or
illness incurred or aggravated
in the active military, naval,
or air service during a period
of active duty pursuant to a
call or order to active duty
under a provision of law
referred to in subclause (I) on
or after September 11, 2001;
and
(ii) was subject to the time
limitation during such period of active
duty.
(B) Duration.--Upon submission of proper
documentation to the Administrator, the
extension of a time limitation under
subparagraph (A) shall be equal to the period
of time that such veteran who owned or
controlled such a concern was on active duty as
described in that subparagraph.
(C) Exception for programs subject to federal
credit reform act of 1990.--The provisions of
subparagraphs (A) and (B) shall not apply to
any programs subject to the Federal Credit
Reform Act of 1990 (2 U.S.C. 661 et seq.).
(r) Definitions Relating to Small Business Lending
Companies.--As used in section 23 of this Act:
(1) Small business lending company.--The term ``small
business lending company'' means a business concern
that is authorized by the Administrator to make loans
pursuant to section 7(a) and whose lending activities
are not subject to regulation by any Federal or State
regulatory agency.
(2) Non-federally regulated lender.--The term ``non-
Federally regulated lender'' means a business concern
if--
(A) such concern is authorized by the
Administrator to make loans under section 7;
(B) such concern is subject to regulation by
a State; and
(C) the lending activities of such concern
are not regulated by any Federal banking
authority.
(s) Major Disaster.--In this Act, the term ``major disaster''
has the meaning given that term in section 102 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5122).
(t) Small Business Development Center.--In this Act, the term
``small business development center'' means a small business
development center described in section 21.
(u) Region of the Administration.--In this Act, the term
``region of the Administration'' means the geographic area
served by a regional office of the Administration established
under section 4(a).
(v) Multiple Award Contract.--In this Act, the term
``multiple award contract'' means--
(1) a multiple award task order contract or delivery
order contract that is entered into under the authority
of sections 303H through 303K of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253h
through 253k); and
(2) any other indefinite delivery, indefinite
quantity contract that is entered into by the head of a
Federal agency with 2 or more sources pursuant to the
same solicitation.
(w) Presumption.--
(1) In general.--In every contract, subcontract,
cooperative agreement, cooperative research and
development agreement, or grant which is set aside,
reserved, or otherwise classified as intended for award
to small business concerns, there shall be a
presumption of loss to the United States based on the
total amount expended on the contract, subcontract,
cooperative agreement, cooperative research and
development agreement, or grant whenever it is
established that a business concern other than a small
business concern willfully sought and received the
award by misrepresentation.
(2) Deemed certifications.--The following actions
shall be deemed affirmative, willful, and intentional
certifications of small business size and status:
(A) Submission of a bid or proposal for a
Federal grant, contract, subcontract,
cooperative agreement, or cooperative research
and development agreement reserved, set aside,
or otherwise classified as intended for award
to small business concerns.
(B) Submission of a bid or proposal for a
Federal grant, contract, subcontract,
cooperative agreement, or cooperative research
and development agreement which in any way
encourages a Federal agency to classify the bid
or proposal, if awarded, as an award to a small
business concern.
(C) Registration on any Federal electronic
database for the purpose of being considered
for award of a Federal grant, contract,
subcontract, cooperative agreement, or
cooperative research agreement, as a small
business concern.
(3) Certification by signature of responsible
official.--
(A) In general.--Each solicitation, bid, or
application for a Federal contract,
subcontract, or grant shall contain a
certification concerning the small business
size and status of a business concern seeking
the Federal contract, subcontract, or grant.
(B) Content of certifications.--A
certification that a business concern qualifies
as a small business concern of the exact size
and status claimed by the business concern for
purposes of bidding on a Federal contract or
subcontract, or applying for a Federal grant,
shall contain the signature of an authorized
official on the same page on which the
certification is contained.
(4) Regulations.--The Administrator shall promulgate
regulations to provide adequate protections to
individuals and business concerns from liability under
this subsection in cases of unintentional errors,
technical malfunctions, and other similar situations.
(x) Annual Certification.--
(1) In general.--Each business certified as a small
business concern under this Act shall annually certify
its small business size and, if appropriate, its small
business status, by means of a confirming entry on the
Online Representations and Certifications Application
database of the Administration, or any successor
thereto.
(2) Regulations.--Not later than 1 year after the
date of enactment of this subsection, the
Administrator, in consultation with the Inspector
General and the Chief Counsel for Advocacy of the
Administration, shall promulgate regulations to ensure
that--
(A) no business concern continues to be
certified as a small business concern on the
Online Representations and Certifications
Application database of the Administration, or
any successor thereto, without fulfilling the
requirements for annual certification under
this subsection; and
(B) the requirements of this subsection are
implemented in a manner presenting the least
possible regulatory burden on small business
concerns.
(y) Policy on Prosecutions of Small Business Size and Status
Fraud.--Not later than 1 year after the date of enactment of
this subsection, the Administrator, in consultation with the
Attorney General, shall issue a Government-wide policy on
prosecution of small business size and status fraud, which
shall direct Federal agencies to appropriately publicize the
policy.
(z) Aquaculture Business Disaster Assistance.--Subject to
section 18(a) and notwithstanding section 18(b)(1), the
Administrator may provide disaster assistance under section
7(b)(2) to aquaculture enterprises that are small businesses.
(aa) Venture Capital Operating Company.--In this Act, the
term ``venture capital operating company'' means an entity
described in clause (i), (v), or (vi) of section 121.103(b)(5)
of title 13, Code of Federal Regulations (or any successor
thereto).
(bb) Hedge Fund.--In this Act, the term ``hedge fund'' has
the meaning given that term in section 13(h)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1851(h)(2)).
(cc) Private Equity Firm.--In this Act, the term ``private
equity firm'' has the meaning given the term ``private equity
fund'' in section 13(h)(2) of the Bank Holding Company Act of
1956 (12 U.S.C. 1851(h)(2)).
(dd) Definitions Pertaining to Subcontracting.--In this Act:
(1) Subcontract.--The term ``subcontract'' means a
legally binding agreement between a contractor that is
already under contract to another party to perform
work, and a third party, hereinafter referred to as the
subcontractor, for the subcontractor to perform a part,
or all, of the work that the contractor has undertaken.
(2) First tier subcontractor.--The term ``first tier
subcontractor'' means a subcontractor who has a
subcontract directly with the prime contractor.
(3) At any tier.--The term ``at any tier'' means any
subcontractor other than a subcontractor who is a first
tier subcontractor.
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