[Federal Register Volume 84, Number 227 (Monday, November 25, 2019)]
[Rules and Regulations]
[Pages 64707-64723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24239]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 131
RIN 3245-AG02
Office of Women's Business Ownership: Women's Business Center
Program
AGENCY: Small Business Administration.
ACTION: Final rule.
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SUMMARY: The U.S. Small Business Administration (SBA) is codifying
regulations for the Women's Business Center (WBC) Program as directed
in section 29 of the Small Business Act (the Act). This final rule also
codifies policy and procedural changes included in the WBC Program
Announcement and Notice of Award (NOA). These changes include, but are
not limited to, the following: Language on risk assessment, as required
by the Uniform Grant Guidance; limitations on carryovers; a reduction
in reporting requirements; and eligibility criteria for selection as a
WBC. Implementing these regulations will result in greater
standardization and transparency in the delivery of the WBC Program.
DATES: This rule is effective January 24, 2020.
FOR FURTHER INFORMATION CONTACT: Donald Smith, Deputy Assistant
Administrator, U.S. Small Business Administration, 409 3rd Street SW,
Washington, DC 20416, telephone number (202) 205-7279 or
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Women's Business Center Program (WBC Program) was created under
the authority of Title II of the Women's Business Ownership Act of 1988
(Pub. L. 100-533). The WBC Program authority is now codified in the
Small Business Act (Act), 15 U.S.C. 656. The initial Demonstration
Training Program, later renamed the WBC Program, was created with the
Congressional intent to remove barriers to the creation and development
of small businesses owned and controlled by women and to stimulate the
economy by aiding and encouraging the growth and development of such
businesses. The specific objectives of the Demonstration Training
Program were to provide long-term training and counseling to potential
and current women business owners, including those who are Socially and
Economically Disadvantaged as defined in 13 CFR 124.103 and 124.104.
Since its creation, the WBC Program has transformed through a
number of public laws from a Demonstration Training Program into a
permanent program. The laws that have impacted the WBC Program include
the following: The Women's Business Development Act of 1991 (Pub. L.
102-191); the Women's Business Centers Sustainability Act of 1999 (Pub.
L. 106-165); the U.S. Troop Readiness, Veterans' Care, Katrina
Recovery, and Iraq Accountability Appropriations Act of 2007 (Pub. L.
110-28); and the Small Business Jobs Act of 2010 (Pub. L. 111-240).
Section 29 of the Act, 15 U.S.C. 656, authorizes the SBA to provide
financial assistance, in the form of grants, to private nonprofit
organizations to conduct five-year projects for the benefit of small
business concerns owned and controlled by women. The Act further
authorizes the SBA to renew a grant for additional three-year periods
and provides that there are no limitations on the number of times a
grant may be renewed.
On November 22, 2016, the SBA published a proposed rule with a
request for public comment in the Federal Register to outline program
requirements and standardize the delivery of the WBC Program (81 FR
83718). The information proposed by the SBA included clarification of
terms and definitions as well as overall program policies.
This final rule codifies the SBA's oversight responsibilities of
the WBC Program into a newly created Part 131 of the SBA's regulations
by incorporating the following: (A) Standard definitions for the
program (13 CFR 131.110); (B) program-participation requirements and
application procedures (13 CFR 131.210, 13 CFR 131.300, 13 CFR
131.400); (C) financial-management and grant-administration
requirements (13 CFR 131.500); (D) oversight and programmatic and
financial-examination provisions (13 CFR 131.700 and 13 CFR 131.720);
(E) procedures for the suspension, termination, and non-renewal of a
grant (13 CFR 131.830); and (F) procedures for dispute resolution (13
CFR 131.840).
II. Summary of Comments Received
The comment period was open from November 22, 2016, to January 23,
2017, and the SBA received 46 comments. Of the 46 comments received, 36
were from individuals or groups that concurred with the comments
submitted by the Association of Women's Business Centers (AWBC). This
preamble includes the SBA's response to all of the comments received.
One of the comments received referenced the intended use of the
Women's Business Center (WBC or Center) regulations. The commenter
indicated that while the SBA's intent of the proposed rule is to
outline policies and procedures for the WBC Program and streamline both
the program announcement and the notice of award, it continually
references both of the aforementioned program documents for additional
guidance. The commenter suggested that program applicants and/or
participants should not have to refer to multiple documents for
guidance. While the proposed rule references both
[[Page 64708]]
the program announcement and the notice of award (NOA), the Office of
Women's Business Ownership (OWBO) anticipates that both documents will
include references to the regulations, resulting in consistency for the
program. The regulations will continue to reference the program
announcement and NOA, which outline the period of performance and is
the legally binding agreement signed annually by the host organization
and an authorized staff person at the SBA. In addition, any changes to
the grant, including award amounts, SBA targeted/specialized services,
initiatives or populations will continue to appear in the annual
program announcement(s) and/or NOA.
There were three comments to the Advanced Notice of Proposed
Rulemaking (ANPRM) (80 FR 22434, April 22, 2015) that a commenter
indicated were not fully addressed in the Notice of Proposed Rulemaking
(NPRM). The comments were: (1) Training--The commenter stated that the
training provided by OWBO is limited, only addresses compliance, and
does not include training on best practices. OWBO shares best practices
through regular outreach to the network of WBCs. Best practices are
also shared at the annual WBC training conference held by the AWBC.
Historically, the compliance training coordinated by OWBO has included
instruction on the preparation of effective funding applications,
budgets, and modifications. OWBO has also paired new WBCs or new WBC
staff with experienced, effective centers or staff for discussions that
included, but were not limited to, the pros and cons of using certain
training curriculums, what and how to charge fees for services, and
marketing strategies. (2) Data Collection System--Several commenters
identified the need for the SBA to update the current data collection
system. As an Agency priority, the SBA recently improved the
Entrepreneurial Development Management Information System (EDMIS) to
reduce system errors related to data uploading. The Agency continues to
identify ways to improve or replace EDMIS. We appreciate the ongoing
feedback from our stakeholders. (3) Repository of Information--A
commenter requested that the SBA outline its plan to develop a
repository of information for WBCs. The commenter further stated that
the repository should include information on best practices, program
materials, and documents that can be shared among WBCs. It should also
include a forum for questions and answers, an up-to-date map of current
WBCs, their managers, and program profiles that include a description
of their services, outputs, and outcomes. Additionally, the commenter
envisioned the clearinghouse/repository as a forum for WBCs to ask
questions and solicit advice. Currently, some of the information
identified by the commenter (program materials and reporting documents)
can be accessed at the SBA's public website for the program,
www.sba.gov/wbc. The locations and contact information for all WBCs are
included in the local SBA assistance tool at https://www.sba.gov/tools/local-assistance/wbc. OWBO is continuing to identify new opportunities
for sharing relevant information across the WBC network.
As stated in the preamble of the proposed rule, the SBA intends to
work with women's organizations to develop an information repository;
however, this rulemaking action is not the proper forum to include an
outline of such repository. The creation and management of a
repository, as part of this rule, would necessitate frequent
modifications to its governing documents. As the repository develops
and evolves, it would become extremely burdensome and ineffective for
the SBA to continually revise the program regulations. The commenter
further suggested that the SBA provide funds to the AWBC to develop a
clearinghouse if the SBA is unable to develop one. However, there are
currently no resources available to the SBA to develop and manage a
clearinghouse or to direct and fund another entity to carry out such a
function.
One public comment addressed concerns with the Women-Owned Small
Business Procurement Program (WOSB), 13 CFR part 127. However, the WOSB
Program is outside the scope of this rule.
131.110 Definitions.
This section defines 57 words and phrases used in the management
and oversight of the WBC Program. These definitions have been
consolidated from existing documents, including program announcements
and cooperative agreements, to ensure consistency and clarity within
the WBC Program.
Several commenters suggested that the definition for counseling be
revised. Specifically, a commenter questioned why resource partners and
SBA district office personnel are included in the definitions, as WBCs
do not require assistance from other resource partners or SBA district
office personnel to provide counseling services. Based on the public
comments received, the SBA has determined that it will remove the
definitions related to district office personnel as well as to resource
partners.
Commenters recommended that the definition for full-time be
clarified and that the ``full-time'' executive director or program
manager of a given WBC be able to have responsibilities for associated
programs that support and extend the impact of the SBA-funded WBC
Program. This rule does not prohibit the Executive Director or WBC
Program Director from performing tasks associated with activities that
support the WBC project. Rather, the proposed rule defines a full-time
employee as one who should not engage in activities that do not pertain
to the WBC project. Activities in support of the WBC project are
therefore allowable. Additionally, part-time staff paid through the WBC
budget are allowed to complete any task(s) associated with the WBC
project. The SBA has determined that the definition will remain as
originally proposed.
The proposed rule limited the term of an Interim Program Director
to no more than 60 days. The SBA received several comments suggesting
60 days did not allow the center sufficient time to identify a new WBC
Program Director. In light of the comments and upon further
consideration, the SBA has decided to increase the time allowed for an
Interim Director to remain in position on an interim basis from 60 days
to 90 days. The language in this final rule has been revised.
The proposed rule defined socially and economically disadvantaged
women as, ``women who have been subjected to racial or ethnic prejudice
or cultural bias within American society because of their identities as
members of groups and without regard to their individual qualities. It
also includes women whose ability to compete in the free enterprise
system has been impaired due to diminished capital and credit
opportunities as compared to others in the same or similar line of
business.'' A commenter suggested that the word gender be added just
before the word racial in this definition. It is the SBA's position
that women have been recognized as socially disadvantaged on a case-by-
case basis under the SBA's contracting programs on the grounds that
they have experienced cultural bias on the basis of gender. There is
not a gender-based presumed group for women as there are for race-based
groups or members of minority groups, but individual women have been
recognized by the SBA as being socially disadvantaged. The SBA would
like to avoid conflicting definitions of socially and economically
[[Page 64709]]
disadvantaged. Furthermore, 13 CFR 124.103 expressly references the
fact that social disadvantage can be based on gender in 13 CFR
124.103(c)(2)(i). Additionally, all of the examples included under
Sec. 124.103(c)(3) involve cases of women establishing social
disadvantage. Given the aforementioned information, the SBA has
determined that the definition will remain as originally proposed.
A commenter suggested that the SBA change the terms ``counseling
records'' and ``training records'' to ``client records.'' The SBA
agrees with the recommendation and included revised language in this
final rule.
131.300 Women's Business Centers (WBCs)
As part of the negotiation process for the cooperative agreement,
the ANPRM required that each Center do the following: (1) Collaborate
with its local SBA district office and OWBO to develop annual goals,
and (2) receive written concurrence on annual goals from its SBA
district office for inclusion in the application submission. However, a
public commenter reported that many district offices do not have staff
equipped to provide this support. The commenter also stated that
receiving written concurrence from the SBA district office for
inclusion in the application submission places the burden of
coordination on the WBC. Lastly, the commenter included an example from
the previous year of one SBA district office that was reluctant to
provide concurrence at the WBC's request because they felt it was
providing ``preferential treatment.'' The SBA agrees with the
commenter. Therefore, this provision will be removed from the final
rule.
131.310 Operating Requirements
Paragraph (e) requires that all new applicants accepted into the
WBC Program after the effective date of this rule be required to
include the specific identification ``Women's Business Center'' as part
of their WBC's official name. The proposed rule similarly required that
any WBC applying for a renewal grant after the effective date of this
rule also include the specific identification ``Women's Business
Center'' as part of its official name. The rule further proposes that
any existing WBC that does not include ``Women's Business Center'' in
its name (until such time that a renewal application is submitted) must
include the following language prominently on its website and
promotional documents: ``The Women's Business Center is funded in part
by the U.S. Small Business Administration.'' A commenter wrote that the
two sentences seemed contradictory. In the first sentence, ``must'' is
used. In the second sentence, it seems inclusion of ``Women's Business
Center'' in the official name is optional as long as ``funded in part
by the SBA'' is prominently displayed on websites and promotional
documents. The commenter recommended that the language be clarified.
The SBA agrees with the commenter and has revised the language for
clarification.
A commenter requested that the SBA define ``official'' name and
explain how it differs from ``legal name.'' The SBA's intention is that
the official name is the name assigned to the WBC by its host
organization. The legal name is the name of the host organization and
is the name usually listed in the Application for Federal Assistance,
SF 424. For clarification, the language in this final rule has been
revised.
The SBA received several comments regarding whether the costs
incurred to change the official name of the WBC to comply with the rule
are allowable. As this rule only applies to the official name of the
WBC and not the host organization, costs associated with the name
change should be minimal and are allowable.
Paragraph (g) addresses conflict of interest. A commenter suggested
that it was reasonable to require employees, contractors, and
consultants to sign a conflict-of-interest statement, but thought the
requirement to have volunteers sign a conflict-of-interest statement
was burdensome. The SBA has revised this section of the proposed rule
and the submission of conflict-of-interest policy statements is no
longer required. However, the WBC must implement conflict-of-interest
policies consistent with 2 CFR 2701.112.
131.330 Services and Restrictions on Services
Paragraph (a) of Sec. 131.330 requires WBCs to create and update
client records to document each time services are provided to a client.
A comment was received stating that this language focuses on
documentation of counseling services and does not document the
provision of training services, despite the fact that 85% of the WBC's
clients receive training. SBA agrees that this regulatory provision was
unclear, and the Agency has revised the rule to refer to services
generally and removed references to any specific category of services.
Paragraph (b)(5) of the proposed rule prohibited WBCs from
intervening in loan decisions, servicing loans, making credit
recommendations, or influencing decisions regarding the award of any
loans or lines of credit on behalf of the WBC's clients, unless the WBC
operates as an SBA Microloan Intermediary and is awarding an individual
or small business concern an SBA microloan. A comment was received that
recommended the SBA expand the exception, since not all WBCs who are
lenders are microlenders, if they make small business loans above the
microloan definition. The commenter further explained that not all WBCs
who are microlenders are SBA microlenders. The SBA does not agree with
the commenter to expand the exception related to the WBCs' involvement
in loan activities. The SBA loan programs include restrictions and
protections against self-dealing that may not be present in other non-
SBA lending programs. As such, other lending programs may present
greater risk of conflicts of interest. The language in paragraphs
(b)(5) and (6) of the rule remains the same to ensure compliance
regarding WBC loan activities.
A comment was received regarding the WBC Program Director's
participation in the loan process. The commenter suggested that the
policies governing WBCs should exempt Certified Development Financial
Institutions (CDFIs) in addition to SBA microlenders. The commenter
also stated that the relationship between the WBC Director and the loan
client is critical to the growth and success of the client's business
and that the WBC Director maintains an ongoing relationship with
clients through site visits and check-ins. This commenter further
stated that the involvement of the WBC Program Director was critical to
the loan process, not only for the SBA microlenders but also for the
CDFIs. The SBA agrees that the role of the WBC Program Director is
important in supporting access to capital. However, the WBC staff must
limit their interaction in the loan process to loan packaging
activities. The language in sections (b)(5) and (b)(6) of this rule
remains the same to ensure compliance regarding WBC loan activities.
One commenter suggested that WBC Program Directors be allowed as
much time as possible for fundraising activities. This rule does not
propose restrictions on fundraising activities or the time allowed for
fundraising. However, fundraising activities require prior approval
from the Assistant Administrator of OWBO and must comply with 2 CFR
200.442.
[[Page 64710]]
131.340 SpecificWBC Program Responsibilities
In paragraph (c)(2), the WBC Program Director is required to have
the necessary authority from the host organization to control all WBC
budgets and expenditures. A commenter wrote that, while they support
the requirement, many WBCs do not have this authority from the host
organization. The commenter suggested that the regulations be revised
to include guidelines on how the SBA will properly enforce this
requirement. Because SBA's guidance in this area may develop over time
based on practical experience, lessons learned, and changing
circumstances, SBA believes that this guidance could be flexible and
more effectively provided through annual program announcements rather
than via regulation. Therefore, as a result of the comment received,
this provision of the proposed rule has been removed.
131.350 Selection and Retention of the WBC Program Director
To ensure effective management of the WBC project, paragraph (a)(2)
outlines the actions a WBC must take if there is a vacancy in the WBC
Program Director position. Several commenters indicated that the 90-day
timeframe included in the proposed rule did not allow sufficient time
to recruit and hire a permanent WBC Program Director. While the SBA
will uphold the 90-day requirement, the rule's language has been
revised to allow the approved Interim WBC Program Director to remain in
the position past 90 days upon obtaining the prior written approval
from the Assistant Administrator of OWBO or designee.
Paragraph (a)(3) of the proposed rule requires an Interim Program
Director to allocate his/her time and effort solely to the WBC Program
until a permanent WBC Program Director is in position. A commenter
suggested that an Interim Program Director may have other
responsibilities within the recipient organization. The commenter also
stated that while the Interim Program Director should allocate a large
percentage of his/her time and effort to the WBC, it may not be
possible or necessary to allocate all of his/her time and effort solely
to the WBC Program. The SBA agrees with the commenter and has revised
the language in this final rule.
Paragraph (b) outlines the SBA's process to ensure that candidates
for the WBC Program Director position are qualified to manage the day-
to-day operations of the WBC project. A comment was submitted stating
that the SBA's involvement in the hiring of the WBC Program Director
should be limited to reviewing legal issues such as conflict of
interest, disbarment (sic), and payment of taxes. Additionally, the
commenter stated that since the SBA grant represents partial funding
for the WBC, not the entire funding, personnel decisions should be left
to the discretion of the recipient organization. The SBA has determined
that it is important to review a candidate's resume to ensure that the
candidate has the core competencies outlined in paragraph (a)(1) of
this rule. It should be noted that all funds (Federal, non-Federal cash
match, and program income) included in the WBC budget are considered
WBC project funds and constitute full funding for the project. Further,
in adherence to 2 CFR 200.201(b)(5) and 2 CFR 200.308, changes in the
project leader or key person require the prior written approval of the
Federal awarding agency. Therefore, provisions of the proposed rule
remain unchanged.
131.400 Application Procedures
Several commenters noted that the application process, especially
for existing WBCs, is onerous and gives no deference to past
performance. Further, several commenters recommended for the process to
be streamlined. SBA concurs with those comments and has removed the
sections related to application procedures (e.g., new applications,
renewals, and decisions) from the rule. This approach will afford SBA
the flexibility to innovate and refine the application process based on
practical experience as well as current Office of Management and Budget
regulations. Subsequent sections of this rule have been renumbered
reflecting this deletion.
Paragraph (b)(1) outlines application selection criteria, including
the applicant organization's expertise in providing long-term and
short-term training and counseling programs, and, most specifically,
experience in providing targeted business development services to a
distinct population.
A commenter suggested that the term ``distinct population'' be
replaced with ``women.'' The commenter further stated that the
selection criteria should be focused on the applicant's experience and
commitment to helping women. The SBA agrees with the commenter that the
focus of the program is women but will maintain the use of the term
``distinct population'' in this section of the rule, as the definition
for ``distinct population'' specifically references women. However, the
language has been revised to reference the definition for ``distinct
population,'' which is included in the Definitions section of this
rule.
131.520 Carryover of Federal Funds
This section limits the option to carry over any unexpended Federal
funds to the next funding period to WBCs within the first or second
year of an initial phase project only. Several commenters suggested
that more flexibility is needed as there may be some circumstances that
impact a Center's ability to expend funds. WBCs are responsible for
matching all carryover funds. It has been the SBA's experience that
when unexpended Federal funds are carried over to the next funding
period, WBCs often have difficulty raising matching funds for both the
carryover funds and the option year funds. This creates a situation in
which the organization will match and spend the carryover funding but
is then not able to spend the current year funding, thus creating a
cycle where it must request carryover funding the following year. While
there is never a penalty for requesting less funding, carryover funding
represents an underutilization of the Federal funds provided. Also,
elimination of the carryover does not preclude a Center from requesting
the maximum amount of available funding the following year.
The SBA has given the issue of carryover funds further
consideration and determined that based on the public comments
received, it would be more efficient to address this issue via policy.
Therefore, the language in this final rule has been revised
accordingly.
131.530 Matching Funds
Paragraph (i)(l) outlines items that cannot be considered as
sources of matching funds, including uncompensated student labor. A
commenter requested that the prohibition of student labor for matching
funds be clarified. The commenter explained that some WBCs, including
those whose recipient organizations are universities, utilize
university undergraduate and graduate students for substantive work.
These students receive school credit for their work instead of monetary
compensation. Lastly, the commenter suggested that the services
provided by these students be allowed as matching funds. The SBA
reviewed the issue and determined that a WBC can claim student
volunteer time as an in-kind contribution, provided the WBC can
document adequate valuation for the services. However, if a WBC is
providing some form of tuition remission to the student volunteers and
claiming that as a direct cost under its
[[Page 64711]]
grant (or including it in its indirect cost rate), then it cannot also
claim that time as an in-kind contribution. If the WBC will not claim
the student's time under the grant in some way, and if the WBC can
adequately document the value of the services provided, then the WBC
should be able to claim student volunteer time as an in-kind
contribution. The SBA removed the language in the proposed rule that
prohibited the use of student volunteer time as in-kind match.
Relatedly, a commenter raised the notion of using the in-kind criteria
established by the IRS and referenced in FASB FAS 116 which describes
how volunteer service hours can used as match. OWBO disagrees with this
comment and concludes that 2 CFR 200.96 and 2 CFR 200.306 is sufficient
in this area and would also cover special circumstances such as
allowing donated salaries to be used as cash match.
The SBA also received a comment that described the process used to
validate match as tedious and burdensome. The commenter suggested that
the match requirement be decreased significantly or eliminated
entirely. Based on the public comments received regarding the match
requirements, the Agency has determined to address this issue via
policy and has removed paragraphs (d) through (h) of this section from
the final rule.
131.570 Payments and Reimbursements
This section detailed the process through which advances and
reimbursements were disbursed. Several commenters noted that the
program had accumulated administratively burdensome requirements over
its existence and where appropriate should be curtailed. Section
131.570 was removed as its provisions should implemented via policy.
131.600 Reports
This section lists the types and frequencies of reports required
for submission. One commenter suggested that, while the SBA/OWBO has
streamlined many of its reporting requirements, additional improvements
could be made to eliminate duplication of time and effort. The
commenter also indicated that the renewal application process could be
shortened by simply updating the information that was included in the
initial application. The requirement to submit a renewal application
every three years is consistent with the Act. While this section of the
rule does not provide information on the renewal application process
(See Sec. 131.420), the SBA has and will continue to streamline its
application processes. For example, OWBO established a 10-page limit
for the narrative response for renewal applications. Additionally, some
of the forms previously required (e.g., Cost Sharing (SBA 1224) and
Certification Regarding Debarment, Suspension and Other Responsibility
Matters--Primary Covered Transactions (SBA 1623)) are no longer
required. Several commenters highlighted the need for the Agency to
revamp its reporting processes. Based on the public comments, the
Agency undertook a comprehensive review of its reporting requirements.
Redundant and ineffective processes were identified and eliminated. As
a result, the Agency identified a need for continuous improvement in
this area and will remove this section from the final rule. This will
allow the Agency flexibility to address reporting via policy and to
modify those requirements as needed in order to make the WBC program
more effective and efficient and to improve the delivery of its
services. Subsequent sections of this rule have been renumbered
accordingly reflecting this deletion.
131.900 Client Privacy
Several commenters noted that OWBO should provide clarity on the
means, methods, and purpose of data collected by the program and should
collect additional performance and demographic data. This desire for
more data is hindered by Sec. 131.900 and therefore the section has
been removed from the final rule.
Compliance With Executive Orders 12866, 13563, 12988, 13132, and 13771,
the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork
Reduction Act (44 U.S.C. Ch. 35)
Executive Order 12866
The Office of Management and Budget has determined that this rule
constitutes a ``significant regulatory action'' under Executive Order
12866. However, this is not a major rule under the Congressional Review
Act, 5 U.S.C. 800.
The SBA provides a detailed Regulatory Impact Analysis for this
final rule below.
Regulatory Impact Analysis
1. Is there a need for this regulatory action?
The WBC Program was established in 1988 as a pilot program and
became permanent in 2007. Regulations for the WBC Program had not been
previously promulgated. The SBA had used the program announcement and
the notice of award to incorporate statutory requirements to implement
the WBC Program. The annual program announcement and the notice of
award have become, for all practical purposes, documents that interpret
the statute. The SBA believes it is past time for regulations outlining
guidance of the policies and procedures for the WBC Program. This
regulation incorporates the changes required by 2 CFR part 200. The
Office of Management and Budget (``OMB'') issued the ``Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards, Final Rule (Uniform Guidance) on December 26,
2013'', which is referred to as OMB ``Super Circular'' or ``Omni
Circular'' and is codified at 2 CFR part 200. The Super Circular
supersedes and streamlines requirements applicable to the
administration, use and audit of federal grant funds by non-profit
organizations, state, local and tribal governments, and colleges and
universities. This regulation also encompasses other program changes
that have taken place since the WBC Program was initially established.
Additionally, the AWBC has supported implementing regulations to
streamline and standardize processes.
2. What are the potential benefits and costs of this regulatory action?
In fiscal year 2016, the WBC Program received $17 million in
Federal funds, which it provided to over 100 WBCs. The SBA also
received $18 million in Federal funds for WBCs in fiscal year 2017.
Grantees are required to supply a one-to-one match of those funds,
except in the program's initial two years, during which time the
required match is two-to-one (Federal to match). The benefit of this
requirement is that the grantee is as invested as the Federal
Government in ensuring the success of the WBC Program, while small
businesses benefit from the no- or low-cost counseling and training.
The counseling and training services that the WBCs provide help
educate small businesses to promote growth, expansion, innovation,
increased productivity and management improvement. In 2017, the WBC
Program assisted 148,106 clients. These clients benefitted from
technical advice on topics like how to obtain loans, how to create a
business plan, how to promote their business, and other areas.
According to a 2016 WBC survey, clients of the WBC Program created
17,438 new business starts and received over $582,000,000 in capital
infusion. Further, the potential benefits of this rule are based on
both incorporating all of the changes that have occurred with the
publication of 2 CFR 200 and a
[[Page 64712]]
streamlining of the program announcement and the notice of award. The
new regulations further clarify the program announcement(s) issued by
OWBO.
The costs to the SBA in making this revision are minimal, as most
of the requirements of this rule are currently implemented and
followed. The estimated annual cost to the Federal Government for
oversight of the WBC Program is currently provided for in the existing
SBA infrastructure.
The annual cost to the WBCs includes the burden at the time of
application and the annual financial reporting required of WBCs. Over
the past five years, there were a total of 133 new applications for the
WBC Program, averaging 27 applications per year. The SF 424
(Application for Federal Assistance) on grants.gov does not include a
field for revenue size; however, given that the majority of entities
are small, the SBA can presume that the majority of applicant
organizations are also small. It is projected that a grants writer
would require approximately 20 hours to complete and submit the
required application forms through grants.gov. Using the loaded wage
for an accountant at $44.06 per hour (BLS does not publish a wage for
grants writers so an accountant wage is used as a proxy; the 2018
hourly wage rate for an accountant is $33.89 and adding 30% for
benefits totals $44.06 per hour), this would cost the applicant
organization approximately $881 or a total cost of $23,787 to all
applicants of the WBC program annually.
A participant in the WBC Program submits a Federal Financial Report
and attachments twice a year, the estimated burden of which is two
hours twice a year. The annual submission of a work plan requires
substantially less time than the renewal application, as its purpose is
to update the initial application to reflect any changes. The estimate
for completion of the work plan and attachments on an annual basis is
approximately 14 hours. Using the loaded wage for an accountant at
$44.06 per hour, the estimated annual cost for a WBC would be $617.
There are currently 113 entities that participate in the WBC Program
for a total cost of $69,721.
Considering the cost to new applicants and the annual preparation
of a work plan and attachments for participants, the annual cost of
this rule is $93,508. The annualized cost of this rule in 2016 dollars
is $89,740.
Comments were submitted regarding the costs considered in this
rule. The commenters indicated that the section of the proposed rule
describing the regulatory flexibility analysis minimizes the scope of
WBC reporting requirements and grossly underestimates the cost and
amount of time required. One commenter also suggested that, in addition
to the cost and time required to submit an application, WBCs are
required to submit a work plan each year. The commenter also identified
the multiple reporting requirements (e.g., EDMIS quarterly reports,
semi-annual or quarterly narrative and financial reports) as burdensome
to the WBCs. While the commenter did not provide an estimate of time or
cost for the tasks referenced in this section, the proposed rule
estimated a burden to complete the required forms and reports annually
at 14 hours of work. The estimate of 14 hours refers only to the time
it would take on average to complete WBC application documents. Also,
contrary to the statement provided by the commenter, WBCs are not
required to submit an application and a work plan each year. Centers
are required to submit either an application (if in a renewal phase) or
a work plan (if in an option year) annually. Furthermore, there are no
additional costs for the submission of budgetary and performance
reports as the cost for these activities is already included as part of
the funds provided to the WBC to manage the program. This rule serves
to codify existing requirements. Further, the work plan submissions
require narratives that do not exceed five pages. The SBA will,
however, continue to explore ways to further reduce and simplify
reporting requirements.
3. What alternatives have been considered?
After publishing the ANPRM on April 22, 2015, the NPRM on November
22, 2016, and reviewing the comments submitted, the SBA believes that
publishing regulations for the WBC Program would be the best way to
create long-lasting consistency in the implementation of the WBC
Program. The alternative would be to not publish regulations and
instead continue to rely on grant documents to implement the WBC
Program. However, 15 U.S.C. 656(n)(3) requires the SBA to issue
regulations establishing standards for financial audit disclosures.
Because the SBA is required to issue regulations for part of the WBC
Program, the Agency believes it would be more beneficial to grantees
and the public to issue regulations establishing one set of rules for
the program as a whole rather than relying upon a piecemeal approach
utilizing a mix of regulations and grant documents to govern the
program.
Executive Order 13563
Prior to developing this final rule, the SBA issued an ANPRM on
April 22, 2015, to solicit comments. Additionally, public comments were
solicited as part of the NPRM issued on November 22, 2016. Further, the
OWBO staff attended the annual WBC training conferences to discuss
policy, procedures, and the proposed regulations.
Comments for both the ANPRM and NPRM can be found at: https://www.regulations.gov/docketBrowser?rpp=50&so=DESC&sb=postedDate&po=0&dct=PS&D=SBA-2015-0007.
The SBA did not receive any comments from other Federal Agencies.
Executive Order 12988
For the purposes of Executive Order 12988, Civil Justice Reform,
the SBA has determined that this final rule is drafted, to the extent
practicable, in accordance with the standards set forth in Sec. 3(a)
and 3(b)(2), to minimize litigation, eliminate ambiguity, and reduce
burden. The regulations provide for WBC Program participants' rights of
appeal in the event they are aggrieved by an Agency decision, thereby
limiting the possibility of litigation. This final rule does not have
retroactive or pre-emptive effect.
Executive Order 13132
For the purposes of Executive Order 13132, the SBA has determined
that this rule has no federalism implications warranting preparation of
a federalism assessment.
Executive Order 13771
This final rule is an Executive Order 13771 regulatory action with
an annualized cost in 2016 dollars of $89,740 and a net present value
of $1,281,998. There are several unquantifiable benefits of the WBC
program for small businesses including new business starts and capital
infusion. Details on the estimated costs and a discussion of the
benefits of this final rule can be found in the rule's regulatory
impact analysis.
Compliance With the Regulatory Flexibility Act, 5 U.S.C. 601-612
When an agency issues a rule, the Regulatory Flexibility Act (RFA)
requires the agency to prepare a final regulatory flexibility analysis
(FRFA), which describes whether the rule will have a significant
economic impact on a substantial number of small entities. However,
Section 605 of the RFA allows an agency to certify a rule, in lieu of
[[Page 64713]]
preparing a FRFA, if the rulemaking is not expected to have a
significant economic impact on a substantial number of small entities.
The counseling and training services that the WBCs provide help
educate small businesses to promote growth, expansion, innovation,
increased productivity and management improvement. In 2017, the WBC
Program assisted 148,106 clients. These clients benefitted from
technical advice on topics like how to obtain loans, how to create a
business plan, how to promote their business, and other areas.
According to a 2016 WBC survey, clients of the WBC Program created
17,438 new business starts and received over $582,000,000 in capital
infusion.
Further, the potential benefits of this rule are based on both
incorporating all of the changes that have occurred with the
publication of 2 CFR part 200 and a streamlining of the program
announcement and the notice of award. The new regulations further
clarify the program announcement(s) issued by OWBO.
This rule covers both the application process to become funded as a
WBC and the on-going operations for currently funded WBCs. As these
populations are different, the analysis is included for each.
This final rule could theoretically affect all nonprofit entities,
as the statute requires that an entity be organized as a nonprofit in
order to participate. According to the IRS, for tax year 2010 there
were over 269,000 entities that filed returns as a 501(c)(3). The North
American Industry Classification System (NAICS) codes that are most
relevant to participation in the WBC program are 541611, Administrative
Management and General Management Consulting Services and 541990, All
Other Professional, Scientific and Technical Services. The size
standard for both of these NAICs codes is $15 million in average annual
receipts. According to the IRS, 92 percent of all 501(c)(3) filers had
total revenue greater than $10 million. The majority of the 501(c)
entities would fall under the threshold as a small entity. In addition,
as the application process is voluntary and does not require a
nonprofit entity to apply, the vast majority of nonprofits would not be
affected. Over the past five years, there were a total of 133 new
applications for the WBC Program, averaging between 25 and 35
applications per year. The SF 424 (Application for Federal Assistance)
on grants.gov does not include a field for revenue size; however, given
that the majority of entities are small, the SBA can presume that the
majority of applicant organizations are also small. It is projected
that a grants writer would require approximately 20 hours to complete
and submit the required application forms through grants.gov. Using the
loaded wage for an accountant at $44.06 per hour, this would cost the
applicant organization approximately $881. These estimates are based on
burden statements associated with the grants.gov application forms and
anecdotal information supplied by applicant organizations to the WBC
Program. Therefore, the SBA has determined that the application section
of the final rule would not have a significant impact on a substantial
number of small entities.
There are currently 113 entities that participate in the WBC
Program, all of which are small entities. A participant in the WBC
Program submits a Federal Financial Report and attachments twice a
year, the estimated burden of which is two hours twice a year. The
annual submission of a work plan requires substantially less time than
the renewal application, as its purpose is to update the initial
application to reflect any changes. The estimate for completion of the
work plan and attachments on an annual basis is approximately 14 hours.
Using the loaded wage for an accountant at $44.06 per hour, the
estimated annual cost would be $617. Therefore, the SBA has determined
that the financial reporting section of the final rule would not have a
significant impact on a substantial number of small entities.
Comments were submitted regarding the SBA's compliance with the
Regulatory Flexibility Act (RFA). The commenters indicated that the
section of the proposed rule describing the regulatory flexibility
analysis minimizes the scope of WBC reporting requirements and grossly
underestimates the cost and amount of time required. One commenter also
suggested that, in addition to the cost and time required to submit an
application, WBCs are required to submit a work plan each year. The
commenter also identified the multiple reporting requirements (e.g.,
EDMIS quarterly reports, semi-annual or quarterly narrative and
financial reports) as burdensome to the WBCs. While the commenter did
not provide an estimate of time or cost for the tasks referenced in
this section, the proposed rule estimated a burden to complete the
required forms and reports annually at 14 hours of work. The estimate
of 14 hours refers only to the time it would take on average to
complete WBC application documents. Also, contrary to the statement
provided by the commenter, WBCs are not required to submit an
application and a work plan each year. Centers are required to submit
either an application (if in a renewal phase) or a work plan (if in an
option year) annually. Furthermore, there are no additional costs for
the submission of budgetary and performance reports as the cost for
these activities is already included as part of the funds provided to
the WBC to manage the program. This rule serves to codify existing
requirements. Further, the work plan submissions require narratives
that do not exceed five pages. The SBA will, however, continue to
explore ways to further reduce and simplify reporting requirements.
Accordingly, the Administrator of the SBA hereby certifies that
this rule will not have a significant economic impact on a substantial
number of small entities.
Paperwork Reduction Act, 44 U.S.C., Ch. 35
The SBA has determined that this final rule will not impose
additional reporting and recordkeeping requirements under the Paperwork
Reduction Act (PRA), 44 U.S.C. Chapter 35. Currently, the following
eight PRA submissions are associated specifically with the WBC Program:
(1) OMB control number 3245-0140, Notice of Award and Cooperative
Agreement; (2) OMB control number 3245-0169, Federal Cash Transaction
Report, Financial Status Report, Program Income Report, and Narrative
Program Report; (3) OMB control number 3245-0324, EDMIS data collection
(Forms 641 and 888); (4) OMB control number 4040-0004, SF 424,
Application for Financial Assistance; (5) OMB control number 4040-0006,
SF 424A, Budget Summary for Non-Construction Projects; (6) OMB control
number 4040-0007, SF 424B, Assurances for Non-Construction Projects;
(7) OMB control number 4040-0013, SF-LLL, Disclosure of Lobbying
Activities; and (8) 4040-0014SF-425, Federal Financial Report. These
reports will not change and no new reports are required in this final
rule.
List of Subjects in 13 CFR Part 131
Entrepreneurship, Grant programs--business, Minority businesses--
women, Reporting and recordkeeping requirements, Small businesses.
0
For the reasons stated in the preamble, SBA adds 13 CFR part 131 to
read as follows:
PART 131--WOMEN'S BUSINESS CENTER PROGRAM
Sec.
[[Page 64714]]
131.100 Introduction.
131.110 Definitions.
131.200 Eligible entities.
131.300 Women's Business Centers (WBCs).
131.310 Operating requirements.
131.320 Area of service.
131.330 WBC services and restrictions on service.
131.340 Specific WBC program responsibilities.
131.350 Selection and retention of the WBC Program Director.
131.400 Grant administration and cost principles.
131.410 Maximum grant.
131.420 Carryover of Federal funds.
131.430 Matching funds.
131.440 Program income and fees.
131.450 Budget justification.
131.460 Restricted and prohibited costs.
131.470 Payments and reimbursements.
131.500 Oversight of the WBC program.
131.510 SBA review authority.
131.520 Audits, examinations, and investigations.
131.600 Cooperative agreement and contracts.
131.610 Other Federal grants.
131.620 Revisions and amendments to cooperative agreements.
131.630 Suspension, termination, and non-renewal.
131.640 Dispute procedures.
131.650 Closeout procedures.
Authority: 15 U.S.C. 656.
Sec. 131.100 Introduction.
(a) The Women's Business Centers (WBC) program has grown and
evolved to provide a variety of services to many entrepreneurs ranging
from those interested in starting businesses to those looking to expand
an existing business.
(b) The U.S. Small Business Administration (SBA), through the
Office of Women's Business Ownership (OWBO), is responsible for the
general management and oversight of the WBC program. The SBA issues an
annual cooperative agreement to recipient organizations for the
delivery of assistance to individuals and small businesses. The WBC
program acts as a catalyst for providing in-depth, substantive,
outcome-oriented business services, including training, counseling, and
technical assistance, to women entrepreneurs and both nascent and
established businesses, a representative number of whom are socially
and economically disadvantaged. By providing training and counseling on
a wide variety of topics through WBCs, the SBA meets the needs of the
individual client in the local marketplace.
(c) Unless otherwise indicated, all deadlines referred to in this
Part are measured in terms of calendar days.
Sec. 131.110 Definitions.
Advisory board. A group established to confer with and provide
recommendations to the WBC Program Director on matters pertaining to
the operation of the WBC. The advisory board will also act as a
catalyst to raise funds for the WBC.
Applicant organization. An entity that applies for Federal
financial assistance to establish, administer, and operate a WBC under
a new or renewed cooperative agreement.
Application (also known as the proposal). The written submission by
a new applicant organization or an existing recipient organization
describing its projected WBC activities for the upcoming budget period
and requesting SBA funding for use in its operations.
Annual work plan. See option year work plan and budget.
Area of service. The State or U.S. Territory, or a regional portion
of a State or U.S. Territory, in which the SBA approves a WBC to
provide services.
Assistant Administrator of the Office of Women's Business
Ownership. (AA/OWBO). The AA/OWBO is statutorily responsible for
management of the WBC program. The AA/OWBO may elect to designate staff
to complete tasks assigned to the AA/OWBO position. When AA/OWBO is
referenced, it includes the designee.
Associate Administrator for the Office of Entrepreneurial
Development. (AA/OED). The AA/OED is responsible for enhancing the
nationwide network of offices, business executives, and mentors that
support current and aspiring business owners as they start, grow, and
expand in today's global market. This nationwide network includes the
following Resource Partners: Women's Business Centers (WBCs), Small
Business Development Centers (SBDCs), and SCORE.
Authorized official. A person who has the legal authority to sign
for and/or speak on behalf of an organization.
Budget period. The period of performance in which expenditures and
obligations are incurred by a WBC, consistent with 2 CFR 200.77.
Carryover funds (carryover). Unobligated Federal funds reallocated
from one budget period to the next through an amendment to the current
year's cooperative agreement.
Cash match. Non-Federal funds specifically budgeted and expended by
the recipient organization for the operation of a WBC project. Cash
match must be in the form of cash and/or program income.
Client. An entrepreneur or existing small business seeking services
provided by a WBC.
Client record. A record that provides individual client contact
information, client/business demographics, and documentation of the
services provided. Additionally, the record provides aggregate data
about a training event, including topic, date, attendance, format, and
evaluation.
Cognizant agency for audit. The Federal agency designated to carry
out the responsibilities as described in 2 CFR 200.513(a).
Cognizant agency for indirect costs. The Federal agency responsible
for reviewing, negotiating, and approving cost allocation plans or
indirect cost proposals developed under 2 CFR 200.19.
Conditional approval. An approval granted when an application has
been determined to meet eligibility requirements and has been
recommended for funding, but requiring special conditions, such as
submitting certifications, assurances, or other documentation.
Cooperative agreement (also known as notice of award). A legal
instrument of financial assistance between the SBA and a recipient
organization that is consistent with 31 U.S.C. 6302-6305 and provides
for substantial involvement between the SBA and the recipient
organization in carrying out the proposed activities.
Counseling. Services provided to an individual and/or small
business owner that are substantive in nature, require assistance from
a resource partner or SBA district office personnel regarding the
formation, management, financing, and/or operation of a small business
enterprise, and are specific to the needs of the business or
individual.
Direct costs. Costs as defined in 2 CFR 200.413.
Dispute. A programmatic or financial disagreement that the
recipient organization requests be handled according to the dispute
resolution procedures under Sec. 131.840.
Distinct population. A specific targeted group. For the purpose of
the WBC program, the targeted group is women entrepreneurs.
District office. The local SBA office charged, in collaboration
with the WBCs, with meeting the needs of women entrepreneurs in the
community.
Financial examiner. An SBA employee, or designee, charged with
conducting financial examinations.
Full-time. An employee all of whose time and effort (minimum of 30
hours per week, as defined by the Internal Revenue Service, Sec.
4980H(c)(4)) is allocated to the WBC project. An employee who is full-
time under the WBC should not engage in activities that do not pertain
to the WBC project.
[[Page 64715]]
Grants and Cooperative Agreement Appeals Committee. The SBA
committee, appointed by the SBA Administrator, to resolve appeals
arising from disputes between a recipient organization and the SBA.
Grants Management Officer. An SBA employee who meets the Office of
Management and Budget standards and certifications to obligate Federal
funds by signing a notice of award.
Grants management specialist. An SBA employee responsible for the
budgetary review and financial oversight of WBC agreements.
Indirect costs. Costs as defined in 2 CFR 200.56.
In-kind contributions (third party). Costs incurred as described in
2 CFR 200.96.
Interim Program Director. An individual temporarily assigned by the
recipient organization to fulfill the responsibilities of a vacant WBC
Program Director position for no more than 90 days.
Key personnel/key employee. For the purposes of the WBC program,
the WBC Program Director is identified as the key employee.
Loan packaging. Includes any activity done in support of a client
or in preparation of the client's credit application to a lender for a
loan, line of credit, or other financial instrument.
Matching funds. For all Federal awards, any shared costs or
matching funds and all contributions, as defined in 2 CFR 200.306.
Microloan. A loan as specified in 13 CFR 120.701.
Non-Federal entity. An organization as defined in 2 CFR 200.69.
Nonprofit organization. Any corporation, trust, association,
cooperative, or other organization as defined in 2 CFR 200.70.
Notice of award (NOA). See cooperative agreement.
Office of Women's Business Ownership Program Analyst. An SBA
employee designated by the AA/OWBO who oversees and monitors WBC
operations.
Option year. Additional 12-month budget period awarded after the
first budget year (base year) as determined by the period of
performance identified in the cooperative agreement.
Option year work plan and budget. The written submission by an
existing WBC applying for an additional year of grant funding. This
submission is required to ensure the recipient organization's continued
alignment with the WBC program and to update its description of
projected WBC activities for the upcoming option year budget period.
Overmatch. Any non-Federal contribution applied to the WBC award in
excess of the minimum amount of match required. See Sec. 131.530 for
specific details on match requirements.
Period of performance. The period of time as specified in 2 CFR
200.77.
Principal investigator. The individual primarily responsible for
achieving the technical success of a project, while also complying with
the financial and administrative policies and regulations associated
with the grant.
Prior approval. The written concurrence from the appropriate Office
of Women's Business Ownership official for a proposed action or
amendment to a WBC cooperative agreement. Specific guidelines governing
the prior approval process, including the documentation required, are
outlined in the cooperative agreement.
Program announcement. The SBA's annual publication of requirements,
to which an applicant organization must respond in its five-year
initial or three-year renewal application.
Program income. Gross income earned by a non-Federal entity, as
described in 2 CFR 200.80.
Project funds. All funds authorized under the cooperative agreement
including Federal funds, non-Federal cash, in-kind contributions (third
party), and program income, as well as any Federal funds and/or non-
Federal match authorized or reported as carryover funds.
Project period. The period of time specified in the notice of
award, which identifies the start and end date of a recipient
organization's five-year or three-year project.
Recipient organization. An applicant organization selected to
receive Federal funding to deliver WBC services under a cooperative
agreement. By statute, only private, nonprofit organizations certified
under Sec. 501(c) of the Internal Revenue Code of 1986 can be
recipient organizations.
Socially and economically disadvantaged women. As defined by 13 CFR
124.103 and 124.104, respectively.
Specialized services. WBC services other than basic counseling and
training. The services can include, but are not limited to, assistance
with disaster readiness; assistance to home-based businesses;
assistance to agribusinesses; and assistance to construction,
childcare, elder care, manufacturing or procurement businesses.
State or U.S. Territory. For the purpose of these regulations, the
50 United States, and the U.S. Territories of Guam, the U.S. Virgin
Islands, American Samoa, the Northern Mariana Islands, the Commonwealth
of Puerto Rico and the District of Columbia.
Training. A qualified activity or event, presented or cosponsored
by a WBC, that delivers a structured program of knowledge, information,
or experience on an entrepreneurial or business-related subject.
WBC Program Director. An individual whose time and effort is
allocated solely to the WBC program. The WBC Program Director position
is the only position that requires approval from the Office of Women's
Business Ownership prior to hiring.
Women's Business Centers (WBCs). WBCs represent a national network
of educational centers throughout the United States and its territories
that assist women in starting and growing small businesses.
Women-owned businesses. A business concern that is not less than 51
percent owned by one or more women; additionally, its management and
daily operations are controlled by one or more women.
Sec. 131.200 Eligible entities.
(a) Eligible organizations. By statute, only a nonprofit
organization with active 501(c) certification from the United States
Department of the Treasury/Internal Revenue Service is eligible to
apply for Federal funding to operate a WBC project.
(b) Ineligible organizations. Organizations ineligible to receive
Federal funds to manage a WBC project include, but are not limited to,
the following:
(1) Any organization that owes an outstanding and unresolved
financial obligation to the Federal Government;
(2) Any organization, employee, or principal investigator of an
organization that is currently suspended, debarred, or otherwise
prohibited from receiving awards, contracts, or grants from the Federal
Government;
(3) Any organization with an outstanding and unresolved material
deficiency reported under the requirements of the Single Audit Act
within the past three years, consistent with 2 CFR 200.501;
(4) Any organization that has had a grant or cooperative agreement
involuntarily terminated or non-renewed by the SBA for cause/material
non-compliance;
(5) Any organization that has filed for bankruptcy within the past
five years;
(6) Any organization that does not propose to hire and employ a
full-time WBC Program Director whose time is solely dedicated to
managing the day-to-day operation of the WBC and staff;
(7) Any organization that proposes to serve as a pass-through and
permit
[[Page 64716]]
another organization to manage the day-to-day operations of the
project;
(8) Any organization that had an officer or agent acting on its
behalf convicted of a felony criminal violation under any Federal law
within the preceding 24 months; or
(9) Any other organization the SBA reasonably determines to be
ineligible to receive Federal funds to manage a WBC project.
Sec. 131.300 Women's Business Centers (WBCs).
Women's Business Centers (WBCs) are established under the statutory
authority of the SBA through cooperative agreements with nonprofit
recipient organizations. WBC program announcements and requests for
work plans and budgets establish the operating and performance
parameters, initiatives, and strategies for each project period.
(a) Program announcements. (1) The SBA will issue a program
announcement each fiscal year to fund those recipient organizations
already operating successful WBC projects. The program announcement
will detail the goals, objectives, and other terms and conditions for
renewable projects entering a three-year phase of the program. The
issuance of the program announcement is contingent upon SBA's approved
budget and funding availability.
(2) At any time during the current fiscal year, and based on the
availability of funds, the SBA may, at its discretion, also issue a
program announcement for the upcoming fiscal year, detailing the goals,
objectives, and other terms and conditions for new WBC projects. New
WBC projects may be awarded a maximum of one base year and 4 additional
option years of funding.
(3) The SBA reserves the right to cancel a program announcement, in
whole or in part, at the agency's discretion.
(b) Option year work plans and budgets. (1) Each year, the SBA will
issue instructions for the submission of the option year work plan and
budget for those WBCs currently in (and wishing to continue in) the
SBA's WBC program that will have successfully completed year one, two,
three or four of an initial project, or year one or two of a renewal
project. In order to be considered for renewal, submissions for option
year work plans and budget must be received by OWBO by the deadline
specified in the annual instructions for the submission of each work
plan.
(2) The SBA reserves the right to revise the submission
requirements, in whole or in part, at the Agency's discretion.
(3) Awarding option year funding is at the sole discretion of the
SBA and is subject to continuing program authority, the availability of
funds, and satisfactory performance by the recipient organization.
(c) Cooperative agreement. (1) The terms and conditions must
include, but are not limited to, Office of Management and Budget
guidelines for grant administration and cost principles, regulations
and laws governing the WBC project and federally sponsored programs,
and current year guidelines from the program announcement.
(2) The SBA will issue a notice of award annually to each eligible
WBC participant, based on the acceptance of the organization's annual
proposal or work plan.
(d) Negotiating the cooperative agreement. The WBC's participation
in negotiations should include, but is not limited to, the following:
(1) Proposing services and an appropriate delivery structure to
meet the needs of the local small business community, specifically
targeting women, including a representative number of women who are
socially and economically disadvantaged; and
(2) Proposing adequate technical and managerial resources for the
WBC to achieve its performance goals and program objectives, as set
forth in the cooperative agreement.
(e) Women's Business Center (WBC) funds. Budgeted WBC funds
(including match) must be used solely for the WBC project.
Sec. 131.310 Operating requirements.
(a) The recipient organization has contractual responsibility for
the duties of the WBC project, which must be a separate and distinct
entity within the recipient organization, having its own budget, staff,
and full-time WBC Program Director.
(b) The WBC must establish an advisory board that is representative
of the community it will serve and that will confer with and provide
recommendations to the WBC Program Director on matters pertaining to
the operation of the WBC. The advisory board will also assist the WBC
in meeting the match requirements of the program.
(c) An employee who is full-time under the WBC program should not
engage in activities that do not pertain to the WBC project. The WBC is
not prohibited from operating other Federal programs that focus on
women or other underserved small business concerns if doing so does not
hinder its ability to deliver the services of the WBC program.
(d) The WBC must have facilities and administrative infrastructure
sufficient for its operations, including program development, program
management, financial management, reports management, promotion and
public relations, program assessment, program evaluation, and internal
quality control. The WBC must document annual financial and
programmatic reviews and evaluations of its center(s) consistent with
Agency policy.
(e) Any new applicant that is accepted into the WBC program after
January 24, 2020 must include as part of its official name the specific
identification ``Women's Business Center.'' For the purpose of the WBC
program, the official name used is the name assigned to the WBC by the
host organization. The legal name of the organization is the name of
the host organization and is the name usually listed on line 7a of the
Application for Federal Assistance, SF 424. Any WBC that is applying
for a renewal grant after January 24, 2020 must also include the
specific identification ``Women's Business Center'' as part of its
official name. Until such time that any existing WBC has to submit a
renewal application to the SBA for funding, and does not currently
include ``Women's Business Center'' in its official name, it must
include the following language prominently on its website and
promotional documents: ``The Women's Business Center is funded in part
by the U.S. Small Business Administration.'' However, at the time of
submission of its renewal application, it must include WBC as part of
its official name.
(f) The WBC must maintain adequate staff to operate the WBC,
including the WBC Program Director and at least one other person,
preferably a business counselor.
(g) The WBC must use an enforceable conflict-of-interest policy
that is consistent with the requirements of 2 CFR 2701.112.
(h) The WBC must be open to the public a minimum of 40 hours a week
(which must include evening and weekend hours) and meet other
requirements as specified in the program announcement. Emergency
closures must be reported to the district office and Office of Women's
Business Ownership Program Analyst as soon as is feasible.
(i) The WBC must comply with 13 CFR parts 112, 113, 117, and 136
requiring that no person be excluded from participation in, be denied
the benefits of, or otherwise be subjected to discrimination under any
program or
[[Page 64717]]
activity conducted by the WBC. However, all WBC marketing programs and
services must target women.
(j) The WBC project must not be listed in the organizational
structure under any other Federal grant.
Sec. 131.320 Area of service.
(a) Cooperative agreement. The recipient organization will identify
in its application the geographic area for which it plans to provide
assistance and should strive to not duplicate services to the same
client population as an existing WBC. Once approved, the AA/OWBO will
codify, in writing, the geographic area of service of each recipient
organization. More than one recipient organization may be located in a
State, Territory, or other geographic area. Once the SBA has entered
into a cooperative agreement with a recipient organization, the area of
service cannot be changed without prior approval by the AA/OWBO. A
subsequent decision by the recipient organization to change the area of
service in the cooperative agreement without prior approval by OWBO may
constitute grounds for suspension, non-renewal, and/or termination as
set forth in Sec. 131.830.
(b) Location of WBC projects. An applicant organization responding
to a program announcement and within proximity of an existing WBC
project shall provide in its written narrative a justification for
placing another WBC in the proximity of an existing WBC, including the
number of socially and economically disadvantaged persons within the
proposed service area, relevant census data, and information on
population density. The information provided must clearly justify the
necessity for an additional WBC project within the same area of service
as the existing WBC project. The SBA will take the narrative and any
supporting documentation into consideration when reviewing, ranking,
and scoring the applicant organization's proposal.
(c) Resources. An applicant organization's plan for the commitment
and allocation of resources, including the site from which the WBC
plans to provide services, will be reviewed as part of the application
review process for each budget period to ensure adequate coverage in
the area of service.
Sec. 131.330 WBC services and restrictions on services.
(a) Services. The WBC must provide prospective entrepreneurs and
existing small businesses, known as clients, with training, counseling,
and specialized services. The services provided must relate to the
formation, financing, management, and operation of small business
enterprises. The WBC must create and update client records to document
each time that services are provided to a client. The WBC must provide
services that meet local needs as determined through periodic needs
assessments; additionally, services must be adjusted over time to meet
changing small business needs. Any changes to the scope of services
must be in accordance with Sec. 131.820.
(b) Access to capital. (1) WBCs must provide training and
counseling services that enhance a small business concern's ability to
access capital, such as business plan development, financial statement
preparation/analysis, and cash flow preparation/analysis.
(2) WBCs may provide loan packaging services and other related
services to WBC clients and may charge a fee for such assistance (see
Sec. 131.540). Any fees so generated will constitute program income.
The WBC must ensure that these services are not credited to both the
WBC program and any other Federally-funded program, thereby double
counting the efforts.
(3) WBCs shall prepare their clients to represent themselves to
lending institutions. WBC personnel may attend meetings with lenders to
assist clients in preparing financial packages; however, neither WBC
staff nor their agents may take a direct or indirect role in
representing clients in any loan negotiations.
(4) WBCs shall disclose to their clients that financial counseling
assistance, including loan packaging, will not guarantee receipt or
imply approval of a loan or loan guarantee.
(5) WBCs must not intervene in loan decisions, service loans, make
credit recommendations, or otherwise influence decisions regarding the
award of any loans or lines of credit on behalf of the WBC's clients,
unless the WBC operates as an SBA Microloan Intermediary and is
awarding an individual or small business concern an SBA microloan.
(6) When the recipient organization operates both a WBC and a
separate loan program, the WBC must disclose to the client other
financing options that may be available besides the one offered by the
recipient organization to ensure that the client has the opportunity to
seek financing outside of the recipient organization. If the recipient
organization operates an SBA loan program, it must comply with Sec.
120.140 of this chapter.
(7) WBCs must disclose to loan packaging clients any financial
relationships between the WBC and a lender or the sale of their credit
products.
(8) With respect to loan programs, allowable activities include the
following: assisting clients in formulating a business plan, preparing
financial statements, completing forms that are part of a loan
application, and accompanying an applicant appearing before the SBA or
other lenders. See paragraph (b)(5) of this section for further
limitations.
(9) WBCs are to collaborate with state, local, and Federal
government agencies to identify other resources that may be available
to its clients and to facilitate interactions deriving from these
collaborations.
(c) Special emphasis initiatives. In addition to requiring WBCs to
assist women entrepreneurs, including a representative number of women
who are socially and economically disadvantaged, the SBA may identify
and include in the cooperative agreement other portions of the general
population that WBCs must target for assistance.
Sec. 131.340 Specific WBC program responsibilities.
(a) Policy development. The AA/OWBO will establish and modify WBC
program policies and procedures to improve the delivery of services by
WBCs to the small business community and to enhance compliance with
applicable laws, regulations, Office of Management and Budget
guidelines, and Executive Orders.
(b) Program administration. The AA/OWBO will recommend the annual
program budget, establish appropriate funding levels in compliance with
the statute, and review the annual budgets submitted by each
organization.
(c) Responsibilities of WBC Program Director. (1) The WBC Program
Director must be a full-time employee of the recipient organization and
not a contractor, consultant, or company. The WBC Program Director will
direct and monitor all program activities and all financial affairs of
the WBC to ensure effective delivery of services to the small business
community and compliance with applicable laws, regulations, Office of
Management and Budget circulars, Executive Orders, and the terms and
conditions of the cooperative agreement.
(2) The WBC Program Director may not manage any other programs
under the recipient organization.
(3) The WBC Program Director will serve as the SBA's principal
contact for all matters involving the WBC.
(d) Principal investigator. The principal investigator is primarily
responsible for achieving the technical success of the project while
also
[[Page 64718]]
complying with the financial and administrative policies and
regulations associated with the grant. Although principal investigators
may have administrative staff to assist them with the management of the
project, the ultimate responsibility for the management of the project
rests with the principal investigator. The principal investigator of a
recipient organization could also fill the role of Executive Director,
WBC Program Director, President/CEO, or another key position.
Sec. 131.350 Selection and retention of the WBC Program Director.
(a) General. (1) The WBC Program Director selected to manage the
daily operations of the WBC shall possess core competencies in the
areas of business and/or entrepreneurship training, project and/or
small business management, effective communication, and collaboration.
(2)(i) The recipient organization must provide written notification
to the AA/OWBO or his/her designee within five business days following
a vacancy in a WBC Program Director position. The notification must
include the date the former WBC Program Director vacated the position,
as well as the name, resume, salary, date of appointment, and contact
information for the person assigned the role of the WBC Interim Program
Director. If the WBC Program Director temporarily vacates the position,
the notification must include the projected date of return. The
placement of an Interim Program Director does not require the
submission of a key personnel change request; however, the information
outlined in this section must be submitted to the OWBO Program Analyst,
via email, consistent with the required timeframe.
(ii) The Interim Director may not remain in the position more than
90 calendar days from the date of the vacancy without written approval
from the AA/OWBO. The recipient organization must document the
appointment of the Interim Program Director in accordance with its
policies and procedures and the cooperative agreement.
(3) An Interim Program Director must allocate a sufficient amount
of his/her time and effort to management of the daily operations of the
WBC program until a permanent WBC Program Director is in position.
(4) Within 30 days from the date of the vacancy, the recipient
organization must provide OWBO with its plan of how it will ensure that
a full-time WBC Program Director is hired within the 90 day timeframe
allocated.
(5) If it is anticipated that the Interim Program Director will be
in the position for more than 90 days, prior to the end of the 90 day
period, the recipient organization must submit a written request to the
OWBO Program Analyst for approval of an extension. OWBO is not required
to reimburse personnel costs for any WBC Interim Program Director that
remains in the position for more than 90 days without prior written
approval.
(b) SBA involvement. The AA/OWBO will review the selection of the
new WBC Program Director submitted by the recipient organization to
ensure the candidate selected is qualified and their hiring would not
present a conflict of interest or similar concern that would negatively
affect the WBC's ability to carry out project and program objectives.
(c) Recruitment activity and associated costs. Allocable personnel
compensation and benefits costs are as provided in 2 CFR 200.463.
Sec. 131.400 Grant administration and cost principles.
Upon approval of a WBC's initial or renewal application, the SBA
will enter into a cooperative agreement with the recipient
organization, setting forth the programmatic and fiscal
responsibilities of the recipient organization and the SBA, the scope
of the project to be funded, and the budget for the period covered by
the cooperative agreement. The WBC program adopts and implements Office
of Management and Budget regulations as published and amended in 2 CFR
part 200. Additional qualifications or clarifications may be
promulgated through the program announcement, a revised notice of
award, or the regulatory process.
Sec. 131.410 Maximum grant.
No individual WBC project will receive a WBC grant in any fiscal
year under a cooperative agreement in excess of the amount authorized
by statute. While an individual WBC project cannot exceed the statutory
limit, a recipient organization is not limited from establishing
multiple WBC projects as long as the projects are distinct from each
other and are serving distinct populations that would not otherwise be
served.
Sec. 131.420 Carryover of Federal funds.
The AA/OWBO will approve requests for carryover on a case-by-case
basis. In doing so, the AA/OWBO will take into account the amount of
carryover requested, whether the WBC currently has any funds carried
over from prior years, the WBC's record of utilizing all of its awarded
funding or providing the required level of match, and any factors
beyond the WBC's control that impeded its ability to conduct project
activities as originally proposed.
Sec. 131.430 Matching funds.
(a) The recipient organization must provide matching funds equal to
one-half of the Federal funding received for the first two years of its
initial award (a statutory match ratio of 2:1 Federal to non-Federal
funding). For the remainder of the time the recipient organization is
in the WBC program, it must provide matching funds of one dollar for
every dollar of its annual Federal award amount (a statutory match
ratio of 1:1 Federal to non-Federal funding). At least 50 percent of
the matching funds must be in cash (the sum of non-Federal cash and
program income). The remaining 50 percent may be provided through
allowable combinations of cash, in-kind contributions (third party), or
authorized indirect costs.
(b) Once the cash match and total match requirements have been met,
any additional matching funds are considered overmatch. WBCs may
provide overmatch if they choose to do so; however, if they have used
Federal funds to raise match above the required amount, the funds must
only be used to meet the Federal objective of the WBC program and must
be verifiable from the non-Federal entity's records. All funds
allocated to a WBC project through a budget proposal are subject to
Federal rules and regulations, consistent with 2 CFR part 200. The
funds must also be used solely for the WBC project. However, this does
not prohibit WBC recipient organizations from raising funds separately
and apart from the WBC program. Those funds that are not raised with
WBC funds and are not used as match are not subject to the same
recordkeeping requirements as they are not tied to the WBC program.
(c) If the recipient organization indicates difficulty in meeting
the match requirement, it can request a reduction of the Federal award.
For specific guidance regarding the allowability, valuation, and
documentation of match please see 2 CFR 200.306.
Sec. 131.440 Program income and fees.
(a) Program income, including any interest earned on program
income, may only be used for authorized purposes and in accordance with
the cooperative agreement. Program income may be used as matching funds
and, when expended, is counted towards the cash match requirement of
the award. Program income must be used to expand
[[Page 64719]]
the quantity or quality of services and for resources or outreach
provided by the WBC project.
(b) Unused program income may be carried over to the subsequent
budget period by a WBC. The WBC must report the consolidated program
income sources and uses.
(c) A WBC may charge clients a reasonable fee for services,
including training and counseling provided by the WBC (sponsored or
cosponsored), the sale of books, or the rental of equipment or space.
Any fees so generated will constitute program income, and such fees
must not restrict access to any services for economically disadvantaged
entrepreneurs.
Sec. 131.450 Budget justification.
General. The WBC Program Director or finance person of the non-
Federal entity will prepare and submit the budget justification for the
upcoming program/budget period for review by the SBA as part of the
WBC's application package pursuant to the applicable program
announcement. Worksheets are provided by OWBO for this purpose.
Sec. 131.460 Restricted and prohibited costs.
SBA prohibitions are consistent with those set forth in 2 CFR part
200.
(a) A WBC may not use project funds as collateral for a loan,
assign an interest in them, or use them for any other such monetary
purpose.
(b) Use of project funds in violation of these restrictions may be
cause for termination, suspension, or non-renewal of the cooperative
agreement.
Sec. 131.500 Oversight of the WBC program.
(a) The AA/OWBO will monitor the WBC's performance and its ongoing
operations under the cooperative agreement to determine if the WBC is
making effective and efficient use of program funds, in compliance with
applicable law and other requirements, for the benefit of the small
business community.
(b) The AA/OWBO may revoke delegated authority of oversight
responsibilities at any time it is deemed necessary and will notify the
recipient organization of such a change in a timely manner.
Sec. 131.510 SBA review authority.
To ensure compliance and the effectiveness of WBCs, OWBO staff will
coordinate with SBA district offices to provide periodic programmatic
site visits on behalf of OWBO. Prior to conducting such visits, SBA
district office personnel will coordinate with and provide written
notice to the WBC Program Director. The SBA's district office personnel
may inspect WBC records and client files to analyze and assess WBC
activities, and, if necessary, make recommendations for improved
service delivery to the OWBO Program Analyst. Periodic district office
site visits do not supersede or replace OWBO site visits.
Sec. 131.520 Audits, examinations, and investigations.
(a) General audits. The SBA may conduct WBC audits.
(1) Audits of a recipient organization will be conducted pursuant
to the Single Audit Act of 1984 (if applicable) and applicable Office
of Management and Budget circulars.
(2) The SBA's Office of Inspector General (OIG) or its agents may
inspect, audit, investigate, or otherwise review the WBC as the
Inspector General deems appropriate.
(b) Financial examinations. The WBC will have periodic financial
examinations conducted by either the SBA or an independent contracted
firm. WBCs, in accordance with the program announcement and the
cooperative agreement, must comply with all requirements set forth for
such purposes.
(1) Applicant organizations proposing to enter the WBC program for
the first time shall be subject to a post-award examination or
sufficiency review conducted by or coordinated with the SBA or its
designee. As part of the financial examination, the financial examiner
will verify the adequacy of the accounting system, the suitability of
proposed costs, and the nature and sources of proposed matching funds.
(2) Examinations by the SBA will not serve as a substitute for
audits required of Federal recipients under the Single Audit Act of
1984, 31 U.S.C. Chapter 75 or applicable Office of Management and
Budget guidelines (see 2 CFR part 200), nor will such internal reviews
serve as a substitute for audits to be conducted by the SBA's Office of
the Inspector General under authority of the Inspector General Act of
1978, as amended.
(c) Investigations. The SBA may conduct investigations to determine
whether any person or entity has engaged in acts or practices
constituting a violation of the Small Business Act, 15 U.S.C. 656; any
rule, order, or regulation; or any other applicable Federal law.
Sec. 131.600 Cooperative agreement and contracts.
(a) General. A recipient organization will incorporate into its WBC
the applicable provisions of the cooperative agreement.
(b) Goals and milestones. (1) OWBO will work in conjunction with
WBC participants to establish program goals for the cooperative
agreement annually. Agency loan goals may not be negotiated or
incorporated into the cooperative agreement without the prior written
approval of the AA/OWBO.
(2) Failing to meet the goals and milestones of the cooperative
agreement may result in suspension, termination, or non-renewal in
accordance with Sec. 131.830.
(c) Procurement policies and procedures. (1) The WBC may contract
out for certain functions as permitted by the terms and conditions of
the cooperative agreement but may not expend more than 49 percent of
the total project funds on contractors and consultants.
(2) The SBA may direct or otherwise approve any obligations or
expenditures by recipient organizations, including those related to
vendors or contractors, as deemed appropriate by the Agency.
Sec. 131.610 Other Federal grants.
(a) Grants from other agencies. A recipient organization may enter
into a contract or grant with another Federal department or agency to
provide specific assistance to small business concerns in accordance
with the following conditions:
(1) Any additional contract or grant funds obtained from a Federal
source may not be used as matching funds for the WBC project, with the
exception of Community Development Block Grant (CDBG) funds.
(2) Federal funds from the SBA and match expenditures reported to
the SBA under the cooperative agreement may not be used or reported as
match for another Federal program.
(3) The SBA does not impose any requirements for additional
matching funds for those recipient organizations managing other Federal
contracts.
(4) The WBC must report these other Federal funds and any
associated matching funds separately to the SBA.
(b) RISE After Disaster grants. In accordance with 15 U.S.C.
636(b)(12), the SBA may provide financial assistance to a WBC, SBDC
(under 13 CFR part 130), SCORE, or any proposed consortium of such
individuals or entities to spur disaster recovery and growth of small
business concerns located in an area for which the President has
declared a major disaster.
(1) The Administrator, in cooperation with the recipients of
financial assistance under this paragraph, shall establish metrics and
goals for performance of grants, contracts, and cooperative agreements
under this
[[Page 64720]]
paragraph, which shall include recovery of sales, recovery of
employment, reestablishment of business premises, and establishment of
new small business concerns.
(2) Matching funds are not required for any grant, contract, or
cooperative agreement under this paragraph (see section 7(b) of the
Small Business Act 15 U.S.C. 636 (b)).
Sec. 131.620 Revisions and amendments to cooperative agreements.
During a project period, the WBC may request, in writing, one or
more revisions to the cooperative agreement. The request must be
submitted by the recipient organization's authorized official.
Revisions will normally relate to changes in scope, work, or funding
during the specified budget period. No proposed revision will be
implemented without the prior approval from the OWBO Program Analyst.
Revisions that require an amendment include the prior approval items
set forth in 2 CFR 200.308 and 200.407.
Sec. 131.630 Suspension, termination, and non-renewal.
(a) General. After entering into a cooperative agreement with a
recipient organization, the AA/OWBO may take, as appropriate, any of
the following enforcement actions based upon one or more of the
circumstances set forth in paragraph (b) of this section:
(1) Suspension. (i) The AA/OWBO may suspend a cooperative agreement
with a recipient organization at any point. The decision to suspend a
cooperative agreement with a recipient organization is effective
immediately as of the date of the notice of suspension. The period of
suspension will begin on the date of the notice of suspension and will
last no longer than six months. At the end of the period of suspension,
or at any point during that period, the AA/OWBO will either reinstate
the cooperative agreement or commence an action for termination or non-
renewal.
(ii) The notice of suspension will recommend that the recipient
organization cease work on the WBC project immediately. The AA/OWBO is
under no obligation to reimburse any expenses incurred by a recipient
organization while its cooperative agreement is under suspension. Where
the AA/OWBO decides to lift a suspension and reinstate a recipient
organization's cooperative agreement, the Agency may, at its
discretion, choose to make funds available to reimburse a recipient
organization for some or all of the expenses it incurred in furtherance
of project objectives during the period of suspension. However, there
is no guarantee that the Agency will elect to accept such expenses and
recipient organizations incurring expenses while under suspension do so
at their own risk.
(2) Termination. (i) The AA/OWBO may terminate a cooperative
agreement with a recipient organization at any point. A decision to
terminate a cooperative agreement is effective immediately as of the
date of the notice of termination. A recipient organization may not
incur further obligations under the cooperative agreement after the
date of termination unless it has been expressly authorized to do so in
the notice of termination.
(ii) Funds remaining under the cooperative agreement may be made
available by the AA/OWBO to satisfy financial obligations properly
incurred by the recipient organization prior to the date of
termination. Award funds will not be available for obligations incurred
subsequent to the effective date of termination unless expressly
authorized under the notice of termination. A recipient organization
that has had its cooperative agreement terminated will have 90 days to
submit final closeout documents as instructed by the SBA.
(3) Non-renewal. (i) The AA/OWBO may elect not to renew a
cooperative agreement with a recipient organization at any point. In
undertaking a non-renewal action, the SBA may either decline to accept
or consider any application for renewal the organization submits, or
the agency may decline to exercise any option years remaining under the
cooperative agreement. A recipient organization that has had its
cooperative agreement non-renewed may continue to conduct project
activities and incur allowable expenses until the end of the current
budget period.
(ii) Funds remaining under a non-renewed cooperative agreement may
be utilized to satisfy financial obligations the recipient organization
properly incurred prior to the end of the budget period. Award funds
will not be available for obligations incurred subsequent to the end of
the current budget period. A recipient organization that has had its
cooperative agreement non-renewed will have until the end of the
current budget period or 120 days, whichever is longer, to conclude its
operations and submit closeout documents as instructed by the SBA.
(b) Material non-compliance. The AA/OWBO may suspend, terminate, or
not renew a cooperative agreement, in whole or in part, with a
recipient organization for material non-compliance (frequently referred
to as for cause). Material non-compliance may include, but is not
limited to, the following:
(1) Non-performance;
(2) Poor performance;
(3) Unwillingness or inability to implement changes to improve
performance;
(4) Willful or material failure to comply with the terms and
conditions of the cooperative agreement, including relevant Office of
Management and Budget circulars;
(5) Conduct reflecting a lack of business integrity or honesty on
the part of the recipient organization, the WBC Program Director, or
other significant employee(s), which has not been properly addressed;
(6) A conflict of interest on the part of the recipient
organization, the WBC Program Director, or other significant employees
causing real or perceived detriment to a small business concern, a
contractor, the WBC, or the SBA;
(7) Improper management or use of Federal funds;
(8) Failure of a WBC to consent to audits or examinations, or to
maintain required documents or records;
(9) Failure to implement recommendations from the audits or
examinations within 30 days of their receipt;
(10) Failure of the WBC Program Director to work at the WBC on a
100 percent full-time basis on the WBC project;
(11) Failure to promptly suspend or terminate the employment of a
WBC Program Director, or other significant employee, upon receipt of
knowledge or written information by the recipient organization and/or
the SBA indicating that such individual has engaged in conduct, which
may result or has resulted in a criminal conviction or civil judgment
which would cause the public to question the WBC's integrity. In making
the decision to suspend or terminate such an employee, the recipient
organization must consider such factors as the magnitude and
repetitiveness of the harm caused and the remoteness in time of the
behavior underlying any conviction or judgment;
(12) Failure to maintain adequate client service facilities or
service hours;
(13) Fraud, waste, abuse, mismanagement or criminal activity on the
part of the recipient organization and/or its staff/employees; or
(14) Any other action that the AA/OWBO believes materially and
adversely affects the operation or integrity of a WBC or the WBC
program.
(c) Procedures. The same procedures will apply regardless of
whether a cooperative agreement with a recipient
[[Page 64721]]
organization is being suspended, terminated, or non-renewed by the SBA.
(1) Taking action. When the AA/OWBO has reason to believe there is
cause to suspend, terminate, or non-renew a cooperative agreement with
a recipient organization (either based on its own knowledge or upon
information provided to it by other parties), the AA/OWBO may undertake
such an enforcement action by issuing a written notice of suspension,
termination, or non-renewal to the recipient organization.
(2) Notice requirements. Each notice of suspension, termination, or
non-renewal will set forth the specific facts and reasons for the AA/
OWBO decision and will include reference to the appropriate legal
authority. The notice will also advise the recipient organization that
it has the right to request an administrative review of the decision to
suspend, terminate, or non-renew its cooperative agreement in
accordance with the procedures set forth in paragraph (d) of this
section. The notice will be transmitted to the recipient organization
on the same date it is issued by both U.S. Mail and facsimile or as an
email attachment.
(3) Relationship to government-wide suspension and debarment. A
decision by the AA/OWBO to suspend, terminate, or non-renew a WBC
cooperative agreement does not constitute a nonprocurement suspension
or debarment of a recipient organization under Executive Order 12549
and SBA's implementing regulations (2 CFR part 2700). However, a
decision by the AA/OWBO to undertake a suspension, termination, or non-
renewal enforcement action with regard to a particular WBC cooperative
agreement does not preclude or preempt the Agency from also taking
action to suspend or debar a recipient organization for purposes of all
Federal procurement and/or nonprocurement opportunities.
(d) Administrative review. Any recipient organization that has had
its cooperative agreement suspended, terminated, or non-renewed has the
right to request an administrative review of the AA/OWBO's enforcement
action. Administrative review of WBC enforcement actions will be
conducted by the AA/OED.
(1) Format. There is no prescribed format for a request for
administrative review of an SBA enforcement action. While a recipient
organization has the right to retain legal counsel to represent its
interests in connection with an administrative review, it is under no
obligation to do so. Formal briefs and other technical forms of
pleading are not required. However, a request for administrative review
of an SBA enforcement action must be in writing, should be concise and
logically arranged, and must at a minimum include the following
information:
(i) Name and address of the recipient organization;
(ii) Identification of the relevant SBA office/program (i.e., OWBO/
WBC Program);
(iii) Cooperative agreement number;
(iv) Copy of the notice of suspension, termination, or non-renewal;
(v) Statement regarding why the recipient organization believes the
SBA's actions were arbitrary, capricious, an abuse of discretion, and/
or otherwise not in accordance with the law;
(vi) Identification of the specific relief being sought (e.g.,
lifting of the suspension);
(vii) Statement as to whether the recipient organization is
requesting a hearing and, if so, the reasons why it believes a hearing
is necessary; and
(viii) Copies of any documents or other evidence the recipient
organization believes support its position.
(2) Service. Any recipient organization requesting administrative
review of an SBA enforcement action must submit copies of its request
(including any attachments) to all of the following parties:
(i) Associate Administrator for the Office of Entrepreneurial
Development, U.S. Small Business Administration;
(ii) Assistant Administrator for the Office of Women's Business
Ownership U.S. Small Business Administration;
(iii) Associate General Counsel for Procurement Law, U.S. Small
Business Administration.
(e) Timeliness. (i) In order to be considered timely, the AA/OED
must receive a recipient organization's request for administrative
review within 30 days of the date of the notice of suspension,
termination, or non-renewal. Any request for administrative review
received by the AA/OED more than 30 days after the date of the notice
of suspension, termination, or non-renewal will be considered untimely
and will automatically be rejected without being considered.
(ii) In addition, if the AA/OED does not receive a request for
administrative review within the 30-day deadline, then the decision by
the AA/OWBO to suspend, terminate, or non-renew a recipient
organization's cooperative agreement will automatically become the
final Agency decision on the matter.
(f) Standard of review. In order to have the suspension,
termination, or non-renewal of a cooperative agreement reversed on
administrative review, a recipient organization must successfully
demonstrate that the SBA enforcement action was arbitrary, capricious,
an abuse of discretion, and/or otherwise not in accordance with the
law.
(g) Conduct of the proceeding. (1) Each party must serve the
opposing party with copies of all requests, arguments, evidence, and
any other filings it submits pursuant to the administrative review.
Within 30 days of the AA/OED receiving a request for administrative
review, the AA/OED must also receive the SBA's arguments and evidence
in defense of its decision to suspend, terminate, or non-renew a
recipient organization's cooperative agreement. If the SBA fails to
provide its arguments and evidence in a timely manner, the
administrative review will be conducted solely on the basis of the
information provided by the recipient organization.
(2) After receiving the SBA's response to the request for
administrative review or the passage of the 30-day deadline for filing
such a response, the AA/OED will take one or more of the following
actions, as applicable:
(i) Notify the parties whether she/he has decided to grant a
request for a hearing;
(ii) Direct the parties to submit further arguments and/or evidence
on any issues which she/he believes require clarification; and/or
(iii) Notify the parties that she/he has declared the record to be
closed and therefore she/he will refuse to admit any further evidence
or argument.
(3) The AA/OED will only grant a request for a hearing if she/he
concludes that there is a genuine dispute as to a material fact that
cannot be resolved except by the taking of testimony and the
confrontation of witnesses. If the AA/OED grants a request for a
hearing, she/he will set the time and place for the hearing, determine
whether the hearing will be conducted in person or via telephone, and
identify which witnesses will be permitted to give testimony.
(4) Within 10 calendar days of declaring the record to be closed,
the AA/OED will provide all parties with a copy of her/his written
decision on the merits of the administrative review.
(h) Evidence. The recipient organization and the SBA each have the
right to submit whatever evidence they believe is relevant to the
matter in dispute. No form of discovery will be permitted unless a
party has made a substantial showing, based upon credible evidence and
not mere allegation that the other party has acted
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in bad faith or engaged in improper behavior.
(i) Decision. (1) The decision of the AA/OED will be effective
immediately as of the date it is issued. The decision of the AA/OED
will represent the final Agency decision on all matters in dispute on
administrative review. No further relief may be sought from or granted
by the Agency. If the AA/OED determines that the SBA's decision to
suspend, terminate, or non-renew a cooperative agreement was arbitrary,
capricious, an abuse of discretion, and/or otherwise not in accordance
with the law, she/he will reverse the Agency's enforcement action and
direct the SBA to reinstate the recipient organization's cooperative
agreement.
(2) Where an enforcement action has been reversed on administrative
review, the SBA will have no more than 10 calendar days to implement
the AA/OED's decision. However, to the extent permitted under the
applicable Office of Management and Budget circulars, the SBA reserves
the right to impose such special conditions in the recipient
organization's cooperative agreement as it deems necessary to protect
the government's interests.
Sec. 131.640 Dispute procedures.
(a) Financial and Programmatic disputes. (1) A recipient
organization wishing to resolve a dispute regarding a financial or
programmatic matter other than suspension, termination, or non-renewal
of its award must submit a written appeal petition describing the
subject of the dispute, along with any relevant documentation, to the
Chairman of the grant appeals committee (the Committee).
(2) The appeal petition must be received by the Committee within 30
calendar days of the date of SBA's decision. A copy of the appeal
petition must also be provided to the AA/OWBO.
(3) There is no prescribed format for the submission of an appeal
petition. Formal briefs and other technical forms of pleading are not
required, nor is the grantee required to obtain civil representation.
However, the appeal petition must be in writing and must be concise,
factual, and logically arranged. In addition, the appeal petition must
contain the following:
(i) Name and address of organization; (ii) Name and address of the
appropriate local SBA district office;
(iii) Identification of the appropriate SBA program office and the
award number;
(iv) A statement of the material which are substantially in
dispute;
(v) Copies of any documents or other evidence supporting the
appeal;
(vi) A request for the specific relief desired on appeal: and
(vii) A statement as to whether an oral hearing is being requested
and, if so, the reason for the hearing.
(4) The Committee will first rule on a request for an oral hearing
before proceeding to consider the merits of an appeal petition. Within
60 calendar days of receiving the appeal petition, the Committee will
present its decision in writing to the recipient organization and the
AA/OWBO. The Committee's ruling will represent the final Agency
decision on the subject of the dispute and will not be further
appealable within SBA.
(5) Requests for an appeal before the Committee will not be granted
unless the Agency determines there are substantial material facts in
dispute.
(6) The Committee may request additional information or
documentation from the recipient organization at any stage in the
proceedings. The recipient organization's response to the Committee's
request for additional information or documentation must be submitted,
in writing, to the Committee within 15 calendar days of receipt of the
request. In the event that the recipient organization fails to follow
the procedures specified in paragraph (a)(3) of this section, the
Committee may dismiss the appeal by a written order.
(7) If a request for an appeal is granted, the Committee will
provide the recipient organization with written instructions and will
afford the parties an opportunity to present their positions to the
Committee in writing.
(8) The chairperson of the Committee, with advice from the SBA's
Office of General Counsel, will issue a final written decision within
30 calendar days of receipt of all information or inform the recipient
organization that additional time to issue a decision is necessary. A
copy of the decision will be transmitted to the recipient organization,
with copies to the AA/OWBO.
(9) At any time within 120 days of the end of the budget period,
the recipient organization may submit a written request to use an
expedited dispute appeal process. The Committee, by an affirmative vote
of a majority of its total membership, may expedite the appeals process
to attain final resolution of a dispute before the issuance date of a
new cooperative agreement.
(b) [Reserved]
Sec. 131.650 Closeout procedures.
(a) General. Closeout procedures are used to ensure that the WBC
program funds and property acquired or developed under the WBC
cooperative agreement are fully reconciled and transferred seamlessly
between the recipient organization and other Federal programs. The
responsibility of conducting closeout procedures is vested with the
recipient organization whose cooperative agreement is being
relinquished, terminated, non-renewed, or suspended.
(b) Responsibilities--(1) Recipient organizations. When a WBC
cooperative agreement is not being renewed or a WBC is terminated,
regardless of cause, the recipient organization will address the
following in its closeout process and perform the necessary inventories
and reconciliations prior to submitting the final annual financial
report.
(i) An inventory of WBC property must be compiled, evaluated, and
all property and the aggregate of usable supplies and materials
accounted for in this inventory.
(ii) Program income balances will be reconciled and unused WBC
program income which is not used as match or cannot otherwise be used
to offset legitimate expenditures of the WBC must be returned to the
SBA.
(iii) Client records, paper and electronic, will be compiled to
facilitate an SBA program closeout review.
(iv) Financial records will be compiled to facilitate a closeout of
the SBA financial examination.
(2) SBA. Upon receipt of the final annual financial report from a
non-renewing or terminated recipient organization, the AA/OWBO will
issue disposition instructions to the former recipient organization.
(c) Final disposition. (1) The final financial status report from
the recipient organization must include the information identified in
the inventory process and identify any WBC program income collected for
services provided.
(2) The AA/OWBO will issue written disposition instructions to the
recipient organization providing the following:
(i) The name and address of the entity or agency to which property
and program income must be transferred;
(ii) The date by which the transfer must be completed;
(iii) Actions to be taken regarding property and WBC program
income;
(iv) Actions to be taken regarding WBC program records such as
client and training files; and
(v) Authorization to incur costs for accomplishing the transfer.
Such costs may, when authorized, be applied to
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residual WBC program income or Federal or matching funds.
Christopher M. Pilkerton,
Acting Administrator.
[FR Doc. 2019-24239 Filed 11-22-19; 8:45 am]
BILLING CODE 8026-03-P