Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?
                                                      Calendar No. 482
114th Congress      }                                   {       Report
 2d Session         }                                   {      114-418




               December 20, 2016.--Ordered to be printed

   Filed, under authority of the order of the Senate of December 10 
                  (legislative day, December 9), 2016


Mr. Vitter, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2838]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 2838) to improve the HUBZone 
program, having considered the same, reports favorably thereon 
with amendments and recommends that the bill, as amended, do 

                            I. INTRODUCTION

    The Small Business Transforming America's Regions Act of 
2016 was introduced by Senator David Vitter on April 21, 2016, 
with Senators Gary Peters and Jeanne Shaheen as cosponsors. The 
Act would improve the HUBZone program. During the markup of the 
bill, the bill was approved by roll call vote.


    The SBA's Historically Underutilized Business Zone 
(HUBZone) program was authorized by the Small Business 
Reauthorization Act of 1997. The program encourages economic 
development in historically underutilized business zones--
``HUBZones''--by providing federal contracts to small 
businesses in designated HUBZone areas. In administering the 
HUBZone program, the SBA: (1) Determines which businesses are 
eligible to receive HUBZone contracts; (2) maintains a listing 
of qualified HUBZone small businesses that federal agencies can 
use to locate vendors; (3) adjudicates protests of eligibility 
to receive HUBZone contracts; and (4) reports to the Congress 
on the program's impact on employment and investment in HUBZone 
    HUBZone designations are based on economic data, and 
therefore if the economy improves in a location, the area may 
lose its HUBZone status. Currently, if an area loses HUBZone 
designation the area is redesignated (i.e., retains its HUBZone 
designation) for three years after the date the area ceases to 
be so qualified. This bill extends the redesignation period to 
7 years to allow firms to make more substantial long-term 
investments without fear of losing HUBZone status before the 
business has the chance to succeed. This section retains that 
thirty-five percent of the firm's employees must still reside 
in a HUBZone, which is another important aspect for the 
economic well-being of distressed communities.

                      III. HEARINGS & ROUNDTABLES

    In the 109th Congress, the Senate Committee on Small 
Business and Entrepreneurship held a hearing entitled ``The 
Impact of Hurricane Katrina on Small Business'' on September 
22, 2005. The hearing assessed relief programs of various 
federal agencies. HUBZones were introduced as a possible use to 
help the economic development of areas affected by Hurricane 
    In the 110th Congress, the Committee held a hearing 
entitled ``Increasing Government Accountability and Ensuring 
Fairness in Small Business Contracting'' on July 18, 2007. This 
hearing discussed using HUBZone businesses as contractors. The 
HUBZone program was designed to create jobs where they are 
needed the most. At this hearing, witness's testimonies focused 
on the benefits of the HUBZone program, and how to improve its 

                        IV. DESCRIPTION OF BILL

    As introduced, this bill amends the Small Business Act to 
include in the HUBZone program a qualified area designated by 
the SBA in response to a petition by the governor of a state, 
the District of Columbia, or a U.S. territory. The bill would 
authorize the SBA to designate in response to such a petition 
only a tract that: (1) has a median household income less than 
70 percent of the state median household income; (2) has an 
unemployment rate at least 120 percent of the average U.S. or 
state unemployment rate, whichever is less; or (3) meets other 
SBA criteria. The bill also would require the SBA to establish 
procedures to: ensure that it accepts petitions from all states 
each fiscal year, and give an interested governor technical 
assistance before a petition is filed.
    Between introduction of the bill on April 21 and Committee 
passage on May 24, modifications were made to the bill which 
were facilitated by its inclusion in a manager's package. As 
amended via the manager's package, the following changes were 
           Expanding the applicability and eligibility 
        requirements to include nonmetropolitan counties.
           Changing the qualifying threshold from 
        census tracts with a median household income that is 
        less than 70 percent of the median household income of 
        the relevant state, to nonmetropolitan counties that 
        have a median household income that is less than 90 
        percent of the median household income.
           Extending the applicability from the date of 
        the bill's enactment to three years before the date of 
        the bill's enactment.
           Making changes in how small business concern 
        size standards are petitioned for reconsideration.
           Requiring prime contractors to submit 
        performance assessments for subcontractors working on 
        federal contracts.
           Adding the SBA Administrator to the Federal 
        Acquisition Regulatory Committee.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI (7)(b) of the Standing Rules 
of the Senate, the following vote was recorded on May 11, 2015.
    A motion to adopt the Small Business Transforming America's 
Regions Act of 2016, a bill to improve the HUBZone program, was 
approved by roll call vote with the following Senators present: 
Vitter, Risch, Scott, Ernst, Ayotte, Shaheen, Cantwell, Cardin, 
Heitkamp, Markey, Booker, Coons, Hirono, and Peters.

                           VI. COST ESTIMATE

    In compliance with rule XXVI (11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:

                                                     July 11, 2016.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2838, the Small 
Business Transforming America's Regions Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
                                                        Keith Hall.

S. 2838--Small Business Transforming America's Regions Act of 2016

    Summary: S. 2838 would add the Small Business 
Administration (SBA) to the Federal Acquisition Regulatory 
(FAR) Council, and make several changes to the Historically 
Underutilized Business Zone (HUBZone) program. CBO estimates 
that implementing S. 2838 would cost $7 million over the 2017-
2021 period. Such spending would be subject to the availability 
of appropriated funds
    The FAR Council consists of the Department of Defense, the 
National Aeronautics and Space Administration, and the General 
Services Administration and is overseen by the Office of 
Management and Budget. The FAR council manages, coordinates, 
monitors, and changes federal acquisition regulations. Each 
member agency contributes staff and technical expertise to the 
operations of the council. On the basis of information from 
current FAR council members, CBO estimates that the SBA's 
inclusion on the council would cost around $2 million in 2017 
and $1 million in each subsequent year for additional staff and 
administrative expenses related to performing the duties 
required for membership on the FAR council.
    The SBA administers the HUBZone program, which gives 
preference to participating small businesses located in areas 
with certain economic characteristics when they seek contracts 
with the federal government. S. 2838 would permit the governor 
of a state to petition the SBA to designate certain counties as 
a HUBZone that would not otherwise be eligible for designation, 
if they meet criteria specified in the bill. On the basis of 
information from the SBA, CBO estimates that implementing this 
provision would cost $1 million in 2017, and less than $500,000 
in subsequent years, for SBA to evaluate petitions and update 
HUBZone maps.
    Enacting S. 2838 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting S. 2838 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    S. 2838 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would benefit state governments and some counties in cases 
where the governor successfully petitioned the SBA for a county 
to be designated as a HUBZone. Any costs to states or counties 
would result from complying with conditions of federal 
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.


    In compliance with rule XXVI (11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.


Section 1. Short title

    This section designates the bill as the ``Small Business 
Transforming America's Regions Act of 2016.''

Section 2. Modification to the HUBZone program

    This section amends the Small Business Act so that 
qualified areas may be included in the HUBZone program in 
response to a petition of the governor of a state. Criteria for 
the inclusion of such areas are established in this section. 
This section also extends the period for which an area which 
ceased to qualify for the HUBZone program may be redesignated 
to qualify. This extension shall increase the period from three 
years to seven years.

Section 3. Filing of petitions for reconsideration of size standards

    This section deals with the processes by which small 
businesses concern size standards are petitioned for 

Section 4. Past performance credit for subcontractors

    This section requires that prime contractors submit a past 
performance rating for any subcontractor used in the process of 
completing a federal contract. Federal agencies shall use these 
past performance ratings when determining whether to award a 
prime contract to a subcontractor.

Section 5. Membership of the administrator of the Small Business 
        Administration on the Federal Acquisition Regulatory Council

    This sections adds the Administrator of the Small Business 
Administration of the Federal Acquisition Regulatory Council.