II

104TH CONGRESS

2D SESSION S. 1574

To provide Federal contracting opportunities for small business concerns

located in historically underutilized business zones, and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 27 (legislative day, FEBRUARY 23), 1996

Mr. BOND introduced the following bill; which was read twice and referred to

the Committee on Small Business

A BILL

To provide Federal contracting opportunities for small business concerns located in historically underutilized business zones, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘HUBZone Act of

5 1996’’.

6 SEC. 2. HISTORICALLY UNDERUTILIZED BUSINESS ZONES.

7 (a) DEFINITIONS.—Section 3 of the Small Business

8 Act (15 U.S.C. 632) is amended by adding at the end the

9 following new subsection:
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1 ‘‘(o) DEFINITIONS RELATING TO HISTORICALLY

2 UNDERUTILIZED BUSINESS ZONES.—For purposes of this

3 section, the following definitions shall apply:

4 ‘‘(1) HISTORICALLY UNDERUTILIZED BUSINESS

5 ZONE.—The term ‘historically underutilized business

6 zone’ means any area located within one or more

7 qualified census tracts or qualified nonmetropolitan

8 counties.

9 ‘‘(2) SMALL BUSINESS CONCERN LOCATED IN A

10 HISTORICALLY UNDERUTILIZED BUSINESS ZONE.—

11 The term ‘small business concern located in a his12 torically underutilized business zone’ means a small

13 business concern—

14 ‘‘(A) that is owned and controlled by one

15 or more persons, each of whom is a United

16 States citizen;

17 ‘‘(B) the principal office of which is located

18 in a historically underutilized business zone;

19 and

20 ‘‘(C) not less than 35 percent of the em21 ployees of which reside in a historically

22 underutilized business zone.

23 ‘‘(3) QUALIFIED AREAS.—

24 ‘‘(A) QUALIFIED CENSUS TRACT.—The

25 term ‘qualified census tract’ has the same
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1 meaning as in section 42(d)(5)(C)(i)(I) of the

2 Internal Revenue Code of 1986.

3 ‘‘(B) QUALIFIED NONMETROPOLITAN

4 COUNTY.—The term ‘qualified nonmetropolitan

5 county’ means, based on the most recent data

6 available from the Bureau of the Census of the

7 Department of Commerce, any county—

8 ‘‘(i) that is not located in a metropoli9 tan statistical area (as that term is defined

10 in section 143(k)(2)(B) of the Internal

11 Revenue Code of 1986); and

12 ‘‘(ii) in which the median household

13 income is less than 80 percent of the

14 nonmetropolitan State median household

15 income.

16 ‘‘(4) QUALIFIED SMALL BUSINESS CONCERN

17 LOCATED IN A HISTORICALLY UNDERUTILIZED BUSI18 NESS ZONE.—

19 ‘‘(A) IN GENERAL.—A small business con20 cern located in a historically underutilized busi21 ness zone is ‘qualified’, if—

22 ‘‘(i) the small business concern has

23 certified in writing to the Administrator

24 that—
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1 ‘‘(I) it is a small business con2 cern located in a historically

3 underutilized business zone;

4 ‘‘(II) it will comply with the sub5 contracting limitations specified in

6 Federal Acquisition Regulation

7 52.219–14;

8 ‘‘(III) in the case of a contract

9 for services (except construction), not

10 less than 50 percent of the cost of

11 contract performance incurred for

12 personnel will be expended for employ13 ees of that small business concern or

14 for employees of other small business

15 concerns located in historically

16 underutilized business zones; and

17 ‘‘(IV) in the case of a contract

18 for procurement of supplies (other

19 than procurement from a regular

20 dealer in such supplies), the small

21 business concern (or a subcontractor

22 of the small business concern that is

23 also a small business concern located

24 in a historically underutilized business

25 zone) will perform work for not less
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1 than 50 percent of the cost of manu2 facturing the supplies (not including

3 the cost of materials) in a historically

4 underutilized business zone; and

5 ‘‘(ii) no certification made by the

6 small business concern under clause (i) has

7 been, in accordance with the procedures es8 tablished under section 30(c)(2)—

9 ‘‘(I) successfully challenged by an

10 interested party; or

11 ‘‘(II) otherwise determined by the

12 Administrator to be materially false.

13 ‘‘(B) CHANGE IN PERCENTAGES.—The Ad14 ministrator may utilize a percentage other than

15 the percentage specified in under subclause

16 (III) or (IV) of subparagraph (A)(i), if the Ad17 ministrator determines that such action is nec18 essary to reflect conventional industry practices

19 among small business concerns that are below

20 the numerical size standard for businesses in

21 that industry category.

22 ‘‘(C) CONSTRUCTION AND OTHER CON23 TRACTS.—The Administrator shall promulgate

24 final regulations imposing requirements that

25 are similar to those specified in subclauses (III)
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1 and (IV) of subparagraph (A)(i) on contracts

2 for general and specialty construction, and on

3 contracts for any other industry category that

4 would not otherwise be subject to those require5 ments. The percentage applicable to any such

6 requirement shall be determined in accordance

7 with subparagraph (B).

8 ‘‘(D) LIST OF QUALIFIED SMALL BUSINESS

9 CONCERNS.—The Administrator shall establish

10 and maintain a list of qualified small business

11 concerns located in historically underutilized

12 business zones, which list shall—

13 ‘‘(i) include the name, address, and

14 type of business with respect to each such

15 small business concern;

16 ‘‘(ii) be updated by the Administrator

17 not less than annually; and

18 ‘‘(iii) be provided upon request to any

19 Federal agency or other entity.’’.

20 (b) FEDERAL CONTRACTING PREFERENCES.—The

21 Small Business Act (15 U.S.C. 631 et seq.) is amended—

22 (1) by redesignating section 30 as section 31;

23 and

24 (2) by inserting after section 29 the following

25 new section:
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1 ‘‘SEC. 30. HISTORICALLY UNDERUTILIZED BUSINESS ZONES

2 PROGRAM.

3 ‘‘(a) IN GENERAL.—There is established within the

4 Administration a program to be carried out by the Admin5 istrator to provide for Federal contracting assistance to

6 qualified small business concerns located in historically

7 underutilized business zones in accordance with this sec8 tion.

9 ‘‘(b) CONTRACTING PREFERENCES.—

10 ‘‘(1) CONTRACT SET-ASIDE.—

11 ‘‘(A) REQUIREMENT.—The head of an ex12 ecutive agency shall afford the opportunity to

13 participate in a competition for award of a con14 tract of the executive agency, exclusively to

15 qualified small business concerns located in his16 torically underutilized business zones, if the Ad17 ministrator determines that—

18 ‘‘(i) it is reasonable to expect that not

19 less than 2 qualified small business con20 cerns located in historically underutilized

21 business zones will submit offers for the

22 contract; and

23 ‘‘(ii) the award can be made on the

24 restricted basis at a fair market price.

25 ‘‘(B) COVERED CONTRACTS.—Subpara26 graph (A) applies to a contract that is esti-
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1 mated to exceed the simplified acquisition

2 threshold.

3 ‘‘(2) SOLE-SOURCE CONTRACTS.—

4 ‘‘(A) REQUIREMENT.—The head of an ex5 ecutive agency, in the exercise of authority pro6 vided in any other law to award a contract of

7 the executive agency on a sole-source basis,

8 shall award the contract on that basis to a

9 qualified small business concern located in a

10 historically underutilized business zone, if any,

11 that—

12 ‘‘(i) submits a reasonable and respon13 sive offer for the contract; and

14 ‘‘(ii) is determined by the Adminis15 trator to be a responsible contractor.

16 ‘‘(B) COVERED CONTRACTS.—Subpara17 graph (A) applies to a contract that is esti18 mated to exceed the simplified acquisition

19 threshold and not to exceed $5,000,000.

20 ‘‘(3) PRICE EVALUATION PREFERENCE IN FULL

21 AND OPEN COMPETITIONS.—In any case in which a

22 contract is to be awarded by the head of an execu23 tive agency on the basis of full and open competi24 tion, the price offered by a qualified small business

25 concern located in a historically underutilized busi-
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1 ness zone shall be deemed as being lower than the

2 price offered by another offeror (other than another

3 qualified small business concern located in a histori4 cally underutilized business zone) if the price offered

5 by the qualified small business concern located in a

6 historically underutilized business zone is not more

7 than 10 percent higher than the price offered by the

8 other offeror.

9 ‘‘(4) RELATIONSHIP TO OTHER CONTRACTING

10 PREFERENCES.—

11 ‘‘(A) SUBORDINATE RELATIONSHIP.—A

12 procurement may not be made from a source on

13 the basis of a preference provided in paragraph

14 (1), (2), or (3) if the procurement would other15 wise be made from a different source under sec16 tion 4124 or 4125 of title 18, United States

17 Code, or the Javits-Wagner-O’Day Act.

18 ‘‘(B) SUPERIOR RELATIONSHIP.—A pro19 curement may not be made from a source on

20 the basis of a preference provided in section

21 8(a), if the procurement would otherwise be

22 made from a different source under paragraph

23 (1), (2), or (3) of this subsection.

24 ‘‘(5) DEFINITIONS.—For purposes of this sub25 section, the terms ‘executive agency’, ‘full and open
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1 competition’, and ‘simplified acquisition threshold’

2 have the meanings given such terms in section 4 of

3 the Office of Federal Procurement Policy Act.

4 ‘‘(c) ENFORCEMENT; PENALTIES.—

5 ‘‘(1) IN GENERAL.—The Administrator shall

6 enforce the requirements of this section.

7 ‘‘(2) VERIFICATION OF ELIGIBILITY.—In carry8 ing out this subsection, the Administrator shall es9 tablish procedures relating to—

10 ‘‘(A) the filing, investigation, and disposi11 tion by the Administration of any challenge to

12 the eligibility of a small business concern to re13 ceive assistance under this section (including a

14 challenge, filed by an interested party, relating

15 to the veracity of a certification made by a

16 small business concern under section

17 3(o)(4)(A)); and

18 ‘‘(B) verification by the Administrator of

19 the accuracy of any certification made by a

20 small business concern under section

21 3(o)(4)(A).

22 ‘‘(3) RANDOM INSPECTIONS.—The procedures

23 established under paragraph (2) may provide for

24 random inspections by the Administrator of any
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1 small business concern making a certification under

2 section 3(o)(4).

3 ‘‘(4) PROVISION OF DATA.—Upon the request

4 of the Administrator, the Secretary of Labor and the

5 Secretary of Housing and Urban Development shall

6 promptly provide to the Administrator such informa7 tion as the Administrator determines to be necessary

8 to carry out this subsection.

9 ‘‘(5) PENALTIES.—In addition to the penalties

10 described in section 16(d), any small business con11 cern that is determined by the Administrator to have

12 misrepresented the status of that concern as a ‘small

13 business concern located in a historically

14 underutilized business zone’ for purposes of this sec15 tion, shall be subject to the provisions of—

16 ‘‘(A) section 1001 of title 18, United

17 States Code; and

18 ‘‘(B) sections 3729 through 3733 of title

19 31, United States Code.’’.

20 SEC. 3. TECHNICAL AND CONFORMING AMENDMENTS TO

21 THE SMALL BUSINESS ACT.

22 (a) PERFORMANCE OF CONTRACTS.—Section 8(d) of

23 the Small Business Act (15 U.S.C. 637(d)) is amended—

24 (1) in paragraph (1)—
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1 (A) in the first sentence, by striking ‘‘,,

2 small business concerns owned and controlled

3 by socially and economically disadvantaged indi4 viduals’’ and inserting ‘‘, qualified small busi5 ness concerns located in historically

6 underutilized business zones, small business

7 concerns owned and controlled by socially and

8 economically disadvantaged individuals’’; and

9 (B) in the second sentence, by inserting

10 ‘‘qualified small business concerns located in

11 historically underutilized business zones,’’ after

12 ‘‘small business concerns,’’;

13 (2) in paragraph (3)—

14 (A) by inserting ‘‘qualified small business

15 concerns located in historically underutilized

16 business zones,’’ after ‘‘small business con17 cerns,’’ each place that term appears; and

18 (B) by adding at the end the following new

19 subparagraph:

20 ‘‘(F) For purposes of this contract, the term

21 ‘qualified small business concern located in a histori22 cally underutilized business zone’ has the same

23 meaning as in section 3(o) of the Small Business

24 Act.’’;

25 (3) in paragraph (4)—
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1 (A) in subparagraph (D), by inserting

2 ‘‘qualified small business concerns located in

3 historically underutilized business zones,’’ after

4 ‘‘small business concerns,’’; and

5 (B) in subparagraph (E), by striking

6 ‘‘small business concerns and’’ and inserting

7 ‘‘small business concerns, qualified small busi8 ness concerns located in historically

9 underutilized business zones, and’’;

10 (4) in paragraph (6), by inserting ‘‘qualified

11 small business concerns located in historically

12 underutilized business zones,’’ after ‘‘small business

13 concerns,’’ each place that term appears; and

14 (5) in paragraph (10), by inserting ‘‘qualified

15 small business concerns located in historically

16 underutilized business zones,’’ after ‘‘small business

17 concerns,’’.

18 (b) AWARDS OF CONTRACTS.—Section 15 of the

19 Small Business Act (15 U.S.C. 644) is amended—

20 (1) in subsection (g)(1)—

21 (A) by inserting ‘‘qualified small business

22 concerns located in historically underutilized

23 business zones,’’ after ‘‘small business con24 cerns,’’ each place that term appears; and
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1 (B) by inserting after the second sentence

2 the following: ‘‘The Governmentwide goal for

3 participation by qualified small business con4 cerns located in historically underutilized busi5 ness zones shall be established at not less than

6 1 percent of the total value of all prime con7 tract awards for fiscal year 1997, not less than

8 2 percent of the total value of all prime con9 tract awards for fiscal year 1998, not less than

10 3 percent of the total value of all prime con11 tract awards for fiscal year 1999, and not less

12 than 4 percent of the total value of all prime

13 contract awards for fiscal year 2000 and each

14 fiscal year thereafter.’’;

15 (2) in subsection (g)(2)—

16 (A) in the first sentence, by striking ‘‘,, by

17 small business concerns owned and controlled

18 by socially and economically disadvantaged indi19 viduals’’ and inserting ‘‘, by qualified small

20 business concerns located in historically

21 underutilized business zones, by small business

22 concerns owned and controlled by socially and

23 economically disadvantaged individuals’’;

24 (B) in the second sentence, by inserting

25 ‘‘qualified small business concerns located in
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1 historically underutilized business zones,’’ after

2 ‘‘small business concerns,’’; and

3 (C) in the fourth sentence, by striking ‘‘by

4 small business concerns owned and controlled

5 by socially and economically disadvantaged indi6 viduals and participation by small business con7 cerns owned and controlled by women’’ and in8 serting ‘‘by qualified small business concerns lo9 cated in historically underutilized business

10 zones, by small business concerns owned and

11 controlled by socially and economically dis12 advantaged individuals, and by small business

13 concerns owned and controlled by women’’; and

14 (3) in subsection (h), by inserting ‘‘qualified

15 small business concerns located in historically

16 underutilized business zones,’’ after ‘‘small business

17 concerns,’’ each place that term appears.

18 (c) OFFENSES AND PENALTIES.—Section 16 of the

19 Small Business Act (15 U.S.C. 645) is amended—

20 (1) in subsection (d)(1)—

21 (A) by inserting ‘‘, a ‘qualified small busi22 ness concern located in a historically

23 underutilized business zone’,’’ after ‘‘ ‘small

24 business concern’,’’; and
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1 (B) in subparagraph (A), by striking ‘‘sec2 tion 9 or 15’’ and inserting ‘‘section 9, 15, or

3 30’’; and

4 (2) in subsection (e), by inserting ‘‘, a ‘small

5 business concern located in a historically

6 underutilized business zone’,’’ after ‘‘ ‘small business

7 concern’,’’.

8 SEC. 4. OTHER TECHNICAL AND CONFORMING AMEND9 MENTS.

10 (a) TITLE 10, UNITED STATES CODE.—Section 2323

11 of title 10, United States Code, is amended—

12 (1) in subsection (a)(1)(A), by inserting before

13 the semicolon the following: ‘‘, and qualified small

14 business concerns located in historically

15 underutilized business zones (as that term is defined

16 in section 3(o) of the Small Business Act)’’; and

17 (2) in subsection (f), by inserting ‘‘or as a

18 qualified small business concern located in a histori19 cally underutilized business zone (as that term is de20 fined in section 3(o) of the Small Business Act)’’

21 after ‘‘subsection (a))’’.

22 (b) FEDERAL HOME LOAN BANK ACT.—Section

23 21A(b)(13) of the Federal Home Loan Bank Act (12

24 U.S.C. 1441a(b)(13)) is amended—
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1 (1) by striking ‘‘concerns and small’’ and in2 serting ‘‘concerns, small’’; and

3 (2) by inserting ‘‘, and qualified small business

4 concerns located in historically underutilized busi5 ness zones (as that term is defined in section 3(o)

6 of the Small Business Act)’’ after ‘‘disadvantaged

7 individuals’’.

8 (c) SMALL BUSINESS ECONOMIC POLICY ACT OF

9 1980.—Section 303(e) of the Small Business Economic

10 Policy Act of 1980 (15 U.S.C. 631b(e)) is amended—

11 (1) in paragraph (1), by striking ‘‘and’’ at the

12 end;

13 (2) in paragraph (2), by striking the period at

14 the end and inserting ‘‘; and’’; and

15 (3) by adding at the end the following new

16 paragraph:

17 ‘‘(3) qualified small business concerns located

18 in historically underutilized business zones (as that

19 term is defined in section 3(o) of the Small Business

20 Act).’’.

21 (d) SMALL BUSINESS INVESTMENT ACT OF 1958.—

22 Section 411(c)(3)(B) of the Small Business Investment

23 Act of 1958 (15 U.S.C. 694b(c)(3)(B)) is amended by in24 serting before the semicolon the following: ‘‘, or to a quali25 fied small business concern located in a historically
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1 underutilized business zone, as that term is defined in sec2 tion 3(o) of the Small Business Act’’.

3 (e) TITLE 31, UNITED STATES CODE.—

4 (1) CONTRACTS FOR COLLECTION SERVICES.—

5 Section 3718(b) of title 31, United States Code, is

6 amended—

7 (A) in paragraph (1)(B), by inserting ‘‘and

8 law firms that are qualified small business con9 cerns located in historically underutilized busi10 ness zones (as that term is defined in section

11 3(o) of the Small Business Act)’’ after ‘‘dis12 advantaged individuals’’; and

13 (B) in paragraph (3)—

14 (i) in the first sentence, by inserting

15 before the period ‘‘and law firms that are

16 qualified small business concerns located in

17 historically underutilized business zones’’;

18 (ii) in subparagraph (A), by striking

19 ‘‘and’’ at the end;

20 (iii) in subparagraph (B), by striking

21 the period at the end and inserting ‘‘;

22 and’’; and

23 (iv) by adding at the end the following

24 new subparagraph:
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1 ‘‘(C) the term ‘qualified small business

2 concern located in a historically underutilized

3 business zone’ has the same meaning as in sec4 tion 3(o) of the Small Business Act.’’.

5 (2) PAYMENTS TO LOCAL GOVERNMENTS.—Sec6 tion 6701(f) of title 31, United States Code, is

7 amended—

8 (A) in paragraph (1)—

9 (i) in subparagraph (A), by striking

10 ‘‘and’’ at the end;

11 (ii) in subparagraph (B), by striking

12 the period at the end and inserting ‘‘;

13 and’’; and

14 (iii) by adding at the end the follow15 ing new subparagraph:

16 ‘‘(C) qualified small business concerns lo17 cated in historically underutilized business

18 zones.’’; and

19 (B) in paragraph (3)—

20 (i) in subparagraph (A), by striking

21 ‘‘and’’ at the end;

22 (ii) in subparagraph (B), by striking

23 the period at the end and inserting ‘‘;

24 and’’; and
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1 (iii) by adding at the end the follow2 ing new subparagraph:

3 ‘‘(C) the term ‘qualified small business

4 concern located in a historically underutilized

5 business zone’ has the same meaning as in sec6 tion 3(o) of the Small Business Act.’’.

7 (3) REGULATIONS.—Section 7505(c) of title 31,

8 United States Code, is amended by striking ‘‘small

9 business concerns and’’ and inserting ‘‘small busi10 ness concerns, qualified small business concerns lo11 cated in historically underutilized business zones,

12 and’’.

13 (f) OFFICE OF FEDERAL PROCUREMENT POLICY

14 ACT.—

15 (1) ENUMERATION OF INCLUDED FUNC16 TIONS.—Section 6(d) of the Office of Federal Pro17 curement Policy Act (41 U.S.C. 405(d)) is amend18 ed—

19 (A) in paragraph (5)(C), by inserting ‘‘and

20 of qualified small business concerns located in

21 historically underutilized business zones’’ after

22 ‘‘other minorities’’;

23 (B) in paragraph (10), by inserting ‘‘quali24 fied small business concerns located in histori25 cally underutilized business zones (as that term
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1 is defined in section 3(o) of the Small Business

2 Act),’’ after ‘‘small businesses,’’; and

3 (C) in paragraph (11), by inserting ‘‘quali4 fied small business concerns located in histori5 cally underutilized business zones (as that term

6 is defined in section 3(o) of the Small Business

7 Act),’’ after ‘‘small businesses,’’.

8 (2) PROCUREMENT DATA.—Section 19A of the

9 Office of Federal Procurement Policy Act (41 U.S.C.

10 417a) is amended—

11 (A) in subsection (a)—

12 (i) by inserting ‘‘the number of quali13 fied small business concerns located in his14 torically underutilized business zones,’’

15 after ‘‘Procurement Policy’’; and

16 (ii) by inserting a comma after

17 ‘‘women’’; and

18 (B) in subsection (b), by adding at the end

19 the following: ‘‘For purposes of this section, the

20 term ‘qualified small business concern located

21 in a historically underutilized business zone’ has

22 the same meaning as in section 3(o) of the

23 Small Business Act.’’.
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1 (g) ENERGY POLICY ACT OF 1992.—Section 3021 of

2 the Energy Policy Act of 1992 (42 U.S.C. 13556) is

3 amended—

4 (1) in subsection (a)—

5 (A) in paragraph (2), by striking ‘‘or’’;

6 (B) in paragraph (3), by striking the pe7 riod and inserting ‘‘; or’’; and

8 (C) by adding at the end the following new

9 paragraph:

10 ‘‘(4) qualified small business concerns located

11 in historically underutilized business zones.’’; and

12 (2) in subsection (b), by adding at the end the

13 following new paragraph:

14 ‘‘(3) The term ‘qualified small business concern

15 located in a historically underutilized business zone’

16 has the same meaning as in section 3(o) of the

17 Small Business Act.’’.

18 (h) TITLE 49, UNITED STATES CODE.—

19 (1) PROJECT GRANT APPLICATION APPROVAL

20 CONDITIONED ON ASSURANCES ABOUT AIRPORT OP21 ERATION.—Section 47107(e) of title 49, United

22 States Code, is amended—

23 (A) in paragraph (1), by inserting before

24 the period ‘‘or qualified small business concerns

25 located in historically underutilized business
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1 zones (as that term is defined in section 3(o) of

2 the Small Business Act)’’;

3 (B) in paragraph (4)(B), by inserting be4 fore the period ‘‘or as a qualified small business

5 concern located in a historically underutilized

6 business zone (as that term is defined in section

7 3(o) of the Small Business Act)’’; and

8 (C) in paragraph (6), by inserting ‘‘or a

9 qualified small business concern located in a

10 historically underutilized business zone (as that

11 term is defined in section 3(o) of the Small

12 Business Act)’’ after ‘‘disadvantaged individ13 ual’’.

14 (2) MINORITY AND DISADVANTAGED BUSINESS

15 PARTICIPATION.—Section 47113 of title 49, United

16 States Code, is amended—

17 (A) in subsection (a)—

18 (i) in paragraph (1), by striking the

19 period at the end and inserting a semi20 colon;

21 (ii) in paragraph (2), by striking the

22 period at the end and inserting ‘‘; and’’;

23 and

24 (iii) by adding at the end the follow25 ing new paragraph:
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1 ‘‘(3) the term ‘qualified small business concern

2 located in a historically underutilized business zone’

3 has the same meaning as in section 3(o) of the

4 Small Business Act.’’; and

5 (B) in subsection (b), by inserting before

6 the period ‘‘or qualified small business concerns

7 located in historically underutilized business

8 zones’’.

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