II

105TH CONGRESS

1ST SESSION S. 208

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

JANUARY 28, 1997

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 1997’’.

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:
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1 ‘‘(o) DEFINITIONS RELATING TO HISTORICALLY

2 UNDERUTILIZED BUSINESS ZONES.—In this section:

3 ‘‘(1) HISTORICALLY UNDERUTILIZED BUSINESS

4 ZONE.—The term ‘historically underutilized business

5 zone’ means any area located within one or more

6 qualified census tracts or qualified nonmetropolitan

7 counties.

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

9 HISTORICALLY UNDERUTILIZED BUSINESS ZONE.—

10 The term ‘small business concern located in a his11 torically underutilized business zone’ means a small

12 business concern—

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

14 or more persons, each of whom is a United

15 States citizen;

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

17 in a historically underutilized business zone;

18 and

19 ‘‘(C) not less than 35 percent of the em20 ployees of which reside in a historically under21 utilized business zone.

22 ‘‘(3) QUALIFIED AREAS.—

23 ‘‘(A) QUALIFIED CENSUS TRACT.—The

24 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 non14 metropolitan State median household in15 come.

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 underuti3 lized 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 under16 utilized 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:
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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.
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1 ‘‘(B) COVERED CONTRACTS.—Subpara2 graph (A) applies to a contract that is esti3 mated to exceed the simplified acquisition

4 threshold.

5 ‘‘(2) SOLE-SOURCE CONTRACTS.—

6 ‘‘(A) REQUIREMENT.—The head of an ex7 ecutive agency, in the exercise of authority pro8 vided in any other law to award a contract of

9 the executive agency on a sole-source basis,

10 shall award the contract on that basis to a

11 qualified small business concern located in a

12 historically underutilized business zone, if any,

13 that—

14 ‘‘(i) submits a reasonable and respon15 sive offer for the contract; and

16 ‘‘(ii) is determined by the Adminis17 trator to be a responsible contractor.

18 ‘‘(B) COVERED CONTRACTS.—Subpara19 graph (A) applies to a contract that is esti20 mated to exceed the simplified acquisition

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

22 ‘‘(3) PRICE EVALUATION PREFERENCE IN FULL

23 AND OPEN COMPETITIONS.—In any case in which a
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1 contract is to be awarded by the head of an execu2 tive agency on the basis of full and open competi3 tion, the price offered by a qualified small business

4 concern located in a historically underutilized busi5 ness zone shall be deemed as being lower than the

6 price offered by another offeror (other than another

7 qualified small business concern located in a histori8 cally underutilized business zone) if the price offered

9 by the qualified small business concern located in a

10 historically underutilized business zone is not more

11 than 10 percent higher than the price offered by the

12 other offeror.

13 ‘‘(4) RELATIONSHIP TO OTHER CONTRACTING

14 PREFERENCES.—

15 ‘‘(A) SUBORDINATE RELATIONSHIP.—A

16 procurement may not be made from a source on

17 the basis of a preference provided in paragraph

18 (1), (2), or (3) if the procurement would other19 wise be made from a different source under sec20 tion 4124 or 4125 of title 18, United States

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

22 ‘‘(B) SUPERIOR RELATIONSHIP.—A pro23 curement may not be made from a source on

24 the basis of a preference provided in section

25 8(a), if the procurement would otherwise be
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1 made from a different source under paragraph

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

3 ‘‘(5) DEFINITIONS.—In this subsection, the

4 terms ‘executive agency’, ‘full and open competition’,

5 and ‘simplified acquisition threshold’ have the mean6 ings given such terms in section 4 of the Office of

7 Federal Procurement Policy Act.

8 ‘‘(c) ENFORCEMENT; PENALTIES.—

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

10 enforce the requirements of this section.

11 ‘‘(2) VERIFICATION OF ELIGIBILITY.—In carry12 ing out this subsection, the Administrator shall es13 tablish procedures relating to—

14 ‘‘(A) the filing, investigation, and disposi15 tion by the Administration of any challenge to

16 the eligibility of a small business concern to re17 ceive assistance under this section (including a

18 challenge, filed by an interested party, relating

19 to the veracity of a certification made by a

20 small business concern under section

21 3(o)(4)(A)); and

22 ‘‘(B) verification by the Administrator of

23 the accuracy of any certification made by a

24 small business concern under section

25 3(o)(4)(A).
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1 ‘‘(3) RANDOM INSPECTIONS.—The procedures

2 established under paragraph (2) may provide for

3 random inspections by the Administrator of any

4 small business concern making a certification under

5 section 3(o)(4).

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

7 of the Administrator, the Secretary of Labor and the

8 Secretary of Housing and Urban Development shall

9 promptly provide to the Administrator such informa10 tion as the Administrator determines to be necessary

11 to carry out this subsection.

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

13 described in section 16(d), any small business con14 cern that is determined by the Administrator to have

15 misrepresented the status of that concern as a ‘small

16 business concern located in a historically underuti17 lized business zone’ for purposes of this section,

18 shall be subject to the provisions of—

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

20 States Code; and

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

22 31, United States Code.’’.
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1 SEC. 3. TECHNICAL AND CONFORMING AMENDMENTS TO

2 THE SMALL BUSINESS ACT.

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

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

5 (1) in paragraph (1)—

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

7 small business concerns owned and controlled

8 by socially and economically disadvantaged indi9 viduals’’ and inserting ‘‘, qualified small busi10 ness concerns located in historically underuti11 lized business zones, small business concerns

12 owned and controlled by socially and economi13 cally disadvantaged individuals’’; and

14 (B) in the second sentence, by inserting

15 ‘‘qualified small business concerns located in

16 historically underutilized business zones,’’ after

17 ‘‘small business concerns,’’;

18 (2) in paragraph (3)—

19 (A) by inserting ‘‘qualified small business

20 concerns located in historically underutilized

21 business zones,’’ after ‘‘small business con22 cerns,’’ each place that term appears; and

23 (B) by adding at the end the following:
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1 ‘‘(F) In this contract, the term ‘qualified small

2 business concern located in a historically underuti3 lized business zone’ has the same meaning as in sec4 tion 3(o) of the Small Business Act.’’;

5 (3) in paragraph (4)—

6 (A) in subparagraph (D), by inserting

7 ‘‘qualified small business concerns located in

8 historically underutilized business zones,’’ after

9 ‘‘small business concerns,’’; and

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

11 ‘‘small business concerns and’’ and inserting

12 ‘‘small business concerns, qualified small busi13 ness concerns located in historically underuti14 lized business zones, and’’;

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

16 small business concerns located in historically under17 utilized business zones,’’ after ‘‘small business con18 cerns,’’ each place that term appears; and

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

20 small business concerns located in historically under21 utilized business zones,’’ after ‘‘small business con22 cerns,’’.

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

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

25 (1) in subsection (g)(1)—
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1 (A) by inserting ‘‘qualified small business

2 concerns located in historically underutilized

3 business zones,’’ after ‘‘small business con4 cerns,’’ each place that term appears; and

5 (B) by inserting after the second sentence

6 the following: ‘‘The Governmentwide goal for

7 participation by qualified small business con8 cerns located in historically underutilized busi9 ness zones shall be established at not less than

10 1 percent of the total value of all prime con11 tract awards for fiscal year 1998, not less than

12 2 percent of the total value of all prime con13 tract awards for fiscal year 1999, not less than

14 3 percent of the total value of all prime con15 tract awards for fiscal year 2000, and not less

16 than 4 percent of the total value of all prime

17 contract awards for fiscal year 2001 and each

18 fiscal year thereafter.’’;

19 (2) in subsection (g)(2)—

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

21 small business concerns owned and controlled

22 by socially and economically disadvantaged indi23 viduals’’ and inserting ‘‘, by qualified small
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1 business concerns located in historically under2 utilized business zones, by small business con3 cerns owned and controlled by socially and eco4 nomically disadvantaged individuals’’;

5 (B) in the second sentence, by inserting

6 ‘‘qualified small business concerns located in

7 historically underutilized business zones,’’ after

8 ‘‘small business concerns,’’; and

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

10 small business concerns owned and controlled

11 by socially and economically disadvantaged indi12 viduals and participation by small business con13 cerns owned and controlled by women’’ and in14 serting ‘‘by qualified small business concerns lo15 cated in historically underutilized business

16 zones, by small business concerns owned and

17 controlled by socially and economically dis18 advantaged individuals, and by small business

19 concerns owned and controlled by women’’; and

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

21 small business concerns located in historically under22 utilized business zones,’’ after ‘‘small business con23 cerns,’’ each place that term appears.

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

25 Small Business Act (15 U.S.C. 645) is amended—
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1 (1) in subsection (d)(1)—

2 (A) by inserting ‘‘, a ‘qualified small busi3 ness concern located in a historically underuti4 lized business zone’,’’ after ‘‘ ‘small business

5 concern’,’’; and

6 (B) in subparagraph (A), by striking ‘‘sec7 tion 9 or 15’’ and inserting ‘‘section 9, 15, or

8 30’’; and

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

10 business concern located in a historically underuti11 lized business zone’,’’ after ‘‘ ‘small business con12 cern’,’’.

13 SEC. 4. OTHER TECHNICAL AND CONFORMING AMEND14 MENTS.

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

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

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

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

19 business concerns located in historically underuti20 lized business zones (as that term is defined in sec21 tion 3(o) of the Small Business Act)’’; and
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1 (2) in subsection (f), by inserting ‘‘or as a

2 qualified small business concern located in a histori3 cally underutilized business zone (as that term is de4 fined in section 3(o) of the Small Business Act)’’

5 after ‘‘subsection (a))’’.

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

7 21A(b)(13) of the Federal Home Loan Bank Act (12

8 U.S.C. 1441a(b)(13)) is amended—

9 (1) by striking ‘‘concerns and small’’ and in10 serting ‘‘concerns, small’’; and

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

12 concerns located in historically underutilized busi13 ness zones (as that term is defined in section 3(o)

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

15 individuals’’.

16 (c) SMALL BUSINESS ECONOMIC POLICY ACT OF

17 1980.—Section 303(e) of the Small Business Economic

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

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

20 end;

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

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

23 (3) by adding at the end the following:

24 ‘‘(3) qualified small business concerns located

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

2 Act).’’.

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

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

5 Act of 1958 (15 U.S.C. 694b(c)(3)(B)) is amended by in6 serting before the semicolon the following: ‘‘, or to a quali7 fied small business concern located in a historically under8 utilized business zone, as that term is defined in section

9 3(o) of the Small Business Act’’.

10 (e) TITLE 31, UNITED STATES CODE.—

11 (1) CONTRACTS FOR COLLECTION SERVICES.—

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

13 amended—

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

15 law firms that are qualified small business con16 cerns located in historically underutilized busi17 ness zones (as that term is defined in section

18 3(o) of the Small Business Act)’’ after ‘‘dis19 advantaged individuals’’; and

20 (B) in paragraph (3)—

21 (i) in the first sentence, by inserting

22 before the period ‘‘and law firms that are

23 qualified small business concerns located in

24 historically underutilized business zones’’;
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1 (ii) in subparagraph (A), by striking

2 ‘‘and’’ at the end;

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

4 the period at the end and inserting ‘‘;

5 and’’; and

6 (iv) by adding at the end the follow7 ing:

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

9 concern located in a historically underutilized

10 business zone’ has the same meaning as in sec11 tion 3(o) of the Small Business Act.’’.

12 (2) PAYMENTS TO LOCAL GOVERNMENTS.—Sec13 tion 6701(f) of title 31, United States Code, is

14 amended—

15 (A) in paragraph (1)—

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

17 ‘‘and’’ at the end;

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

19 the period at the end and inserting ‘‘;

20 and’’; and

21 (iii) by adding at the end the follow22 ing:

23 ‘‘(C) qualified small business concerns lo24 cated in historically underutilized business

25 zones.’’; and
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1 (B) in paragraph (3)—

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

3 ‘‘and’’ at the end;

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

5 the period at the end and inserting ‘‘;

6 and’’; and

7 (iii) by adding at the end the follow8 ing:

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

10 concern located in a historically underutilized

11 business zone’ has the same meaning as in sec12 tion 3(o) of the Small Business Act (15 U.S.C.

13 632(o)).’’.

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

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

16 business concerns and’’ and inserting ‘‘small busi17 ness concerns, qualified small business concerns lo18 cated in historically underutilized business zones,

19 and’’.

20 (f) OFFICE OF FEDERAL PROCUREMENT POLICY

21 ACT.—

22 (1) ENUMERATION OF INCLUDED FUNC23 TIONS.—Section 6(d) of the Office of Federal Pro24 curement Policy Act (41 U.S.C. 405(d)) is amend25 ed—
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1 (A) in paragraph (11), by inserting ‘‘quali2 fied small business concerns located in histori3 cally underutilized business zones (as that term

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

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

6 (B) in paragraph (12), by inserting ‘‘quali7 fied small business concerns located in histori8 cally underutilized business zones (as that term

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

10 Act (15 U.S.C. 632(o)),’’ after ‘‘small busi11 nesses,’’.

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

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

14 417a) is amended—

15 (A) in subsection (a)—

16 (i) by inserting ‘‘the number of quali17 fied small business concerns located in his18 torically underutilized business zones,’’

19 after ‘‘Procurement Policy’’; and

20 (ii) by inserting a comma after

21 ‘‘women’’; and

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

23 the following: ‘‘In this section, the term ‘quali24 fied small business concern located in a histori25 cally underutilized business zone’ has the same
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1 meaning as in section 3(o) of the Small Busi2 ness Act (15 U.S.C. 632(o)).’’.

3 (g) ENERGY POLICY ACT OF 1992.—Section 3021 of

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

5 amended—

6 (1) in subsection (a)—

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

8 (B) in paragraph (3), by striking the pe9 riod and inserting ‘‘; or’’; and

10 (C) by adding at the end the following:

11 ‘‘(4) qualified small business concerns located

12 in historically underutilized business zones.’’; and

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

14 following:

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

16 located in a historically underutilized business zone’

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

18 Small Business Act (15 U.S.C. 632(o)).’’.

19 (h) TITLE 49, UNITED STATES CODE.—

20 (1) PROJECT GRANT APPLICATION APPROVAL

21 CONDITIONED ON ASSURANCES ABOUT AIRPORT OP22 ERATION.—Section 47107(e) of title 49, United

23 States Code, is amended—

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

25 the period ‘‘or qualified small business concerns
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1 located in historically underutilized business

2 zones (as that term is defined in section 3(o) of

3 the Small Business Act)’’;

4 (B) in paragraph (4)(B), by inserting be5 fore the period ‘‘or as a qualified small business

6 concern located in a historically underutilized

7 business zone (as that term is defined in section

8 3(o) of the Small Business Act)’’; and

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

10 qualified small business concern located in a

11 historically underutilized business zone (as that

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

13 Business Act)’’ after ‘‘disadvantaged individ14 ual’’.

15 (2) MINORITY AND DISADVANTAGED BUSINESS

16 PARTICIPATION.—Section 47113 of title 49, United

17 States Code, is amended—

18 (A) in subsection (a)—

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

20 period at the end and inserting a semi21 colon;

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

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

24 and
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1 (iii) by adding at the end the follow2 ing:

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

4 located in a historically underutilized business zone’

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

6 Small Business Act (15 U.S.C. 632(o)).’’; and

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

8 the period ‘‘or qualified small business concerns

9 located in historically underutilized business

10 zones’’.

Æ