SBA Form 1010 Supporting Statement 12-21-10

SBA Form 1010 Supporting Statement 12-21-10.doc

8(A)/SBD Paper and Electronic Application

OMB: 3245-0331

⚠️ Notice: This form may be outdated. More recent filings and information on OMB 3245-0331 can be found here:

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Paperwork Reduction Act Submission

Supporting Statement

Application for the 8(a) Business Development (BD) Program

Explain the circumstances that make the collection of information necessary. Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information.

The U.S. Small Business Administration’s (SBA) 8(a) Business Development (BD) Program was created by Section 8(a) of the Small Business Act and implemented by Title 13, Part 124, Subpart A of the Code of Federal Regulations (CFR). The purpose of the 8(a) BD Program is to assist eligible small disadvantaged businesses to compete in the American economy through business development. SBA’s regulations require a formal application to determine if a business meets the criteria for 8(a) Program eligibility. This application includes the collection of specific information to enable SBA to properly review, evaluate and determine each applicant’s eligibility for Program participation.

SBA no longer certifies firms for small disadvantaged business eligibility. In October 2008, 13 CFR, Part 124 was revised to reflect the authority to allow small businesses to self-represent their Small Disadvantaged Business (SDB) status, if they meet the criteria established by SBA. (See 13 CFR, Part 124, Subpart B, §124.1001-124.1006) Thus, this submission does not include requests for the approval of forms related to SDB status.

Forms:

This information collection includes the forms listed below. The regulatory requirements governing entity-owned firms, such as Alaska Native Corporations (ANC), American Indian Tribal organizations (AIT), community service Native Hawaiian Organizations (NHO) and nonprofit Community Development Corporations (CDC), are significantly different from each other and from the regulatory requirements governing individually-owned firms. This fact necessitates the need for separate supplemental forms for each type of firms listed above. Also, an explanation regarding form changes (e.g., one form incorporated into another form and another form no longer in use), based on the last Office of Management and Budget (OMB) submission, has been provided.

The following form was included in the previous OMB submission and has been included in this submission with minor changes:

SBA Form 1010 (Application form for admission to the 8(a) BD Program)

The following forms listed below were included in the prior OMB submission and have been included here in the same form:

SBA Form 1010-IND (Supplemental application form for concerns owned by Individuals)
SBA Form 1010-ANC (Supplemental application form for concerns owned by Alaska Native Corporations)
SBA Form 1010-NHO (Supplemental application form for concerns owned by Native Hawaiian Organizations)
SBA Form 1010-AIT (Supplemental application form for concerns owned by American Indian Tribes)

SBA form 1010-CDC (Supplemental application form for concerns owned by Community Development Corporations)
SBA Form 1010C (8(a) Business Plan

The two forms listed below represent forms that have changed since the last Paperwork Reduction Act submission:

SBA Form 1010-REP (Supplemental Representatives and Fees) - This form no longer exists as a separate form. The content from this form is now included within SBA Form 1010 and is titled “Representatives and Fees.”
SBA Form 1010-RECERT (SDB recertification) - This form is no longer in use. The SBA no longer requires applications for SDB status and now permits small businesses to self-represent.

SBA has made minor changes to Form 1010 to enhance clarity and ensure that the form is consistent with existing regulations. References to Small Disadvantaged Business (SDB) certification were deleted since there is no longer an application component. As stated above, firms now self-represent their SDB status. The Interim Final Rule, which was effective October 3, 2008, can be found at http://edocket.access.gpo.gov/2008/pdf/E8-23472.pdf.

As mentioned earlier, there have been no changes to the supplemental forms for entity-owned firms, 1010-ANC, 1010-NHO, 1010-AIT and 1010-CDC. It is important to note that these forms can now be submitted via the electronic process. This represents an improvement since the last OMB submission. It was noted in the last submission that Form 1010 and Form 1010-IND (for individually-owned businesses) could be submitted via the electronic process.

There have been no changes to Form 1010C, 8(a) Business Plan.

Below is a list of forms included in this submission along with a short summary related to the collection of information for each and details on any changes made:

FORM 1010

Form 1010 contains the central information needed from all applicants and general information about the application process, resource information and definitions. Form 1010 is used by the applicant to complete the Business Profile, the Management and Administration section of the 8(a) application, and to provide the supporting documentation listed at the end of the form.
In this submission for Form 1010, program instructions and have been grouped in the opening section rather than placed throughout the document as in the prior submission. Program instructions and definitions were added, enhanced and clarified to assist the firm in understanding the 8(a) BD Program and the application process. For example, in our prior OMB submission, we noted that there were new or changed database systems that affect the 8(a) BD program - particularly the implementation of the Central Contractor Registration (CCR) and the Dynamic Small Business Search (DSBS). In this submission, additional instructions on how to apply have been added under the section titled, “Information About the 8(a) Business Development Program Application.”
Also in this section, SBA has added additional instructions on how the businesses interact with the CCR, DSBS and the application (including the electronic version). SBA has also added contact information for the firms when the businesses need assistance with registering in the respective databases. The information collected is not new; such information was included in the previous OMB submission form.
As mentioned above, Form 1010 now includes a section entitled, “Representatives and Fees,” which previously was Form 1010-REP. It was noted in the previous OMB submission that SBA had instituted an electronic version of Form 1010.
In Section I “Business Profile,” a check box entitled “Other Firm(s)” has been added to the ‘Ownership of business concern’ request. The regulations allow firms to have some percentage of ownership by another business. Thus, this check box allows the 8(a) applicant or participant to respond accordingly. (See 13 CFR, §124.106.)
In Section II, “Supporting Documentation,” the phrase ‘owning 10% or more of the business’ was replaced with the phrase ‘owning more than 10% of the business” to be consistent with the Regulations and within the document.
Also, in Section II, regarding requests for documents required, SBA has provided a format change from the previous submission allowing the firm to completely respond on the form rather than responding by attaching a separate sheet as required in the previous submission.
Also, in Section II, in the fourth entry, SBA added clarification that copies of all tax returns must be signed and dated. This was necessitated by the fact that the SBA has received in the past hard copies of electronically-submitted tax returns not signed and dated.

FORM 1010-IND

Form 1010-IND is completed by each person owning more than10% of the applicant firm, along with each director, management member, partner, and officer. The information collected on this form is not new; it was included in the previous OMB submission. As noted above, we stated in the previous OMB submission that SBA instituted an electronic version of the 8(a) BD Program application form for individually-owned firms.

FORMS 1010-ANC, 1010-NHO, 1010-AIT, 1010-CDC

Form 1010-ANC, 1010-NHO, 1010-AIT or 1010-CDC is completed by an entity firm meeting the specific requirements of the entity. The information collected on these forms is not new; such information was included in the previous OMB submission. These forms are able to be submitted via the electronic process. No changes were made to these forms.

FORM 1010C

Form 1010C is the 8(a) Business Plan and is utilized by 8(a) businesses already admitted into the Program. No changes were made to this form.

Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information from the current collection.

SBA’s 8(a) BD Program collects the information from applicants in order to determine each applicant’s 8(a) BD Program eligibility. To be certified as an 8(a) BD Program Participant, a firm must be a small business which is at least 51% unconditionally owned and controlled by persons who are socially and economically disadvantaged and who are U.S. citizens. Firms applying for the 8(a) BD Program must also show that the principals of the firm are of good character and that the firm has the potential for success. SBA also uses some of the information in the compilation of the information required for 8(a) BD Program participation, in accordance with 15 U.S.C. § 631b (e), as part of its annual report to Congress. Each Program Participant is required by statute each year to annually update its business and financial data so that SBA can determine the Participant’s continued 8(a) eligibility.

Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also, describe any consideration of using information technology to reduce burden.

As we noted in our prior OMB submission, in compliance with the Government Paperwork Elimination Act, SBA instituted an electronic version of the 8(a) BD Program application form along with Form 1010-IND. In this OMB submission, we have noted the institution of an electronic version of the supplemental Forms 1010-ANC, 1010-NHO, 1010-AIT and 1010-CDC. It is important to note that all applications are processed electronically even if the applicant chooses to submit a paper application. In the case of the latter, the 8(a) BD Program personnel input the data electronically before processing.

The submission of paper 8(a) applications is still accepted; however, electronic submission of 8(a) applications has provided a more efficient means of collecting and processing the necessary data. The number of applications that come through the electronic version of the 8(a) BD Program application each year has increased significantly since the deployment of the on-line system in 2006.

Whether the application is currently submitted online or via the paper process, supporting documentation is required, as listed in each of the forms included in this submission. When applicants complete the forms online, the electronic system will generate a checklist of supporting documents. That checklist provides the following information to ensure that SBA receives a completed application package: (1) the address where the firm must send the supporting documentation and (2) the list of the required supporting documents. The supporting documentation listed in the system-generated emails is the same as the supporting documents in SBA Form 1010. No additional documentation has been added.

Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.

There are no duplication issues. This information is collected initially from each firm during the application process in order to provide SBA with specific data necessary in determining an applicant’s eligibility for certification in the 8(a) BD Program. If an applicant is declined, that firm, within 45 days, may request that SBA reconsider the decline decision by revising its application package and addressing the factors that led to the decline decision. For those firms that were accepted into the Program during a firm’s nine year tenure, the Participant accesses the forms annually as part of the Annual Review update process. A firm enters only the required information needed – whether it is in the initial application process or the Annual Review process - to allow the SBA to approve eligibility or to confirm continued eligibility.

If the collection of information impacts small businesses or other small entities (Item 5 of OMB Form 83-I), describe any methods used to minimize burden.

The collection impacts small businesses and the principals of these small businesses. However, SBA believes that this collection of information does not present a significant burden or economic impact on these small businesses. The requested information is required to ensure adequate oversight and program integrity and guarantee that only firms meeting the eligibility criteria are certified for 8(a) Program participation. To reduce the burden of responding to this collection of information, the application primarily requires “yes/no” responses and only requires narrative text where necessary. In addition, the electronic application provides a less burdensome and more effective and economical process for completion of the application form.

Describe the consequence to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

This is a one-time collection of information from each applicant. If SBA does not collect this information when a firm applies for 8(a) BD Program certification, SBA will be unable to determine the firm’s Program eligibility. Further, there is an enormous risk associated with SBA not collecting this information since it increases the potential for ineligible firms to gain entry into the 8(a) BD Program thus opening up the Program to fraud, waste and abuse.

Explain any special circumstances that would cause an information collection to be conducted in a manner:

requiring respondents to report information to the agency more often than quarterly;
requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it;
requiring respondents to submit more than an original and two copies of any document;
requiring respondents to retain records other than health, medical, government contract grant-in-aid, or tax records for more than three years;
in connection with a statistical survey, that is not designed to produce valid and reliable results that can be generalized to the universe of study;
requiring the use of a statistical data classification that had not been reviewed and approved by OMB;
that includes a pledge of confidentiality that is not supported by authority established in statue or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or which unnecessarily impedes sharing of data with other agencies for compatible confidential use;
requiring respondents to submit proprietary trade secret, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information’s confidentiality to the extent permitted by law.

Some of the financial information provided by respondents may be confidential. These questions are asked to determine if an applicant firm is in compliance with statutory and regulatory requirements. Without this information, SBA cannot determine whether these individuals are socially and economically disadvantaged, and whether these individuals actually own, manage and control the applicant firms. SBA protects confidential information to the fullest extent possible.

If applicable, provide a copy and identify the date and page number of publication in the Federal Register of the agency’s notice required by 5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments. Specifically address comments received on cost and hour burden.

The Agency’s notice was published in the Federal Register on November 27, 2009 (Volume 74, Number 227, and Page 62359). SBA did not receive any comments.

Describe efforts to consult with person outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and record keeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.

Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 years-even if the collection of information activity is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.

SBA does consult with representatives of those from whom information is to be obtained and those who must compile records at least once every 3 years. The Business Development Specialists (BDS) and other SBA staff located in district offices throughout the country regularly consult with these contacts.

Explain any decision to provide any payment or gift to respondents, other than re-enumeration of contractors or grantees.

There are no payments or gifts given to any respondent.

Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy.

All financial and business information will be protected. We will also ensure compliance with the Privacy Act (5 U.S. Code 552a) and the Freedom of Information Act (U.S. Code 552) provisions. The applicant is informed at the time of application that all information provided will be protected to the extent permitted by the law.

Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. This justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

The agency asks sensitive questions concerning racial or ethnic background, education, employment, citizenship and potentially demeaning or embarrassing instances of discrimination. The objective of the 8(a) BD Program is to help firms owned, managed and controlled by socially and economically disadvantaged individuals compete in the competitive market through various forms of business development. To determine if a firm is owned, managed and controlled by socially and economically disadvantaged individuals, the application must collect information concerning the basis of the individual’s social and economic disadvantage, e.g., ethnic background, gender, or handicap, examples of discrimination and personal financial information. Further, in order to determine that an 8(a) applicant and the principals of an 8(a) applicant firm possess good character and to ensure 8(a) BD Program integrity, SBA collects information regarding arrest records, liens and Federal debt obligations. The sensitive information sought is required by §§7(j) and 8(a) of the Small Business Act, 15 U.S.C. §§ 636(j), 637(a), and 637(d) and the implementing regulations at 13 CFR, Part 124.

Provide estimates of the hour burden of the collection of information. The statement should:

Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated. Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in Item 13 of OMB Form 83-I.

Provide estimates of annualized cost to respondents for the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost of contraction out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14.

ANNUAL HOURLY BURDEN ON RESPONDENTS

The estimated total hourly burden requested for SBA Forms 1010, 1010-IND, 1010-AIT, 1010-ANC, 1010-CDC, 1010-NHO and 1010C is 45,745. SBA accepts Business Plans from the 8(a) BD participants in any format as long as the Business Plan contains all the elements listed in the 1010C. This submission includes the hourly burden related to initially completing the required Business Plan and the annual update of the Business Plan regardless of whether or not Form 1010C is used.

This OMB submission contains the following different types of responses: 8(a) applicants when applying can respond to Form 1010 and one of the supplemental Forms 1010-IND, 1010-ANC, 1010-NHO, 1010-AIT or 1010-CDC); applicants declined can, within 45 days, request that SBA reconsider the decline decision by revising its application package, that will include Form 1010, and one of the following – Form 1010-IND, Form 1010-ANC, Form 1010-NHO, Form 1010-AIT or Form 1010-CDC; the 8(a) Participant firm can update annually Form 1010 and one of the following forms, 1010-IND, 1010-ANC, 1010-NHO, 1010-AIT or 1010-CDC, during the Annual Review process; and the 8(a) Participant firm can update annually Form 1010C or their Business Plan (responding to the required information in Form 1010C) during the Annual Review process.

APPLICATIONS

SBA 1010

It is estimated that approximately 4,224 application forms (paper and electronic) will be received by SBA annually.

Estimated burden hours per response for applicants:

1.5 hrs x 4,224 application = 6,336 total estimated burden hours

SBA 1010 supplemental applications (IND)

It is estimated that approximately 338 application forms will be received by SBA annually.

Estimated burden hours per response for applications:

1 hr x 338 applications = 338 total estimate burden hours

SBA 1010 supplemental applications (ANC, NHO, AIT and CDC)

It is estimated that approximately 42 application forms will be received by SBA annually.

Estimated burden hours per response for applications:

1 hr x 42 applications = 42 total estimate burden hours

SBA 1010 applications rejected and resubmitted during reconsideration process

Estimated burden hours per response for applications:

1.5 hrs x 1,056 applications = 1,584 total estimate burden hours

SBA 1010 supplemental applications (IND) rejected and resubmitted during the reconsideration process

It is estimated that approximately 600 application forms will be received by SBA annually.

Estimated burden hours per response for applications:

1 hr x 600 applications = 600 total estimate burden hours

SBA 1010 supplemental applications (ANC, NHO, AIT and CDC) rejected and resubmitted during the reconsideration process

It is estimated that approximately 11 application forms will be received by SBA annually.

Estimated burden hours per response for applications:

1 hr x 11 applications = 11 total estimate burden hours

BUSINESS FORM

SBA 1010C – 8(a) Business Plan– as required for new 8(a) firms

It is estimated that approximately 2,712 Business Plans as required for new 8(a) firms will be received annually by SBA.

Estimated burden per response for 1010C 8(a) Participants:

7 hrs x 2,712 8(a) Business Plan = 18,984 total estimate burden hours

ANNUAL REVIEW

SBA 1010 and supplemental forms (if appropriate)-updated

It is estimated that the approximately 7,140 8(a) Participants will

respond.

Estimated burden hours per response for annual review responses:

1.5 hr x 7,140 annual reviews = 10,710 total estimate burden hours

SBA 1010C – 8(a) Business Plan updated

It is estimated that approximately 7,140 Business Plans will be received by SBA annually.

Estimated burden per response for 1010C 8(a) Participants:

1 hr x 7,140 8(a) Business Plan = 7,140 total estimate burden hours

Total Burden Hours for all forms during application process and Annual Review= 45,745 (1010, 1010-IND, 1010-ANC, 1010-NHO, 1010-AIT, 1010-CDC and 1010C)

ANNUALIZED HOURLY COST TO RESPONDENTS

Below is the annual cost to respondents for the hour burdens for collection of information. The wage rate used was that of a GS-12/1 grade level, 2010-DCB, incorporating the 1.50% General Schedule increase and a locality payment of 24.22%, for the locality pay area of Washington-Baltimore-Northern Virginia, DC-MD-VA-WV-PA, effective January 2010.

SBA Form 1010