Introduction to HUBZone
The HUBZone Program is designed to stimulate economic development and create jobs in urban and rural communities. The program provides contracting opportunities to small businesses located in, and hiring employees from, Historically Underutilized Business Zones. If you and your business qualify, it could help you break into the business of government contracting.
The Historically Underutilized Business Zone (HUBZone) Empowerment Contracting program, which was enacted into law as part of the Small Business Reauthorization Act of 1997, provides federal contracting assistance and opportunities for qualified small businesses located in distressed historically underutilized business zones, known as “HUBZone.”
Among other things, it allows small firms located in many urban or rural areas to qualify for sole-source and other types of federal contract benefits. The underlying purpose of the program is to encourage economic development and increase employment opportunities.
The HUBZone program falls under the auspices of the Small Business Administration (SBA), which is responsible for implementing the program and determining which businesses are eligible to receive HUBZone contracts. SBA maintains a listing of qualified HUBZone small businesses that federal agencies can use to locate vendors and also adjudicates protests of eligibility to receive HUBZone contracts. In addition, SBA is responsible for reporting to Congress on the program’s impact on employment and investment in HUBZone areas.
There are four types of contract benefits that a HUBZone certified business can qualify for:
1. A competitive HUBZone contract
can be awarded if the Contracting Officer has a reasonable expectation that at least two qualified HUBZone small businesses will submit offers and that the contract can be awarded at a fair market price.
2. A sole source HUBZone contract
can be awarded if the Contracting Officer does not have a reasonable expectation that two or more qualified HUBZone small businesses will submit offers, determines that the qualified HUBZone small business is responsible, and determines that the contract can be awarded at a fair price. The government estimate cannot exceed $5 million for manufacturing purchases or $3 million for all other requirements.
3. A full and open competition contract
can be awarded with a price evaluation preference. The offer of the HUBZone small business will be considered lower than the offer of a non-HUBZone/non-small business, providing that the offer of the HUBZone small business is not more than 10 percent higher than that of the non-HUBZone business.
4. A subcontract
could be awarded by a large prime contractor. Federal rules require these contractors to include HUBZone contracting goals.
Benefits of the HUBZone program:
- Qualify for higher SBA- guaranteed surety bonds on construction and service contract bids
- Firms in Empowerment Zones and Enterprise Communities (EZ/EC) can also benefit from employer tax credits, tax-free facility bonds, and investment tax deductions
- Competitive and Sole Sourcing Contracting
- 10 % price evaluation preference in full and open contract competitions, as well as subcontracting opportunities
- 3% of all federal monetary funds per year must be spent across HUBZone certified Contractors
- Ability to bid on HUBZone Set-aside Solicitations
- Ability to sign up with HUBZone Council as a Certified HUBZone Organization Includes: Complimentary Legal Services, Marketing & Contracting Opportunities, Information & Support Utilizing your HUBZone Certification, Full Listing of Exclusive Members Only Services
Does Your Business Qualify as a HUBZone Business?
Applicants must meet the following criteria for certification:
- Must be considered a Small Business by SBA standards (determined by your NAICS codes)
- Owned and Controlled 51% or greater by U.S. Citizen Or Community Development Corporation, Agricultural Cooperative, or Indian Tribe
- Home office/Principal Office Must be within a designated HUBZone
- At least 35% of Employees MUST reside within a HUBZone
Existing businesses that choose to move to qualified areas are eligible. To fulfill the 35 percent requirement, employees must live in a primary residence within that area for at least 180 days or be a currently registered voter in that area.
To be designated a “HUBZone,” an area must also meet certain criteria. It must be located in one or more of the following three areas:
- A qualified census tract (as defined in the Internal Revenue Code of 1986)
- A qualified “non-metropolitan county” (as defined in the Internal Revenue Code of 1986) with a median household income of less than 80 percent of the State median household income or with an unemployment rate of not less than 140 percent of the statewide unemployment rate, based on U.S. Department of Labor recent data
- A federally recognized Indian reservation.
The certification process is fully electronic, Internet-based, and integrated with CCR. The SBA will verify eligibility and make sure that ownership, location, and employment percentage requirements are satisfied. The average time for processing is approximately 30 days, and SBA’s decision will be in writing.
To apply, companies are encouraged to use the electronic application directly on the HUBZone website. Applicants can also submit a paper copy to SBA headquarters in Washington, D.C.
Applicants can download the paper version from the website or obtain it from any local SBA district office.
Computer mapping software available on SBA’s website allows firms to search a database to determine whether or not they are located in a qualified HUBZone. The system allows searches by address, county or town and displays metropolitan areas, Indian reservations and areas that qualify by income, unemployment rate, or both.
For further information and to find out if your location is in a HUBZone, you can visit the SBA website.