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What is the HUBZone Empowerment Contracting Program?
The HUBZone Empowerment Contracting Program, which is included in the Small Business Reauthorization Act of 1997, is a program designed to stimulate economic development and create jobs in urban and rural communities by providing contracting preferences to small businesses located in and hiring employees from historically underutilized business zones. The program also includes lands within Indian reservations.
Does this program only apply to firms that are currently located in HUBZones, or can firms move to these areas and then become eligible to participate?
This program applies to firms that are currently located within HUBZones, startup businesses that are located in these areas, and existing firms that choose to move their business to qualified areas.
How does a firm qualify for this program?
In order to qualify for the program, a firm must be located within a designated HUBZone area. Metropolitan areas can qualify based upon census tract criteria. Nonmetropolitan counties must meet a specific income or unemployment test. Lands within the external boundaries of an Indian reservation also qualify. Further requirements are that the firm must be a small business that is owned and controlled by U.S. citizens and at least 35% of its employees are HUBZone residents.
Specifically, what benefits will small businesses receive under this program?
Small business firms will have the opportunity to negotiate sole source contracts and participate in restricted competition limited to HUBZone firms. Also, small businesses located in HUBZone areas will be allowed a 10% price evaluation preference in full and open competition. In such cases, the price offered by a HUBZone firm will be determined lower than the price offered by a non-HUBZone firm as long as the HUBZone firm's price is not more than 10% higher than the price offered by the otherwise lowest responsive offeror.
What is the SBA's responsibility under the program?
The SBA is responsible for formulating final regulations to implement the program. The SBA is also required to submit a report to the Small Business Committees concerning the degree to which the HUBZone program has resulted in increased employment opportunities and investment in HUBZones. Further, the SBA is required to examine/verify firm eligibility and investigate eligibility challenges.
When will the program's regulations be written and in place?
The SBA published the final rule to implement the HUBZone Empowerment Contracting Program on June 11, 1998. Not later than 180 days after this date, the Federal Acquisition Regulation Council shall amend the FAR as required.
What type of contracts will be available under the program?
All types of contracts normally authorized under the Federal Acquisition Regulation will be available.
Will 8(a) firms that relocate in a designated HUBZone area be eligible to receive both 8(a) and HUBZone contracting opportunities?
Yes. 8(a) firms that relocate into HUBZone areas will be able to receive contracting opportunities under both programs.
Can a business' subsidiary that is located in a HUBZone be eligible to participate even though the principal office is in a non-HUBZone area?
No. In order to qualify as a HUBZone small business, a firm must:
- be owned and controlled by US citizen
- have its principal office located in a HUBZone
- certify that not less than 35% of its employees are residents of HUBZone area
How can a firm's eligibility as a HUBZone participant be challenged?
The specific process for challenging a firm's eligibility as a HUBZone participant is detailed in the SBA's operating regulations. These regulations allow an interested party to challenge the veracity of a certification made or information provided to the SBA. The SBA will have final authority in this regard.
Can the SBA protest a contracting officer's decision not to award a contract opportunity to a qualified HUBZone small business?
Yes. The Administrator of the SBA may file a written request for reconsideration of the contracting officer's decision with the Secretary of the Department or Agency head.
Does a business that attempts to qualify for the HUBZone Program based upon its location on an Indian reservation have to be Indian owned?
No. As long as the principal office of the business is located on an Indian reservation and the firm meets all other eligibility criteria, including size, ownership/control, and employment requirements (at least 35% of the employees must reside in a HUBZone), it meets the basic HUBZone Program eligibility criteria.
When will SBA begin accepting HUBZone Program applications?
It is anticipated that SBA will begin accepting applications for the HUBZone Program during the second quarter of fiscal year 1999.
When will contracting opportunities be available through the HUBZone Program?
It is expected that the Federal Acquisition Regulations implementing the HUBZone Program will be issued during the first quarter of 1999. Based upon this timeframe, contracting opportunities should be available during the second quarter of fiscal year 1999.
Explain the price preference aspect of HUBZone Program contracting.
In full and open contracting, a HUBZone firm may displace the apparent low offeror (other than a small business) if its price is not more than 10% higher than the otherwise lowest responsive and responsible offeror.
How does SBA define the term "reside" in reference to the requirement that 35% of the firm's employees must reside in a HUBZone?
The term "reside," as defined in SBA's proposed HUBZone rule, means to live in a primary residence at a place for at least 180 days or as a currently registered voter with intent to live there indefinitely.
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