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The HUBZone Empowerment Contracting program provides federal contracting opportunities for qualified small businesses located in distressed areas. Fostering the growth of these federal contractors as viable businesses, for the long term, helps to empower communities, create jobs, and attract private investment.
These are guidelines for statutory federal small business procurement goals.
Federal small business procurement goals are set by Congress, which state that the Federal government shall direct a percentage of spending dollars to small business, and certain categories of small businesses. Congress first enacted a procurement goal in prime contracting for small business in 1988. Since then, goals have been increased, extended to include some subcontracting, and applied to certain sectors of small businesses such as socially and economically disadvantaged small business, service-disabled veteran-owned small businesses, woman-owned small businesses, and Historically Underutilized Business Zones.
A small business must meet all of the following criteria to qualify for the HUBZone program:
it must be located in a "historically underutilized business zone" or HUBZone.
it must be owned and controlled by one or more US Citizens, and
at least 35% of its employees must reside in a HUBZone.
HISTORICALLY UNDERUTILIZED BUSINESS Zone
A "HUBZone" is an area that is located in one or more of the following:
a qualified census tract (as defined in section 42(d)(5)(C)(i)(I) of the Internal Revenue Code of 1986);
a qualified "non-metropolitan county" (as defined in section 143(k)(2)(B) of 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 average, based on US Department of Labor recent data; or
lands within the boundaries of federally recognized Indian reservations.
TYPES OF HUBZone CONTRACTS
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.
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 requirements or $3
million for all other requirements.
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.
The Small Business Reauthorization Act of 1997 increases the overall government wide procurement goal for small business from 20% to 23%. This statue sets the goal for HUBZone contracts at 3%.
AFFECTED FEDERAL AGENCIES
As of October 1, 2000, all Federal agencies are subject to the requirements of the HUBZone Program.
Can Agencies Obtain Credit for Goals in More Than One Category with One Contract?
Yes. Learn more here.
Agencies can take credit in every category that is applicable to the recipient of the contract. When counting goaling achievements, a contract awarded to a service-disabled veteran-owned woman- owned Small Business concern would be counted toward the Small Business (SB) goal, the Service- Disabled Veteran-Owned Small Business (SDVOSB) goal, and the Women-Owned Small Business (WOSB goal. However, these categories are not summed to triple the total count. The Sum of Parts Does Not Equal the Whole. The exception to this non-additive rule is total Small Disadvantaged Business (SDB) which is the sum of 8(a) SDBs and non-8(a) SDBs.
Each socioeconomic category of small businesses is first of all a small business. That also means Federal procurements awarded to a SDVOSB will also have been awarded to Veteran- Owned Small Business (VOSB).
Can Agencies Obtain Credit for Goals for option years of contracts awarded to eligible firms?
Yes. Learn more here.
Generally, SBA determines the eligibility of small business concerns at the time of offer (13 C.F.R. § 121.404(a) – Size, § 125.18(e) – SDVO SBC, § 127503(h) – WOSB/EDWOSB), at the time of award (§ 124.501(g) – 8(a) sole source), as of the date set forth in the solicitation for the receipt of offers (§ 124.507(d) – competitive 8(a)), and at the time of offer and award (§ 126.601(h) – HUBZone). Agencies may receive credit for task orders and option years awarded to concerns that were eligible for the award of the underlying contract even if the size or status of the firm changes during the term of contract performance, unless the concern was required to recertify its size or status pursuant to SBA regulations. The requirement for recertification is triggered by events such as acquisitions, mergers, contract novation, adverse results of a size or status protest, at the five-year term for any long-term contract, and at the request of contracting officers. See 13 C.F.R. § 121.404(g), § 124.503(h)(1)(iii), § 125.18(e)(1), § 126.601(h), § 127503(h).