An Overview of the HUBZone Program - What is it? Who qualifies? How do you get it?

By: Danielle Dietrich

Are you a small business owner looking for opportunities to compete for federal contracts and grow your business? If so, you may be interested in becoming a certified HUBZone small business concern (SBC).

HUBZone stands for Historically Underutilized Business Zone, and it is a program administered by the Small Business Administration (SBA) to help small businesses in economically distressed areas gain access to federal contracting preferences.

To be eligible as a certified HUBZone SBC, you must meet the following requirements:

• Ownership: You must be at least 51% owned and controlled by U.S. citizens, or by certain entities such as Alaska Native Corporations, Indian Tribal Governments, Community Development Corporations, small agricultural cooperatives, or Native Hawaiian Organizations.
• Size: You and your affiliates must qualify as small under the size standard for your primary industry, as defined by the SBA. Use this tool to determine if you meet the size requirement.
• Principal Office: Your primary office must be located in a HUBZone, which is an area designated by the SBA based on criteria such as poverty, unemployment, and population loss. You can find out if your location is in a HUBZone by using the SBA's online map tool.
• Employee Residency: At least 35% of your employees must live in a HUBZone. This means that they must have their primary residence in a HUBZone at the time of application and during the performance of any HUBZone contract.
• Attempt to Maintain: You must make efforts to keep at least 35% of your employees residing in a HUBZone throughout your participation in the program.
• Subcontracting: You must comply with the limitations on subcontracting that apply to your type of contract and industry, which generally means that you must perform a certain percentage of the work yourself or with other HUBZone SBCs or similarly situated entities.
• Suspension and Debarment: You and any of your owners must not be suspended or debarred from federal contracting at the time of application or during your participation in the program.

If you meet these requirements, you can apply to the SBA for HUBZone certification by submitting an online application and providing supporting documents. The SBA is to review your application and notify you of its decision within 90 days, though many folks have reported lengthy delays with any SBA certification approvals. If approved, you will be designated as a certified HUBZone SBC in the SBA's Dynamic Small Business Search (DSBS) database, which is used by federal agencies and prime contractors to find potential HUBZone vendors.

As a certified HUBZone SBC, you will have to recertify your eligibility every year by representing to the SBA that you still meet all the criteria. You will also be subject to periodic program examinations by the SBA to verify your compliance.

As a benefit of being a certified HUBZone SBC, you will be eligible for the following contracting preferences:

• Set-aside contracts: Federal agencies can set aside contracts exclusively for HUBZone SBCs if they expect at least two qualified HUBZone SBCs to submit offers and the contract can be awarded at a fair and reasonable price.
• Sole-source contracts: Federal agencies can award contracts to a single HUBZone SBC without competition if the contract value is below certain thresholds and the agency determines that the HUBZone SBC is responsible and capable of performing the contract.
• Price evaluation preference: Federal agencies can give a 10% price evaluation preference to HUBZone SBCs when they compete for full and open contracts, which means that the agency can add 10% to the price of non-HUBZone offers when comparing them to HUBZone offers.

To take advantage of these preferences, you must meet the contract performance requirements, which include complying with the limitations on subcontracting and ensuring that at least 35% of your employees reside in a HUBZone at the time of contract award and throughout the contract performance.

If you knowingly misrepresent your HUBZone status or eligibility, you may face severe penalties under the False Claims Act and other applicable laws, which could include fines, imprisonment, suspension, debarment, and civil liability. Therefore, it is important to maintain accurate and updated information about your business and to report any changes that may affect your eligibility to the SBA.

If you have questions about HUBZone certification or the application process, please contact Danielle Dietrich, Esq. at ddietrich@potomaclaw.com or 412-449-9141

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