Latest Update and Business Progression with HUBZone Certification

The Historically Underutilized Business Zone (HUBZone) program is a federal certification program designed to help small businesses in economically underutilized areas gain access to federal contracting opportunities. HUBZone-certified businesses can compete for set-aside contracts and receive a 10% price evaluation preference in full and open competition for certain contracts. In this blog, we will discuss the HUBZone certification process, its benefits, and the latest updates.

HUBZone Certification Process 

To become HUBZone-certified, a business must meet the following eligibility requirements:

Location: The business must have a principal office located in a HUBZone. HUBZones are designated by the U.S. Small Business Administration (SBA) based on factors such as income, unemployment rate, and other demographic data.

Ownership: The business must be at least 51% owned and controlled by U.S. citizens, a community development corporation, an agricultural cooperative, or an Indian tribe.

Size: The business must meet the SBA's size standards for its primary industry.

Employees: At least 35% of the business's employees must reside in a HUBZone.

Once a business has confirmed its eligibility, it can begin the certification process by registering in the System for Award Management (SAM). The SAM registration must include the business's HUBZone certification application and supporting documents, such as tax returns, payroll records, and lease agreements.

After the initial application review, the SBA may conduct a site visit to confirm the business's eligibility. If approved, the business will receive its HUBZone certification and can begin bidding on set-aside contracts and competing in full and open competition for contracts with the 10% price evaluation preference.

Benefits of HUBZone Certification

The HUBZone program provides several benefits for small businesses, including:

Access to Federal Contracts: HUBZone-certified businesses can compete for set-aside contracts, which are contracts reserved for small businesses in certain industries.

Price Evaluation Preference: HUBZone-certified businesses receive a 10% price evaluation preference in full and open competition for certain contracts, which can help make their bids more competitive.

Mentor-Protégé Program: HUBZone-certified businesses can participate in the SBA's mentor-protégé program, which provides business development assistance from larger, more experienced companies.

Sole-Source Contracts: HUBZone-certified businesses can receive sole-source contracts, which are contracts awarded without competition, up to a certain dollar threshold.

Requirements for the HUBZone Program

In order to qualify as a HUBZone business by SBA standards, there are a few requirements. First, your company must be considered a small business in the eyes of the government. You can calculate whether your business is small using the SBA’s table of size standards.

Second, it must be owned and controlled at least by 51% by U.S. citizens, a Community Development Corporation, agricultural cooperative, or a Native American tribe.

Third, its principal office must be located within a "Historically Underutilized Business Zone," which includes lands considered "Indian Country."

Lastly, at least 35% of its employees must reside in a HUBZone.

If the business is owned by Indian Tribal Governments, the business must either have their primary office within the HUBZone and maintain a staff that is at least 35% within the HUBZone, or certify that at least 35% of employees on the government contract will live on land either within the HUBZone adjoining the reservation or governed by the Indian Tribal Government. 

Latest Updates

The HUBZone program has undergone several changes in recent years. In 2018, the SBA introduced a new HUBZone map, which uses updated data to identify eligible areas. This new map resulted in some areas losing their HUBZone status, while others gained it.

In addition, the Consolidated Appropriations Act of 2021 included several changes to the HUBZone program, including:

Increased Funding: The act increased funding for the HUBZone program, which will allow more businesses to participate.

Changes to Ownership Requirements: The act expanded the types of entities that can own and control HUBZone-certified businesses, including qualified employee-owned businesses and qualified nonprofit organizations.

Changes to Employee Residency Requirements: The act reduced the employee residency requirement from 35% to 20%, which will make it easier for businesses to meet this requirement.

Conclusion

The HUBZone program is a valuable resource for small businesses in economically underutilized areas. The certification process is rigorous, but the benefits can be significant, including access to federal contracts, a price evaluation preference, and participation in the mentor-protégé program.

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