Economic Development – Hub Zone
The HUBZone Empowerment Contracting Program stimulates economic development in urban and rural communities by providing federal contracting preferences to small businesses. These preferences go to small businesses that obtain HUBZone (Historically Underutilized Business Zone) certification in part by employing staff who live in a HUBZone. Generally speaking, there are two levels of benefit. The first relates directly to Federal contracts, while the second involves specialized assistance.
Federal Contract Benefits —
There are four types of HUBZone contract opportunities:
- Competitive: Contracts can be set-aside for HUBZone competition when the contracting officer has a reasonable expectation that at least two qualified HUBZone small business concerns (SBCs) will submit offers and that the contract will be awarded at a fair market price.
- Sole-source: HUBZone contracts can be awarded if the contracting officer determines that:
- only one qualified HUBZone SBC is responsible to perform the contract,
- two or more qualified HUBZone SBCs are not likely to submit offers and
- the anticipated award price of the proposed contract, including options, will not exceed:
— $5 million for a requirement within the North American Industry Classification System (NAICS) code for manufacturing or
— $3 million for a requirement within all other NAICS codes
- Full and open competitive contracts can be awarded with a price evaluation preference. The offer of the HUBZone small business must not be 10 percent higher than the offer of a non-small business.
- Subcontracting: All subcontracting plans for large business Federal contractors must include a HUBZone subcontracting goal.
Other Specialized Assistance –
- Eligible HUBZone firms can qualify for higher SBA-guaranteed surety bonds on construction and service contract bids.
- Firms in Federal Empowerment Zones and Enterprise Communities (EZ/EC) can also benefit from employer tax credits, tax-free facility bonds, and investment tax deductions.
To be eligible for the program, a concern except tribally-owned concerns, must meet ALL of the following criteria, at the time of application:
- It must be a small business by SBA standards;
- It must owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, or an agricultural cooperative or an Indian tribe;
- Its principal office must be located within a ‘Historically Underutilized Business Zone,’ which includes lands considered Indian Country and military facilities closed by the Base Realignment and Closure Act; and
- At least 35% of employees (total workforce regardless of where the employees work) must reside in a HUBZone.
- Existing businesses that choose to move to qualified areas are eligible. To fulfill the requirement that 35% of a HUBZone firm’s employees reside in the HUBZone, employees must live in a primary residence within that area for at least 180 days or be a currently registered voter in that area.