HUB Zone

How HUBZone Becomes Law

• In 1997, Congress passed and the President signed into law the “Small Business Reauthorization Act of 1997,” which contained the HUBZone provision.
• In 1998, the U.S. Small Business Administration moves final rules to create the HUBZone Empowerment Contracting Program.
• In 2033, expanded areas were developed to reflect 2000 Census data.

Agenda:

• Purpose of the HUBZone Program
• Qualifications
• Features of the Program
• Benefits

Purpose of the HUBZone Program

To provide Federal contracting assistance to qualified small businesses located in distressed areas, or HUBZones.  Why?

• Increase employment opportunities
• Stimulate capital investment in those areas
• Empower communities through economic leveraging and the “multiplier effect”

Qualifications

The HUBZone Program has three categories, Urban, Rural, and Native America.  Anderson is qualified under the Urban category, which is determined through the metropolitan area census tracts (U.S. Department of Housing & Urban Development).

How Do You Qualify as a HUBZone Small Business Concern?

• Must be a small business by SBA standards;
• Business must be owned and controlled only by U.S. citizen, Community Development Corporations or Indian tribes;
• The principal office of the business must be located in a HUBZone; and
• At least 35% of the firm’s employees must reside in a HUBZone.

Definition of SBA Standards: 

• 500 employees for most manufacturing and mining industries
• 100 employees for all wholesale trade industries
• $27.5 million for most general & heavy construction industries
• $11.5 million for all special trade contractors
• $0.75 million for most agricultural industries

Definition of ‘Principal Office’

• Previous rule defined “principal office” to mean location where greatest number of concern’s employees at any one location perform their work.
• For services or construction operations, new rule says principal office is location where greatest number of employees perform work, but excluding those who perform work at job-site locations to fulfill specific contract obligations.

Benefits

• All participants added to SBA’s PRO-Net database with special HUBZone designation at:  http://pro-net.sba.gov
• Set-aside awards
• Sole source awards
• Awards through full and open competition using the price preference mechanism provided just for HUBZone businesses
• Subcontracting

HUBZone Set-Aside Procedures

• HUBZone set-asides to be considered before HUBZone sole-source awards or small business set-asides
• Contract officer may set-aside acquisitions exceeding the Micro Purchase and below the Simplified Acquisition Threshold
• If contract officer declines set aside for HUBZone above $100K, then SBA procurement staff can launch appeal process

HUBZone Sole Source Contract Awards

• $5 million-manufacturing
• $3 million-all other NAICS Codes
• Two or more qualified HUBZone firms are not likely to submit offers
• A HUBZone firm is a responsible contractor to perform the proposed contract

Full and Open Competition Price Evaluation Preference

Subcontracting Requirements

There is no specified HUBZone goal for subcontracting, however for most large contracts (over $500,000 or $1 million construction), large business contractors must create a subcontracting plan reflecting HUBZone firm participation factors into the firm’s ‘Past Performance’ analysis on future contracting actions

Benefits for Resellers and Retailers

• Non-manufacturing HUBZone concerns are no longer required to prove they can provide products manufactured by HUBZone Small Businesses.
• Allows them to use any manufacturer, including a large business, for HUBZone contracts at or below $25,000 in total value.
• Contracts above $25,000 will still require that HUBZone non-manufacturer provide product of a HUBZone manufacturer.

What are the Government-wide HUBZone Goals?

All Federal agencies now are subject to annual HUBZone fiscal year goals.

The government-wide goals have been:

• FY2001---2%  (roughly equals $4billion)
• FY2002---2.5%
• FY2003---3%

...and for each year thereafter (about $6 billion annually)

Certification Process

Online Application Procedure

• Easy and Fast
• Processing time-30 days maximum
• SBA decision in writing

Current Program Status

• Certified firms represent all 50 states, Washington D.C., P.R & the Virgin Islands
• Largest HUBZone Contracts Recorded with SBA to Date:
• Dept. of Veterans Affairs-$4 million
• Dept. of the Army-$4.3 million

Three-Year Grandfathering

• Permits areas that lose HUBZone designation to extend area participation for three years after change in status
• This allows for return-on-investment for owners wiling to invest in HUBZones
• Known as ‘redesignated areas’

For Additional Information

City of Anderson

Department of Economic Development

-Provides HUBZone maps, application information, and assistance to meet requirements.

www.cityofanderson.com

(765)648-6112

HUBZone Home Page: