HUB Zone: Historically Underutilized Business Zone Program
- October, 2003
- by: Lisa Rockett
The HUB Zone program provides federal contracting assistance for qualified small business concerns located in historically underutilized business zones (HUB Zones). The law was created in an effort to increase employment opportunities, investment, and economic development in those areas, long neglected as potential business sites. The law requires that 3 percent of all federal contract funding be directed towards a HUB Zone certified business. Although the percentage seems small, this equals $6 billion in set aside monies going toward HUB Zone Small Business.
The HUB Zone Empowerment Contracting program was enacted into law as part of the Small Business Re-authorization Act of 1997. The program falls under the auspices of the U.S. Small Business Administration. The program encourages economic development in historically underutilized business zones -'B Zones'- through the establishment of preferences.
SBA's HUB Zone program is in line with the efforts of both the Administration and Congress to promote economic development and employment growth in distressed areas by providing access to more Federal contracting opportunities.
To be eligible for the HUB Zone program and become a certified HUB Zone small business, a company must be a small business owned and controlled by U.S. citizens. The principal office must be located in a HUB Zone, and at least 35 percent of its employees must live in a HUB Zone. To be considered a resident of a HUB Zone, the employee must either have registered to vote in the HUB Zone or lived there for at least 180 days. The Small Business Administration (SBA) has decided that only full-time employees who work at least 30 hours per week are eligible.
To become a HUB Zone small business, the owner(s) must apply to the SBA for certification. If granted, the SBA will add the business to the list of certified HUB Zone small businesses. The SBA maintains a listing of qualified HUB Zone small businesses that Federal agencies can us to locate vendors.
There are four types of HUB Zone contracting opportunities:
Competitive: Contracts can be set-aside for HUB Zone competition when the contracting officer has a reasonable expectation that at least two qualified HUB Zone small businesses will submit offers and that the contract will be awarded at a fair market price.
Sole Source: HUB Zone contracts can be awarded if the contracting officer determines that:
- only one qualified HUB Zone small business is responsible to perform the contract,
- two or more qualified HUB Zone small businesses are not likely to submit offers and
- the anticipated award price of the proposed contract will not exceed $5 million for manufacturing requirements and $3 million for all other requirements.
Full & Open: Competitive contracts can be awarded with a price evaluation preference. The offer of the HUB Zone 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 HUB Zone subcontracting goal.
To be awarded contracts under the program, your firm must first meet HUB Zone eligibility requirements, be certified by the U.S. Small Business Administration (SBA) as a qualified HUB Zone small business, and be listed on SBA's 'List of Qualified HUB Zone Small Business Concerns' and in SBA's PRO-Net database. For SBA to certify your firm, they must analyze some factual information about it. They have developed an electronic application form for you to use. You can access the electronic application on their web-site www.sba.gov/hubzone.
Return next month for more detailed information regarding "Qualified Economically Distressed Areas in Western Oklahoma". If you have any questions, please contact me (Lisa Rockett) by phone (580.774.7017) or e-mail.