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The U.S. Small Business Administration today issued a final rule that will implement changes to the Historically Underutilized Business Zone (HUBZone) program that will make the program more attractive to small businesses and encourage them to invest in HUBZone communities and hire HUBZone residents. The new rule changes will also make it easier for federal contracting officers to identify and work with HUBZone-certified small businesses. The rule is published in the Federal Register and effective December 26, 2019.
"The exciting improvements outlined in this rule were designed to address longstanding uncertainty from both small businesses contemplating an investment in a designated HUBZone, as well as government agencies which seek to use HUBZone companies. We anticipate that these impactful changes will lead to the increased use of HUBZone certified small businesses across the country,” said Acting SBA Administrator Chris Pilkerton. “Further, additional program enhancements which will expand the HUBZone footprint and provide greater support to HUBZone eligible small businesses will allow contracting officers to better identify more HUBZone firms and get federal contracts into the hands of those businesses.”
Under the rule, the following changes to the HUBZone program will become effective:
Greater Certainty and Expanded Opportunity Regarding Geographic Eligibility and Residency Requirements
⇒ An employee who resided in a HUBZone for at least six months at the time of certification or recertification, and continues to reside in a HUBZone for at least six months, may continue to be considered a HUBZone resident so long as the individual is employed by the firm, even if he/she moves to a non-HUBZone area, or if the area of his/her residence loses HUBZone geographical eligibility.
⇒ HUBZone maps, currently frozen through 2021, will be updated every five years (as opposed to annually), using data from the Census Bureau, the Department of Housing and Urban Development, and the Department of Labor. Areas will continue to maintain HUBZone designation as for a three-year transition period following the expiration of HUBZone Qualified Census Tracts and Qualified Non-metropolitan Counties.
⇒ Small businesses that invest in HUBZones by purchasing a building or entering into a long-term lease (i.e., 10-year lease or longer) in a HUBZone, may maintain HUBZone certification for a period of 10 years, even if at some point the office location no longer qualifies as a HUBZone, so long as the business continues to meet the HUBZone residency and other requirements of the program.
⇒ Starting January 1, 2020, applications for HUBZone certification will be processed within 60 days of a complete submission.
Improved Contracting Provisions
⇒ If a firm is a certified HUBZone small business at the time of its initial offer for a contract, it generally will be considered a HUBZone small business throughout the life of that contract. HUBZone status will no longer be determined as of the time of award.
⇒ If a firm is HUBZone-certified at the time of initial offer for a HUBZone Multiple Award Contract, it will be considered to be certified for each order issued against the contract; if a Multiple Award Contract is not a HUBZone contract, and a procuring agency sets aside an order as a HUBZone award, the awardee must be HUBZone-certified, and be designated as such in SBA’s Dynamic Small Business Search engine, at the time it submits its offer for the order.
⇒ Once certified as a HUBZone small business, a firm will be eligible for all HUBZone contracts for which the firm qualifies as small, for one year from the date of its initial certification (and subsequently, for one year after each annual recertification), unless the firm acquires, is acquired by, or merges with another firm during that period.
⇒ Employees temporarily living overseas in connection with the performance of a contract will be considered to reside at their U.S. residence for purposes of determining compliance with the program’s 35% HUBZone residency requirement.
Beginning January 2020, the HUBZone Program will usher in additional changes designed to expand the program, including:
⇒ Permitting Governors to petition SBA every year to designate rural areas, with populations under 50,000 and unemployment levels of 120% the US or state average, as HUBZones.
⇒ Expanding the “Early Engagement Initiative,” to increase procurement readiness of firms applying for certification, by mobilizing SBA District Offices, Procurement Center Representatives, Procurement Technical Assistance Centers, Small Business Development Centers, economic development authorities, and chambers of commerce to support prospective HUBZone enterprises with the application process.