HUBZone Empowerment Contracting Program

The HUBZone Empowerment Contracting program provides federal contracting opportunities for qualified small businesses located in distressed areas. Fostering the growth of these federal contractors as viable businesses, for the long term, helps to empower communities, create jobs, and attract private investment.

Program History

The HUBZone Empowerment Contracting program was enacted into law as part of the Small Business Reauthorization 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 - "HUBZones" - through the establishment of preferences.

SBA's HUBZone 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.

How the HUBZone Program Works

The U.S. Small Business Administration (SBA) regulates and implements the program, determines which businesses are eligible to receive HUBZone contracts, maintains a listing of qualified HUBZone small businesses Federal agencies can use to locate vendors, adjudicates protests of eligibility to receive HUBZone contracts, and reports to the Congress on the program's impact on employment and investment in HUBZone areas.

Eligibility

A small business meets all of the following criteria to qualify for the Hubzone program:

• it must be located in a "historically underutilized business zone,"
• it must be owned and controlled by one or more U.S. Citizens, and
• at least 35% of its employees must reside in a HUB Zone.

Historically Underutilized Business Zone

A "HUBZone" is an area that is located in one or more of the following:

• a qualified census tract (as defined in section 42(d)(5)(C)(i)(I) of the Internal Revenue Code of 1986);
• a qualified "non-metropolitan county" (as defined in section 143(k)(2)(B) of the Internal Revenue Code of 1986) with a median household income of less than 80 percent of the State median household income or with an unemployment rate of not less than 140 percent of the statewide average, based on U.S. Department of Labor recent data; or,
• lands within the boundaries of federally recognized Indian reservations.

Types of HUBZone Contracts

A competitive HUBZone contract can be awarded if the contracting officer has a reasonable expectation that at least two qualified HUBZone small businesses will submit offers and that the contract can be awarded at a fair market price.

A sole source HUBZone contract can be awarded if the contracting officer does not have a reasonable expectation that two or more qualified HUBZone small businesses will submit offers, determines that the qualified HUBZone small business is responsible, and determines that the contract can be awarded at a fair price. The government estimate cannot exceed $5 million for manufacturing requirements or $3 million for all other requirements.

A full and open competition contract can be awarded with a price evaluation preference. The offer of the HUBZone small business will be considered lower than the offer of a non-HUBZone/non-small business-providing that the offer of the HUBZone small business is not more than 10 percent higher.

Goaling

The Small Business Reauthorization Act of 1997 increases the overall government wide procurement goal for small business from 20% to 23%. The statute sets the goal for HUBZone contracts as follows: 1999 - 1%; 2000 - 1 ½ %; 2001 - 2%; 2002 - 2 ½ %; 2003; and each year thereafter - 3%.

Affected Federal Agencies

Until September 30, 2000, the HUBZone Empowerment Contracting Program applied only to the procurements of the following Federal agencies:

• U.S. Department of Defense (DOD)
• U.S. Department of Agriculture (USDA)
• U.S. Department of Health and Human Services (HHS)
• U.S. Department of Transportation (DOT)
• U.S. Department of Energy (DOE)
• U.S. Department of Housing and Urban Development (HUD)
• U.S. Environmental Protection Agency (EPA)
• U.S. National Aeronautics and Space Administration (NASA)
• U.S. General Services Administration (GSA), and
• U.S. Department of Veterans Affairs (VA).

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