HUBZone (Historically Underutilized Business Zone)

What is Hubzone Historically Underutilized Business Zone?

The Historically Underutilized Business Zone (HUBZone) program is a Small Business Administration (SBA) initiative designed to promote economic development and create jobs in areas with low income or high unemployment. It gives certified small businesses located in these designated zones a competitive edge in securing federal contracts. This provides them with critical opportunities to grow their businesses and stimulate local economies.

Definition

The HUBZone program, authorized under the Small Business Reauthorization Act of 1997, aims to direct federal contracting dollars to businesses operating and employing residents in economically distressed areas. To become HUBZone certified, a business must meet specific criteria, including being a small business according to SBA size standards, being located in a designated HUBZone, and having at least 35% of its employees residing in a HUBZone. The SBA maintains a list of qualified HUBZones, which can be found on their website. This certification can be a valuable tool for government contractors, enabling them to qualify for set-aside contracts, sole-source awards, and price evaluation preferences. The program is governed by 13 CFR Part 126.

Key Points

• Location Matters: The business's principal office must be located within a designated HUBZone. The SBA provides mapping tools to verify eligible locations.
• Employee Residency: At least 35% of the business's employees must reside in a HUBZone. This requirement ensures that the economic benefits of the contracts directly benefit the designated areas.
• SBA Certification: Businesses must apply for and be certified by the SBA to participate in the HUBZone program. This process involves submitting documentation to verify eligibility.
• Annual Review: Certified HUBZone businesses must undergo an annual review to ensure continued compliance with program requirements. Failing to meet the criteria can result in decertification.

Practical Examples

1. Construction Company Bidding on a Federal Building Project: A small construction company located in a designated HUBZone bids on a federal building project. Its HUBZone certification gives it a price evaluation preference, making its bid more competitive compared to non-HUBZone companies.
2. IT Services Firm Awarded a Sole-Source Contract: An IT services firm located in a HUBZone is awarded a sole-source contract by a federal agency because the agency has determined that the firm is qualified to perform the required services and awarding the contract to the HUBZone firm will further the goals of the HUBZone program.
3. Manufacturing Company Expanding Operations: A manufacturing company in a HUBZone receives a federal contract set-aside specifically for HUBZone firms. This enables the company to expand its operations and hire more employees from the local community.