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The HUBZone certification is a hard-to-reach set-aside goal for most federal agencies and a point of confusion for many government contractors. I recently attended a Govology webinar that explained in-depth, the details essential for a small business to not only obtain but how to best utilize this highly demanded set-aside. To provide some clarity for our government contracting community who may not have attended, I’ll share with you my cliff notes.
In this webinar, Shane McCall and Steven Koprince of Koprince Law presented the material and did a fabulous job in simplifying the process for even the most novice of contractors to understand. You may already be familiar with them from the SmallGovCon Blog, which I am a huge fan of. The presentation went into the nitty-gritty of the HUBZone, even covering the agency requirements, application, and eligibility requirements, such as residency, principal office location, who is considered an employee, ownership, control, and size.
To qualify as a HUBZone Small Business:
- Must be considered a “small business” in primary NAICS code.
- At least 51% unconditionally and directly owned and controlled by persons who are U.S. citizens.
- Principal office located in a HUBZone – the location where the greatest number of concern’s employees work.
- If an employee works in multiple locations, the employee is counted toward the single location where he/she spends more than 50% of their time.
- If an employee doesn’t spend more than 50% of the time at any one location and one of the locations where she works is a non-HUBZone, then the employee will be deemed to work at a non-HUBZone location.
- Principal Office “Investment” Rule applies:
- If a firm makes a long-term investment in a principal office (i.e. sign a long-term lease) in a HUBZone for at least 10 years, even if the HUBZone designation expires.
- The Firm must continue to own the property or maintain the long-term lease.
- This does not apply to leases of office space that are shared with one or more other concerns or individuals.
- At least 35% of employees reside in HUBZone.
- Someone who works at least 40 hours during the 4 weeks immediately before the relevant date of the review.
- Must work for pay, except owners who don’t take pay still count (so long as they work at least 40 hours in the 4 months.
- It May be temporary or seasonal, but not 1099 contractors.
Here are some key takeaways:
- HUBZone stands for “Historically Underutilized Business Zone” and is certified only by the Small Business Administration (SBA).
- Formal certification is required, there is NO self-certification for this program.
- The SBA is working diligently this year (2021) on making this process easier and more efficient for YOU to obtain, small businesses!
- Its purpose is to assist businesses that operate in and employ people who are in economically disadvantaged areas and may need a little extra help.
- You’re required to renew your certification annually.
- Unlike other set-asides, this program is NOT based on the socio-economic status of company owners.
- No income or net worth requirements, nor racial, ethnic, or gender preferences.
- Only HUBZone-certified companies can compete on HUBZone set-aside contracts.
- Sole-Source contracts are up to $7 million in manufacturing NAICS codes and $4 million in others.
- Prime vendors also have subcontracting goals that they have to meet, which include the HUBZone set-aside. → Use this to your strategic advantage!
- 10% price evaluation preference when comparing a HUBZone business to a large business on an unrestricted contract. → Basically, your HUBZone small business is allowed a 10% price handicap against a large company for those contracts where the lowest price is technically acceptable.
- HUBZone criteria are based on Census data and small businesses can determine by address if they qualify using this link.
- SBA Program Examinations are random, unannounced program examinations to determine compliance.
- Watch the full webinar to hear all of the details, there are some great tips given for preparing for this.
- There were many bullet points discussed too, which covered employee relocations and how those might affect your status, things to watch out for and prepare for before you apply, the longevity of maintaining, and more that you can wrap your head around more effectively by watching the full course (or delegating it to a member of your team.)
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