SBA HUBZone Program
An 1997, Missouri Senator Christopher Bond created legislation that
authorizes businesses in low income and/or high unemployment areas to
compete more effectively for government contracts.
The Historically Underutilized Business Zone (HUBZone) Empowerment Contracting
Program is designed to stimulate economic development and create jobs
in urban and rural communities by providing federal contracting preferences
to small businesses. These businesses obtain HUBZone certification in
part by employing staff or workers from a geographical area known as a
HUBZone. HUBZone certified businesses realize many benefits.
Consider how the federal government uses the HUBZone program to encourage
economic development. First, prime contracts of more than $500,000 require
subcontracting plans that use HUBZone contractors. Secondly, under full
and open competition, a small business will have a 10 percent price
preference when competing against a large business. (For example, the
large business (LB) bids $950 and the SB bids $1,040 for a product or
service. The contracting officer adds 10 percent to the LB bid—or
$95. Now the LB bid appears to be (950 + 95 = $1,045). The small business
wins the contract at $1,040.)
Under the competitive contract rules, the contracting officer has
the option to set a contract aside for competition between at least
two HUBZone contractors if he expects two or more certified companies
to submit bids. In this way, the procurement is restricted to HUBZone
companies. Another advantage for HUBZone certified firms is sole source
purchasing, which requires meeting the following criteria:
- Only one qualified HUBZone SBC is responsible to perform the contract.
- Two or more qualified HUBZone SBCs are not likely to submit offers.
- The anticipated award price of the proposed contract, including
options, will not exceed
$5 million for a requirement within the North American Industry Classification
System (NAICS) code for manufacturing or
$3 million for a requirement within all other NAICS codes.
So, in return for employing individuals from low-income and high-unemployment
areas, you can level the playing field in the competition for government
contracts. How do you become HUBZone certified?
First, verify if your business is located in a HUBZone. HUBZone
designation is based on census data, unemployment data for each county
and, in many areas, on specific census tracts in a county. Go to this
site: www.sba.gov/hubzone
and select the option 'Are you in a HUBZone?' to determine if your location
meets the criteria.
The second step is to meet the following four mandatory criteria:
- The business must be classified as "small" by U.S. Small
Business Administration (SBA) size standards, which means fewer than
500 employees or a certain level of sales, depending on the industry.
- If your business is not located in a HUBZone, consider moving into
that area, particularly if relocation is already in your long-range
plans. (This writer also recommends learning about Enterprise Zones
in Missouri.)
- The company must be owned by one or more U. S. citizens or be a
Community Development Corporation or an Indian tribe.
- At least 35 percent of the employees must reside in any HUBZone.
The HUBZone of residence need not be the same HUBZone in which the
business is located.
The third step is to actually apply for HUBZone certification.
This application process is free. Go to https://eweb1.sba.gov/hubzone/internet/
and click on HUBZone Electronic Application. I recommend printing out
the application and filling out the form on paper before applying electronically.
Keep copies of all applications and the date submitted.
SBA should notify your office within 30 business days after receiving
your HUBZone application regarding the status. However, after those
30 days, check on the status as necessary.
While waiting for the designation or certification, do some research
on marketing to the government and the businesses that might need HUBZone
participants. This involves a government marketing plan and quite a
bit of in-depth research. It's best to designate at least one person
as the lead government marketing person. This specialist will then learn
about government marketing, web pages for the government, bid leads,
preparing quotes, preparing proposals and bidding on government contracts.
The Missouri Procurement Technical Assistance Centers (MO-PTAC) are
glad to provide guidance and assistance to motivated businesses. Contact
MO-PTAC at 573-882-9398.
Send this article to a friend
Authored by: Greg McMullin, Procurement Specialist,
Missouri Procurement Technical Assistance Centers
Source: Creating Quality Newsletter, Volume
11, Number 7, July 2002
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