The Congressional Research Service released a report titled “Small Business Administration HUBZone Program.” The report examines arguments both for and against targeting assistance to geographic areas with specified characteristics as opposed to providing assistance to people or businesses with specified characteristics. It then assesses the arguments both for and against the continuation of the HUBZone program. The report also discusses the HUBZone program's structure and operation, focusing on the definition of HUBZone areas and HUBZone small businesses and the program's performance relative to federal contracting goals. It includes an analysis of SBA's administration of the program and SBA's performance measures.
Click here to read the full report
PROPOSED RULE CHANGES
Freezing the HUBZone maps until 2020 and then update the maps every 5 years
This will allow a HUBZone-certified company to rely on having a compliant business location until after 2020, and then the maps will be updated every 5 years.
HUBZone employees (as long as they maintain residence) are qualified until after 2020.
SBA regulations also allow HUBZone companies up to three additional years to move to a new HUBZone location if the Census Tract/HUBZone loses its designation, so the HUBZone firm and its employees effectively have until 2023 or later to enjoy HUBZone certification without having to move.
With the maps being updated every 5 years and the redesignation period being 3 years, that’s eight total years – almost as long as the 8(a) certification, which is nine years. And if you’re an 8(a) firm, now you have two certifications. That will increase a company’s federal contracting opportunities.
Amend “35% rule” regarding mixture of HUBZone/Non-HUBZone employees.
Under the proposed change, an employee must reside in a qualified HUBZone for a specific and uninterrupted period of time and be hired by a HUBZone firm before the employee will count towards the 35% mix of HUBZone/Non-HUBZone employees. After that period of continuous residence in a qualified HUBZone, the employee will always count as a HUBZone employee for that HUBZone firm as long as he/she remains employed by the HUBZone firm, even if the employee moves to a non-HUBZone area or the employee’s residence loses its HUBZone status.
This is meant to address the problem with the current rules, which incentivize a HUBZone firm to fire an employee because he or she moves to a non-HUBZone location or their residence loses its HUBZone status.
Fix the eligibility requirement for awards.
SBA proposes to change the existing requirement that a HUBZone company must be compliant at the time of bid and also at the time of award. The government can take months if not years to award a contract. A firm cannot possibly know when the government will award a contract, and therefore cannot know whether it will be compliant at the time of award. SBA’s proposed changes require that a company only needs to be certified/recertified once a year and will not need to prove compliance at the date of bid or at the time of award.
This will allow a company to bid and win as much business as they can during a given year.
If the company is determined non-compliant by its annual recertification date, it must bring itself into compliance before continuing in the HUBZone program. However, its performance on contracts won in the previously compliant year will not be adversely affected.
Recertification will change from the current submission of a certification document to a fully documented review, akin to determination of initial eligibility.
Direct ownership is not mandated in HUBZone statute effective May 25, 2018.
Freezing the HUBZone maps until January 1, 2020 and transitions the program to 5-year map updates after 2020.
Provides state governors the ability to petition the SBA Administrator to designate areas that have an average unemployment rate of at least 120% of national or state average, whichever is lowest, as HUBZones. Petitions require annual resubmission.
Removes the qualifier “nonmetropolitan” from “state median income” when determining HUBZone program eligibility.
Requires the SBA to make a determination on a firm’s HUBZone eligibility within 60 days of application receipt.
Ensure that BRAC continues to receive HUBZone eligibility for a full eight years beginning on the date the county was designated a BRAC.
Requires the SBA to conduct a study on small business participation on Multiple Award Contracts (MACs).