Sweeping Changes in Federal HUBZone Rules Continue in 2020

The U.S. Small Business Administration (SBA) recently announced that beginning in January 2020, the Historically Underutilized Business Zone (HUBZone) program continued to adapt to the changing federal contracting market making the program more attractive to small businesses and encouraging them to invest in HUBZone communities and hire HUBZone residents.

The January changes included permitting Governors to petition SBA every year to designate rural areas, with populations under 50,000 and unemployment levels of 120% the US or state average, as HUBZones.

Also included is expanding the “Early Engagement Initiative,” to increase procurement readiness of firms applying for certification and complete the processing of the HUBZone certification within 60 days of a complete submission. Various resources are committed to help small businesses with the application process including SBA District Offices, Procurement Center Representatives, Procurement Technical Assistance Centers, Small Business Development Centers, economic development authorities, and chambers of commerce.

These changes further continue the SBA December 26, 2019 final rule implementing substantive overhauls to the HUBZone program benefitting local communities and making it easier for federal contracting officers to identify and work with SBA-certified HUBZone small businesses.

The HUBZone Program has never reached the 3% prime federal contracts goal. This goal intends that 3% of the annual federal contracts awarded, or at least $16.5 billion, should be awarded to businesses certified by the SBA as HUBZone. Since the program was created by Congress in 1998, it has been fraught with challenges including an annual geographic re-certification and the requirement that 35% or more of employees must reside in a designated HUBZone, with complicated burdens of proof affecting both contracting officials and small businesses alike.

The December 2019 final rule addressed many of the challenges in the program and provided small businesses with expanded opportunities and more certainty as they pursue federal contracts. HUBZone maps are now frozen through 2021, and will be updated every five years instead of annually. Employees  who resided in a HUBZone for at least six months at the time of certification or recertification, and continue to reside in a HUBZone for at least six months, may continue to be considered a HUBZone resident so long as the individual is employed by the firm, even if he/she moves to a non-HUBZone area, or if the area of his/her residence loses HUBZone geographical eligibility.

From the contracting perspective, if a firm is a certified HUBZone small business at the time of its initial offer for a contract, it generally will be considered a HUBZone small business throughout the life of that contract.  HUBZone status will no longer be determined as of the time of award. And if a firm is HUBZone-certified at the time of initial offer for a HUBZone Multiple Award Contract, it will be considered to be certified for each order issued against the contract, giving the small business more certainty in pursuing federal contracts.


For more information about the new changes in the SBA HUBZone program visit www.sba.gov/hubzone.

Gloria Larkin is President and CEO of TargetGov, American Express Procurement Advisor and a national expert in business development in the government markets.  Email glorialarkinTG@targetgov.com, visit www.targetgov.com or call toll-free 1-866-579-1346 x 325 for more information.

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