The wild world of Government contracting can be very challenging and competitive – particularly for small businesses. Wouldn’t it be nice if there were options out there that gave small businesses a leg up? Wait…. there is! They are called small business set asides! One of these set asides is HUBZone.
HUBZone is a Small Business Administration (SBA) program designed to fuel growth for small companies that operate AND employ people within Historically Underutilized Business Zones (HUBZone) across the United States. Qualifying businesses have preferential access to federal procurement opportunities (government contracts).
What Are the Benefits to a HUBZone Certification? The Federal government has a goal – to award at least 3% of it’s annual federal prime contracts to HUBZone-certified businesses. HUBZone-certified businesses get a 10% price preference when competing for full and open contracts or subcontract opportunities. To further sweeten this set-aside, HUBZone-certified businesses are eligible for sole source contracts.
Where are HUBZones? HUBZone areas are determined by census tract data. Areas can be designated HUBZone and/or removed from HUBZone status based on data from the census. Census data considered when designating HUBZones includes: local income levels, unemployment rates, difficult development area status, base closure status and Indian land status.
What Makes a Business Eligible?
- Your primary business location (the place that the largest number of employees work) must be located within a designated HUBZone. This could be a business Headquarters, a Regional office, a plant, a warehouse…
- More than 35% of your employees must LIVE within a designated HUBZone. Their physical addresses must be verifiable. An individual is considered an employee if: they have a w-2 and work more than 40 hours a month. Individuals working under a 1099 or volunteering may be considered employees as well, depending on the type of work they do.
- The business must be a Small business, as defined by the SBA.
- The business must be at least 51% owned and controlled by U.S. citizens, a Community Development Corporation, an Agricultural Cooperative or an Indian tribe.
More About Employees: In order to stay eligible for HUBZone, a business MUST maintain a workforce where at least 35 % of the employees reside in a HUBZone. This statement is worth repeating, because it is VERY important! If a business has 2 employees, only 1 needs to live in a HUBZone. If that 1 employee leaves… that business is no longer eligible. For a business employing 3 people, 2 must live in a HUBZone. For a business employing 4 people, 2 must live in a HUBZone. A business must continuously monitor the status of employees and their residences to ensure no interruption to eligibility.
How Does a Business Apply for HUBZone? Interested businesses can complete an online application, found on the SBA website, to get the ball rolling. If this application is accepted, additional documentation and paperwork will be requested and then reviewed.
How Long Does a HUBZone Certification Last? This certification is not permanent. To maintain it, ou will have to be meticulous with record keeping in order to show your compliance. Businesses must recertify every 3 years. As long as their area is still designated as a HUBZone, businesses maintaining compliance and recertifying, can continue with the HUBZone certification indefinitely.
Interested in learning more about HUBZone certification? Contact your contracting experts at Government Contract Services, Inc. at: 234-212-3400.