The Historically Underutilized Business Zones (HUBZone) program helps small businesses in urban and rural communities gain preferential access to federal procurement opportunities. The federal government has a goal of awarding 3% of all dollars for federal prime contracts to HUBZone-certified small businesses and contracts can be sole sourced. Additionally, there is a 10% price evaluation preference in full and open contract competitions.
To qualify for the HUBZone program, a business (except tribally-owned concerns) must meet the following criteria:
- It must be a small business by SBA standards.
- It must be owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, an agricultural cooperative, or an Indian tribe.
- Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act.
- At least 35% of its employees must reside in a HUBZone.
The Good
- The initial online application is quite easy, but the follow on document request can be cumbersome.
- The HUBZone website provides a list of documents that will be requested. If you gather them together before you submit your initial application, you can get in the queue rapidly.
- All the people I have interacted with have been friendly, and responsive.
The Bad
- You have to be extremely independent or hire someone to help you because there isn’t a specific individual to walk you through the process. They do have a town hall style Q&A once a week which is useful, but not comprehensive if you have a lot of questions.
- SBA does not provide a specific format for your response and document submission. This makes it difficult to organize everything for easy review. LRH Group had their first application closed because the evaluator failed to open the first (of nine) files submitted and missed our answers to each request. After I explained to the analyst that the responses that she deemed non-repsonsive were in the first document (and sent her the file), she apologized for the error. Unfortunately, the closing of our application couldn’t be undone. We had to refile, but the analyst did not make us wait in the queue again and reviewed our file quickly.
- The process takes much longer than they advertise. There is a glut of applications so it could be 90 days before your file is sent to an analyst for review.
- Maintaining the certification can be difficult. You should have a plan on how you will maintain the 35% of employees living in a HUBZone requirement prior to application.
LRH Group Helpful Hints
- Apply when your company is small. It is much easier to meet the 35% requirement with 4 employees vice 40.
- Answer all questions and document requests! Even if the document requested does not apply to your company, state that. Otherwise, they will kick back your application as non-responsive.
- We copied and pasted the original email into a Word document and provided our answers one by one. If the answer required review of another file (say our Articles of Organization) we referenced that file and file name in the first document.
- The 35% employee requirement is based on employees who work 40 hours a month (not week). That means, you can hire part time employees to help maintain your 35% requirement. The University of Mary Washington and the entire City of Fredericksburg lie in a HUBZone. So, there is an excellent opportunity to provide paid internships with up and coming talent in order to balance out your employee pool. This allows you to keep your overhead low while providing much needed experience to an incredible talent base.
Our Recommendation
If you can qualify, apply for the program. There are two small business category quotas that are frequently missed: WOSB and HUBZone. Government employee performance evaluations and bonuses are often tied to these quotas, so they are extremely motivated to find good companies that can provide the services they need. That, coupled with the ability to directly award contracts to HUBZone companies without competition, makes this an excellent tool to growing your business. Just remember, though, it’s only a tool. The best way to grow your company is to always perform…perform…perform.
To learn more about the HUBZone process, visit the SBA website at http://www.sba.gov/hubzone/ or email me at wendy.maurer@lrhgroup.net.