Using the HUBZone Program

Using HUBZones for Economic Development in Rural Communities

SBA’s HUBZone Program Offers Opportunities for EZ/EC and Champion Community Businesses

What is it?

The HUBZone Empowerment Contracting Program, included in the Small Business Reauthorization Act of 1997, stimulates economic development and creates jobs in low-income communities by providing Federal contracting preferences to small businesses that are located in a HUBZone, and that hire employees who live in a HUBZone. Most EZ/EC and Champion Communities are eligible HUBZones. This program applies to firms that are currently located within HUBZones, start-up businesses that are located in these areas, and existing firms that choose to move their business to qualified areas.

Until September 30, 2000, the HUBZone Empowerment Contracting Program applies only to the procurements of the following Federal agencies:

U.S. Department of Defense (DOD)
U.S. Department of Agriculture (USDA)
U.S. Department of Health and Human Services (HHS)
U.S. Department of Transportation (DOT)
U.S. Department of Energy (DOE)
U.S. Department of Housing and Urban Development (HUD)
U.S. Environmental Protection Agency (EPA)
U.S. National Aeronautics and Space Administration (NASA)
U.S. General Services Administration (GSA), and
U.S. Department of Veterans Affairs (VA).

After this date the program will apply to all Federal departments and agencies with contracting authority.

How does a business qualify?

A small business meets all of the following criteria to qualify for the HUBZone program:

it must be located in a "historically underutilized business zone,"
it must be owned and controlled by one or more U.S. citizens, and
at least 35% of its employees must reside in a HUBZone.

A "HUBZone" is an area that is located in one or more of the following:

a qualified census tract (as defined in section 42(d)(5)(C)(i)(I) of the Internal Revenue Code of 1986);
a qualified "non-metropolitan county" (as defined in section 143(k)(2)(B) of the Internal Revenue Code of 1986) with a median household income of less than 80 percent of the State median household income or with an unemployment rate of not less than 140 percent of the statewide average, based on U.S. Department of Labor recent data; or
lands within the boundaries of federally recognized Indian reservations.

What are the benefits?

Eligible firms enjoy limited competition for set-aside contracting funds within participating agencies, and are able to receive preferential consideration for other types of Federal procurement contracts:

A competitive contract can be awarded if more than one qualified small business will submit offers and the contract can be awarded at a fair market price.

A sole source contract can be awarded if there is a reasonable expectation that only a single qualified small businesses will submit an offer and the agency determines that the qualified small business is responsible, and that the contract can be awarded at a fair price. The government estimate cannot exceed $5 million for manufacturing requirements or $3 million for all other requirements.

A full and open competition contract can be awarded with a price evaluation preference. The offer of the small business will be considered lower than the offer of a non-eligible business -- if the offer of the HUBZone small business is not more than 10 percent higher.

How does a business apply?

Interested businesses can check to see if they are located in an eligible area, or if an area they are considering for relocation is eligible, by using the locator information on https://eweb1.sba.gov/hubzone/internet/. Specific information on local designations can be obtained by clicking on the geographic area of interest. If the location is a HUBZone, individual businesses can apply to receive preferences under this program by submitting an on-line application.

How can communities use this program?

Communities can encourage and support the use of this program within their communities by

informing local businesses and business leaders about HUBZone program and the appropriate contacts,
becoming familiar with the HUBZone boundaries in their area and helping local businesses determine if they are located in an eligible area.
helping businesses access and complete on-line applications, and
making local businesses aware of Federal contract announcements.

For More Information

Visit the HUB Zone Web site at: https://eweb1.sba.gov/hubzone/internet/

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