SBA proposed a major revamp of how it will interpret and enforce the HUBZone program’s rules back in October of 2019. We wrote about the major changes in a couple of posts (here and here) as well as some of the common misconceptions that SBA cleared up as part of the proposed rule.
Well, the wait is over. SBA will release the final rule November 26 and the new rules will become effective on December 26, 2019.
Last week, the SBA released a proposal to overhaul the HUBZone Program. The proposed rule will make major changes to almost all aspects of the HUBZone Program, and my colleague Ian Patterson is covering those changes in a series of two posts on SmallGovCon.
But while the proposed HUBZone Program rule changes will garner most of the headlines, the SBA also has used the proposed rule as an opportunity to clear up a few very common HUBZone Program misconceptions–such as the notion that so-called “jobsite employees” don’t count toward the 35% HUBZone residency requirement.
Here are three of the most important clarifications SBA offered in the proposed HUBZone rule.
5 Things has previously discussed 8(a) Program basics and eligibility requirements. But the 8(a) Program isn’t the only socioeconomic program benefiting small businesses. In this post, we’ll begin exploring another crucial program for small businesses: the Historically Underutilized Business Zone—or HUBZone—program.
Here are five things you should know about the HUBZone program.
The SBA is considering making changes to improve its socioeconomic programs–particularly the 8(a) and HUBZone Programs.
In a talk yesterday at the 2017 Navy Gold Coast Procurement Conference, Robb Wong, the SBA’s recently-appointed Associate Administrator, Office of Government Contracting and Business Development, discussed some of the big changes the SBA is considering. And to my ears, at least, a lot of what Mr. Wong said makes good sense.
The HUBZone contracting program, while well-intended to provide economic and employment opportunities in otherwise low income, high unemployment areas, must nonetheless connect HUBZone firms with government contracts, the overwhelming majority of which are not located within a HUBZone.
If HUBZone firms are to experience growth, they will need to utilize the local labor force in the area where the contract is to be performed, in addition to utilizing the labor force residing in their HUBZone to perform indirect labor functions. As a company’s direct labor force grows, their indirect labor will also grow, producing more employment opportunities within the HUBZone, thereby fulfilling an intent of the program.
In order for an employee to count as a HUBZone resident for purposes of a specific HUBZone contract, the employee must reside in an officially designated HUBZone on the contract award date.
A recent decision of the U.S. Court of Federal Claims is a cautionary tale for HUBZone companies, which are responsible for ensuring that the 35% employee residency requirement is met on the award date.
The SBA will not aggregate a HUBZone applicant’s employees with the employees of the applicant’s affiliates for purposes of determining compliance with the “35% rule,” but only if the SBA determines that there is a “clear line of fracture” between the HUBZone applicant and its affiliates.
A recent decision by the U.S. Court of Federal Claims highlights an important SBA policy, which isn’t codified in the SBA’s regulations but can have a tremendous impact on HUBZone Program eligibility.