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Chapter 11: Historically Underutilized Business Zone Program (HUBZone) Program

Topics in this Chapter 

  1. Background
  2. Authority
  3. Small Business Goals
  4. Benefits of the HUBZone Program
  5. Parity Rule
  6. HHS Small Business Specialist Review

This part sets forth policy and procedure about HHS’ awards to small business concerns participating in the Historically Underutilized Business Zone Program (HUBZone) Program. It expands on key aspects of the Federal Acquisition Regulations (FAR) and the U.S. Health and Human Services Acquisition Regulations (HHSAR).

A. BACKGROUND

The Historically Underutilized Business Zone (HUBZone) Act of 1997 (15 U.S.C. 631) Title VI of Public Law 105-135 created the HUBZone Empowerment Contracting Program. The purpose of the HUBZone Program is to provide Federal contracting assistance for qualified small business concerns located in historically underutilized business zones, in an effort to increase employment opportunities, investment and economic development in those areas.

B. AUTHORITY

The U.S. Small Business Administration (SBA) regulates and implements the program. In addition, it determines which businesses are eligible to receive HUBZone contracts and maintains a listing of qualified HUBZone small businesses on its website at http://www.sba.gov/hubzone. The SBA adjudicates protests of eligibility to receive HUBZone contracts and monitors the program’s impact on employment and investment in HUBZone areas.

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C. SMALL BUSINESS GOALS

Prime Contracting Goals: 3 percent
Subcontracting:
3 percent

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D. BENEFITS OF THE HUBZone PROGRAM

1. Types of HUBZone Opportunities

HUBZone Set-Aside Awards

Requirements that exceed the SAT shall be set-aside for HUBZone small business competition in accordance with FAR Subpart 19.1305(b). If the contracting official has a reasonable expectation that 1) offers will be received from two or more HUBZone small business concerns; and 2) award will be made at a fair market price, the requirement shall be restricted for competition among HUBZone small business concerns.

The CO shall consider HUBZone set-asides before considering HUBZone sole source awards (FAR Subpart 19.1306) or small business set-asides (FAR Subpart 19.5).

  1. Competitive

A competitive HUBZone contract can be awarded if the CO has a reasonable expectation that at least two qualified HUBZone small businesses will submit offers and that the contract can be awarded at a fair market price.

  1. A joint venture may be eligible for participation if it meets the HUBZone eligibility criteria.

The CO may award contracts to HUBZone small business concerns on a sole source basis (FAR Subpart 19.306 and SBA 13 CFR 126.609) without considering small business set-asides, provided:

  • Only one HUBZone can satisfy the requirement;
  • The anticipated price, including options will not exceed $5.5M for manufacturing and $3.5M for services for all other requirements with any NAICS code;
  • The requirement is not currently being performed by a non- HUBZone small business concern;
  • The acquisition is greater than the SAT;
  • The HUBZone concern has been determined to be a responsible contractor with respect to performance; and
  • Award can be made at a fair and reasonable price.

Note: SBA has the right to appeal the CO’s decision not to make a HUBZone sole source award. The CO shall insert the Clause 52.219-3, Notice of Total HUBZone Set-Aside in solicitations and contracts for acquisitions that are set aside for small business concerns under FAR Subpart 19.1305 or 19.1306.

  1. Full and Open Competition

A full and open competition contract can be awarded with a price evaluation preference of 10 percent. The offer of the HUBZone small business will be considered lower than the offer of a non-HUBZone/non-small business providing that the offer of the HUBZone small business is not more than 10 percent higher. The CO shall insert Clause at FAR Subpart 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns, in solicitations and contracts for acquisitions conducted using full and open competition. The clause shall not be used in acquisitions below the SAT.

Price Evaluation Factor: FAR 19.1307 states that the price evaluation preference for HUBZone small business concerns shall be used in acquisitions conducted using full and open competition. The preference shall not be used (1) in acquisitions expected to be less than or equal to the SAT; (2) where price is not a selection factor so that price evaluation would not be considered (e.g. Architect/Engineer acquisitions), and (3) where all fair and reasonable offers are accepted) (e.g. the award of multiple award schedule contracts).

The CO shall give offers from HUBZone small business concerns a price evaluation preference by adding a factor of 10 percent to all offers, except (1) offers from HUBZone small business that have not waived the evaluation preference and (2) otherwise successful offers from small business concerns.

  1. Simplified Acquisitions

FAR Subpart 19.1305 states that COs may set aside for HUBZone small business concerns an acquisition of supplies or services that has an anticipated dollar value exceeding the micro-purchase threshold ($3,000) but not exceeding the SAT ($100K). The CO's decision not to set aside an acquisition for HUBZone participation below the SAT is not subject to review by the SBA as stated in FAR Subpart 19.4.

  1. Subcontracting Goals. All subcontracting plans for other than small Federal contractors must include a HUBZone subcontracting goal.

  2. Other Specialized Assistance

Eligible HUBZone firms may qualify for higher SBA-guaranteed surety bonds on construction and service contract bids.

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E. PARITY RULE

The HHS policy is succinct with the recent Department of Justice memorandum regarding the permissibility of SBA’s regulations governing the interplay among the 8(a), HUBZone, and the SDVOSB Programs. Market research must be conducted to determine and document program selection. Once market research is performed:

The decision to select between 8(a), HUBZone, or SDVOSB is discretionary for procurements between $3,000 and $100,000.

For procurements over $100,000: after conducting market research, HHS CO has substantial discretion to select between the three programs (8(a), HUBZone, or SDVOSB) before selecting to use a small business set-aside. And the final decision must be documented.

Procurements that are already in the 8(a) Program will remain in the 8(a) program unless released by SBA.

F. HHS SMALL BUSINESS SPECIALIST REVIEW

The CO shall consult the SBS during the acquisition planning process (FAR 7.104(d)(1)). Once the acquisition strategy has been determined, refer to Chapter Two (2)-Acquisition Planning and Market Research, Chapter Four (4)- Small Business Set Asides, Chapter Five (5) - Small Business Review of Simplified Acquisition Actions, Chapter Six (6) Small Business Review of Contract Actions and Chapter Seven (7) - Subcontracting for details regarding the HHS SBS review.


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