HUBZone PROGRAM UPDATE NATIONAL HUBZone SMALL BUSINESS CONFERENCE ORLANDO, FLORIDA August 9, 2005
Arthur E. Collins, Jr. Deputy Associate Administrator for HUBZone Program
Program Overview
HUBZone Program Community Based:
•Employment •Empowerment • Enterprise
Program Purpose
Provide Federal contracting assistance to qualified small business concerns located in historically underutilized business zones (HUBZones) to:
• Increase employment opportunities • Stimulate capital investment in those areas • Empower communities through economic leveraging and the “multiplier effect.”
Program Design
From the outset, designed as a virtual program always available at: www.sba.gov/hubzone
• Application for Certification • Program Examinations • Recertification
HUBZone Eligibility Requirements
Size:
• Small, by relevant SBA standards.
Ownership and Control:
• At least 51% by U.S. citizen(s), Community Development Corporation, Agriculture Cooperative, Alaska Native Corporation, or Indian tribe. Recently changed by statute.
HUBZone Eligibility Requirements, cont‟d…
Location: • “Principal Office” must be located in a HUBZone (may differ for tribally owned concerns). Recently changed by statute. Employment: • At least 35% of employees must reside in a HUBZone (may differ for tribally owned concerns). Recently changed by statute.
HUBZone Geographical Eligibility, Qualified Areas
No community that has met HUBZone geographical qualification requirements since program will exit the program, as a result of economic improvement, until the later of publication of the 2010 Decennial Census or expiration of its “re-designation period.” Recently changed by statute.
• Reconciles program eligibility with a reasonable economic development planning horizon. • Stabilizes portfolio of HUBZone-certified vendors.
HUBZone Eligibility, Qualified Areas, cont‟d…
Metropolitan Area Census Tracts : 11,600 areas • “Qualified Census Tract” that meets test for Low Income Housing Tax Credit. (HUD) (Changes with decennial census.) Non-metropolitan Counties: 1,200 counties • Median household income is less than 80% of the nonmetropolitan state level (Census) (Changes with decennial census.) • Unemployment rate that is at least 140% of the lower of the state-wide or U.S. average (BLS) (Changes annually.) Recently changed by statute.
HUBZone Eligibility, Qualified Areas, cont‟d…
Federally recognized Indian Reservations: Include lands meeting definition of Indian Country (Change is periodic) Areas affected by base realignments and closures. Recently changed by statute.
HUBZone Portfolio
Total Portfolio: 12,728
HUBZone firms‟ total average annual receipts: $24
Billion HUBZone firms‟ total employment: 191,000 employees HUBZone residents employed by HUBZone firms: 124,000 (65%)
HUBZone Portfolio, Firm Demographics
8(a) Firms WOBs Veteran Owned Firms Service Disabled Veteran Firms Minority Owned Firms African American Owned Firms Hispanic Owned Firms Native American Owned Firms Asian Owned Firms
16.3% 29.3% 21% 3.8% 42% 22% 9.4% 8.3% 3.5%
HUBZone Portfolio, Commercial Ranking
If the HUBZone Portfolio were included in the Fortune 500, based on average annual revenue, it would be ranked 92nd , just ahead of McDonalds and Coca Cola. The portfolio:
• Has over 620 firms with average annual revenue in excess of $10 million, • Includes 920 high technology firms in NAICS Code 332710, and • Includes 380 machine shops in NAICS Code 541512.
HUBZone Portfolio, Program Evaluation
Recent regulatory change authorized SBA to collect updated financial information and information relating to employment and capital investment from certified firms in order to gauge the success of the HUBZone Program.
• Survey was approved by the Office of Management and Budget, and • Is being executed over the Internet through September 30, 2005.
HUBZone Program Benefits
Set-aside awards Sole source awards Awards through full and open competition after
application of 10% price evaluation preference
(PEP)
Subcontracting Opportunities
HUBZone Contract Awards by Fiscal Year
FY 1999
Goal - 1%
Actual - Not available
FY 2000
FY 2001
Goal – 1.5% Actual - $663.3M (.33%)
Goal – 2.0% Actual - $1.7 B (.72%)
FY 2002
FY 2003 FY 2004
Goal – 2.5%
Goal – 3.0% Goal – 3.0%
Actual - $1.7 B (.71%)
Actual - $3.4 B (1.23%) Actual - Not yet available
Key Marketing Activity
FedBizOpps electronic monitoring by the Office of HUBZone Program intended to: • Increase program awareness among Federal agencies, and • Remind contract personnel of HUBZone requirement of the 3% statutory prime contracting goal.
Contracting, HUBZone Procurement Methods
Set-aside awards
Sole source awards
Awards through full and open competition after
application of a price preference in favor of the
HUBZone SBC‟s
Subcontracting Opportunities
Contracting, Requirements Not Available for Set-aside
Federal Prison Industries (FPI) Javits-Wagner-O‟Day Act (JWOD) Current 8(a) requirements Micro Purchase requirements at or below $2,500, and
Others, not covered under FAR
Contracting, 8(a)-HUBZone Order of Precedence
Procedural Notice on October 10, 2001 established that:
• The HUBZone and the 8(a) programs have parity in the order of precedence.
Recent regulations establish that the two programs are equal, but the contracting officer must consider the contracting activity‟s achievement of its goals and other relevant factors.
Contracting, Set-Aside Procedures
HUBZone set-asides considered before HUBZone sole-source or small business set-asides Contracting officer may set-aside acquisitions exceeding the Micro Purchase ($2,500) and below the Simplified Acquisition Threshold ($100K)
Contracting, Set-Aside Procedures
Contracting officers shall set-aside acquisitions exceeding the "Simplified Acquisition Threshold ($100,000)" when there is a reasonable expectation that two or more qualified HUBZone small business concerns will compete for the requirement and that the requirement can be obtained at a "fair and reasonable" price.
Contracting, Sole Source
HUBZone contracts can be awarded if the contracting officer determines that:
• Only one qualified HUBZone SBC is responsible to perform the contract, • Two or more qualified HUBZone SBCs are not likely to submit offers, and, • The anticipated award price of the proposed contract, including options, will not exceed: $5 million for a requirement within the North American Industry Classification System (NAICS) code for manufacturing, or $3 million for a requirement within all other NAICS codes
Contracting, Full and Open Competition
Competitive contracts can be awarded with a price evaluation preference. The offer of the HUBZone small business must not be 10 percent higher than the offer of a non-small business.
Contracting, Full and Open, Price Evaluation Preference
Apply a factor of 10 percent to all offers, except offers from other small businesses.
• If the offer of the HUBZone SBC is not more than 10 percent higher than the offer of a non-small business, the qualified HUBZone SBC‟s offer is deemed lower than the offer of the non-small business. • If the HUBZone SBC‟s offer is more than 10 percent higher than the non-small business‟ offer, the Price Evaluation Preference would not be applied.
Contracting, Full and Open, Price Evaluation Preference
Any preference a small business concern receives under the HUBZone program does not eliminate the benefits another small business concern would receive under any other program designed to promote the development of small, small disadvantaged, or women-owned small businesses. When an offer is received from a SDB concern or a firm that qualifies as both a HUBZone and SDB concern, the SDB Price Evaluation Adjustment is applied first in order to establish the lowest, responsive and responsible offeror.
Contracting, Subcontracting Percentages
Services (except construction) - 50 percent General construction - 50 percent Construction - special trade - 50 percent Supplies (other than from a regular dealer) - 50 percent
Contracting, Subcontracting Plans
There is no specified HUBZone goal for subcontracting, however... • For most large contracts (over $500,000 or $1 million construction), large business contractors must create a subcontracting plan reflecting HUBZone firm participation • Factors into the firm‟s „Past Performance‟ analysis on future contracting actions
Contracting, Appeal of Decision not to SetAside Requirements over $100,000 for HUBZone Competition
Contracting Officer (CO) must notify cognizant Procurement Center Representative (PCR). SBA must notify CO of appeal within 5 business days of decision not to set-aside the requirement. CO must suspend action on procurement until Head of Contracting Agency (HCA) issues a decision, unless circumstances are urgent and compelling. SBA must file appeal to HCA within 15 business days of providing notification to CO. Decision is made by the HCA.
Contracting, Protests of Eligibility
Issues addressed:
• Ownership and Control, • Employment of HUBZone Residents, and • Location of Principal Office in
Issues involving size will be treated as a size protest; if protest involves size and status, each will be reviewed concurrently. Protests may be initiated by: • Sole Source - SBA or the CO • Competitive -Any interested party
Contracting, Protests of Eligibility, cont‟d…
Format: Must be in writing and be specific. Filing:
• Unsuccessful offeror - to the contracting officer, CO or SBA - to the Associate Administrator for HUBZone Program (AA/HUB).
• Delivered in person, by Fax, US or Express mail
Timeliness: Within 5 business days of bid opening
or notification of successful offeror.
Contracting, Protests of Eligibility, cont‟d…
The CO must refer protests to the SBA AA/HUB. SBA must notify the CO and the protester of the date of receipt and whether the protest will be processed or dismissed. SBA must determine HUBZone status within 15 business days of receipt unless extended.
Contracting, Protests of Eligibility, cont‟d…
The SBA AA/HUB will decide HUBZone protests. SBA will notify the CO, protester and the protested firm of its determination. If SBA fails to decide the protest within 15 business days (unless the CO grants an extension), the CO may award the contract. If the AA/HUB upholds the protest, the firm will be decertified.
Contracting, Protests of Eligibility, Appeal of Determination
The HUBZone SBC, protester, or CO may appeal Appeal must be in writing, and must be received by SBA within 5 business days after receipt of the protest determination. SBA will only re-examine cases where there was a clear and significant error or complete failure to consider a significant fact. SBA will not consider additional information or changed circumstances that were not disclosed at the time of the decision or that are based upon a disagreement with the determination. Appeals will be decided by the ADA/GC&BD.
The HUBZone Program
“Rebuilding America's Communities, One Small Business at a Time "