Arthur E. Collins, Jr.

1
HUBZone PROGRAM UPDATENATIONAL HUBZone SMALL
BUSINESS CONFERENCEORLANDO, FLORIDAAugust 9,
2005

• Arthur E. Collins, Jr.
• Deputy Associate Administrator for
• HUBZone Program

2
Program Overview

• HUBZone Program -
• Community Based
• Employment
• Empowerment
• Enterprise

3
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.

4
Program Design

• From the outset, designed as a virtual program
  always available at www.sba.gov/hubzone
• Application for Certification
• Program Examinations
• Recertification

5
HUBZone EligibilityRequirements

• 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.

6
HUBZone Eligibility Requirements, contd

• 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.

7
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.

8
HUBZone Eligibility, Qualified Areas, contd

• 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
  non-metropolitan 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.

9
HUBZone Eligibility, Qualified Areas, contd

• 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.

10
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)

11
HUBZone Portfolio, Firm Demographics

• 8(a) Firms 16.3
• WOBs 29.3
• Veteran Owned Firms 21
• Service Disabled Veteran Firms 3.8
• Minority Owned Firms 42
• African American Owned Firms 22
• Hispanic Owned Firms 9.4
• Native American Owned Firms 8.3
• Asian Owned Firms 3.5

12
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.

13
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.

14
HUBZone ProgramBenefits

• Set-aside awards
• Sole source awards
• Awards through full and open competition after
  application of 10 price evaluation preference
  (PEP)
• Subcontracting Opportunities

15
HUBZone Contract Awards by Fiscal Year

• FY 1999 Goal - 1 Actual - Not available
• FY 2000 Goal 1.5 Actual - 663.3M (.33)
• FY 2001 Goal 2.0 Actual - 1.7 B (.72)
• FY 2002 Goal 2.5 Actual - 1.7 B (.71)
• FY 2003 Goal 3.0 Actual - 3.4 B (1.23)
• FY 2004 Goal 3.0 Actual - Not yet available

16
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.

17
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 SBCs
• Subcontracting Opportunities

18
Contracting, Requirements Not Available for
Set-aside

• Federal Prison Industries (FPI)
• Javits-Wagner-ODay Act (JWOD)
• Current 8(a) requirements
• Micro Purchase requirements at or below 2,500,
  and
• Others, not covered under FAR

19
Contracting, 8(a)-HUBZoneOrder 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 activitys
  achievement of its goals and other relevant
  factors.

20
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)

21
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.

22
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

23
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.

24
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 SBCs offer is
  deemed lower than the offer of the non-small
  business.
• If the HUBZone SBCs offer is more than 10
  percent higher than the non-small business
  offer, the Price Evaluation Preference would not
  be applied.

25
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.

26
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

27
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 firms Past Performance
  analysis on future contracting actions

28
Contracting, Appeal of Decision not to Set-Aside
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.

29
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

30
Contracting, Protests of Eligibility, contd

• 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.

31
Contracting, Protests of Eligibility, contd

• 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.

32
Contracting, Protests of Eligibility, contd

• 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.

33
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/GCBD.

34

The HUBZone Program

• Rebuilding America's Communities, One Small
  Business at a Time "