Partnering with HUBZone-certified subcontractors offers numerous unique advantages to prime contractors.
Federal contracts come with numerous benefits — including consistent payment and increased opportunities for women- and minority-owned businesses — that make them a sought-after commodity.
One avenue that companies seeking to compete for federal contracts should consider is the Historically Underutilized Business Zones (HUBZone) program. By partnering with HUBZone-certified subcontractors, companies become eligible for certain lucrative federal contracts that would otherwise be beyond their reach. There are a few other unique advantages to HUBZone contracts — but first, here’s a quick overview of the HUBZone program and its goals.
What Is the HUBZone Program?
The HUBZone program was created in 1997 when Congress passed the Small Business Administration Reauthorization Act, which was designed to encourage economic growth in areas with low income and high rates of poverty or unemployment (based on census data). The HUBZone program seeks to promote economic development in traditionally underdeveloped areas by offering benefits to small businesses while also offering incentives for large corporations to subcontract small businesses from HUBZones when competing for federal contracts.
However, in order to take advantage of these incentives, companies first need to obtain HUBZone certification. To do so, they must:
Meet the Small Business Administration’s definition of a small business (meaning fewer than 500 employees and less than $7.5 million in annual receipts).
Be majority owned and controlled by U.S. citizens, an agricultural cooperative, a Community Development Corporation, an Indian tribe, or a Native Hawaiian organization.
Have their primary office located within a HUBZone.
Ensure at least 35 percent of their employees live within a HUBZone.
Once a company has been certified, there are three main types of HUBZone contracts for which they become eligible:
Competitive HUBZone set-aside contracts: These require the contracting officer to have a reasonable expectation that two or more HUBZone small businesses will submit offers. The resulting contracts must be awarded at a fair market price.
Sole-source HUBZone contracts: These can be awarded if the contracting officer doesn’t have a reasonable expectation that two or more HUBZone small businesses will submit offers. The contracting officer must determine that the qualified HUBZone small business is responsible, and that the contract can be awarded at a fair market price.
Full and open competition contracts: These contracts offer price evaluation preference for HUBZone small businesses.
Advantages of Working with HUBZone Subcontractors
There are three primary advantages to becoming HUBZone-certified.
First, the federal government allocates three percent of all procurement dollars to HUBZone contracts, and by working with HUBZone subcontractors, companies become eligible to compete for these dedicated funds, thereby opening up new business opportunities.
Second, HUBZone-certified companies receive preferential positioning when bidding on contracts. In the interest of stimulating growth, HUBZone teams that make offers up to 10 percent higher than their non-HUBZone-certified counterparts will have their bids considered as lower.
Third, federal agencies want to work with HUBZone teams on large-scale projects. This is because a number of agencies are not meeting their three percent threshold regarding procurement dollars, which means that certified businesses are often shoo-ins for HUBZone contracts. As the boundaries of HUBZone areas continue to change, many companies have lost their certification, and procurers desperately want new certified teams. Prime contractors can locate eligible subcontractors via a directory on the Small Business Administration’s website.
Epiphany Management Group is dedicated to providing world-class, 24/7 IT support services for a wide range of digital project rollouts — especially for prime contractors. Contact us today to learn more about how we can help bring your plans to fruition.