Proposed changes to the HUBZone Program

HUBZone areas are generally defined as areas with low income levels, high poverty and unemployment rate, Indian reservations, closed military bases, or disaster areas.  Because of the need to scale up the number of employees needed when awarded a contract, it may often be challenging to maintain the 35% ratio of employees who must reside in a HUBZone, especially when more skilled labor is required to qualify for the contract.

The proposed changes, resulting from the 2018 NDAA (National Defense Authorization Act), are intended to address the complexities of this program and make it easier to comply with the requirements, but most will not take effect until Jan 1, 2020.  However, effective immediately, the HUBZone map will be frozen until Dec 31, 2021. That’s when SBA estimates the HUBZone maps will be updated to incorporate the results of the 2020 census.  According to the Federal Register “With respect to the 35% residency requirement,…an employee of a certified HUBZone small business concern who resided in a re-designated area as of December 12, 2017, will continue to be treated as a HUBZone resident through Dec 31, 2021.”

What does the new rule propose?

• The new rule proposes to treat an individual as a HUBZone resident if he worked for the firm and resided in a HUBZone at the time the concern was certified, or recertified, even if that person has moved to a non-HUBZone area.
• The employee will continue to count toward the 35% employee requirement until Dec 31, 2021 or the annual recertification thereafter.
• The new rule will eliminate the current requirement to certify each time the concern submits an offer for a HUBZone contract award.
• At the time of recertification, the firm will continue to meet the ownership and control requirements, the 35% HUBZone residency requirement and maintain its principal office in a HUBZone.

If you are currently in the HUBZone program or consider applying, I recommend you check out the posting in the Federal Register.  The comment period opened Oct 31, 2018 and will remain open until Dec. 31, 2018. 

APAC counselors are available to answer questions about the HUBZone program or other questions you may have about government contracting. To ask a question or schedule an appointment, call 501-671-2390 in Little Rock or 501-650-6180 in Bentonville. You may also e-mail ptac@uada.edu.