The Historically Underutilized Business Zone Program will be more attractive to small businesses and encourage them to invest in HUBZone communities and hire HUBZone residents with a new U.S. Small Business Administration final rule implementing several changes to the program.

The new rule changes will also make it easier for federal contracting officers to identify and work with HUBZone-certified small businesses. Effective Dec. 26, the rule will be published in the Federal Register.

“The exciting improvements outlined in this rule were designed to address longstanding uncertainty from both small businesses contemplating an investment in a designated HUBZone, as well as government agencies which seek to use HUBZone companies. We anticipate that these impactful changes will lead to the increased use of HUBZone certified small businesses across the country,” said Acting SBA Administrator Chris Pilkerton. “Further, additional program enhancements which will expand the HUBZone footprint and provide greater support to HUBZone eligible small businesses will allow contracting officers to better identify more HUBZone firms and get federal contracts into the hands of those businesses.”

According to Puerto Rico and U.S. Virgin Islands District Director Yvette T. Collazo, Puerto Rico is 82 percent HUBZone-designated and the U.S. Virgin Islands are 100 percent HUBZone.

“These new changes provide added flexibility for small firms to maintain their HUBZone status,” she said. “We encourage small businesses to attend our free, comprehensive monthly workshops at the district office to learn how they can become certified under the HUBZone contracting program and increase their chances of doing business with the federal government.”

Under the rule, an employee who resided in a HUBZone for at least six months at the time of certification or recertification and continues to reside in a HUBZone for at least six months may continue to be considered a HUBZone resident so long as they are employed by the firm, even if they move to a non-HUBZone area, or if their area of residence loses HUBZone geographical eligibility.

HUBZone maps, currently frozen through 2021, will be updated every five years (as opposed to annually). Areas will continue to maintain HUBZone designation for a three-year transition period following the expiration of HUBZone qualified census tracts and qualified non-metropolitan counties.

Small businesses that invest in HUBZones by purchasing a building or entering into a long-term lease in a HUBZone, may maintain HUBZone certification for a period of 10 years, even if at some point the office location no longer qualifies as a HUBZone, so long as the business continues to meet the HUBZone residency and other requirements of the program. Applications for HUBZone certification will be processed within 60 days of a complete submission starting Jan. 1.

Under the new rule, if a firm is a certified HUBZone small business at the time of its initial offer for a contract, it generally will be considered a HUBZone small business throughout the life of that contract, for single and multiple award contacts. Once certified as a HUBZone small business, a firm will be eligible for all HUBZone contracts for which the firm qualifies, for one year from the date of its certification unless the firm acquires, is acquired by, or merges with another firm during that period.

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For employees, those temporarily living overseas in connection with the performance of a contract will be considered to reside at their U.S. residence for purposes of determining compliance with the program’s 35% HUBZone residency requirement.

Beginning January 2020, the HUBZone Program will usher in additional changes designed to expand the program. Governors will be permitted to petition SBA every year to designate rural areas, with populations under 50,000 and unemployment levels of 120% of the U.S. or state average, as HUBZones.

Also included in the changes, the “Early Engagement Initiative” is expanded to increase procurement readiness of firms applying for certification, by mobilizing SBA District Offices, Procurement Center Representatives, Procurement Technical Assistance Centers, Small Business Development Centers, economic development authorities, and chambers of commerce to support prospective HUBZone enterprises with the application process.

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