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Juice Bar Discussion Outlines HUBZone Eligibility Requirements for Small Businesses
TOPICS & CATEGORIES
Industry professionals in the modeling, simulation, and training (MS&T) community gathered at the UCF Business Incubator for the Central Florida Tech Grove’s “Juice Bar” event that was presented by Project 160, “HUBZone and the DOD,” on Aug. 9, 2023.
Juice Bar events are opportunities for MS&T professionals to have informal discussions with government officials and subject matter experts on topics of interest to the MS&T community. Jay Choi, business opportunity specialist with the Small Business Administration (SBA), gave an overview of the HUBZone program. Leslie Faircloth, small business director for Naval Air Warfare Center Training Systems Division, hosted the discussion and provided insights from a Defense Department perspective with Damien Bailey, small business deputy with Army Contracting Command – Orlando.
HUBZone is an SBA program for small businesses that operate and employ people in historically underutilized business zones, referred to as “HUBZones.” The HUBZone program’s mission is to promote job growth, capital investment, and economic development in economically distressed communities by providing contracting assistance to small businesses located in these areas.
Choi began by saying that benefits for small businesses that qualify for HUBZone certification include set-aside contracts, among other opportunities.
“We are trying to reward firms that are in [HUBZone areas], or incentivize businesses to locate to these areas, and then become HUBZone-certified,” Choi said. “By having that certification, [a small business] can compete for, and possibly even sole-source, contracts to your business.”
Choi went on to say that federal agencies had a goal of setting aside 3% of all contracting dollars, specifically for HUBZone program firms, but many agencies have been challenged in meeting that goal.
“The closest we’ve come has been 2.53%, which came out to $14.3 billion,” Choi said. “We’re still trying to reach those firms out there that don’t know about the HUBZone program, the benefits, and the advantages of having that certification. This is one of the biggest federal efforts solely focused on helping those underserved communities.”
According to Choi, the eligibility requirements to becoming HUBZone-certified include:
1) The company must be a small business.
2) The owner must own at least 51% of the business and be a U.S. citizen, a community development cooperation, an agricultural cooperative, a native Hawaiian organization, or a native American tribe.
3) The firm’s principal office, where most of its employees work, must be located in a HUBZone-eligible area.
4) At least 35% of the company’s employees must reside in a HUBZone area.
Choi clarified that an area’s HUBZone designation could possibly change, based on demographic shifts reflected in future census results. To reassure businesses and incentivize continued investment, such a change would involve a notification to HUBZone businesses three years before they are redesignated.
Recent improvements to the program, according to Choi, include changes stating that the small firms that make long-term community investments by purchasing buildings or signing long-term leases (of 10 years or more) in HUBZones, may maintain their HUBZone eligibility. Another improvement involved rules regarding “legacy employees.” While 35% of a company’s employees must reside in a HUBZone area at the time of certification, if those employees move out of the HUBZone (no earlier than) six months later, they are considered legacy employees, and their residence location does not affect the company’s HUBZone status.
Faircloth noted that, “we are in a HUBZone tract right here in the Central Florida Research Park,” and addressed overarching misperceptions of the HUBZone program and the types of firms that qualify, which need to be corrected.
“A lot of contracting and acquisition professionals think that [these firms] are construction-related, janitorial services or grounds maintenance,” Faircloth said. “They aren’t thinking innovation, simulation, and other things we do here in Team Orlando, but those firms are out there. We need to elevate the awareness of these firms and make sure they are able to participate in our procurements, and that they’re being considered and brought to the table.”
Bailey acknowledged that his agency has struggled in meeting its goals with HUBZone and similar programs, such as those intended for women-owned businesses.
“A problem we have is… consolidation of our requirements has led to requirements that aren’t always feasible for small business, or it takes a very mature small business to even compete for certain requirements,” Bailey said. “Another issue is that HUBZone [companies] haven’t always been aware of what we do. That’s why we’ve been trying to reach out and at least make our presence well known.”
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