DOD, GSA, and NASA Issue Proposed Rule to Update the HUBZone Program in the FAR

The Small Business Administration (SBA) updated its Historically Underutilized Business (HUBZone) program in a final rule issued on November 26, 2019, at 84 FR 65,222. The Department of Defense, General Services Administration, and the National Aeronautics and Space Administration have issued a proposed rule seeking to amend the Federal Acquisition Regulation (FAR) to correspond with the updates made by the SBA. The proposed changes to the FAR include: updating the small business concern definition, adding in status protest procedures for sole-source procurements and joint ventures (JVs), changing eligibility requirements for HUBZone concerns at the time of submitting their offer, and requiring Contracting Officers (COs) to consider HUBZone concerns for sole-source awards regardless if the contract is above or below the simplified acquisition threshold (SAT).

HUBZone Small Business Concern Definition. The proposed rule revises the definition of “HUBZone small business concern” to refer to the requirements in 13 CFR § 126.200 and SBA’s designation of a HUBZone small business concern in the Dynamic Small Business Search (DSBS). If a concern is not in the DSBS as a certified HUBZone small business, they will be ineligible to compete for HUBZone contracts. Additionally, the FAR is amended throughout to remove the term “qualified” from “qualified HUBZone small business concern” and replace it with “certified.” These changes add clarity to the FAR terminology since firms must apply to the SBA and become certified HUBZone concerns before they can qualify to receive benefits from the program.

HUBZone Status Protests Procedures. The proposed rule specifies that for sole-source procurements, only the SBA or CO would be able to protest the HUBZone status. Also, if filing a protest against a HUBZone JV, the protest would have to state: why the HUBZone small business did not meet the eligibility requirements during its application to the SBA or at the time the SBA last certified the concern; why the JV did not meet the requirements of 13 C.F.R § 126.616 at the time of submission of its offer; or both.

Lastly, a protested HUBZone small business, the protester, or the CO may file a HUBZone status appeal with SBA’s Associate Administrator, Office of Government Contracting and Business Development (AA/GC&BD). The proposed rule provides that the party appealing the status determination must only provide notice to the CO and the protested HUBZone small business or original protester, but no longer the SBA’s HUBZone Program Director. More detailed and consistent protest procedures will allow disappointed offerors to file protests with more confidence, knowing they are compliant with the rules.

Eligibility at Time of Initial Offer. The proposed rule would amend the FAR to make a HUBZone small business concern eligible for HUBZone contracts if they are in the DSBS at the time of their initial offer, rather than requiring a firm to have HUBZone status both at the time of its initial offer and at the time of contract award. Further, HUBZone offerors will no longer have to provide notice to a CO if material changes occur before contract award that may affect their HUBZone eligibility. This revision will allow more HUBZone firms to bid on contracts, thus increasing the competitive environment for HUBZone contracts.

Sole-Source Awards Above and Below the SAT. The proposed rule would require a CO to consider a contract award to a HUBZone small business on a sole-source basis before considering a small business set-aside whether or not the acquisition is greater than the SAT. Before, the FAR required the acquisition to be over the SAT to be considered for sole-source. Also, FAR 19.13 – HUBZone Program, would begin to apply to requirements that do not exceed the micro-purchase threshold. This will undoubtedly create more HUBZone opportunities for small businesses and will hopefully help the government get closer to its 3% HUBZone federal contract award goal.

The proposed rule adds clarity, consistency, and more contract opportunities for HUBZone small businesses. Directing funds to HUBZone designated areas will foster economic development in historically underutilized areas of our country while also trying to lessen the effects the pandemic disproportionately had on these areas. Comments on the proposed rule are due on August 13, 2021.

If you have questions regarding the HUBZone program or other government contracting matters, please contact Jon Williams, the author of this blog, or a member of PilieroMazza’s Government Contracts Group.

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