In 2011 and 2012, as a follow up to the 2010 Census data collection, the SBA removed a large number of former HUBZones from the HUBZone designation. Because the SBA did not want to decertify HUBZone companies without giving those companies an opportunity to transition their operations, the SBA created a HUBZone status called “redesignated” for those former HUBZones that were losing their HUBZone status, and then gave HUBZone companies in those “redesignated” areas a three year grace period to move operations and re-confirm that they conformed to the HUBZone requirements. For nearly 600 companies, that three year grace period ends in 2015.
First, a little background on the HUBZone program. This program began with the HUBZone Empowerment Act, which became law as part of the Small Business Reauthorization Act of 1997. The SBA regulates and implements the program, which includes: determining what businesses are eligible to enter the HUBZone Program, maintaining a database of qualified HUBZone businesses, and adjudicating protests and issues related to the award of HUBZone contracts. The SBA designates areas as HUBZone areas based on information from several sources including, the U.S. Bureau of Labor Statistics, Department of Defense, Department of Housing and Urban Development, Bureau of Indian Affairs and the U.S. Census Bureau.
In 2000 and again in 2004 the Small Business Reauthorization Act was amended, both amendments allowing for businesses to maintain their status in the “redesignated areas.” These amendments also allowed for the 3 year grace period.
The three year window on this transition is now about to close. As a result, the nearly 600 small businesses located within these areas are set to lose their HUBZone status and the associated federal contracting benefits. There is no formal program to notify HUBZone companies of the potential future status of current, and “redesignated” HUBZones. If you are a HUBZone company, it is your responsibility to monitor the current and potential future status of the HUBZone within which your primary business location is located, and the HUBZones within which your employees live. Failing to do this could result in your business unintentionally losing its HUBZone status, whether from this specific “redesignation” or generally from some other redesignation of HUBZones.
While many HUBZones are only reviewed every 10 years, after the census, some are reviewed more frequently, in some cases as often as annually. To be safe regarding your HUBZone status, you should monitor your status bi-annually in a general sense, and should specifically review your compliance with HUBZone requirements every time you submit a HUBZone proposal, and every time you are awarded a HUBZone contract. The SBA’s HUBZone mape is a very useful tool in monitoring compliance, not only showing current HUBZones, but also each HUBZone’s history, and if known, any future planned changes in the zone’s status.
You can find the HUBZone map tool here: <a href=’http://map.sba.gov/hubzone/maps/’>http://map.sba.gov/hubzone/maps/</a>
While the possibility of a HUBZone designated area losing such status is cause for concern, HUBZone certification still offers many benefits and is considerably easier to gain access to than the other SBA small business concerns. If your firm is interested in becoming HUBZone certified or if your firm is facing issues because of expiring HUBZone designations or redesignated HUBZone districts and you would like assistance, please contact us.