The Historically Underutilized Business Zones (HUBZone) program is a federal certification that provides contracting preferences for small businesses located in economically distressed areas. Texas has extensive HUBZone-designated areas across the state, particularly in rural communities, border regions, and certain urban census tracts. For Texas businesses in qualifying locations, HUBZone certification provides meaningful federal contracting advantages.
What Is the HUBZone Program?
The HUBZone program is administered by the SBA and was created by Congress to stimulate economic development in historically underutilized areas by providing federal contracting preferences to small businesses located in those areas. The federal government has a statutory goal of awarding at least 3% of all federal prime contract dollars to HUBZone-certified businesses.
HUBZone designations are based on census data and include qualified census tracts, qualified non-metropolitan counties, lands within Indian reservations, military base closure areas, and governor- designated areas. The SBA maintains an interactive HUBZone map at maps.certify.sba.gov where you can check whether your business address is in a HUBZone.
Eligibility Requirements
- Small business: Must meet SBA size standards for its primary NAICS code.
- U.S. ownership: Must be at least 51% owned and controlled by U.S. citizens, a Community Development Corporation, an agricultural cooperative, a Native Hawaiian organization, or an Indian tribe.
- Principal office location: The business's principal office must be located in a HUBZone. The principal office is defined as the location where the greatest number of employees perform their work, or where the most significant work is performed if the business has multiple locations.
- Employee residence: At least 35% of the business's employees must reside in a HUBZone. Employees do not need to live in the same HUBZone as the business — any HUBZone in any state qualifies.
- Attempt to maintain compliance: The business must demonstrate that it will attempt to maintain the 35% employee residence requirement during the performance of any HUBZone contract.
HUBZone Areas in Texas
Texas has a significant number of HUBZone-designated areas including:
- Rural counties: Many non-metropolitan counties across West Texas, East Texas, South Texas, and the Panhandle qualify as HUBZones.
- Border communities: Areas along the Texas-Mexico border frequently qualify based on economic indicators.
- Urban census tracts: Specific census tracts within Houston, Dallas, San Antonio, El Paso, and other cities qualify based on poverty rates and household income data.
- Military base areas: Areas near closed military installations may qualify for additional HUBZone coverage.
Use the SBA's HUBZone map tool at maps.certify.sba.gov to determine whether your specific business address is in a qualified HUBZone.
How to Get Certified
- Verify your location: Use the SBA HUBZone map to confirm your principal office is in a HUBZone.
- Verify employee residences: Confirm that at least 35% of your employees live in a HUBZone (any HUBZone, not necessarily the same one).
- Register in SAM.gov: Active registration is required.
- Apply through certify.sba.gov: Submit the HUBZone certification application through the SBA's online portal.
- Provide documentation: Including lease or deed for the principal office, employee roster with addresses, payroll records, formation documents, and ownership documentation.
- SBA review: The SBA reviews the application and may conduct a site visit. Processing typically takes 60-90 days.
HUBZone certification is free. There is no application fee.
Benefits of HUBZone Certification
Set-Aside Contracts
Federal agencies can set aside contracts exclusively for HUBZone firms. Only other HUBZone-certified businesses can compete for these opportunities.
Sole-Source Contracts
Agencies can award sole-source contracts to HUBZone firms up to $4.5 million for services and $7.5 million for manufacturing.
10% Price Evaluation Preference
In full and open competitions (where any business can bid), HUBZone firms receive a 10% price evaluation preference. This means a HUBZone firm's bid is treated as if it were 10% lower than its actual price when compared to non-small-business offerors.
Stacking HUBZone with Other Certifications
- Texas HUB: HUB and HUBZone are separate programs (state vs. federal) that can be held simultaneously. HUB guide.
- SBA 8(a): A business can hold both 8(a) and HUBZone certifications simultaneously. 8(a) guide.
- SDVOSB: Veteran-owned businesses in HUBZones can hold both certifications. SDVOSB guide.
- WOSB: Women-owned businesses in HUBZones can hold both certifications. WOSB guide.
Important Considerations
- HUBZone designations can change when census data is updated. If your area loses its HUBZone designation, you may receive a transition period to maintain certification.
- You must recertify every three years and report material changes to the SBA.
- The 35% employee residence requirement must be maintained during contract performance, which requires ongoing monitoring.
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