DATE: January 18, 2001

SUBJECT: Small Business Administration; HUBZone Program Improvements

SOURCE: Federal Register, January 18, 2001, Vol. 66, No. 12, page 4643

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: SBA is revising its regulations governing the Historically Underutilized Business Zone (HUBZone) Empowerment Contracting Program to make improvements to the administration and operation of the HUBZone program.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations (CFR). The HUBZone regulations are in Part 126, HUBZone Program, of Title 13.

The Federal Acquisition Regulation (FAR) addresses the HUBZone program in Subpart 19.13, Historically Underutilized Business Zone (HUBZone) Program.

For more on the proposed rule, see the October 3, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration; HUBZone Program Improvements."

EFFECTIVE DATE: February 20, 2001.

FOR FURTHER INFORMATION CONTACT: Michael McHale, Associate Administrator for the HUBZone Program, 202-205-6731 or by e-mail to hubzone@sba.gov.

SUPPLEMENTAL INFORMATION: Title VI of the Small Business Reauthorization Act of 1997 (Public Law 105-135) established the HUBZone program to provide federal contract assistance to qualified small business concerns located in distressed communities. The law established a HUBZone annual contracting goal of 3% of overall prime contracting by Fiscal Year 2003, which means the HUBZone program could account for about $6 billion a year in federal contracts when the full 3% goal becomes effective.

To participate in the HUBZone program, a small business' principal office must be located in a HUBZone. More than 7,000 urban census tracts and 900 rural counties currently qualify as HUBZones. Also, all federally-recognized Native American reservations qualify.

The SBA published implementing regulations that went into effect September 9, 1998. Since then, SBA determined that certain amendments to its regulations would streamline the operation of the HUBZone program, and ease eligibility requirements that are thought to be overly burdensome to businesses. On October 3, 2000, SBA published a proposed rule that would clarify the application of the HUBZone program to state and local governments, revise the definition of the term "principal office," eliminate the program eligibility restrictions on allowable affiliations of HUBZone small business concerns, and ease the program eligibility requirements and procurement restrictions concerning qualified HUBZone small business concerns that operate as non-manufacturers. In addition, SBA proposed to add three departments to the list of agencies that must comply with the HUBZone regulations, as required by Section 212 of Public Law 106-113: the Departments of Commerce, Justice, and State.

Twenty-two (22) comments were received. The vast majority supported the proposed revisions, so SBA is adopting its proposed rule as final with minor editorial changes except for the proposal to include the Departments of Commerce, Justice, and State to the list of agencies required to comply with the HUBZone regulations. Though Public Law 106-113 requires that these three departments comply with the HUBZone regulations, Public Law 105-135 already required that the HUBZone program apply to all federal agencies after September 30, 2000. Therefore, this proposed change was not adopted, and the current language containing the September 30, 2000, effective date is retained.

The following are the provisions of the final rule:

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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