Federal agencies, from the Defense Department to NASA, are constantly seeking to give contracts to area small businesses. The problem is, they often can’t find them. A new federal program aims to change that. The Small Business Administration’s HUBZone Empowerment Contracting Program gives qualified small businesses located in federal HUBZones an advantage in seeking government contracts. HUBZones are areas the government has determined to be “historically underutilized.” The idea is to create jobs in sections of cities that have high unemployment and high populations of low-income people.
Parts of Newport, Providence, Central Falls, and Pawtucket qualify as HUBZones. Recently, Richard L. Hayes, the SBA’s associate deputy administrator for government contracting and minority enterprise development, visited Newport to explain the program to area business people. He was also there to generate enthusiasm for a program he said will help both federal agencies and the communities in which they operate.
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“Our goal is to get firms into the program as quickly as possible,” said Hayes, adding that the government hopes to spend $2 billion through this program in fiscal year 1999, and $6 billion by fiscal year 2003.
Qualified HUBZone businesses can opt to list themselves with the SBA PRO-Net system, which allows federal agencies to find small businesses in their area.
To qualify as a HUBZone business, the company must be certified by the SBA and operate its principal office in a HUBZone or federally recognized Native American reservation. At least 35 percent of its employees must be HUBZone residents. That does not mean, however, that the employees must live near the business, so long as they live in a HUBZone. For example, employees of a Newport HUBZone business could come from a HUBZone in Fall River, Mass., said Mark S. Hayward, acting director of the Rhode Island SBA district office.
The company must also be owned and controlled by U.S. citizens.
For federal agencies, the advantage to the HUBZones program is that they can easily find a small business contractor in their area – which keeps them from awarding jobs to companies located out of state, said Normand T. Deragon, public affairs specialist for the SBA.
The program works in three ways. Agencies may award contracts on a competitive basis if the contracting officer expects two or more qualified HUBZone businesses to bid. They may award a sole-source contract if the agency does not expect to receive more than one HUBZone bid. Agencies may also host a full and open competition for a contract. In this case, it may award the contract to a non-HUBZone contractor if its offer is more than 10 percent lower than the HUBZone small business.
The SBA also increases its guarantees on surety bonds for HUBZone businesses, from the typical 80 percent to 90 percent, making it easier for companies to compete for federal contracts.
Five hundred small businesses have filed applications to qualify for HUBZone certification so far, Hayes said. Be he added: “Unfortunately, we have no applications from this area at this time.”
The U.S. Department of Defense will be one of the largest users of the program, Hayes said, which bodes well for Newport, since the Naval Underwater Warfare Center is nearby. “I think this is going to create lots of jobs,” he said.
One of the program’s goals is to attract more businesses to HUBZones. Along with the jobs created by contractors will be opportunities for subcontractors, he said. When the SBA announced the program on March 22, he added, its Web site received so many hits that the server crashed.
Interested companies may submit applications online by going to the SBA Web site, http://www.sba.gov/hubzone. The site contains a map that shows the various defined HUBZones around the country. Businesses may also download the form and submit applications by mail.
Newport Mayor David Gordon said he hopes the HUBZone designation – located in the city’s northern end – will stimulate small business growth, especially since small businesses drive the economy both locally and nationwide.
“We certainly need it,” Gordon said, “that’s for sure.”
