Effective December 26, 2019, the Small Business Administration (SBA) will implement final rules overhauling regulations for the Historically Underutilized Business Zone Program (HUBZone Program). The new rules will (1) offer HUBZone firms reduced regulatory burdens, (2) help government agencies by eliminating ambiguities in the regulations, and (3) make it easier for HUBZone firms to understand and comply with Program requirements. Below is a practical guide on how the final rules will impact the business goals of government contractors in the HUBZone Program. For an in-depth look at the changes to SBA’s HUBZone Program, please join PilieroMazza on December 10, 2019, for a webinar on this important topic. Visit this link to register.

Key changes to the HUBZone Program include:

  1. An individual will continue to be treated as a HUBZone resident if that individual worked for the firm and resided in a HUBZone at the time the concern was certified or recertified as a HUBZone—even if the area where the individual lives no longer qualifies as a HUBZone or the individual has moved to a non-HUBZone area.
  1. HUBZone firms will only be required to certify on an annual basis, meaning such concerns will no longer be required to expressly qualify as a HUBZone at the time of each offer for a HUBZone contract and award. 
  1. For compliance purposes, HUBZone firms must maintain at least 20% HUBZone residents as employees when performing on HUBZone contracts, or SBA will propose the firm for decertification. HUBZone firms have an affirmative duty to notify SBA if they fall below the 20% attempt to maintain the standard.
  1. When a company buys an office located in a HUBZone or enters into a long-term, 10-year lease for such office space, intending the space to be its principal office, the concern will be able to meet the principal office HUBZone criterion for a period of at least 10 years—even if at some point after the property is purchased or leased, the office location no longer qualifies as a HUBZone. The idea behind this rule is that the HUBZone program should incentivize and reward companies that invest in HUBZones.

Start preparing before the new rules take effect at the end of the month by registering here for PilieroMazza’s December 10, 2019 webinar “Changes to SBA's HUBZone Program Are Here: Their Impact on Your Business Goals”.

Jon Williams, the author of this Client Alert, is a Partner in the Firm’s Government Contracts and Small Business Programs & Advisory Services practice groups.

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