[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR126]
[Page 445-466]
TITLE 13--BUSINESS CREDIT AND ASSISTANCE
CHAPTER I--SMALL BUSINESS ADMINISTRATION
PART 126_HUBZONE PROGRAM
Subpart A_Provisions of General Applicability
Sec.
126.100 What is the purpose of the HUBZone program?
126.101 Which government departments or agencies are affected directly
by the HUBZone program?
126.102 What is the effect of the HUBZone program on the section 8(d)
subcontracting program?
126.103 What definitions are important in the HUBZone program?
Subpart B_Requirements to be a Qualified HUBZone SBC
126.200 What requirements must a concern meet to receive SBA
certification as a qualified HUBZone SBC?
126.201 Who does SBA consider to own a HUBZone SBC?
126.202 Who does SBA consider to control a HUBZone SBC?
126.203 What size standards apply to HUBZone SBCs?
126.204 May a qualified HUBZone SBC have affiliates?
126.205 May participants in other SBA programs be certified as qualified
HUBZone SBCs?
126.206 May non-manufacturers be certified as qualified HUBZone SBCs?
126.207 May a qualified HUBZone SBC have offices or facilities in
another HUBZone or outside a HUBZone?
[[Page 446]]
Subpart C_Certification
126.300 How may a concern be certified as a qualified HUBZone SBC and
what information will SBA consider?
126.301 Is there any other way for a concern to obtain certification?
126.302 When may a concern apply for certification?
126.303 Where must a concern submit its application and certification?
126.304 What must a concern submit to SBA?
126.305 What format must the certification to SBA take?
126.306 How will SBA process this certification?
126.307 Where will SBA maintain the List of qualified HUBZone SBCs?
126.308 What happens if SBA inadvertently omits a qualified HUBZone SBC
from the List?
126.309 May a declined or de-certified concern seek certification at a
later date?
Subpart D_Program Examinations
126.400 Who will conduct program examinations?
126.401 What is a program examination and what will SBA examine?
126.402 When may SBA conduct program examinations?
126.403 May SBA require additional information from a HUBZone SBC?
Subpart E_Maintaining HUBZone Status
126.500 How does a qualified HUBZone SBC maintain HUBZone certification?
126.501 What are a qualified HUBZone SBC's ongoing obligations to SBA?
126.502 Is there a limit to the length of time a qualified HUBZone SBC
may be on the List?
126.503 What happens if SBA is unable to verify a qualified HUBZone
SBC's eligibility or determines that the concern is no longer
eligible for the program?
126.504 When is a concern removed from the List?
Subpart F_Contractual Assistance
126.600 What are HUBZone contracts?
126.601 What additional requirements must a qualified HUBZone SBC meet
to bid on a contract?
126.602 Must a qualified HUBZone SBC maintain the employee residency
percentage during contract performance?
126.603 Does HUBZone certification guarantee receipt of HUBZone
contracts?
126.604 Who decides if a contract opportunity for HUBZone set-aside
competition exists?
126.605 What requirements are not available for HUBZone contracts?
126.606 May a CO request that SBA release a requirement from the 8(a)BD
program for award as a HUBZone contract?
126.607 When must a contracting officer set aside a requirement for
qualified HUBZone SBCs?
126.608 Are there HUBZone contract opportunities at or below the
simplified acquisition threshold or micropurchase threshold?
126.609 What must the contracting officer do if a contracting
opportunity does not exist for competition among qualified
HUBZone SBCs?
126.610 May SBA appeal a contracting officer's decision not to reserve a
procurement for award as a HUBZone contract?
126.611 What is the process for such an appeal?
126.612 When may a CO award sole source contracts to qualified HUBZone
SBCs?
126.613 How does a price evaluation preference affect the bid of a
qualified HUBZone SBC in full and open competition?
126.614 How does a CO apply HUBZone and SDB price evaluation preferences
in full and open competition?
126.615 May a large business participate on a HUBZone contract?
126.616 What requirements must a joint venture satisfy to submit an
offer on a HUBZone contract?
126.617 Who decides contract disputes arising between a qualified
HUBZone SBC and a contracting activity after the award of a
HUBZone contract?
126.618 How does a HUBZone SBC's participation in a Mentor-
Prote[eacute]g[eacute] relationship affect its participation
in the HUBZone Program?
Subpart G_Contract Performance Requirements
126.700 What are the performance of work requirements for HUBZone
contracts?
126.701 Can these subcontracting percentages requirements change?
126.702 How can the subcontracting percentage requirements be changed?
Subpart H_Protests
126.800 Who may protest the status of a qualified HUBZone SBC?
126.801 How does one file a HUBZone status protest?
126.802 Who decides a HUBZone status protest?
126.803 How will SBA process a HUBZone status protest?
126.804 Will SBA decide all HUBZone status protests?
126.805 What are the procedures for appeals of HUBZone status
determinations?
[[Page 447]]
Subpart I_Penalties
126.900 What penalties may be imposed under this part?
Authority: 15 U.S.C. 632(a), 632(j), 632(p) and 657a.
Source: 63 FR 31908, June 11, 1998, unless otherwise noted.
Subpart A_Provisions of General Applicability
Sec. 126.100 What is the purpose of the HUBZone program?
The purpose of the HUBZone program is to provide federal contracting
assistance for qualified SBCs located in historically underutilized
business zones in an effort to increase employment opportunities,
investment, and economic development in such areas.
Sec. 126.101 Which government departments or agencies are affected
directly by the HUBZone program?
(a) The HUBZone Program applies to all federal departments or
agencies that employ one or more contracting officers.
(b) The HUBZone program does not apply to contracts awarded by state
and local governments. However, state and local governments may use the
List of qualified HUBZone SBCs to identify qualified HUBZone SBCs for
similar programs authorized under state or local law.
[63 FR 31908, June 11, 1998, as amended at 66 FR 4645, Jan. 18, 2001; 69
FR 29420, May 24, 2004]
Sec. 126.102 What is the effect of the HUBZone program on the section
8(d) subcontracting program?
The HUBZone Act of 1997 amended the section 8(d) subcontracting
program to include qualified HUBZone SBCs in the formal subcontracting
plans described in Sec. 125.3 of this title.
Sec. 126.103 What definitions are important in the HUBZone program?
Administrator means the Administrator of the United States Small
Business Administration (SBA).
AA/BD means SBA's Associate Administrator for the Office of Business
Development.
AA/HUB means SBA's Associate Administrator for the HUBZone Program.
ADA/GC&BD means SBA's Associate Deputy Administrator for Government
Contracting and Business Development.
ADA/GC&8(a)BD means SBA's Associate Deputy Administrator for
Government Contracting and 8(a) Business Development.
Agricultural commodity has the same meaning as in section 102 of the
Agricultural Trade Act of 1978 (7 U.S.C. 5602).
Alaska Native Corporation (ANC) has the same meaning as the term
``Native Corporation'' in section 3 of the ANCSA, 43 U.S.C. 1602.
Alaska Native Village has the same meaning as the term ``Native
village'' in section 3 of the ANCSA, 43 U.S.C. 1602.
ANCSA means the Alaska Native Claims Settlement Act, as amended.
Attempt to maintain means making substantive and documented efforts
such as written offers of employment, published advertisements seeking
employees, and attendance at job fairs.
Base closure area means lands within the external boundaries of a
military installation that were closed through a privatization process
under the authority of:
(1) The Defense Base Closure and Realignment Act of 1990 (part A of
title XXIX of division B of Public Law 101-510; 10 U.S.C. 2687 note);
(2) Title II of the Defense Authorization Amendments and Base
Closure and Realignment Act (Pub. L. 100-526; 10 U.S.C. 2687 note);
(3) 10 U.S.C. 2687; or
(4) Any other provision of law authorizing or directing the
Secretary of Defense or the Secretary of a military department to
dispose of real property at the military installation for purposes
relating to base closures of redevelopment, while retaining the
authority to enter into a leaseback of all or a portion of the property
for military use.
Certify means the process by which SBA determines that a HUBZone SBC
is qualified for the HUBZone program and entitled to be included in
SBA's ``List of Qualified HUBZone SBCs.''
[[Page 448]]
Citizen means a person born or naturalized in the United States. SBA
does not consider holders of permanent visas and resident aliens to be
citizens.
Community Development Corporation (CDC) means a corporation that has
received financial assistance under Part 1 of Subchapter A of the
Community Economic Development Act of 1981, 42 U.S.C. 9805-9808.
Concern means a firm which satisfies the requirements in Sec. Sec.
121.105(a) and (b) of this title.
Contract opportunity means a situation in which a requirement for a
procurement exists, none of the exclusions from Sec. 126.605 applies,
and any applicable conditions in Sec. 126.607 are met.
Contracting Officer (CO) has the meaning given that term in 41
U.S.C. 423(f)(5), which defines a CO as a person who, by appointment in
accordance with applicable regulations, has the authority to enter into
a Federal agency procurement contract on behalf of the Government and to
make determinations and findings with respect to such a contract.
County means the political subdivisions recognized as a county by a
state or commonwealth or which is an equivalent political subdivision
such as a parish, borough, independent city, or municipio, where such
subdivisions are not subdivisions within counties.
County unemployment rate is the rate of unemployment for a county
based on the most recent data available from the United States
Department of Labor, Bureau of Labor Statistics. The appropriate data
may be found in the DOL/BLS publication titled ``Supplement 2,
Unemployment in States and Local Areas.'' This publication is available
for public inspection at the Department of Labor, Bureau of Labor
Statistics, Division of Local Area Unemployment Statistics located at 2
Massachusetts Ave., NE, Room 4675, Washington D.C. 20212. A copy is also
available at SBA, Office of AA/HUB, 409 3rd Street, SW, Washington D.C.
20416.
De-certify means the process by which SBA determines that a concern
is no longer a qualified HUBZone SBC and removes that concern from its
List.
Employee means a person (or persons) employed by a HUBZone SBC on a
full-time (or full-time equivalent), permanent basis. Full-time
equivalent includes employees who work 30 hours per week or more. Full-
time equivalent also includes the aggregate of employees who work less
than 30 hours a week, where the work hours of such employees add up to
at least a 40 hour work week. The totality of the circumstances,
including factors relevant for tax purposes, will determine whether
persons are employees of a concern. Temporary employees, independent
contractors or leased employees are not employees for these purposes.
Example 1: 4 employees each work 20 hours per week; SBA will regard
that circumstance as 2 full-time equivalent employees.
Example 2: 1 employee works 20 hours per week and 1 employee works
15 hours per week; SBA will regard that circumstance as not a full-time
equivalent.
Example 3: 1 employee works 15 hours per week, 1 employee works 10
hours per week, and 1 employee works 20 hours per week; SBA will regard
that circumstance as 1 full-time equivalent employee.
Example 4: 1 employee works 30 hours per week and 2 employees each
work 15 hours per week; SBA will regard that circumstance as 1 full-time
equivalent employee.
HUBZone means a historically underutilized business zone, which is
an area located within one or more:
(1) Qualified census tracts;
(2) Qualified non-metropolitan counties;
(3) Lands within the external boundaries of an Indian reservation;
(4) Qualified base closure area; or
(5) Redesignated area.
HUBZone small business concern (HUBZone SBC) means an SBC that is:
(1) At least 51% owned and controlled by 1 or more persons, each of
whom is a United States citizen;
(2) An ANC owned and controlled by Natives (as determined pursuant
to section 29(e)(1) of the ANCSA, 43 U.S.C. 1626(e)(1));
(3) A direct or indirect subsidiary corporation, joint venture, or
partnership of an ANC qualifying pursuant to section 29(e)(1) of the
ANCSA, 43 U.S.C. 1626(e)(1)), if that subsidiary, joint venture, or
partnership is owned and controlled by Natives (as determined pursuant
to section 29(e)(2) of the ANCSA, 43 U.S.C. 1626(e)(2));
[[Page 449]]
(4) Wholly owned by one or more Indian Tribal Governments, or by a
corporation that is wholly owned by one or more Indian Tribal
Governments;
(5) An SBC that is owned in part by one or more Indian Tribal
Governments or in part by a corporation that is wholly owned by one or
more Indian Tribal Governments, if all other owners are either United
States citizens or SBCs;
(6) An SBC that is wholly owned by a CDC or owned in part by one or
more CDCs, if all other owners are either United States citizens or
SBCs; or
(7) An SBC that is a small agricultural cooperative organized or
incorporated in the United States, wholly owned by one or more small
agricultural cooperatives organized or incorporated in the United States
or owned in part by one or more small agricultural cooperatives
organized or incorporated in the United States, provided that all other
owners are small business concerns or United States citizens.
Indian reservation (1) Has the same meaning as the term ``Indian
country'' in 18 U.S.C. 1151, except that such term does not include:
(i) Any lands that are located within a State in which a tribe did
not exercise governmental jurisdiction as of December 21, 2000, unless
that tribe is recognized after that date by either an Act of Congress or
pursuant to regulations of the Secretary of the Interior for the
administrative recognition that an Indian group exists as an Indian
tribe (25 CFR part 83); and
(ii) Lands taken into trust or acquired by an Indian tribe after
December 21, 2000 if such lands are not located within the external
boundaries of an Indian reservation or former reservation or are not
contiguous to the lands held in trust or restricted status as of
December 21, 2000; and
(2) In the State of Oklahoma, means lands that:
(i) Are within the jurisdictional areas of an Oklahoma Indian tribe
(as determined by the Secretary of the Interior); and
(ii) Are recognized by the Secretary of the Interior as of December
21, 2000, as eligible for trust land status under 25 CFR part 151.
Indian Tribal Government means the governing body of any Indian
tribe, band, nation, pueblo, or other organized group or community which
is recognized as eligible for the special programs and services provided
by the United States to Indians because of their status as Indians.
Interested party means any concern that submits an offer for a
specific HUBZone sole source or set-aside contract, any concern that
submitted an offer in full and open competition and its opportunity for
award will be affected by a price evaluation preference given a
qualified HUBZone SBC, the contracting activity's contracting officer,
or SBA.
Lands within the external boundaries of an Indian reservation
include all lands within the perimeter of an Indian reservation, whether
tribally owned and governed or not. For example, land that is
individually owned and located within the perimeter of an Indian
reservation is ``lands within the external boundaries of an Indian
reservation.'' By contrast, an Indian-owned parcel of land that is
located outside the perimeter of an Indian reservation is not ``lands
within the external boundaries of an Indian reservation.''
List refers to the database of qualified HUBZone SBCs that SBA has
certified.
Median household income has the meaning used by the Bureau of the
Census, United States Department of Commerce, in its publication titled,
``1990 Census of Population, Social and Economic Characteristics,''
Report Number CP-2, pages B-14 and B-17. This publication is available
for inspection at any local Federal Depository Library. For the location
of a Federal Depository library, call toll-free (888) 293-6498 or
contact the Bureau of the Census, Income Statistics Branch, Housing and
Economic Statistics Division, Washington D.C. 20233-8500.
Metropolitan statistical area means an area as defined in section
143(k)(2)(B) of the Internal Revenue Code of 1986, (Title 26 of the
United States Code).
Non-metropolitan has the meaning used by the Bureau of the Census,
United States Department of Commerce, in its publication titled, ``1990
[[Page 450]]
Census of Population, Social and Economic Characteristics,'' Report
Number CP-2, page A-9. This publication is available for inspection at
any local Federal Depository Library. For the location of a Federal
Depository Library, call toll-free (888) 293-6498 or contact the Bureau
of the Census, Population Distribution Branch, Population Division,
Washington D.C. 20233-8800.
Person means a natural person.
Principal office means the location where the greatest number of the
concern's employees at any one location perform their work. However, for
those concerns whose ``primary industry'' (see 13 CFR 121.107) is
service or construction (see 13 CFR 121.201), the determination of
principal office excludes the concern's employees who perform the
majority of their work at job-site locations to fulfill specific
contract obligations.
Qualified base closure area means a base closure area for a period
of 5 years either from December 8, 2004, or from the date of final base
closure, whichever is later.
Qualified census tract has the meaning given that term in section
42(d)(5)(C)(ii) of the Internal Revenue Code of 1986.
Qualified HUBZone SBC means a HUBZone SBC that SBA certifies as
qualified for federal contracting assistance under the HUBZone program.
Qualified non-metropolitan county means any county that was not
located in a metropolitan statistical area at the time of the most
recent census taken for purposes of selecting qualified census tracts
under section 42(d)(5)(C)(ii) of the Internal Revenue Code of 1986, and
in which:
(i) The median household income is less than 80% of the non-
metropolitan State median household income, based on the most recent
data available from the Bureau of the Census of the Department of
Commerce; or
(ii) The unemployment rate is not less than 140 percent of the
average unemployment rate for the United States or for the State in
which such county is located, whichever is less, based on the most
recent data available from the Secretary of Labor.
Redesignated area means any census tract or any non-metropolitan
county that ceases to be a qualified HUBZone, except that such census
tracts or non-metropolitan counties may be ``redesignated areas'' only
until the later of:
(1) The date on which the Census Bureau publicly releases the first
results from the 2010 decennial census; or
(2) Three years after the date on which the census tract or non-
metropolitan county ceased to be so qualified. The date on which the
census tract or non-metropolitan county ceases to be qualified is the
date that the official government data, which affects the eligibility of
the HUBZone, is released to the public.
Reside means to live in a primary residence at a place for at least
180 days, or as a currently registered voter, and with intent to live
there indefinitely.
Small agricultural cooperative means an association (corporate or
otherwise), comprised exclusively of other small agricultural
cooperatives, small business concerns, or U.S. citizens, pursuant to the
provisions of the Agricultural Marketing Act, 12 U.S.C. 1141j, whose
size does not exceed the applicable size standard pursuant to part 121
of this chapter. In determining such size, an agricultural cooperative
is treated as a ``business concern'' and its member shareholders are not
considered affiliated with the cooperative by virtue of their membership
in the cooperative.
Small business concern (SBC) means a concern that, with its
affiliates, meets the size standard for its primary industry, pursuant
to part 121 of this chapter.
Small disadvantaged business (SDB) means a concern that is small
pursuant to part 121 of this chapter, is owned and controlled by one or
more socially and economically disadvantaged individuals, tribes, ANCs,
Native Hawaiian Organizations, or CDCs and has been certified pursuant
to subpart A or B, part 124 of this chapter.
Statewide average unemployment rate is the rate based on the most
recent data available from the Bureau of Labor Statistics, United States
Department of Labor, Division of Local Area Unemployment Statistics, 2
Massachusetts Ave., NE., Room 4675, Washington, D.C. 20212. A copy is
also available at SBA,
[[Page 451]]
Office of AA/HUB, 409 3rd Street, SW., Washington DC 20416.
[63 FR 31908, June 11, 1998, as amended at 66 FR 4645, Jan. 18, 2001; 69
FR 29421, May 24, 2004; 70 FR 51248, Aug. 30, 2005]
Subpart B_Requirements to be a Qualified HUBZone SBC
Sec. 126.200 What requirements must a concern meet to receive SBA
certification as a qualified HUBZone SBC?
(a) Concerns owned by Indian Tribal Governments--(1) Ownership. (i)
The concern must be wholly owned by one or more Indian Tribal
Governments;
(ii) The concern must be wholly owned by a corporation that is
wholly owned by one or more Indian Tribal Governments;
(iii) The concern must be owned in part by one or more Indian Tribal
Governments and all other owners are either United States citizens or
SBCs; or
(iv) The concern must be owned in part by a corporation, which is
wholly owned by one or more Indian Tribal Governments, and all other
owners are either United States citizens or SBCs.
(2) Size. The concern, with its affiliates, must meet the size
standard corresponding to its primary industry classification as defined
in part 121 of this chapter.
(3) Other Requirements. The concern must either:
(i) Maintain a principal office located in a HUBZone and ensure that
at least 35% of its employees reside in a HUBZone as provided in
paragraph (b)(4) of this section; or
(ii) Certify that when performing a HUBZone contract, at least 35%
of its employees engaged in performing that contract will reside within
any Indian reservation governed by one or more of the Indian Tribal
Government owners, or reside within any HUBZone adjoining such Indian
reservation. A HUBZone and Indian reservation are adjoining when the two
areas are next to and in contact with each other; and
(iii) The concern will ``attempt to maintain'' (see Sec. 126.103)
that applicable employment percentage stated above during the
performance of any HUBZone contract it receives.
(b) Concerns owned by U.S. citizens, ANCs or CDCs--(1) Ownership.
(i) The concern must be at least 51% unconditionally and directly owned
and controlled by persons who are United States citizens;
Example: A concern that is a partnership owned 50% by an individual
who is a United States citizen and 50% by someone who is not, is not an
eligible concern because it is not at least 51% owned by United States
citizens.
(ii) The concern must be an ANC owned and controlled by Natives
(determined pursuant to section 29(e)(1) of the ANCSA); or a direct or
indirect subsidiary corporation, joint venture, or partnership of an ANC
qualifying pursuant to section 29(e)(1) of ANCSA, if that subsidiary,
joint venture, or partnership is owned and controlled by Natives
(determined pursuant to section 29(e)(2)) of the ANCSA); or
(iii) The concern must be wholly owned by a CDC, or owned in part by
one or more CDCs, if all other owners are either United States citizens
or SBCs;
(2) Size. The concern, together with its affiliates, must qualify as
a small business under the size standard corresponding to its primary
industry classification as defined in part 121 of this chapter.
(3) Principal office. The concern's principal office must be located
in a HUBZone.
(4) Employees. At least 35% of the concern's employees must reside
in a HUBZone. When determining the percentage of employees that reside
in a HUBZone, if the percentage results in a fraction, round up to the
nearest whole number;
Example 1: A concern has 25 employees, 35% or 8.75 employees must
reside in a HUBZone. Thus, 9 employees must reside in a HUBZone.
Example 2: A concern has 95 employees, 35% or 33.25 employees must
reside in a HUBZone. Thus, 34 employees must reside in a HUBZone.
(5) Contract Performance. The concern must represent, as provided in
the application, that it will ``attempt to maintain'' (see Sec.
126.103) having 35% of
[[Page 452]]
its employees reside in a HUBZone during the performance of any HUBZone
contract it receives.
(6) Subcontracting. The concern must represent, as provided in the
application, that it will ensure that it will comply with certain
contract performance requirements in connection with contracts awarded
to it as a qualified HUBZone SBC, as set forth in Sec. 126.700.
(c) Concerns owned by small agricultural cooperatives--(1)
Ownership. (i) A small agricultural cooperative organized or
incorporated in the United States;
(ii) A small business concern wholly owned by one or more small
agricultural cooperatives organized or incorporated in the United
States; or
(iii) A small business concern owned in part by one or more small
agricultural cooperatives organized or incorporated in the United
States, provided that all other owners are small business concerns or
United States citizens.
(2) Size. The small agricultural cooperative must meet the size
standard corresponding to its primary industry classification as defined
in part 121 of this chapter. However, in determining such size, an
agricultural cooperative is treated as a ``business concern'' and its
member shareholders are not considered affiliated with the cooperative
by virtue of their membership in the cooperative.
(3) Principal office. The cooperative's principal office must be
located in a HUBZone.
(4) Employees. At least 35% of the cooperative's employees must
reside in a HUBZone. When determining the percentage of employees that
reside in a HUBZone, if the percentage results in a fraction, round up
to the nearest whole number.
(5) Contract Performance. The concern must represent, as provided in
the application, that it will ``attempt to maintain'' (see Sec.
126.103) having 35% of its employees reside in a HUBZone during the
performance of any HUBZone contract it receives.
(d) Subcontracting. The concern must represent, as provided in the
application, that it will ensure that it will comply with certain
contract performance requirements in connection with contracts awarded
to it as a qualified HUBZone SBC, as set forth in Sec. 126.700.
[69 FR 29422, May 24, 2004, as amended at 70 FR 51249, Aug. 30, 2005]
Sec. 126.201 Who does SBA consider to own a HUBZone SBC?
An owner of a SBC seeking HUBZone certification or a qualified
HUBZone SBC is a person who owns any legal or equitable interest in such
SBC. If an Employee Stock Option Plan owns all or part of the concern,
SBA considers each stock trustee and plan member to be an owner. If a
trust owns all or part of the concern, SBA considers each trustee and
trust beneficiary to be an owner. In addition:
(a) Corporations. SBA considers any person who owns stock, whether
voting or non-voting, to be an owner. SBA considers options to purchase
stock and the right to convert debentures into voting stock to have been
exercised.
Example: U.S. citizens own all of the stock of a corporation. A
corporate officer, a non-U.S. citizen, owns no stock in the corporation
but owns options to purchase stock in the corporation. SBA will consider
the options exercised and the individual to be an owner. Therefore, if
that corporate officer has options to purchase 50% or more of the
corporate stock, pursuant to Sec. 126.200, the corporation would not be
eligible to be a qualified HUBZone SBC because it is not at least 51%
owned and controlled by persons who are U.S. citizens.
(b) Partnerships. SBA considers all partners, whether general or
limited, to be owners in a partnership.
(c) Sole proprietorships. The proprietor is the owner.
(d) Limited liability companies. SBA considers each member to be an
owner of a limited liability company.
[69 FR 29422, May 24, 2004, as amended at 70 FR 51249, Aug. 30, 2005]
Sec. 126.202 Who does SBA consider to control a HUBZone SBC?
Control means both the day-to-day management and long-term decision-
making authority for the HUBZone SBC. Many persons share control of a
concern, including each of those occupying the following positions:
officer, director, general partner, managing
[[Page 453]]
partner, managing member and manager. In addition, key employees who
possess expertise or responsibilities related to the concern's primary
economic activity may share significant control of the concern. SBA will
consider the control potential of such key employees on a case by case
basis.
[69 FR 29422, May 24, 2004]
Sec. 126.203 What size standards apply to HUBZone SBCs?
(a) At time of application for certification. A HUBZone SBC must
meet SBA's size standards for its primary industry classification as
defined in Sec. 121.201 of this title. If SBA is unable to verify that
a concern is small, SBA may deny the concern status as a qualified
HUBZone SBC, or SBA may request a formal size determination from the
responsible Government Contracting Area Director or designee.
(b) At time of initial contract offer. A HUBZone SBC must be small
for the size standard corresponding to the NAICS code assigned to the
contract.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29422, May 24, 2004]
Sec. 126.204 May a qualified HUBZone SBC have affiliates?
A concern may have affiliates provided that the aggregate size of
the concern and all of its affiliates is small as defined in part 121 of
this title, except as otherwise provided for small agricultural
cooperatives in Sec. 126.103.
[70 FR 51249, Aug. 30, 2005]
Sec. 126.205 May participants in other SBA programs be certified as
qualified HUBZone SBCs?
Participants in other SBA programs may be certified as qualified
HUBZone SBCs if they meet all of the requirements set forth in this
part. Participation in other SBA Programs is not a requirement for
participation in the HUBZone Program.
[69 FR 29422, May 24, 2004]
Sec. 126.206 May non-manufacturers be certified as qualified HUBZone
SBCs?
Non-manufacturers (referred to in the HUBZone Act of 1997 as
``regular dealers'') may be certified as qualified HUBZone SBCs if they
meet all of the requirements set forth in Sec. 126.200. For purposes of
this part, a ``non-manufacturer'' is defined in Sec. 121.406(b)(1)(i)
and (ii) of this title.
[66 FR 4645, Jan. 18, 2001]
Sec. 126.207 May a qualified HUBZone SBC have offices or facilities in
another HUBZone or outside a HUBZone?
A qualified HUBZone SBC may have offices or facilities in another
HUBZone or even outside a HUBZone and still be a qualified HUBZone SBC.
However, in order to be certified as a qualified HUBZone SBC and if
required by Sec. 126.200, the concern's principal office must be
located in a HUBZone.
[69 FR 29423, May 24, 2004]
Subpart C_Certification
Sec. 126.300 How may a concern be certified as a qualified HUBZone SBC
and what information will SBA consider?
A concern must apply to SBA for certification. SBA will consider the
information provided by the concern in order to determine whether the
concern qualifies. SBA, in its discretion, may rely solely upon the
information submitted to establish eligibility, may request additional
information, or may verify the information before making a
determination. SBA may draw an adverse inference and deny the
certification where a concern fails to cooperate with SBA or submit
information requested by SBA. If SBA determines that the concern is a
qualified HUBZone SBC, it will issue a certification to that effect and
add the concern to the List.
[69 FR 29423, May 24, 2004]
Sec. 126.301 Is there any other way for a concern to obtain
certification?
No. SBA certification is the only way to qualify for HUBZone program
status.
Sec. 126.302 When may a concern apply for certification?
A concern may apply to SBA and submit the required information
whenever it can represent that it meets the
[[Page 454]]
eligibility requirements, subject to Sec. 126.309. All representations
and supporting information contained in the application must be complete
and accurate as of the date of submission. The application must be
signed by an officer of the concern who is authorized to represent the
concern.
Sec. 126.303 Where must a concern submit its application and
certification?
A concern seeking certification as a HUBZone SBC must submit either
an electronic application to SBA via https://eweb1.sba.gov/hubzone/
internet/ or a written application to the AA/HUB, U.S. Small Business
Administration, 409 3rd Street, SW., Washington, DC 20416. Certification
pages must be validated electronically or signed by a person authorized
to represent the concern.
[69 FR 29423, May 24, 2004]
Sec. 126.304 What must a concern submit to SBA?
(a) To be certified by SBA as a qualified HUBZone SBC, a concern
must submit a completed application and represent to SBA that it meets
the requirements set forth in Sec. 126.200. After submitting the
application, applicants must notify SBA of any material changes that
could affect its eligibility. The concern must also submit any
additional information required by SBA.
(b) Concerns applying for HUBZone status based on a location within
the external boundaries of an Indian reservation must use SBA's maps
(located at https://eweb1.sba.gov/hubzone/internet/) to verify that the
location is within the external boundaries of an Indian reservation. If,
however, SBA's maps indicate that the location is not within the
external boundaries of an Indian reservation and the concern disagrees,
then the concern must submit official documentation from the appropriate
Bureau of Indian Affairs (BIA) Land Titles and Records Office with
jurisdiction over the concern's area, confirming that it is located
within the external boundaries of an Indian reservation. BIA lists the
Land Titles and Records Offices and their jurisdiction in 25 CFR 150.4
and 150.5.
(c) Concerns applying for HUBZone status based on a location within
a qualified base closure area must use SBA's List of Qualified Base
Closure Areas (located at http://www.sba.gov/hubzone) to verify that the
location is within a qualified base closure area. If a concern disagrees
with the failure of SBA's List of Qualified Base Closure Areas to
include a particular area as a qualified base closure area, then the
concern must submit relevant documentation from the Department of
Defense, Office of Economic Adjustment, or the military department
responsible for closing that installation.
(d) If the concern was decertified for failure to notify SBA of a
material change affecting its eligibility pursuant to Sec. 126.501, it
must include with its application for certification a full explanation
of why it failed to notify SBA of the material change. If SBA is not
satisfied with the explanation provided, SBA may decline to certify the
concern.
[69 FR 29423, May 24, 2004, as amended at 70 FR 51249, Aug. 30, 2005]
Sec. 126.305 What format must the certification to SBA take?
A concern must submit the required information in either a written
or electronic application form provided by SBA. An electronic
application must be sufficiently authenticated for enforcement purposes.
Sec. 126.306 How will SBA process the certification?
(a) The AA/HUB or designee is authorized to approve or decline
certifications. SBA will receive and review all certifications, but SBA
will not process incomplete packages. SBA will make its determination
within 30 calendar days after receipt of a complete package whenever
practicable. The decision of the AA/HUB or designee is the final agency
decision.
(b) SBA may request additional information or clarification of
information contained in an application submission at any time.
(c) If SBA approves the application, SBA will send a written notice
to the concern and automatically enter it on the List described in Sec.
126.307.
[[Page 455]]
(d) A decision to deny eligibility must be in writing and state the
specific reasons for denial.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29423, May 24, 2004; 70
FR 58974, Oct. 11, 2005]
Sec. 126.307 Where will SBA maintain the List of qualified HUBZone
SBCs?
Qualified HUBZone SBCs are identified by running a search on CCR/
DSBS (http://dsbs.sba.gov/dsbs/dsp--dsbs.cfm) and are listed on the
HUBZone Web page at https://eweb1.sba.gov/hubzone/internet/general/
approved-firms.cfm. In addition, requesters may obtain a copy of the
List by writing to the AA/HUB at U.S. Small Business Administration, 409
3rd Street, SW., Washington, DC 20416 or at hubzone@sba.gov.
[69 FR 29423, May 24, 2004]
Sec. 126.308 What happens if SBA inadvertently omits a qualified
HUBZone SBC from the List?
A HUBZone SBC that has received SBA's notice of certification, but
is not on the List within 10 business days thereafter, should
immediately notify the AA/HUB in writing at U.S. Small Business
Administration, 409 Third Street, SW., Washington, DC 20416 or via e-
mail at hubzone@sba.gov. The concern must appear on the List to be
eligible for HUBZone contracts.
[69 FR 29423, May 24, 2004]
Sec. 126.309 May a declined or decertified concern seek certification
at a later date?
A concern that SBA has declined or decertified may seek
certification no sooner than one year from the date of decline or
decertification if it believes that it has overcome all reasons for
decline or decertification through changed circumstances and is
currently eligible. See Sec. 126.304(c).
[69 FR 29423, May 24, 2004]
Subpart D_Program Examinations
Sec. 126.400 Who will conduct program examinations?
SBA field staff or others designated by the AA/HUB will conduct
program examinations.
Sec. 126.401 What is a program examination and what will SBA examine?
(a) General. A program examination is an investigation by SBA
officials, which verifies the accuracy of any certification made or
information provided as part of the HUBZone application process or in
connection with a HUBZone contract. Thus, examiners may verify that the
concern currently meets the program's eligibility requirements, and that
it met such requirements at the time of its application for
certification, its most recent recertification, or its certification in
connection with a HUBZone contract.
(b) Scope of review. Examiners may conduct the review, or parts of
the review, at one or all of the concern's offices. SBA will determine
the location of the examination. Examiners may review any information
related to the concern's eligibility requirements including, but not
limited to, documentation related to the location and ownership of the
concern, the employee percentage requirements, and the concern's
``attempt to maintain'' (see Sec. 126.103) this percentage. The concern
must document each employee's residence address through employment
records. The examiner also may review property tax, public utility or
postal records, and other relevant documents. The concern must retain
documentation demonstrating satisfaction of the employee residence and
other qualifying requirements for 6 years from date of submission of the
application and any recertifications issued to SBA.
[69 FR 29423, May 24, 2004]
Sec. 126.402 When may SBA conduct program examinations?
SBA may conduct a program examination at any time after the concern
submits its application, during the processing of the application, and
at any time while the concern is certified as a qualified HUBZone SBC.
[69 FR 29423, May 24, 2004]
Sec. 126.403 May SBA require additional information from a HUBZone
SBC?
(a) At the discretion of the AA/HUB, SBA has the right to require
that a HUBZone SBC submit additional information as part of the
certification
[[Page 456]]
process, or at any time thereafter. SBA may draw an adverse inference
from the failure of a HUBZone SBC to cooperate with a program
examination or provide requested information.
(b) In order to gauge the success of the program, SBA requires that
a HUBZone SBC submit updated financial information and information
relating to the number of its employees.
[69 FR 29424, May 24, 2004]
Subpart E_Maintaining HUBZone Status
Sec. 126.500 How does a qualified HUBZone SBC maintain HUBZone
certification?
Any qualified HUBZone SBC seeking to remain on the List must
recertify every three years to SBA that it remains a qualified HUBZone
SBC (See Sec. 126.501 for ongoing obligations). Concerns wishing to
remain in the program without any interruption must recertify their
continued eligibility to SBA within 30 calendar days after the third
anniversary of their date of certification and each subsequent three-
year period. Failure to do so will result in SBA initiating
decertification proceedings. Once decertified, the concern then would
have to submit a new application for certification pursuant to Sec.
126.309. The recertification to SBA must be in writing and must
represent that the circumstances relative to eligibility that existed on
the date of certification showing on the List have not materially
changed and that the concern meets any new eligibility requirements.
[69 FR 29424, May 24, 2004]
Sec. 126.501 What are a qualified HUBZone SBC's ongoing obligations to
SBA?
A qualified HUBZone SBC must immediately notify SBA of any material
change that could affect its eligibility. Material change includes, but
is not limited to, a change in the ownership, business structure, or
principal office of the concern, or a failure to meet the 35% HUBZone
residency requirement (See Sec. 126.200 for certain eligibility
requirements). The notification must be in writing, and must be sent or
delivered to the AA/HUB to comply with this requirement. Failure of a
qualified HUBZone SBC to notify SBA of such a material change may result
in decertification and removal from the List pursuant to Sec. 126.504.
In addition, SBA may seek the imposition of penalties under Sec.
126.900. If the concern later becomes eligible for the program, it must
apply for certification pursuant to Sec. Sec. 126.300 through 126.306.
[69 FR 29424, May 24, 2004]
Sec. 126.502 Is there a limit to the length of time a qualified
HUBZone SBC may be on the List?
There is no limit to the length of time a qualified HUBZone SBC may
remain on the List so long as it continues to follow the provisions of
Sec. Sec. 126.200, 126.500, and 126.501.
Sec. 126.503 What happens if SBA is unable to verify a qualified
HUBZone SBC's eligibility or determines that the concern is no
longer eligible for the program?
If SBA is unable to verify a qualified HUBZone SBC's eligibility or
determines it is not eligible for the program, SBA may propose
decertification of the concern.
(a) Proposing Decertification. Except as set forth in paragraph (c)
of this section, the Deputy AA/HUB or designee will first notify the
qualified HUBZone SBC in writing that SBA is proposing to decertify it,
the reasons for the proposed de-certification, and that the SBC must
rebut each of the reasons SBA sets forth. The qualified HUBZone SBC will
have 30 calendar days from the date that it receives SBA's notification
to respond, in writing, to the AA/HUB or designee.
(b) SBA's Decision. The AA/HUB or designee will consider the reasons
for proposed decertification and the qualified HUBZone SBC's response
before making a written decision whether to decertify. The AA/HUB may
draw an adverse inference where a qualified HUBZone SBC fails to
cooperate with SBA or provide the information requested. The AA/HUB's
decision is the final agency decision.
(c) Decertifying Pursuant to a Protest. SBA will decertify a
qualified HUBZone SBC and remove its name
[[Page 457]]
from the List without first proposing it for decertification if the AA/
HUB upholds a protest pursuant to Sec. 126.803 and the AA/HUB's
decision is not overturned pursuant to Sec. 126.805.
[69 FR 29424, May 24, 2004, as amended at 70 FR 51250, Aug. 30, 2005]
Sec. 126.504 When is a concern removed from the List?
If SBA determines at any time that a HUBZone SBC is not qualified,
SBA may de-certify the HUBZone SBC, remove the concern from the List,
and seek imposition of penalties pursuant to Sec. 126.900. An adverse
finding in the resolution of a protest also may result in de-
certification and removal from the List, and the imposition of penalties
pursuant to Sec. 126.900. Failure to notify SBA of a material change
which could affect a concern's eligibility will result in immediate de-
certification, removal from the List, and SBA may seek the imposition of
penalties under Sec. 126.900.
[63 FR 31908, June 11, 1998. Redesignated at 69 FR 29424, May 24, 2004]
Subpart F_Contractual Assistance
Sec. 126.600 What are HUBZone contracts?
HUBZone contracts are contracts awarded to a qualified HUBZone SBC
through any of the following procurement methods:
(a) Sole source awards to qualified HUBZone SBCs;
(b) Set-aside awards based on competition restricted to qualified
HUBZone SBCs; or
(c) Awards to qualified HUBZone SBCs through full and open
competition after a price evaluation preference in favor of qualified
HUBZone SBCs.
Sec. 126.601 What additional requirements must a qualified HUBZone SBC
meet to bid on a contract?
(a) In order to submit an offer on a specific HUBZone contract, the
qualified HUBZone SBC, together with its affiliates, must be small under
the size standard corresponding to the NAICS code assigned to the
contract.
(b) A firm must be a qualified HUBZone SBC both at the time of its
initial offer and at the time of award in order to be eligible for a
HUBZone contract.
(c) At the time a qualified HUBZone SBC submits its initial offer,
and where applicable its final offer, on a specific HUBZone contract, it
must certify to the CO that:
(1) It is a qualified HUBZone SBC that appears on SBA's List;
(2) There has been no material change in its circumstances since the
date of certification shown on the List that could affect its HUBZone
eligibility;
(3) It is small under the NAICS code assigned to the procurement;
and
(4) If the qualified HUBZone SBC was certified pursuant to Sec.
126.200(b), it must represent that it will ``attempt to maintain'' (See
Sec. 126.103) the required percentage of employees who are HUBZone
residents during the performance of a HUBZone contract. If the qualified
HUBZone SBC was certified pursuant to Sec. 126.200(a), then it must
represent that at least 35% of its employees engaged in performing the
HUBZone contract reside within any Indian reservation governed by one or
more of its Indian Tribal Government owners or reside within any HUBZone
adjoining any such Indian reservation.
(d) If submitting an offer as a joint venture, each qualified
HUBZone SBC must make the certifications in paragraph (c) of this
section separately under its own name.
(e) A qualified HUBZone SBC may submit an offer on a HUBZone
contract for supplies as a nonmanufacturer if it meets the requirements
of the nonmanufacturer rule set forth at Sec. 121.406(b)(1) of this
chapter, and if the small manufacturer providing the end item for the
contact is also a qualified HUBZone SBC.
(1) There are no waivers to the nonmanufacturer rule for HUBZone
contracts.
(i) SBA will not issue contract-specific waivers as it does for
small business set-aside and 8(a) contracts under Sec. 121.406(b)(3)(i)
of this chapter.
(ii) Class waivers issued under Sec. 121.406(b)(3)(ii) of this
chapter do not apply to HUBZone contracts.
(2) For HUBZone contracts at or below $25,000 in total value, a
qualified
[[Page 458]]
HUBZone SBC may supply the end item of any manufacturer, including a
large business, so long as the product acquired is manufactured or
produced in the United States.
[69 FR 29424, May 24, 2004]
Sec. 126.602 Must a qualified HUBZone SBC maintain the employee
residency percentage during contract performance?
Qualified HUBZone SBCs eligible for the program pursuant to Sec.
126.200(b) must ``attempt to maintain'' (See Sec. 126.103) the required
percentage of employees who reside in a HUBZone during the performance
of any contract awarded to the concern on the basis of its HUBZone
status. Qualified HUBZone SBCs eligible for the program pursuant to
Sec. 126.200(a) must have at least 35% of its employees engaged in
performing a HUBZone contract residing within any Indian reservation
governed by one or more of the concern's Indian Tribal Government
owners, or residing within any HUBZone adjoining any such Indian
reservation. To monitor compliance, SBA will conduct program
examinations, pursuant to Sec. Sec. 126.400 through 126.403, where
appropriate.
[69 FR 29425, May 24, 2004]
Sec. 126.603 Does HUBZone certification guarantee receipt of HUBZone
contracts?
HUBZone certification does not guarantee that a qualified HUBZone
SBC will receive HUBZone contracts. Qualified HUBZone SBCs should market
their capabilities to appropriate contracting activities in order to
increase the prospect that the contracting activity will adopt an
acquisition strategy that includes HUBZone contract opportunities.
[69 FR 29425, May 24, 2004]
Sec. 126.604 Who decides if a contract opportunity for HUBZone set-
aside competition exists?
The contracting officer for the contracting activity makes this
decision.
Sec. 126.605 What requirements are not available for HUBZone
contracts?
A contracting activity may not make a requirement available for a
HUBZone contract if:
(a) The contracting activity otherwise would fulfill that
requirement through award to Federal Prison Industries, Inc. under 18
U.S.C. 4124 or 4125, or to Javits-Wagner-O'Day Act participating non-
profit agencies for the blind and severely disabled, under 41 U.S.C. 46
et seq., as amended; or
(b) An 8(a) participant currently is performing the requirement
through the 8(a)BD program or SBA has accepted the requirement for award
through the 8(a)BD program, unless SBA has consented to release the
requirement from the 8(a)BD program.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29425, May 24, 2004]
Sec. 126.606 May a CO request that SBA release a requirement from the
8(a)BD program for award as a HUBZone contract?
A CO may request that SBA release an 8(a) requirement for award as a
HUBZone contract. However, SBA will grant its consent only where neither
the incumbent nor any other 8(a) participant can perform the
requirement. The request must be made to the AA/BD, who will make a
determination after consulting with the AA/HUB.
[69 FR 29425, May 24, 2004]
Sec. 126.607 When must a contracting officer set aside a requirement
for qualified HUBZone SBCs?
(a) The contracting officer first must review a requirement to
determine whether it is excluded from HUBZone contracting pursuant to
Sec. 126.605.
(b) If the contracting officer determines that Sec. 126.605 does
not apply, the contracting officer shall set aside the requirement for
HUBZone, 8(a) or SDVO SBC contracting before setting aside the
requirement as a small business set-aside.
(c) If the contracting officer decides to set aside the requirement
for competition restricted to qualified HUBZone SBCs, the contracting
officer must:
[[Page 459]]
(1) Have a reasonable expectation after reviewing SBA's list of
qualified HUBZone SBCs that at least two responsible qualified HUBZone
SBCs will submit offers; and
(2) Determine that award can be made at fair market price.
[63 FR 31908, June 11, 1998, as amended at 70 FR 51250, Aug. 30, 2005]
Sec. 126.608 Are there HUBZone contract opportunities at or below the
simplified acquisition threshold or micropurchase threshold?
A CO may make a requirement available as a HUBZone set-aside if it
is at or below the simplified acquisition threshold. In addition, a CO
may award a requirement as a HUBZone contract to a qualified HUBZone SBC
at or below the micropurchase threshold.
[69 FR 29425, May 24, 2004]
Sec. 126.609 What must the contracting officer do if a contracting
opportunity does not exist for competition among qualified
HUBZone SBCs?
If a contract opportunity for competition among qualified SBCs does
not exist under the provisions of Sec. 126.607, the contracting officer
must first consider the possibility of making an award to a qualified
HUBZone SBC on a sole source basis, and then to a small business under
small business set-aside procedures, in that order of precedence. If the
criteria are not met for any of these special contracting authorities,
then the contracting officer may solicit the procurement through another
appropriate contracting method.
Sec. 126.610 May SBA appeal a contracting officer's decision not to
reserve a procurement for award as a HUBZone contract?
(a) The Administrator may appeal a CO's decision not to make a
particular requirement available for award as a HUBZone contract to the
Secretary of the department or head of the agency.
(b) An appeal is initiated by SBA's Procurement Center
Representative to the CO, and may be in response to information supplied
by the AA/HUB, his or her designee, or other interested parties.
[69 FR 29425, May 24, 2004]
Sec. 126.611 What is the process for such an appeal?
(a) Notice of appeal. When the contracting officer rejects a
recommendation by SBA's Procurement Center Representative to make a
requirement available for award as a HUBZone contract, he or she must
notify the Procurement Center Representative as soon as practicable. If
the Administrator intends to appeal the decision, SBA must notify the
contracting officer no later than five business days after receiving
notice of the contracting officer's decision.
(b) Suspension of action. Upon receipt of notice of SBA's intent to
appeal, the contracting officer must suspend further action regarding
the procurement until the head of the contracting activity issues a
written decision on the appeal, unless the head of the contracting
activity makes a written determination that urgent and compelling
circumstances which significantly affect the interests of the United
States compel award of the contract.
(c) Deadline for appeal. Within 15 business days of SBA's
notification to the CO, SBA must file its formal appeal with the
Secretary of the department or head of the agency, or the appeal will be
deemed withdrawn.
(d) Decision. The contracting activity must specify in writing the
reasons for a denial of an appeal brought under this section.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29425, May 24, 2004]
Sec. 126.612 When may a CO award sole source contracts to qualified
HUBZone SBCs?
A contracting officer may award a sole source contract to a
qualified HUBZone SBC only when the contracting officer determines that:
(a) None of the provisions of Sec. Sec. 126.605 or 126.607 apply;
(b) The anticipated award price of the contract, including options,
will not exceed:
(1) $5,000,000 for a requirement within the NAICS codes for
manufacturing; or
(2) $3,000,000 for a requirement within all other NAICS codes;
(c) Two or more qualified HUBZone SBCs are not likely to submit
offers;
[[Page 460]]
(d) A qualified HUBZone SBC is a responsible contractor able to
perform the contract; and
(e) In the estimation of the CO, contract award can be made at a
fair and reasonable price.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29425, May 24, 2004]
Sec. 126.613 How does a price evaluation preference affect the bid of
a qualified HUBZone SBC in full and open competition?
(a)(1) Where a CO will award a contract on the basis of full and
open competition, the CO must deem the price offered by a qualified
HUBZone SBC to be lower than the price offered by another offeror (other
than another SBC) if the price offered by the qualified HUBZone SBC is
not more than 10% higher than the price offered by the otherwise lowest,
responsive, and responsible offeror. For a best value procurement, the
CO must apply the 10% preference to the otherwise successful offer of a
large business and then determine which offeror represents the best
value to the Government, in accordance with the terms of the
solicitation.
(2) Where, after considering the price evaluation adjustment, the
price offered by a qualified HUBZone SBC is equal to the price offered
by a large business (or, in a best value procurement, the total
evaluation points received by a qualified HUBZone SBC is equal to the
total evaluation points received by a large business), award shall be
made to the qualified HUBZone SBC.
Example 1: In a full and open competition, a qualified HUBZone SBC
submits an offer of $98, a non-HUBZone SBC submits an offer of $95, and
a large business submits an offer of $93. The lowest, responsive,
responsible offeror would be the large business. However, the CO must
apply the HUBZone price evaluation preference. In this example, the
qualified HUBZone SBC's offer is not more than 10% higher than the large
business' offer and, consequently, the qualified HUBZone SBC displaces
the large business as the lowest, responsive, and responsible offeror.
Example 2: In a full and open competition, a qualified HUBZone SBC
submits an offer of $103, a non-HUBZone SBC submits an offer of $100,
and a large business submits an offer of $93. The lowest, responsive,
responsible offeror would be from the large business. The CO must then
apply the HUBZone price evaluation preference. In this example, the
qualified HUBZone SBC's offer is more than 10% higher than the large
business' offer and, consequently, the qualified HUBZone SBC does not
displace the large business as the lowest, responsive, and responsible
offeror. In addition, the non-HUBZone SBC's offer at $100 does not
displace the large business' offer because a price evaluation preference
is not applied to change an offer and benefit a non-HUBZone SBC.
Example 3: In a full and open competition, a qualified HUBZone SBC
submits an offer of $98 and a non-HUBZone SBC submits an offer of $93.
The CO would not apply the price evaluation preference in this
procurement because the lowest, responsive, responsible offeror is a
SBC.
(b)(1) For purchases by the Secretary of Agriculture of agricultural
commodities, the price evaluation preferences shall be:
(i) 10%, for the portion of a contract to be awarded that is not
greater than 25% of the total volume being procured for each commodity
in a single invitation for bids (IFB);
(ii) 5%, for the portion of a contract to be awarded that is greater
than 25%, but not greater than 40%, of the total volume being procured
for each commodity in a single IFB; and
(iii) Zero, for the portion of a contract to be awarded that is
greater than 40% of the total volume being procured for each commodity
in a single IFB.
(2) The 10% and 5% price evaluation preferences for agricultural
commodities apply to all offers from qualified HUBZone SBCs up to the
25% and 40% volume limits specified in paragraph (b)(1) of this section.
As such, more than one qualified HUBZone SBC may receive a price
evaluation preference for any given commodity in a single IFB.
Example: There is an IFB for 100,000 pounds of wheat. Bid 1 (from a
large business) is $1/pound for 100,000 pounds of wheat. Bid 2 (from a
HUBZone SBC) is $1.05/pound for 20,000 pounds of wheat. Bid 3 (from a
HUBZone SBC) is $1.04/pound for 20,000 pounds. Bid 3 receives a 10%
price evaluation adjustment for 20,000 pounds, since 20,000 is less than
25% of 100,000 pounds. With the 10% price evaluation adjustment, Bid 1
changes from $20,000 for the first 20,000 pounds to $22,000. Bid 3's
price of $20,800 ($1.04 x 20,000) is now lower than any other bid for
20,000 pounds. Thus, Bid 3 will be accepted for the full 20,000 pounds.
Bid 2 receives a 10% price
[[Page 461]]
evaluation adjustment for that amount of its bid when added to the
volume in Bid 3 that does not exceed 25% of the total volume being
procured. Since 25,000 pounds is 25% of the total volume of wheat under
the IFB, and Bid 3 totaled 20,000 pounds, a 10% price evaluation
adjustment will be applied to the first 5,000 pounds of Bid 2. With the
price evaluation adjustment, the price for Bid 1, as measured against
Bid 2, for 5,000 pounds changes from $5,000 to $5,500. Bid 2's price of
$5,250 ($1.05 x 5,000) is lower than Bid 1 for 5,000 pounds. Bid 2 will
then receive a 5% price evaluation adjustment for the remaining 15,000
pounds, since the total volume of Bids 3 and 2 receiving an adjustment
does not exceed 40% of the total volume of wheat under the IFB (i.e.,
40,000 pounds). With the 5% price evaluation adjustment, Bid 1's price
for the next 15,000 pounds changes from $15,000 to $15,750. Bid 2's
price for that 15,000 pounds is also $15, 750 ($1.05 x 15,000). Because
the evaluation price for Bid 2 is not more than 10% higher than the
price offered by Bid 1, Bid 2's price is deemed to be lower than the
price offered by Bid 1. Since the evaluation price for both the first
5,000 pounds (receiving a 10% price evaluation adjustment) and the
remaining 15,000 pounds (receiving a 5% price evaluation adjustment) is
less than Bid 1, Bid 2 will be accepted for the full 20,000 pounds.
(c) For purchases by the Secretary of Agriculture of agricultural
commodities for export operations through international food aid
programs administered by the Farm Service Agency, the price evaluation
preference shall be 5% on the first portion of a contract to be awarded
that is not greater than 20% of the total volume being procured for each
commodity in a single IFB.
(d) A contract awarded to a qualified HUBZone SBC under a preference
described in paragraph (b) of this section shall not be counted toward
the fulfillment of any requirement partially set aside for competition
restricted to SBCs.
[69 FR 29425, May 24, 2004, as amended at 70 FR 51250, Aug. 30, 2005]
Sec. 126.614 How does a CO apply HUBZone and SDB price evaluation
preferences in full and open competition?
A CO may receive offers from both qualified HUBZone SBCs and SDB
concerns, or from concerns that qualify as both, during a full and open
competition. The CO must first apply the SDB price evaluation preference
described in 10 U.S.C. 2323 to all appropriate offerors. The CO must
then apply the HUBZone price evaluation preference as described in Sec.
126.613 to all appropriate offerors. A concern that is both a qualified
HUBZone SBC and an SDB must receive the benefit of both the HUBZone
price evaluation preference described in Sec. 126.613 and the SDB price
evaluation preference described in 10 U.S.C. 2323 and the Federal
Acquisition Streamlining Act, section 7102(a)(1)(B), Public Law 103-355,
in a full and open competition.
Example 1: In a full and open competition, a qualified HUBZone SBC
(but not an SDB) submits an offer of $102; an SDB (but not a qualified
HUBZone SBC) submits an offer of $107; and a large business submits an
offer of $93. The CO first applies the SDB price evaluation preference
and adds 10% to the qualified HUBZone SBC's offer thereby making that
offer $112.2, and to the large business's offer thereby making that
offer $102.3. As a result, the large business is the lowest, responsive,
and responsible offeror. Next, the CO applies the HUBZone preference
and, since the qualified HUBZone SBC's offer is not more than 10% higher
than the large business's offer, the CO must deem the price offered by
the qualified HUBZone SBC to be lower than the price offered by the
large business.
Example 2: A qualified HUBZone SBC (but not an SDB) submits an offer
of $102; a qualified HUBZone SBC that is also an SDB submits an offer of
$105; an SDB (but not a qualified HUBZone SBC) submits an offer of $107;
a small business concern (but not a qualified HUBZone SBC or an SDB)
submits an offer of $100; and a large business submits an offer of $93.
The CO must first apply the SDB price evaluation preference to establish
the lowest, responsive, and responsible offeror. Thus, the qualified
HUBZone SBC's offer becomes $112.2; the qualified HUBZone SBC/SDB's
offer remains $105; the SDB's offer remains $107; the small business
concern's offer becomes $110; and the large business's offer becomes
$102.3. As a result of the SDB price evaluation preference, the large
business is the lowest, responsive, and responsible offeror. Next, the
CO must apply the HUBZone price evaluation preference and if a qualified
HUBZone SBC's price is not more than 10% higher than the large
business's price, the CO must deem its price to be lower than the large
business's price. In this example, the qualified HUBZone price of $112.2
is not more than 10% higher than the large business's price, however,
the qualified HUBZone/SDB's price of $105 is also not more than 10%
higher than the large business's price and is lower than the qualified
HUBZone SBC's price.
[[Page 462]]
Consequently, the CO must deem the price of the qualified HUBZone/SDB as
the lowest, responsive, and responsible offeror.
[69 FR 29426, May 24, 2004]
Sec. 126.615 May a large business participate on a HUBZone contract?
A large business may not participate as a prime contractor on a
HUBZone award but may participate as a subcontractor to an otherwise
qualified HUBZone SBC, subject to the contract performance requirements
set forth in Sec. 126.700.
Sec. 126.616 What requirements must a joint venture satisfy to submit
an offer on a HUBZone contract?
A joint venture may submit an offer on a HUBZone contract if the
joint venture meets all of the following requirements:
(a) HUBZone joint venture. A qualified HUBZone SBC may enter into a
joint venture with another qualified HUBZone SBC for the purpose of
submitting an offer for a HUBZone contract. The joint venture itself
need not be certified as a qualified HUBZone SBC.
(b) Size of concerns. (1) A joint venture of two or more qualified
HUBZone SBCs may submit an offer for a HUBZone contract so long as each
concern is small under the size standard corresponding to the NAICS code
assigned to the contract and the HUBZone joint venture in the aggregate
may exceed the size standard provided the procurement meets the
following conditions:
(i) For a procurement having a revenue-based size standard, the
procurement exceeds half the size standard corresponding to the NAICS
code assigned to the contract; and
(ii) For a procurement having an employee-based size standard, the
procurement exceeds $10 million.
(2) For a procurement that does not exceed the applicable dollar
amount specified in paragraph (b)(1) of this section, a joint venture of
two or more qualified HUBZone SBCs may submit an offer for a HUBZone
contract so long as the qualified HUBZone SBCs in the aggregate are
small under the size standard corresponding to the NAICS code assigned
to the contract.
(c) Performance of work. The aggregate of the qualified HUBZone SBCs
to the joint venture, not each concern separately, must perform the
applicable percentage of work required by 13 CFR 125.6.
[69 FR 29426, May 24, 2004]
Sec. 126.617 Who decides contract disputes arising between a qualified
HUBZone SBC and a contracting activity after the award of a
HUBZone contract?
For purposes of the Disputes Clause of a specific HUBZone contract,
the contracting activity will decide disputes arising between a
qualified HUBZone SBC and the contracting activity.
[69 FR 29426, May 24, 2004]
Sec. 126.618 How does a HUBZone SBC's participation in a Mentor-
Prot[eacute]g[eacute] relationship affect its participation in
the HUBZone Program?
(a) Qualified HUBZone SBCs may enter into Mentor-
Prot[eacute]g[eacute] relationships in connection with other Federal
programs, provided that such relationships do not conflict with the
underlying HUBZone requirements.
(b) For purposes of determining whether an applicant to the HUBZone
Program or a HUBZone SBC qualifies as small under part 121 of this
chapter, SBA will not find affiliation between the applicant or
qualified HUBZone SBC and the firm that is its mentor in a Federally-
approved mentor-Prot[eacute]g[eacute] relationship (including a mentor
that is other than small) on the basis of the mentor-
Prot[eacute]g[eacute] agreement.
(c)(1) A qualified HUBZone SBC that is a prime contractor on a
HUBZone contract may team with and subcontract work to its mentor.
(i) The HUBZone SBC must meet the applicable performance of work
requirement set forth in Sec. 125.6(b) of this chapter.
(ii) SBA may find affiliation between a prime HUBZone contractor and
its mentor subcontractor where the mentor will perform primary and vital
requirements of the contract. See Sec. 121.103(f)(4) of this chapter.
(2) A qualified HUBZone SBC may not joint venture with its mentor on
a
[[Page 463]]
HUBZone contract unless the mentor is also a qualified HUBZone SBC.
[69 FR 29427, May 24, 2004]
Subpart G_Contract Performance Requirements
Sec. 126.700 What are the performance of work requirements for HUBZone
contracts?
(a) A prime contractor receiving an award as a qualified HUBZone SBC
must meet the performance of work requirements set forth in Sec.
125.6(c) of this chapter.
(b) In addition to the requirements set forth in Sec. 125.6(c), one
or more qualified HUBZone SBCs must spend at least 50% of the cost of
the contract incurred for personnel on its own employees or employees of
other qualified HUBZone SBCs.
(1) A qualified HUBZone SBC prime contractor receiving a HUBZone
contract for general construction may meet this requirement itself by
expending at least 50% of the cost of the contract incurred for
personnel on its employees or it may subcontract at least 35% of the
cost of the contract performance incurred for personnel to one or more
qualified HUBZone SBCs. A qualified HUBZone SBC prime contractor may
not, however, subcontract more than 50% of the cost of the contract
incurred for personnel to non-qualified HUBZone SBCs.
(2) A qualified HUBZone SBC prime contractor receiving a HUBZone
contract for specialty construction may meet this requirement itself by
expending at least 50% of the cost of the contract incurred for
personnel on its employees or it may subcontract at least 25% of the
cost of the contract performance incurred for personnel to one or more
qualified HUBZone SBCs. A qualified HUBZone SBC prime contractor may
not, however, subcontract more than 50% of the cost of the contract
incurred for personnel to non-qualified HUBZone SBCs.
(c) A contracting officer may waive the 50% requirement set forth in
paragraph (b) of this section for a particular procurement after
determining that at least two qualified HUBZone SBCs cannot meet the
requirement. Where a waiver is granted, the qualified HUBZone SBC prime
contractor must still meet the performance of work requirements set
forth in Sec. 125.6(c) of this chapter.
[70 FR 51250, Aug. 30, 2005]
Sec. 126.701 Can these subcontracting percentages requirements change?
Yes. The Administrator may change the subcontracting percentage
requirements if the Administrator determines that such action is
necessary to reflect conventional industry practices.
Sec. 126.702 How can the subcontracting percentage requirements be
changed?
SBA may change the required subcontracting percentage for a specific
industry if the Administrator determines that such action is necessary
to reflect conventional industry practices among SBCs that are below the
numerical size standard for businesses in that industry group. The
procedures for requesting changes in subcontracting percentages are set
forth in Sec. 125.6 of this chapter.
[69 FR 29427, May 24, 2004]
Subpart H_Protests
Sec. 126.800 Who may protest the status of a qualified HUBZone SBC?
(a) For sole source procurements. SBA or the contracting officer may
protest the proposed awardee's qualified HUBZone SBC status.
(b) For all other procurements. SBA, the CO, or any other interested
party may protest the apparent successful offeror's qualified HUBZone
SBC status.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29427, May 24, 2004]
Sec. 126.801 How does one file a HUBZone status protest?
(a) General. The protest procedures described in this part are
separate from those governing size protests and appeals. All protests
relating to whether a qualified HUBZone SBC is other than small for
purposes of any Federal program are subject to part 121 of this chapter
and must be filed in accordance with that part. If a protester protests
both the size of the HUBZone SBC
[[Page 464]]
and whether the concern meets the HUBZone qualifying requirements set
forth in Sec. 126.200, SBA will process protests concurrently, under
the procedures set forth in part 121 of this chapter and this part. SBA
does not review issues concerning the administration of a HUBZone
contract.
(b) Format. Protests must be in writing and state all specific
grounds for the protest. A protest merely asserting that the protested
concern is not a qualified HUBZone SBC, without setting forth specific
facts or allegations, is insufficient.
(c) Filing. (1) An interested party other than a contracting officer
or SBA must submit its written protest to the contracting officer.
(2) A contracting officer and SBA must submit their protest to the
AA/HUB.
(3) Protestors may deliver their protests in person, by facsimile,
by express delivery service, or by U.S. mail (postmarked within the
applicable time period).
(d) Timeliness. (1) For negotiated acquisitions, an interested party
must submit its protest by close of business on the fifth business day
after notification by the contracting officer of the apparent successful
offeror.
(2) For sealed bid acquisitions:
(i) An interested party must submit its protest by close of business
on the fifth business day after bid opening, or
(ii) If the price evaluation preference was not applied at the time
of bid opening, by close of business on the fifth business day from the
date of identification of the apparent successful offeror.
(3) Any protest submitted after the time limits is untimely, unless
it is from SBA or the CO.
(4) Any protest received prior to bid opening or notification of
intended award, whichever applies, is premature.
(e) Referral to SBA. The CO must forward to SBA any non-premature
protest received, notwithstanding whether he or she believes it is
sufficiently specific or timely. The CO must send the protests, along
with a referral letter, to AA/HUB, U.S. Small Business Administration,
409 3rd Street, SW, Washington, DC 20416. The CO's referral letter must
include information pertaining to the solicitation that may be necessary
for SBA to determine timeliness and standing, including: the
solicitation number; the name, address, telephone number and facsimile
number of the CO; the type of HUBZone contract at issue; if the
procurement was conducted using full and open competition with a HUBZone
price evaluation preference, and whether the protester's opportunity for
award was affected by the preference; if the procurement was a HUBZone
set-aside, whether the protester submitted an offer; whether the
protested concern was the apparent successful offeror; whether the
procurement was conducted using sealed bid or negotiated procedures; the
bid opening date, if applicable; when the protest was submitted to the
CO; and whether a contract has been awarded.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29427, May 24, 2004]
Sec. 126.802 Who decides a HUBZone status protest?
The AA/HUB or designee will determine whether the concern has
qualified HUBZone status.
Sec. 126.803 How will SBA process a HUBZone status protest?
(a) Notice of receipt of protest. (1) SBA immediately will notify
the contracting officer and the protestor of the date SBA receives a
protest and whether SBA will process the protest or dismiss it in
accordance with Sec. 126.804.
(2) If SBA determines the protest is timely and sufficiently
specific, SBA will notify the protested HUBZone SBC of the protest and
the identity of the protestor. The protested HUBZone SBC may submit
information responsive to the protest within 5 business days.
(b) Time period for determination. (1) SBA will determine the
HUBZone status of the protested HUBZone SBC within 15 business days
after receipt of a protest.
(2) If SBA does not contact the contracting officer within 15
business days, the contracting officer may award the contract, unless
the contracting officer has granted SBA an extension.
(3) The contracting officer may award the contract after receipt of
a
[[Page 465]]
protest if the contracting officer determines in writing that an award
must be made to protect the public interest.
(c) Notice of determination. SBA will notify the contracting
officer, the protestor, and the protested concern of its determination.
(d) Effect of determination. The determination is effective
immediately and is final unless overturned on appeal by the ADA/GC&BD,
pursuant to Sec. 126.805. If SBA upholds the protest, SBA will
decertify the concern.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29427, May 24, 2004]
Sec. 126.804 Will SBA decide all HUBZone status protests?
SBA will decide all protests not dismissed as premature, untimely or
non-specific.
Sec. 126.805 What are the procedures for appeals of HUBZone status
determinations?
(a) Who may appeal. The protested HUBZone SBC, the protestor, or the
CO may file appeals of protest determinations with the ADA/GC&BD.
(b) Timeliness of appeal. The ADA/GC&BD must receive the appeal no
later than five business days after the date of receipt of the protest
determination. SBA will dismiss any appeal received after the five-day
period.
(c) Method of Submission. The party appealing the decision may
deliver its appeal in person, by facsimile, by express delivery service,
or by U.S. mail (postmarked within the applicable time period).
(d) Notice of appeal. The party bringing an appeal must provide
notice of the appeal to the contracting activity contracting officer and
either the protested HUBZone SBC or original protestor, as appropriate.
(e) Grounds for appeal. (1) SBA will re-examine a protest
determination only if there was a clear and significant error in the
processing of the protest or if the AA/HUB failed completely to consider
a significant fact contained within the information supplied by the
protestor or the protested HUBZone SBC.
(2) SBA will not consider additional information or changed
circumstances that were not disclosed at the time of the AA/HUB's
decision or that are based on disagreement with the findings and
conclusions contained in the determination.
(f) Contents of appeal. The appeal must be in writing. The appeal
must identify the protest determination being appealed and set forth a
full and specific statement as to why the decision is erroneous or what
significant fact the AA/HUB failed to consider.
(g) Completion of appeal after award. An appeal may proceed to
completion even after award of the contract that prompted the protest,
if so desired by the protested HUBZone SBC, or where SBA determines that
a decision on appeal is meaningful.
(h) Decision. The ADA/GC&BD will make a decision within five
business days of receipt of the appeal, if practicable, and will base
his or her decision only on the information and documentation in the
protest record as supplemented by the appeal. SBA will provide a copy of
the decision to the CO, the protestor, and the protested HUBZone SBC,
consistent with law. The ADA/GC&BD's decision is the final agency
decision.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29427, May 24, 2004]
Subpart I_Penalties
Sec. 126.900 What penalties may be imposed under this part?
(a) Suspension or debarment. The Agency debarring official may
suspend or debar a person or concern pursuant to the procedures set
forth in part 145 of this title. The contracting agency debarring
official may debar or suspend a person or concern under the Federal
Acquisition Regulation, 48 CFR Part 9, subpart 9.4.
(b) Civil penalties. Persons or concerns are subject to civil
penalties under the False Claims Act, 31 U.S.C. 3729-3733, and under the
Program Fraud Civil Remedies Act, 31 U.S.C. 3801-3812, and any other
applicable laws.
(c) Criminal penalties. Persons or concerns are subject to severe
criminal penalties for knowingly misrepresenting the HUBZone status of a
small business concern in connection with procurement programs pursuant
to section 16(d) of the Small Business Act, 15
[[Page 466]]
U.S.C. 645(d), as amended; 18 U.S.C. 1001; and 31 U.S.C. 3729-3733.
Persons or concerns also are subject to criminal penalties for knowingly
making false statements or misrepresentations to SBA for the purpose of
influencing any actions of SBA pursuant to section 16(a) of the Small
Business Act, 15 U.S.C. 645(a), as amended, including failure to correct
``continuing representations'' that are no longer true.
[63 FR 31908, June 11, 1998, as amended at 69 FR 29428, May 24, 2004]