Those amendments to our rules appeared in the Federal Register on Jan. 18, 2001. The amendments impact four areas:
Clarification on applicability to state and local governments
- This makes clear that the HUBZone program does not apply to contracts awarded by state and local governments, since the HUBZone Act only applies to the federal government.
Definition of ‘principal office
- The amended rule says that for concerns whose primary industry is services or construction (i.e., other than manufacturing), the principal office would be the location where the greatest number of the concern’s employees perform their work, but excluding those employees who perform their work at job-site locations to fulfill specific contract obligations.
Rules on affiliation
- Before the amendment, regulations permitted a qualified HUBZone SBC to have affiliates only if those affiliates are qualified HUBZone SBCs, participants in the 8(a) Business Development Program, or woman-owned businesses (WOBs). But this was all seen as overly restrictive.
- Accordingly, SBA eliminated these restrictions on affiliation and allows a qualified HUBZone SBC to have affiliates as long as it, when combined with its affiliates, is still small pursuant to SBA’s size regulations.
- In addition, the removal allows SBCs in non-HUBZone areas to establish new business ventures in HUBZones. This is especially critical due to the historical lack of investment capital in HUBZones and the need for such capital to establish new businesses that will promote economic development and create jobs.
Procurement requirements for non-manufacturers
- SBA amended the provisions concerning non-manufacturers.
- Under the amended rule, non-manufacturer HUBZone concerns no longer are required to demonstrate that they can provide product or products manufactured by qualified HUBZone SBCs.
- SBA now allows a qualified HUBZone SBC to use any manufacturer, including a large business, for HUBZone contracts at or below $25,000 in total value. This provision encourages the participation of small business non-manufacturers that are located in HUBZones.
- Contracts above $25,000 will still require that the HUBZone non-manufacturer provide the product of a HUBZone manufacturer