Historically Underutilized Business Zone (HUBZONE) and Future Endeavors

Published: November 07, 2018

Contracting TrendsHUBZoneSet-AsideSmall BusinessSole-source Contracting

Background on HUBZones

The HUBZone program first came into effect in 1998 after US Congress created the HUBZone Empowerment Act. The purpose of this act was to give small businesses located in Historically Underutilized Business Zones the ability to compete for federal procurement opportunities. Through the use of this program, employment rates and economic development were expected to rise.

HUBZones are typically found in communities where the average household has low income and/or high unemployment rates. Although this set-aside was created to allow for further development amongst these areas, this set-aside has been continuously underutilized by the government. Each year, the government has a goal of awarding 3% of its prime contracts to HUBZone entities. However, this is the only set-aside since 2013 that has repeatedly fallen below the 3% goal, with the average percentage being 1.76%. By issuing additional HUBZone sole source contracts, HUBZone set-asides, and partnerships with other/larger firms, the government can get closer to reaching that 3% goal.

Small Businesses that are eligible for the HUBZone program should register themselves as it is beneficial for both the firm and the federal government. The more qualified HUBZone firms, the closer the government gets to reaching the 3% goal. In addition, HUBZones are granted price evaluation preferences up to 10% in unrestricted bids. During full and open competition, contracting officers are given the ability to add 10% to the price offers received from vendors, except for HUBZones. This is useful when determining which proposal represents the best value for the government as it gives HUBZones a greater advantage.

Top HUBZone Opportunities to look out for

Out of the top 10 opportunities, the Department of Defense is the leading buyer when it comes to HUBZone set-asides, with the Navy and Army tied for second. Due to this, competition within these agencies are likely to be higher. However, in other agencies where this is not the case, vendors can use this to their benefit and pre-market themselves in hopes of swaying these areas of the government to issue more HUBZone set-asides and sole source contracts.

Currently, WHS Technical Engineering Analytical Management Support Program BPA is the highest valued HUBZone set-aside in GovWin’s database. The value sits at $995,500,000 with a total of seven teams and 33 BPA awarded contracts, meaning this will be a top opportunity to compete for. Especially valuable is the ability for those with less experience to team with other vendors and prepare themselves for future competition.

Coming in second is AEC Architect Engineering Environmental Services. 20+ vendors were awarded this opportunity for a total value of $500,000,000. Similar to the previous opportunity, this allows for teaming and further practice within the industry.

The fourth opportunity, AEC Multiple Award Construction Contract NAVFAC Northwest, has a total value of $240M, with each task order ranging from $1M-$20M. This new requirement comes out of the Navy and is specifically set aside for HUBZones and SDVOSBs. Six awards are expected.

USACE AEC HUBZone Construction Services within the Louisville District Mission Boundaries is the sixth highest valued HUBZone opportunity in GovWin’s database. Four awards were issued for the incumbent contract (T&T Construction Enterprises LLC, Calista Corporation, Pentacon LLC, and Environet Inc). The incumbent contracts are set to expire in November 2019. Deltek estimates that a Solicitation for the follow-on will be issued in August 2019 and award in November 2019.

Technical, Administrative, Management, Professional, Augmentation Staff Services Domestic HUBZone is the ninth top HUBZone opportunity. Out of the last four mentioned, the incumbent contract is held by only one vendor. With the value estimated at $103 Million for the incumbent, Deltek anticipates the follow-on may be of similar value. Due to the large value and only one award expected, competition for this requirement may be high.

For the last opportunity, USACE AEC Barstow ECS TEMF and Warehouse, the magnitude of this project is anticipated to be between $25,000,000 and $100,000,000. An incumbent contract is not present due to this being a construction requirement.

When further analyzing these opportunities, a noticeable trend comes to the forefront. Although not true to all HUBZone opportunities, it appears that the government tends to issue multiple awards for larger HUBZone requirements. As previously stated, this is beneficial for those that are hoping to gain more experience and prove to the government and other vendors that they are capable of handling these tasks. With HUBZones being underutilized, it is important to pay close attention to specific prospects coming out of the government designed for these set-asides and take advantage of the perks that come with being HUBZone certified.

GovWin's Federal research team has produced a series of reports studying the Top Federal Opportunities for FY 2019 including top unrestricted opportunities, top set-aside opportunities, top civilian opportunities and top AEC opportunities. Learn more and request your copy of each exclusive report HERE.