BY NANCY Cotten HIRST

Contributing Editor, Delta Business Journal

Beginning this month, small businesses in a large portion of the Delta will have a new advantage in bidding on contracts with the Federal Government. The HUBZone Program is part of the Small Business Reauthorization Act of 1997 and is intended to stimulate investment and help create jobs in areas that traditionally haven't had major business development.

In fact, the program title, HUBZone, is an acronym for historically underutilized business zones. Intended to help accomplish welfare to work goals, the program seeks to create jobs by insuring that a significant portion of federal government contracting is given to businesses in these designated HUBZones.

What does this mean to Delta businesses? Basically, that those businesses located within the zones have a distinct competitive advantage in bidding on federal contracts. This is to be accomplished in two ways. One part of the act sets aside a small but significant percentage of contracts to be offered only to HUBZone businesses. This restricted competition allows companies to negotiate sole source contracts in some instances and to compete only with other HUBZone firms in other bidding situations.

Another part of the act gives HUBZone firms a 10% price advantage in bidding that is open to everyone. In other words, if a qualified HUBZone business is bidding against a non-HUBZone business, the price offered by a HUBZone firm will be deemed the lower price if it is no more than 10% higher than the lowest price offered by other responders.

While these preferences are distinct advantages, not all Delta businesses will benefit from the act. In order to qualify, a business must have its primary offices (not subsidiary) within the HUBZone itself. In addition, 35% of the business employees must reside within the HUBZone. If a business meets these criteria, it still must be certified by the Small Business Administration (SBA), which is the administering agency for the program.

Pat Thomas, Director of the Delta Contract Procurement Center in Greenville, believes that every business interested in doing business with the federal government should look into the program. He says that while the HUBZones are restricted to certain census tracts and to the already designated Empowerment Zone, that most of the Delta counties have HUBZone tracts.

ÒOur job is to assist businesses in opening up new markets through government contracting,Ó Thomas explains. ÒWe see a great deal of potential Delta business with this act. WeÕre looking at everything from supplying lumber, to cut and sew operations, metal fabricators, tool shops, and that is just the beginning of the ideas.Ó

HUBZones are based, in rural areas, on census tracts that show either high poverty levels or high unemployment levels. Several tracts in the Delta meet both criteria and would be obvious candidates, but Thomas encourages any interested business to check its census tract location, because it could be located in a HUBZone even though there is good employment in the area. Tunica County, for instance, wouldn't qualify based on unemployment figures, due to job growth in the casino industry. It does qualify, however, based on a poverty rate of over 20%.

Washington County is just the reverse. While its median household income wouldn't qualify, the unemployment rate is high enough for the designation. In either county, however, a business would still need to check the individual census tracts to make sure it is located within a designated area.

One goal of the act is to encourage businesses to locate in these historically underutilized areas. It would theoretically be possible, for instance, for a business located outside a HUBZone to move into the zone to take advantage of the benefits of the act. Unless a business looks forward to a great deal of government contracting, this idea doesn't appear to be feasible unless a move would only entail a small business office.

For businesses located within a zone, the small amount of paperwork necessary to be certified by the SBA seems a small price to pay for such a significant advantage in contract procurement. The only criteria to be met are those of location and employment. The act is ethnically generic, meaning that the business doesn't need to meet minority ownership standards.

This caused some original problems in passage of the act since businesses qualifying under the 8(a) program were concerned about dilution of their preferences. This bill will not dilute the 8(a) program, according to people familiar with both programs. They say that nearly 50% of 8(a) contracts are awarded in the Washington, D.C. area and that most of the rest of the awards went to firms in California and other affluent areas of the country.

The targets of this bill are blighted urban areas and underdeveloped rural areas. While there may be many minority-owned businesses located in or interested in locating in these areas, this program will actually provide additional opportunities for them.

All types of contracts normally authorized under the Federal Acquisition Regulation processes will be available to companies interested in bidding on federal business. For Delta businesses which provide the types of goods and services normally purchased by the federal government, assistance in determining your HUBZone status and eligibility is available through Thomas's office and the SBA. DBJ

HOME || SUBSCRIBE || CIRCULATION || ADVERTISING || CONTACT DBJ