SmallGovCon: The HUBZone 35% Residency Requirement in Between Certifications

As we noted above, “[i]n order to be eligible for HUBZone certification, at least 35% of a concern’s employees must reside in a HUBZone.” 13 C.F.R. § 126.200(d)(1). But, of course, certification is only one part of the HUBZone program. What about everything afterwards, like bidding on or performing contracts?

Bidding on Contracts

Over ten years ago, the HUBZone rules were a fair bit stricter with regards to when a HUBZone business absolutely had to demonstrate that it met the 35% employee HUBZone residency requirement. We discussed this in a post from 2012 (Yes, 2012 was over ten years ago, no, I don’t like that fact any more than you). At that time, a HUBZone concern not only had to meet the 35% requirement when it applied for the program or recertified. It also had to meet the 35% requirement at the time it made any initial offers on a solicitation, as well as when it actually was issued an awarded contract…

Now, some of you may now be wondering about the “attempt to maintain” requirement. After all,  13 C.F.R. § 126.200(e)(1) notes that “At the time of application, a concern must certify that it will ‘attempt to maintain’ having at least 35% of its employees reside in a HUBZone during the performance of any HUBZone contract it receives.” Doesn’t this mean that a HUBZone concern has to show it is meeting that 35% requirement throughout the performance of a HUBZone set aside contract?

While SBA certainly wants HUBZone concerns to try, the answer appears to be no. First, the “attempt to maintain” requirement doesn’t mandate that HUBZone concerns be at that 35% requirement for the duration of the performance of a HUBZone contract. It really just asks that they try. For the HUBZone program, “Attempt to maintain means making substantive and documented efforts, such as written offers of employment, published advertisements seeking employees, and attendance at job fairs and applies only to concerns during the performance of any HUBZone contract. A certified HUBZone small business concern that has less than 20% of its total employees residing in a HUBZone during the performance of a HUBZone contract has failed to attempt to maintain the HUBZone residency requirement.” 13 C.F.R. § 126.103. In other words, as long as a company is actually trying to meet or exceed the 35% requirement and at least 20% of its employees are HUBZone residents, it meets the “attempt to maintain” requirement and can continue performing… Read the full article here.