New Census Data Threatens HUBZone Contractors SBA says up to half of all HUBZone companies may be dropped from the program after the Census Bureau releases 2010 data this fall. By law, census data is used to determine which areas qualify as HUBZones. Generally HUBZone areas must have low income or high unemployment. Changes in the new census are likely to show that many areas no longer qualify. If some of a firm’s employees live in an area that is no longer a HUBZone, those employees would not count in determining the firm’s eligibility for the program. HUBZone companies are required to draw 35% of their workforce from a HUBZone. Many of the affected companies are located in what are called “redesignated areas”— areas that at one time were in a HUBZone but are no longer considered to be HUBZones because of changes in census data. Congress granted a grace period for such companies to stay in the HUBZone program temporarily, but the grace period for many will expire with the release of 2010 data. A new SBA rule will allow decertified companies to re-apply for the program after 90 days, rather than one year under the previous rule. However, the Venable law firm warns that the wait may be considerably longer because SBA would have to deal with a large number of applications for recertification. SBA says a company can avoid decertification by moving its principal office to an area that still qualifies as a HUBZone. If a company learns that its area is going to lose HUBZone status, the company can voluntarily decertify before it receives a formal notice, reducing the waiting period before it can re-apply. Companies whose employees no longer live in a HUBZone would need to hire new employees that fit the qualification. The most immediate impact would fall on companies that have submitted an offer on a contract, but are decertified before the contract is awarded. HUBZone rules require a company to be certified at the time of award as well as at the time an offer is submitted. SBA’s interim rule allowing companies to re-apply 90 days after decertification was effective July 21. Comments are due Aug. 22.