HUBZone rules changes posted

Selected key changes in the HUBZone regulations were published July 25 as part of a more comprehensive set of changes to mentor-protégé rules for all socio-economic categories.

In addition to significant changes to the HUBZone mentor-protégé rules, the new HUBZone sections revise the timeline for processing and approving applications for HUBZone certification. Under the revised rule, SBA commits to making its certification decision within 90 days after receipt of a complete application package. The current timeline calls for a decision within 30 days. SBA does not explain why the processing time has been extended.

In response to a request from Set-Aside Alert, Shirley Bailey, President and Board Chair of the HUBZone National Contractors Council, stated “It’s unfortunate that SBA tripled the acceptable processing time for a program already moving too slowly. Other programs have made noticeable strides in streamlining application while the HUBZone program is moving in the wrong direction.”

The actual average processing time now is 77 days after receipt of a complete package, according to a spokesperson for the HUBZone National Contractors Council. The current average is a significant improvement over the processing times cited in a February 2015 GAO report. GAO states in that report, that in fiscal years 2013 and 2014 it took an average of 103 and 123 days, respectively.

The modified regulation specifically reminds applicants, in a new clause, that “the burden of proof to demonstrate eligibility is on the applicant concern.” If the applicant does not respond to an SBA request for additional information in the allotted time, “SBA may presume that disclosure of the missing information would adversely affect” the application. Also, “the applicant must be eligible as of the date it submitted its application and up until and at the time the [Director] issues a decision.”

The most significant change set up by the new regulation concerns HUBZone joint ventures. Currently HUBZone companies may only form joint ventures with other HUBZone companies. According to Matthew Schoonover, senior associate at Koprince Law, “the new regulation will correct this problem and put HUBZones in a similar position as participants in SBA’s other three major socioeconomic programs.

A comprehensive rewrite of SBA’s processes and procedures for implementing the HUBZone program is anticipated in October, according to the agency’s Regulatory Calendar.

More Information:
Current regulation: 13 C.F.R. 126 http://goo.gl/oVGrUU
Final Rule sections pertaining to Section 126: https://goo.gl/sJMwtB
2015 GAO Report: http://gao.gov/assets/670/668468.pdf
Regulatory Calendar: http://goo.gl/RE8ujv
Koprince blog post: http://goo.gl/dwipVG

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