Being a Historically Underutilized Business Zone (HUBZone) company does have its benefits. One such benefit is where small businesses are entitled to a HUBZone price evaluation preference when there is full and open competition bids.
When government contracting agencies fail to follow the SBA SBA HUBZone price preference rules in their proposal evaluations, there could be an argument that any best value tradeoff decisions could be legally flawed. Under 15 USC 657a(b)(3)(A) (2006), federal contracting agencies must follow this regulation. There simply should be no discretion allowed.
HUBZone Price Evaluation Preference Statutory Language
15 USC 657a(b)(3)(A) provides that Subject to subparagraph (B), in any case in which a contract is to be awarded on the basis of full and open competition, the price offered by a qualified SBA HUBZone small business concern shall be deemed as being lower than the price offered by another offeror (other than another small business concern), if the price offered by the qualified HUBZone companies is not more than 10 percent higher than the price offered by the otherwise lowest, responsive, and responsible offeror.
To comply with the important regulation, FAR 19.1307 requires that agencies “shall give offers from HUBZone small business concerns a HUBZone price evaluation preference by adding a factor of 10 percent to all offers,” except for offers from small business concerns that have not waived the evaluation preference, or otherwise successful offers from small business concerns.
Key benefit: the preference creates a benefit for HUBZone companies. However, companies may use the strategy of challenging the status of the potential awardee in a bid protest. This can be a night for a contracting officer where the award could help the agency meet its HUBZone goals.
Avoid misconceptions: It is important to distinguish when the price preference applies and when it does not apply. The preference can be used only in unrestricted or full and open competition. By contract, it cannot be used in procurements where the agency does not have price as an evaluation factor. The price preference also does not apply in the award of multiple award contracts, buying schedules or in circumstances where all fair and reasonable offers are accepted.
Applicable to Best Value Procurements
When the procurement is issued as a best value procurement the agency must apply a price preference of 10% to the small business HUBZone company when the otherwise awardee would have been the awardee.
HUBZone Companies Must Pay Attention to the Solicitation Terms
Typically, the small business must be the one to watch for whether the government contracting agency actually included the provision in the solicitation. Also, find out more about filing HUBzone bid protests. If the requirement is publicized as “full and open” then there should be provision under FAR 19.1307 that allows for the SBA HUBZone price preference. You want to consider filing a pre-award protest in order to protect any rights you have.
- If there is a form for you to fill out, then failure to complete it could waive the HUBZone price preference.
If you are a small business seeking to protect your rights for government small business lawyers at 1-866-601-5518. under the price preference rule, call our