Changes to HUBZone Ownership Requirements

The SBA issued a final rule on March 26, 2018, implementing changes flowing from the National Defense Authorization Act of 2018 (“NDAA 2018”). The rule takes effect on May 25, 2018. One of the major changes relates to the ownership requirements for HUBZone businesses and amends the HUBZone regulations to allow indirect ownership by United States citizens. The changes recognize that the HUBZone program is different from the other small business programs, in that it is focused on the location of the business and its employees, rather than the socioeconomic status of the business owners. The rule deletes the requirement that ownership by United States citizens in the HUBZone program must be direct and, instead, follows the statutory requirement that a HUBZone small business concern must be at least 51 percent owned and controlled by United States citizens.

The NDAA 2018 changes also modify the sole source limits for SBA programs for inflation as follows: for the 8(a) Business Development (BD) program, $7 million for manufacturing contracts and $4 million for all other contracts; for the Service Disabled Veteran Owned small business program and Women-Owned Small Business program, $6.5 million for manufacturing contracts and $4 million for all other contracts; and for the HUBZone program $7 million for manufacturing contracts and $4 million for all other contracts.