HUBZone and NHO Enterprises: What You Need To Know PilieroMazza PLLC 888 17th Street, NW, 11th Floor Washington, DC 20006 Tel: (202) 857-1000 Fax: (202) 857-0200 HUBZone and NHO Enterprises: What You Need To Know John Shoraka PilieroMazza July 27, 2017

Overview Preparing for a smooth certification process PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Overview Preparing for a smooth certification process Taking full advantage of the HUBZone program Maintaining eligibility/avoiding pitfalls Looking ahead Size Multiple ways that affiliation can arise Key is when one firm controls or has the power to control the other, or a third party or parties control or have the power to control both, even if this control is not exercised (13 C.F.R. § 121.103) Affiliates Special affiliation concerns related to employees and principal office calculations (we will address later) © PilieroMazza 2017

Preparing for a Smooth Certification Process PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Preparing for a Smooth Certification Process © PilieroMazza 2017

Make Sure You Meet the Eligibility Criteria! PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Make Sure You Meet the Eligibility Criteria! Must be a SMALL business Size of a firm includes any affiliates Can have affiliates, but must be small combined Special affiliation rules for NHOs Size Multiple ways that affiliation can arise Key is when one firm controls or has the power to control the other, or a third party or parties control or have the power to control both, even if this control is not exercised (13 C.F.R. § 121.103) Affiliates Special affiliation concerns related to employees and principal office calculations (we will address later) © PilieroMazza 2017

HUBZone Eligibility Criteria for Firms Owned by US Citizens PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know HUBZone Eligibility Criteria for Firms Owned by US Citizens Must be owned and controlled at least 51% by a U.S. citizen “Principal office” must be located in a HUBZone At least 35% of employees must live in a HUBZone © PilieroMazza 2017

HUBZone Eligibility Criteria for NHO-Owned Firms: Ownership PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know HUBZone Eligibility Criteria for NHO-Owned Firms: Ownership Firm must be: The concern must be wholly owned by one or more NHOs, or by a corporation that is wholly owned by one or more NHOs, or owned in part by one or more NHOs, if all other owners are either United States citizens or small business concerns. © PilieroMazza 2017

Eligibility Criteria for NHO-Owned Firms: Other Requirements PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Eligibility Criteria for NHO-Owned Firms: Other Requirements Size: Firm, together with its affiliates, must be small under its primary industry Business concerns owned and controlled by NHOs, or wholly-owned entities of NHOs are not considered affiliates of the NHO. Business concerns owned and controlled by NHOs, or wholly-owned entities of NHOs are not considered to be affiliated with other concerns owned by NHOs because of their common ownership or common management. In addition, affiliation will not be found based upon the performance of common administrative services so long as adequate payment is provided for those services. Principal office and HUBZone employees: Maintain a principal office located in a HUBZone and ensure that at least 35% of its employees reside in a HUBZone. Also, firm must “attempt to maintain” that applicable employment percentage stated above during the performance of any HUBZone contract it receives. © PilieroMazza 2017

“Principal Office” and “Employee” PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know “Principal Office” and “Employee” “Principal office” means the location where the greatest number of the concern’s employees at any one location perform their work (13 C.F.R. § 126.103) “Employee” means all individuals employed on a full- time, part-time, or other basis, so long as that individual works a minimum of 40 hours per month However, for those concerns whose “primary industry” is service or construction, the determination of principal office excludes the concern’s employees who perform the majority of their work at job-site locations to fulfill specific contract obligations Includes temporary, leased, or “co- employed” employees Also includes owner, even if no compensation is received © PilieroMazza 2017

Understand the Application Process PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Understand the Application Process Verify eligibility Gather supporting documentation Review sample HUBZone application form Review and ask questions Access SBA’s General Login System Soon to be certify.SBA.gov Complete and submit online HUBZone application Submit any requested supporting documentation About 25% of applications are denied, a figure deemed “unacceptable” by the SBA Must wait 90 days after denial before being able to re-apply SBA statistics demonstrate that more “established” firms typically have greater success in the Program Not a business development program like 8(a) Program Only 30% of HUBZone-certified firms in the SBA’s portfolio have HUBZone contracts, most do not get work Hard to stay compliant with all Program criteria © PilieroMazza 2017

Documents You Will Need PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Documents You Will Need General business information Appropriate NAICS codes DUNS number Proof of principal office location, such as lease agreement Business and personal federal tax returns for the last three years Official payroll records and other information showing employees residing within HUBZones (drivers licenses, HUBZone maps, etc.) Business ownership documentation – articles of incorporation, LLC, etc. Citizen documentation for owners (if individually owned) Other information supporting HUBZone eligibility requirements SAM.gov profile © PilieroMazza 2017

Taking Full Advantage of the HUBZone Program PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Taking Full Advantage of the HUBZone Program © PilieroMazza 2017

Taking Advantage of HUBZone Program PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Taking Advantage of HUBZone Program 10% Price Evaluation Preference for Full and Open Competitions Cautions: Open to protest Does not apply to subcontracting goals Receipt of performance can subject firm to presumed loss liability Competitive and sole source opportunities Participation in new All Small Mentor-Protégé Program Joint Venturing © PilieroMazza 2017

Looking Ahead PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Looking Ahead © PilieroMazza 2017

Changes Are Coming 90-day target for processing new applications PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Changes Are Coming 90-day target for processing new applications Overhaul of regulations to be published sometime soon, on SBA’s regulatory agenda Uptick in number of IG investigations Site visits of about 10% per year of all HUBZone participants will continue Reduce full document reviews from once every three years to once every six years? Seven year grace period after re-designation © PilieroMazza 2017

Questions? John Shoraka ajshoraka@pilieromazza.com 202-857-1000 PilieroMazza PLLC HUBZone and NHO Enterprises: What You Need To Know Questions?   John Shoraka ajshoraka@pilieromazza.com 202-857-1000 PilieroMazza PLLC 888 17th Street, NW, 11th Floor Washington, DC 20006 Tel: (202) 857-1000 www.pilieromazza.com © PilieroMazza 2017