The HUBZone program provides participating small businesses located in areas with low income, high poverty, or high levels of unemployment with contracting opportunities in the form of set-asides , sole-source awards , and price-evaluation preferences . In FY2017, the federal government awarded 81,082 contracts valued at $7.53 billion to HUBZone-certified businesses. About $1.90 billion of that amount was awarded with a HUBZone preference ($1.49 billion through a HUBZone set-aside, $65.3 million through a HUBZone sole-source award, and $346.9 million through a HUBZone price-evaluation preference). About $1.53 billion of that amount was awarded to HUBZone-certified businesses in open competition with other firms. The remaining $4.10 billion was awarded with another small business preference (e.g., set aside and sole source awards for small business generally and for 8(a), women-owned, and service-disabled veteran-owned small businesses). The program's administrative cost is about $9.8 million annually. It received an appropriation of $3 million for FY2019, with the additional cost of administering the program provided by the SBA's appropriation for salaries and general administrative expenses. This report 
examines arguments presented both for and against targeting assistance to geographic areas with specified characteristics as opposed to providing assistance to people or businesses with specified characteristics; assesses arguments presented both for and against the creation and continuation of the HUBZone program, starting with the arguments presented during consideration of P.L. 105-135 , which authorized the program; discusses the HUBZone program's structure and operation, focusing on the definitions of HUBZone areas and HUBZone small businesses and the program's performance relative to federal contracting goals; and provides an analysis of the SBA's administration of the HUBZone program and the SBA's performance measures. This report also examines HUBZone-related legislation, including
P.L. 114-92 , the National Defense Authorization Act for Fiscal Year 2016, which expanded the definition of a Base Realignment and Closure Act (BRAC) military base closure area to make it easier for businesses located in those areas to meet the HUBZone program's requirement that at least 35% of its employees reside in a HUBZone area. It also extended BRAC base closure area HUBZone eligibility from five years to not less than eight years, provided HUBZone eligibility to qualified disaster areas, and added Native Hawaiian Organizations to the list of HUBZone eligible small business concerns. Specifically, the act, among other provisions, allows small businesses that have HUBZone status on or before December 31, 2019, to retain that status from January 1, 2020, until the SBA prepares an updated online tool depicting HUBZone qualified areas (anticipated by the SBA to take place in December 2021). Once the new online tool (currently called the HUBZone map) is operational, the SBA must update it every five years for qualified census tracts and nonmetropolitan counties and when a change in status takes place for other HUBZone types (e.g., when an area becomes, or ceases to be, a redesignated area). The act also allows governors, starting on January 1, 2020, to petition the SBA each year to designate areas located in nonurban areas, with a population of 50,000 or fewer, and an average unemployment rate at least 120% of the national or state average, whichever is lower, as HUBZones; requires the SBA to process HUBZone certification applications with sufficient and complete documentation within 60 days of receipt; ensures that HUBZone-eligible BRAC areas receive HUBZone eligibility for a full eight years, beginning on the date they are designated a BRAC; and requires the SBA, not later than one year after enactment, to publish performance metrics measuring the HUBZone program's success in promoting economic development in economically distressed areas. 115-91 , the National Defense Authorization Act for Fiscal Year 2018. HUBZone Businesses Defined

Firms must be certified by the SBA to participate in the HUBZone program. As of April 3, 2019, the SBA's Dynamic Small Business Search database included 6,769 firms with active HUBZone certifications. Congressional Issues

Congressional interest in the HUBZone program has increased in recent years, primarily due to GAO reports of fraud in the program and efforts by small businesses to ease HUBZone eligibility requirements.
The Historically Underutilized Business Zone Empowerment Contracting (HUBZone) program provides participating small businesses located in areas with low income, high poverty, or high unemployment with contracting opportunities in the form of set-asides, sole-source awards, and price-evaluation preferences. Its primary objectives are job creation and increased capital investment in distressed communities. Firms must be certified by the SBA to participate in the program. As of April 3, 2019, the SBA's Dynamic Small Business Search database included 6,769 firms with active HUBZone certifications.
In FY2017, the federal government awarded 81,082 contracts valued at $7.53 billion to HUBZone-certified businesses. About $1.90 billion of that amount was awarded with a HUBZone preference ($1.49 billion through a HUBZone set-aside, $65.3 million through a HUBZone sole-source award, and $346.9 million through a HUBZone price-evaluation preference). About $1.53 billion of that amount was awarded to HUBZone-certified businesses in open competition with other firms. The remaining $4.10 billion was awarded with another small business preference (e.g., set aside and sole source awards for small business generally and for 8(a), women-owned, and service-disabled veteran-owned small businesses).
The HUBZone program's administrative cost is about $8.4 million annually. It received an appropriation of $3.0 million for FY2019, with the additional cost of administering the program provided by the SBA's appropriation for salaries and general administrative expenses.
Congressional interest in the HUBZone program has increased in recent years, primarily due to GAO reports of fraud in the program and efforts by small businesses to ease HUBZone eligibility requirements.
This report examines arguments both for and against targeting assistance to geographic areas with specified characteristics as opposed to providing assistance to people or businesses with specified characteristics. It then assesses the arguments both for and against the continuation of the HUBZone program.
The report also discusses the HUBZone program's structure and operation, focusing on the definition of HUBZone areas and HUBZone small businesses and the program's performance relative to federal contracting goals. It includes an analysis of the SBA's administration of the program and the SBA's performance measures.
This report also examines HUBZone-related legislation, including
P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, which, among other provisions, expanded the definition of a Base Realignment and Closure Act (BRAC) military base closure area to make it easier for businesses located in those areas to meet the HUBZone program's requirement that at least 35% of its employees reside in a HUBZone area. It also extended BRAC base closure area HUBZone eligibility from five years to not less than eight years, provided HUBZone eligibility to qualified disaster areas, and added Native Hawaiian Organizations to the list of HUBZone eligible small business concerns. P.L. 115-91, the National Defense Authorization Act for Fiscal Year 2018, which, among other provisions, allows small businesses that have HUBZone status on or before December 31, 2019, to retain that status from January 1, 2020, until the SBA prepares an updated online tool depicting HUBZone qualified areas (anticipated by the SBA to take place in December 2021). Once the new online tool (currently called the HUBZone map) is operational, the SBA must update it every five years for qualified census tracts and nonmetropolitan counties and when a change in status takes place for other HUBZone types (e.g., when an area becomes or ceases to be a redesignated area). The act also allows governors, starting on January 1, 2020, to petition the SBA each year to designate areas located in nonurban areas, with a population of 50,000 or fewer, and an average unemployment rate at least 120% of the national or state average, whichever is lower, as HUBZones; requires the SBA to process HUBZone certification applications with sufficient and complete documentation within 60 days of receipt; ensures that HUBZone-eligible BRAC areas receive HUBZone eligibility for a full eight years, beginning on the date they are designated a BRAC; and requires the SBA, not later than one year after enactment, to publish performance metrics measuring the HUBZone program's success in promoting economic development in economically distressed areas.