Providing Economic Support to Businesses in Areas Affected by Disasters and Base Closures (S. 1292)

What is S. 1292?

(Updated March 15, 2018)

This bill would allow certain areas affected by disasters or base closures to qualify for HUBZone (Historically Underutilized Business Zones) status -- which provides small businesses in certain areas with preferential access to economic support and business development opportunities. HUBZone is a program that is operated by the Small Business Administration (SBA).

Qualified areas that have suffered from a disaster could obtain HUBZone status for five years in the case of major disasters, and 10 years for catastrophic disasters. There is also a provision affecting HUBZone areas that had been home to a military base which has since been closed, that would allow these HUBZones to maintain their status for eight years. Under current law, base closure HUBZone status lasts for five years.

Businesses that participate in the HUBZone program must conform to the SBA’s definition of a small business, be majority-owned and operated by U.S. citizens, have its primary office located in a HUBZone, and at least 35 percent of its employees live in a HUBZone.

Participants in HUBZone receive a 10 percent price evaluation preference in full and open contract competitions, as well as subcontracting opportunities. They also can obtain competitive and sole source contracts. The federal government has a goal of awarding 3 percent of all dollars for federal prime contracts to HUBZone-certified small businesses each year.

Argument in favor

It can sometimes take decades for an area’s economy to recover from a disaster, and military base closures can have a similar impact on small businesses — so broadening the HUBZone program to fit that need makes sense.

Argument opposed

These programs provide an unfair advantage to businesses in HUBZones, and those businesses may not even do most of their business within the zone but they can still receive those benefits.

Impact

Businesses and their employees that are located in HUBZones; the SBA; federal agencies soliciting competitive and sole source contracts.

Cost of S. 1292

A CBO cost estimate is unavailable.

Additional Info

In-Depth: This bill’s sponsor, Sen. David Vitter (R-LA), said that: “Designating HUBZones in struggling areas can make a huge difference helping local economies recover by getting businesses back on their feet, and this legislation will give many small businesses the tools they need to rebuild, recover, and bring jobs back.”

HUBZones have been heavily involved in military-related legislation, as Sen. Angus King (I-ME) tied a provision supporting HUBZones affected by base closures to the Senate’s version of the National Defense Authorization Act (NDAA).

In total, there are 13,795 HUBZone areas -- which includes 508 rural counties, 107 base closure areas, and 592 qualified Indian lands.

Media:

• Senate Small Business and Entrepreneurship Committee Press Release
• SBA HUBZone Program (Context)