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By: Jake Noe and Brad Reaves If you are a certified HUBZone small business — or a large business considering a joint venture with a HUBZone — the SBA has just made a significant regulatory change you need to know about. Traditionally, one of the biggest advantages of being a HUBZone concern has been the “price evaluation preference.” Under this rule, in full and open competition, a contracting officer must treat a certified HUBZone’s bid as lower than that of a large business if the HUBZone’s price is no more than 10% higher than the large business’s offer. In a nutshell: if your HUBZone bid is within that 10% margin, you're treated as the lowest-priced offeror.
Until now, this price preference also extended to joint ventures where the HUBZone firm was the lead — even if the other joint venture partner was a large business. The SBA is changing this rule.. New Rule: The price evaluation preference only applies to joint ventures between a certified HUBZone small business and another small business that meets the criteria of 13 C.F.R. § 125.9. It does not apply if the joint venture includes a large business mentor, even under the SBA’s All Small Mentor-Protégé Program. In plain terms: if you're a large business forming a mentor-protégé joint venture with a HUBZone concern, you will no longer be able to leverage the price evaluation preference. The SBA’s reasoning is straightforward — large businesses should not obtain a competitive pricing edge over other large firms just by partnering with a HUBZone. While the policy shift makes sense in principle, this is a major strategic consideration for any large firm weighing a joint venture with a HUBZone protégé. So, what should you do? If you are a large business planning this type of JV, it may be time to rethink your strategy. The good news? Joint ventures between two small businesses — including one HUBZone firm — will still benefit from the preference. Moreover, the new regulations do NOT address situations where a HUBZone entity subcontracts with a large business (in that case the HUBZone would still obtain the price evaluation preference) Given the complexity and potential impact of this change, it’s smart to get legal guidance tailored to your situation. Our team at Reaves GovCon Group is here to help. Please contact Reaves GovCon Government Contracts Attorneys Jake Noe or Brad Reaves if you have any questions, or if you would like assistance assuring that your HUBZone business or Joint Venture is fully compliant with the new regulations. Disclaimer: Please contact us for specific legal advice. The foregoing is educational information and should not be construed as legal advice pertaining to your individual situation. Comments are closed.
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