What are Procurement Opportunity Programs?
The Procurement Opportunity Programs (POP) provide direct HUD contracting and subcontracting opportunities to businesses and organizations which are eligible for preferential treatment under a variety of Federal laws, Executive Orders, etc. (e.g., the Small Business Act). Eligible organizations include: small, small disadvantaged, women-owned, historically underutilized business zone (HUBZone), veteran-owned, and service disabled veteran-owned small businesses. The POPs also provide a means for establishing and monitoring HUD's annual goals for the participation of other eligible small businesses in its direct procurement of supplies and services and to report HUD's performance to the U.S. Small Business Administration (SBA).
HUD's Office of Small and Disadvantaged Business Utilization (OSDBU), created in response to Public Law 95-507 (the Amendments to the Small Business Act of 1958), is responsible for the development and administration of the POPs. For further information about the POPs you may contact the OSDBU directly (see Appendix II). A brief description of each of the current POPs follows.
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Small Business Set-Aside Program (see also Federal Acquisition Regulation, "FAR," Subpart 19.5)
Section 15 of the Small Business Act, as amended, requires the Federal Government to reserve a fair proportion of its total purchases and contracts for property and services for small business concerns. The Government does this by reserving or "setting aside," entire procurements or parts of procurements for small businesses. This does not guarantee that any particular small business will receive a contract. It means that only small businesses may compete for the contract ("total small business set-aside") or the reserved portion ("partial small business set-aside").
The Small Business Act also requires the Government to buy goods and services at competitive, fair market prices. Therefore, contracts are set aside only when at least two qualified small businesses are expected to submit offers that are competitive in terms of market prices, quality and delivery. In this context, "market price" means a price based on reasonable costs under normal competitive conditions, and not lowest possible cost (FAR 19.001).
The SBA establishes size standards defining small businesses on an industry-by-industry basis. They are defined by dollar volume of sales, number of employees or a combination of these factors. Size standards are published in FAR Subpart 19.1 and are also available online at SBA’s Internet site. The size standard is particular to the supplies or services being procured, e.g., it varies by procurement.
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Small Business Subcontracting Program (see also FAR Subpart 19.7)
Section 211 of Public Law 95-507 requires that the successful offeror or bidder on contracts valued at $500,000 or more ($1 million for construction of public facilities) must submit to the awarding agency an acceptable subcontracting plan that sets percentage and dollar goals for the award of subcontracts to small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. (NOTE: Small business concerns receiving prime contracts are exempt from this requirement.) The plan must be submitted and accepted before the contract may be awarded. Appropriate HUD staff (OSDBU and Contracting Officers) review all subcontracting plans submitted by prime contractors to ensure compliance with the requirements of Section 211. In addition, FAR 19.702 requires, "Any contractor receiving a contract for more than the simplified acquisition threshold [$100,000] must agree in the contract that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance."
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Section 8(a) Program (see also FAR Subpart 19.8)
Section 8(a) of the Small Business Act authorizes the SBA to enter into contracts with other Federal government agencies to supply needed goods and services. The SBA in turn subcontracts the actual performance of the work to small businesses enrolled in the SBA's 8(a) Program. The goal of the 8(a) Program is to help eligible small disadvantaged firms become independently competitive for Federal contracts.
The selection of an 8(a) subcontractor may be made on a sole source or competitive basis. Contracts under $3 million ($5 million for construction contracts) are normally awarded on a sole source basis. Contracts in excess of $3 million must be competed among 8(a) firms. HUD has executed a memorandum of understanding with the SBA, which allows it to directly award 8(a) contracts to 8(a) firms. This helps speed up the award of these contracts.
To be eligible for 8(a) Program participation, a small business must be at least 51 percent owned, controlled and daily operated by one or more socially and economically disadvantaged persons.
- "Socially disadvantaged" individuals are those who have been subject to racial or ethnic prejudice or cultural bias because of their identification as members of certain groups. Black Americans, Native Americans, Hispanic Americans, Asian-Pacific Americans and Asian-Indian Americans have been officially designated as socially disadvantaged. Members of other groups must show proof of their socially disadvantaged status.
- "Economically disadvantaged" individuals are socially disadvantaged individuals (as defined above) whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities. Economically disadvantaged must be established for all applicants. The SBA determines eligibility on a case-by-case basis.
All applications for the 8(a) Program must be made directly to the SBA. If you are interested in the program, contact your nearest SBA office or a HUD Business Utilization Development Specialist.
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Women-Owned Small Business Program (see also FAR Subpart 19.9)
Executive Order 12138 ("National Women's Business Enterprise Policy") directs all Federal agencies to take action to strengthen women-owned business enterprise and to ensure full participation by women in the free enterprise system. The Executive Order does not permit HUD to set-aside procurements for women-owned businesses. HUD makes special efforts, though, to advise women business owners of contracting opportunities and to encourage their participation in HUD procurements. The FAR requires Federal agencies to actively encourage their prime contractors to use women-owned small businesses as subcontractors. All contracts valued at $100,000 or more include a clause, which requires the prime contractor to provide the maximum practicable opportunity to women-owned small businesses to compete for subcontracts.
A women-owned small business concern is defined as at least 51 percent owned by one or more women, or in the case of publicly owned businesses, at least 51 percent of the stock is owned by one or more women, and the management and daily operations of which are controlled by one or more women.
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Small Disadvantaged Business Participation Program (See FAR Subparts 19.11 and 19.12)
HUD also encourages the award of prime contracts valued at $100,000 or more to small disadvantaged business (SDB) concerns (other than certified 8(a) firms) that are at least 51 percent owned and controlled by socially and economically disadvantaged individuals. As a means of ensuring SDBs the maximum practicable opportunity to compete for and receive Federal contracts, small businesses certified as SDBs can receive a price preference (currently 10%) or evaluation credit when competing for certain procurements. The Department of Commerce determines which industrial categories are eligible for the SDB contract price preference and evaluation credits. Businesses seeking certification, as SDBs, should contact the SBA for more information.
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Historically Underutilized Business Zone (HUBZone) Program (see also FAR Subpart 19.13)
Created by the HUBZone Act of 1997, Title VI of Public Law 105135, this program provides Federal contracting opportunities for certain qualified small business concerns located in economically distressed communities. The goal of the HUBZone Program is to provide federal contracting assistance for qualified small business concerns located in HUBZone areas in order to increase employment opportunities, stimulate capital investments in those areas, and empower communities through economic leveraging. HUBZone areas are determined by various census data. To qualify as a HUBZone business, the business must be small, owned by a US citizen and have its principal office located in a HUBZone. At least 35% of the employees must reside in a HUBZone. The SBA formally certifies firms as HUBZone businesses. HUBZone businesses can receive sole-source or set-aside federal contracts, or receive a price preference up to 10% when competing for full and open competition procurements. In addition to the Government-wide prime contracting goals established by the SBA, HUD establishes annual goals for subcontracting with HUBZone businesses.
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Veteran-Owned Small Business Program
In accordance with Title V of Public Law 106-50, the Veterans Entrepreneurship and Small Business Development Act of 1999, HUD establishes annual Departmental goals for prime contracts with small businesses owned and controlled by service-disabled veterans. HUD also establishes annual goals for subcontracting by its prime contractors with veteran-owned and service-disabled veteran-owned small businesses.
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Minority Business Enterprise (MBE) Programs
In accordance with Executive Orders 12432, "Minority Business Enterprise Development," and 11625, "National Program for Minority Business Enterprise," OSDBU is charged with overseeing the implementation of voluntary compliance programs to stimulate MBE participation in procurement and assistance programs. OSDBU provides advice and recommendations to the Secretary of HUD on MBE activities, prepares, monitors and evaluates the Department's Annual Minority Business Development Plan and reports MBE program performance to the Minority Business Development Agency (MBDA) of the Department of Commerce.
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HUD is committed to the use of minority-owned media to the extent practical and cost effective. The Department buys advertising for HUD's programs (e.g., Fair Housing billboard displays, Housing's Real Estate Owned property sales and Section 202 Housing for the Elderly). The total expenditures for advertising under these activities and the portion of total dollars spent with the minority media is reported semi-annually to OSDBU. OSDBU is responsible for monitoring HUD's procurement of minority media services.