Congressman John Delaney

Representing the 6th District of Maryland
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Delaney Files Bipartisan Legislation to Protect Garrett County Jobs, Extend Federal HUBZone Status

Apr 7, 2017
Press Release
Delaney’s GARRETT HUBZone Redesignation Act extends federal eligibility to 2022

WASHINGTON – Congressman John K. Delaney (MD-6) has filed bipartisan legislation to extend federal HUBZone eligibility for Garrett County businesses to 2022. The GARRETT HUBZone Redesignation Act (H.R. 2013) reforms the Small Business Administration’s (SBA) Historically Underutilized Business Zone Empowerment Contracting (HUBZone) program, giving Garrett County and similar communities around the country significantly more time to utilize the program and adjust to potential changes in their eligibility. Congressman Delaney’s legislation also provides the additional time necessary to implement potential changes to the designation process without undermining any economic growth achieved through the program.

Congressman Delaney first introduced the GARRETT HUBZone Redesignation Act in 2016. The bill is cosponsored by Republican Chuck Fleischmann of Tennessee and Democrat Dave Loebsack of Iowa.  

Absent congressional action, Garrett County will lose HUBZone status in 2018. According to the Garrett County Chamber of Commerce, there are 11 HUBZone certified businesses countywide, employing nearly 500 people. The HUBZone program is a small business federal contracting assistance program designed to encourage economic development in economically underperforming areas.

“I’m honored to stand with Garrett County and again introduce this important legislation to protect local jobs,” said Congressman Delaney. “Federal HUBZone eligibility supports hundreds of Garrett County jobs and I will continue to work with local business leaders to fight to extend their status. The HUBZone program needs to be reformed nationwide and that’s why it’s so important that this bill has bipartisan support. By definition the communities using this program need sustained economic development and it is just pure common sense to give them additional time to benefit from the program and adjust to future changes.”

 “The HUB Zone program is vitally important to Garrett County as we have 11 companies employing nearly 500 people utilizing the program,” said Nicole Christian, President & CEO of the Garrett County Chamber of Commerce. “The County will lose its HUB Zone status in the near future and the legislation that Congressman Delaney is sponsoring will soften the blow for these companies and provide additional time for Garrett County to work to retain our HUB Zone designation. We are appreciative of Congressman Delaney’s efforts to help our community and the companies that are thriving because of the HUB Zone program.”

“The HUBZone designation is the main reason that two of our largest employers (Garrett Container Systems and GCC Technologies) located to Garrett County (and why they have remained) and we currently have 11 companies participating in the program,” said Paul Edwards, Chairman Garrett County Board of Commissioners. “Being a struggling rural county with the 4th lowest per capita income in the state, these businesses are invaluable to our economy and to our community.  This legislation would help provide more time to work with these companies to hopefully retain them, as well as to help the community transition and diversify.” 

“A major objective of the HUBZone program is to spur economic development and generate jobs in economically distressed areas by setting aside federal contracting dollars towards small businesses servicing those areas,” said Shirley Bailey of GCC Technologies, headquartered in Oakland, Maryland. “One of the major deterrents to companies investing in these areas is the business uncertainty associated with area redesignations and the short time frame associated with the current 3 year re-designation period.  By increasing the re-designation period from 3 to 7 years, communities and businesses will be provided a level of business certainty that will enable them an opportunity to diversify and maintain the business investments in the re-designated communities while mitigating financial impacts. The HUBZone Council considers this legislation to be a major step in creating jobs in our nation's most distressed communities and helping those communities continue to move towards economic stability.”

“For 15 years, TDEC has effectively used the HUBZone certification to substantially grow our business while creating new jobs in Garrett County, MD, an area of persistent unemployment,” said R. Dennis DuFour, President of TDEC, headquartered in Oakland, Maryland. “Extending the redesignation period to 7 years will allow companies in Garrett and other affected areas to continue to leverage the certification creating even more new jobs which is good for business and the economy.”

“HUBZones have made a huge difference to the communities which continue to struggle in this economy. The loss of HUBZone status, as now faces more than 86 counties across 25 states will have certain unintentional consequences, setting these economically-fragile communities back significantly and impacting 5000 livelihoods,” said Keith Haller, National Director, Save Our HUBZone. “‘Save Our HUBZone’ came together in an unusual way to prevent this tragedy from happening.  It’s about jobs and economic vitality. Congress can quickly solve this problem through House Bill 2013 and Senate Bill 690. We will not relent until Congress takes action.”

The legislation is also supported by the HUBZone Contractors National Council, a non-profit trade association providing information and support for companies and professionals participating in the HUBZone Contracting Program.

 

The GARRETT HUBZone Redesignation Act (H.R. 2013)

 

Background

  • The Small Business Administration (SBA) administers the Historically Underutilized Business Zone Empowerment Contracting (HUBZone) program. Created in 1997, HUBZone is a small business federal contracting assistance program designed to encourage economic development in economically underperforming rural and urban areas.
  • HUBZone-certified companies receive competitive and sole source contracting and a 10% price evaluation preference in full and open contract competitions, as well as subcontracting opportunities. 
  • The Census Bureau periodically analyzes data to determine which counties are designated as HUBZones. If a HUBZones no longer qualifies, they are assigned as “redesignated” for 3 years with full elimination of HUBzone benefits at the conclusion of the term.
  • Six HUBZone types currently exist:
    • Qualified census tracts 
    • Qualified nonmetropolitan counties
    • Difficult development areas
    • Qualified Indian reservations/Indian Country
    • Military bases closed under the Base Realignment and Closure Act (BRAC)
    • Qualified disaster areas

 

The Problem

  • Entities residing in areas that lose their HUBZone designation only have three years to prepare for the loss of HUBZone Status. For example, in 2015, Garrett County, MD, was redesignated, meaning the community will lose the HUBZone status in 2018.
  • For some companies, federal contracts represent approximately 50% of their revenue and a loss of HUBZone status will have a significant impact not just on their individual business, but on the local economy and the local tax base, impacting the private and public sectors significantly.
  • The short redesignation period also inhibits more substantial, long-term investments from businesses due to lack of certainty.
  • Time is needed for local governments to prepare to keep and attract businesses and jobs.

The Solution

  • Extend the “redesignation” period to 7 years.
  • Such an extension will provide communities and businesses an opportunity to diversify their business to transition seamlessly.
  • An extension will also provide the confidence needed for businesses to further increase the investment in currently designated HUBZones.

 

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