FAR 19.1307—Price evaluation preference for HUBZone small business concerns.
Plain-English Summary
FAR 19.1307 explains how the HUBZone price evaluation preference works in full and open competition. It covers when the preference may be used, when it may not be used, how the contracting officer must apply the 10 percent evaluation factor, how to treat line items and other price-related adjustments such as transportation costs or rent-free Government property, and the special award rule when a HUBZone small business concern and a large business are tied after the preference is applied. In practice, this section is meant to improve the competitiveness of HUBZone firms in eligible procurements by adjusting evaluated prices rather than changing the actual contract price. It is a source-selection tool, not a mandatory price discount, and it only affects evaluation in the situations the FAR allows. Contracting officers must apply it carefully and consistently, because the wrong use of the preference can distort competition or create an improper award decision. Contractors should understand that the preference can improve their chances of award, but only in the acquisition types and evaluation methods covered by this rule.
Key Rules
Use only in full and open competition
The HUBZone price evaluation preference applies only to acquisitions conducted using full and open competition. It is not a general preference for every procurement and cannot be used outside the competitive context described in this section.
Do not use in excluded procurements
The preference may not be used when price is not a selection factor, such as Architect-Engineer acquisitions, when all fair and reasonable offers are accepted, such as some multiple-award schedule awards, or for the reserved portion of a multiple-award contract solicitation.
Apply a 10 percent evaluation factor
The contracting officer must add a 10 percent factor to offers from HUBZone small business concerns, unless the offeror has waived the preference or the offer is otherwise successful from a small business concern. This is an evaluation adjustment only, not a price change.
Apply on a line-item basis
The 10 percent factor must be applied to each line item or to any group of items on which award may be made. The evaluation must be done at the level where award decisions are actually made.
Include other price adjustments first
Before adding the 10 percent factor, the contracting officer must add other evaluation factors such as transportation costs or the value of rent-free Government property to establish the base offer. The preference is applied after those adjustments.
Award to HUBZone in a tie
If the two highest rated offerors are a HUBZone small business concern and a large business, and the HUBZone concern’s evaluated offer is equal to the large business’s evaluated offer after the preference is applied, the contracting officer must award to the HUBZone concern.
Responsibilities
Contracting Officer
Determine whether the procurement is eligible for the HUBZone price evaluation preference, exclude ineligible acquisitions, apply the 10 percent factor correctly, include other price-related evaluation adjustments before applying the preference, evaluate offers on the proper line-item or award-group basis, and make the required award to the HUBZone concern in a tie with a large business after the preference is applied.
HUBZone Small Business Concern
Submit an offer with awareness that the price evaluation preference may be applied unless waived, and understand that the preference can improve evaluated competitiveness without changing the actual proposed price.
Small Business Concern
Recognize that otherwise successful small business offers are excepted from the 10 percent adjustment under this section, and ensure the offer is structured and certified as required to receive any applicable small business treatment.
Large Business Offeror
Compete under the evaluation rules as written, understanding that HUBZone offers may receive a 10 percent evaluation advantage and that a tie after application of the preference must be resolved in favor of the HUBZone concern.
Agency/Source Selection Team
Use the correct evaluation methodology in the solicitation and evaluation record, ensure the preference is not applied where prohibited, and document how the evaluated prices were calculated and compared.
Practical Implications
This rule can materially change award outcomes even when the HUBZone firm is not the lowest nominal-price offeror, because the evaluation preference can make its evaluated price lower than a competitor’s.
A common pitfall is applying the preference where price is not a selection factor or where the procurement structure expressly excludes it; that can lead to an improper evaluation and award decision.
Another frequent mistake is applying the 10 percent factor to the wrong level of evaluation, such as the total offer when award is made by line item or by a specific group of items.
Contracting officers must remember to add other price-related evaluation adjustments before applying the HUBZone factor, or the evaluated price will be wrong.
The tie-break rule is mandatory: if the HUBZone concern and a large business are tied after the preference is applied, the HUBZone concern must receive the award.
Official Regulatory Text
(a) The price evaluation preference for HUBZone small business concerns shall be used in acquisitions conducted using full and open competition. The preference shall not be used- (1) Where price is not a selection factor so that a price evaluation preference would not be considered ( e.g., Architect/Engineer acquisitions); (2) Where all fair and reasonable offers are accepted ( e.g., the award of multiple award schedule contracts); or (3) For the reserved portion of a solicitation for a multiple-award contract (see 19.503 ). (b) The contracting officer shall give offers from HUBZone small business concerns a price evaluation preference by adding a factor of 10 percent to all offers, except- (1) Offers from HUBZone small business concerns that have not waived the evaluation preference; or (2) Otherwise successful offers from small business concerns. (c) The factor of 10 percent shall be applied on a line item basis or to any group of items on which award may be made. Other evaluation factors, such as transportation costs or rent-free use of Government property, shall be added to the offer to establish the base offer before adding the factor of 10 percent. (d) When the two highest rated offerors are a HUBZone small business concern and a large business, and the evaluated offer of the HUBZone small business concern is equal to the evaluated offer of the large business after considering the price evaluation preference, the contracting officer shall award the contract to the HUBZone small business concern.