FAR 52.219-4—Notice of Price Evaluation Preference for HUBZone Small Business Concerns.
Plain-English Summary
FAR 52.219-4 establishes the price evaluation preference for HUBZone small business concerns in competitive acquisitions. It tells contracting officers how to adjust evaluated prices, when the 10 percent factor applies, how it interacts with other evaluation factors, and when a HUBZone concern can waive the preference. The clause also addresses the special tie-breaking rule that favors a HUBZone small business concern over a large business when their evaluated offers are equal after the preference is applied. In addition, it sets a performance commitment for HUBZone joint ventures, requiring the HUBZone small business parties to perform at least 40 percent of the aggregate work and to perform more than administrative functions. In practice, this clause affects proposal preparation, price evaluation, award decisions, and post-award performance expectations, so both offerors and contracting officers need to understand exactly how the preference changes the competitive landscape.
Key Rules
10% Price Evaluation Preference
Offers are generally evaluated by adding 10 percent to the price of all offers, except offers from HUBZone small business concerns that have not waived the preference and otherwise successful offers from small business concerns. This is an evaluation adjustment only; it does not change the actual contract price.
Preference Applied by Line Item
The 10 percent factor must be applied on a line-item basis or to any group of items on which award may be made. Other evaluation factors in the solicitation are applied first, and then the price preference is applied to the evaluated price.
Tie Goes to HUBZone Concern
If the two highest rated offerors are a HUBZone small business concern and a large business, and their evaluated offers are equal after the preference is considered, award must be made to the HUBZone small business concern. This creates a mandatory award outcome in that specific tie situation.
Waiver Is Permitted
A HUBZone small business concern may elect to waive the evaluation preference. If it does, the 10 percent factor is added to its offer for evaluation purposes, which can make the offer less competitive in exchange for other strategic reasons.
Joint Venture Workshare
A HUBZone joint venture must agree that at least 40 percent of the aggregate work performed under the contract will be completed by the HUBZone small business parties to the joint venture. Their work must be substantive and cannot consist only of administrative functions.
Responsibilities
Contracting Officer
Insert the clause when prescribed, apply the 10 percent evaluation factor correctly, evaluate offers on the proper basis, honor the HUBZone tie-break rule when applicable, and ensure the solicitation and award decision reflect the clause’s sequencing and scope.
HUBZone Small Business Concern
Decide whether to retain or waive the evaluation preference, represent HUBZone status accurately, and if awarded as a joint venture participant, ensure the required workshare and substantive performance commitments are met.
Other Small Business Offeror
Understand that otherwise successful small business offers are excluded from the 10 percent upward adjustment and prepare proposals with awareness of how the preference affects competition.
Large Business Offeror
Recognize that its evaluated price may be increased by 10 percent for comparison purposes and account for the HUBZone preference in pricing and competitive strategy.
HUBZone Joint Venture Parties
Structure performance so that the HUBZone small business parties perform at least 40 percent of the aggregate work and ensure their participation goes beyond administrative tasks.
Practical Implications
This clause can change the apparent low bidder or best-value offeror because the government compares evaluated prices, not just proposed prices.
Offerors should pay close attention to whether the solicitation applies the preference to line items, groups of items, or the overall award basis, because that can materially affect ranking.
HUBZone firms need to make a deliberate choice about waiving the preference; waiving may help in some strategies but can also reduce the chance of award.
Joint ventures should document workshare planning early, because the 40 percent requirement is a performance commitment, not just a proposal statement.
A common pitfall is assuming the preference changes the contract price; it does not—it only affects evaluation and award decisions.
Official Regulatory Text
As prescribed in 19.1309 (b) , insert the following clause: Notice of Price Evaluation preference for HUBZone Small Business Concerns (Oct 2022) (a) Evaluation preference. (1) Offers will be evaluated by adding a factor of 10 percent to the price of all offers, except- (i) Offers from HUBZone small business concerns that have not waived the evaluation preference; and (ii) Otherwise successful offers from small business concerns. (2) 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 described in the solicitation shall be applied before application of the factor. (3) 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, award will be made to the HUBZone small business concern. (b) Waiver of evaluation preference . A HUBZone small business concern may elect to waive the evaluation preference, in which case the factor will be added to its offer for evaluation purposes. □ Offeror elects to waive the evaluation preference. (c) Joint venture. A HUBZone joint venture agrees that, in the performance of the contract, at least 40 percent of the aggregate work performed by the joint venture shall be completed by the HUBZone small business parties to the joint venture. Work performed by the HUBZone small business parties to the joint venture must be more than administrative functions. (End of clause)