2020: The Year of the Hubzone

Whats a Hubzone Business?

As we sit among the 2019 Federal Government Proposal Season, I reflect on my decision to commit Hunter Strategy to the HUBZone program in 2017. Unlike other small business programs which typically focus on a company owner’s background, the HUBZone program has a community oriented purpose whose goal is to bring jobs and economic development to the communities that need it the most. Administered by the US Small Business Administration (SBA), HUBZone certified small businesses are allowed special opportunities and set asides for those companies that locate their offices and employ 35% of their employees from areas designated with low employment and higher poverty rates, as reported by US Census data.

This spoke to me directly as a business owner and a generally social-minded capitalist. This is an approach to harness the spending of economic giants such as the Federal government and direct them towards areas that require the economic benefit by a strict set of metrics. This also spoke to me as an engineer and entrepreneur: A set of metrics measured census data is far less politically charged than many methods by which small businesses are given set asides. I will admit there seem to be some unintended side-effects with in some urban areas, but by and large, this program shifted income and capital to the places that need an economic boost without the need for administrative overhead typically found in more standard approaches such as non-profit programs and government assistance.

What kind of businesses are Hubzone Certified?

I did a little more digging in the Federal Procurement Data System (FPDS) and it turns out that in addition to Hunter Strategy, there are a large and growing number of HUBZone certified businesses performing IT Services. In fact by looking at 2018 spend specifically below, we can see that IT Services make up almost half the top 10 NAICS Code obligations in 2018 services.

So why have I never heard of a Hubzone?

While the Hubzone program has effectively brought billions of dollars and thousands of job opportunities to underserved areas, HUBZone businesses are frequently perceived to be more credible providers of lower cost services such as general administrative, construction, and custodial services. This is largely because the Hubzone program at 20 years old is still relatively new compared to the 50+ year old 8(a) program (established by the executive branch in 1967). The 8(a) program represents both more total dollars and IT Spend. In reality Hubzone Certified Businesses are still a growing phenomena. The Small business spend recorded below by SBA since 2014 shows Hubzone Certified Businesses have never broken 2.1% of the total budget (with a 3% target). This makes the Hubzone set-aside most consistently underachieved small business target for the SBA.

Why is 8a the only sole source in town when there are also HUBZone (and other socioeconomic designations) with the same or better capabilities?

That answer lies, not within FPDS, but with Government Contracts Officers. Based on our experience in several instances, there seems to be a lack of familiarity with the HUBZone program and how to use it. Few seem willing to leave their socioeconomic comfort zones such as 8(a), SDVOSB, and Women Owned Set-Asides. While a handful of agencies are looking to turn this around (DISA, USCIS and DHS HQ all are top spenders in IT with Hubzone businesses), many are still unaware of the savings and social impact that is possible with a HUBZone contract award. This is why organizations such as the HUBZone Chamber of Commerce and HUBZone Council have been created. They are needed to help educate the acquisition community on our very important program. We at Hunter Strategy, are committed to the ideals of the HUBZone program and stand hand-in-hand with our sisters and brothers “in-arms” to close the gap on HUBZone spending targets in 2020.