Washington, D.C.— Today, the House Small Business Committee Subcommittee on Contracting and Infrastructure, led by Chairman Kwesi Mfume (D-MD), held a hearing assessing the Small Business Administration’s (SBA) Historically Underutilized Business Zone (HUBZone) program. Congress created HUBZone in 1997 to boost Federal contracting opportunities for small businesses located in economically distressed areas.
“Over the years, this Committee and the SBA have worked to increase the stability, certainty, and flexibility of the HUBZone Program. As we chart a path forward, it is vital that we examine how these changes are working for Program participants,” said Chairman Mfume. “By improving the HUBZone Program to meet its full potential, we can empower small businesses to support local economies and uplift socially and economically disadvantaged communities.”
Access to federal contracting opportunities is critical for underserved small businesses as the U.S. government serves as the world's largest purchaser of goods and services. Participants in the HUBZone program can access various incentives, including set-asides, sole-source contracts, and price evaluation preferences. The Small Business Act also sets a 3% government-wide contracting goal for participation by HUBZone small businesses. However, since the inception of HUBZone, the government has not met this goal.
The hearing allowed members to examine challenges facing the HUBZone program, including consolidation in the small business contracting base due to Category Management, flagging small firm participation in the program, and a lack of reliable program performance metrics. The hearing also focused on the effectiveness of previous program reforms enacted by Congress and the SBA to increase stability, certainty, and flexibility within HUBZone. Witnesses testified on their experience within HUBZone and offered suggestions for actions to improve the program.
“I view the federal government’s failure to meet its HUBZone contracting goals as indefensible. The point of the HUBZone program focuses on lifting entire communities through the influx of targeted dollars,” said Matthew Schoonover, Managing Member at Schoonover & Moriarty LLC in Olathe, KS. “These communities are, definitionally, underutilized—when the federal government fails to meet its prime contract goals for HUBZone companies, it fails to help provide needed economic development to these areas.”
“The HUBZone Program is needed now more than ever, as the number of HUBZone locations around the country have roughly doubled since Congress first created the program more than 25 years ago,” said Shirley Bailey, Chief Executive Officer at Summit Federal Services, LLC in Loch Lynn Heights, MD. “The HUBZone contractor community is optimistic that the Congressional actions to provide more certainty, flexibility, and fair requirements for the program will help it fulfill its promise for more federal agencies, prime contractors, and HUBZone communities across the country.”
“More effort needs to go into awareness and education about the HUBZone program. Although, I have had success in the HUBZone program, statistics show not enough of the contracts have been set-aside for HUBZone certified firms,” said Inés Rivas-Hutchins, Founder and President at Intec Group, LLC in Paducah, KY. “Contracting officers say they are unable to find enough qualified firms to set-aside contracts. On the other hand, HUBZone companies within WCOE have indicated they have a hard time finding contracts. So, more marketing and education for contracting officers, for businesses, and now to Governors regarding their ability to expand the map in their states, would benefit the program.”
“As a thirteen-year HUBZone program member, I have observed the strengths and weaknesses of this program firsthand. I believe it can serve a crucial role in reaching underserved communities, like that of the Rose Hill neighborhood in Charlottesville, VA where our company’s headquarters is located,” said Brent Lillard, CEO and Co-Founder of GovSmart, Inc. in Charlottesville, VA. “I also believe the program has some endemic challenges that need to be addressed to maximize its reach. I further believe the HUBZone program is engaged in an unanticipated competition for Federal contracts with other highly-valued socioeconomic programs – and I believe it is currently losing that competition.”
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