As 2019 gets underway, 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 mission that strives to bring jobs and economic development to the communities that need them the most.
This concept spoke to me directly as a business owner and a social-minded capitalist. How can we harness the spending of economic giants such as the Federal government and direct them towards areas that have social and economic impact, while still providing reasonably priced services? The HUBZone program is designed to address this idea. 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 based off US Census data. This spoke to me in a very Keynesian way, yes there may be unintended side-effects, but by and large, this moved income and tax revenue to the places that need an economic boost. The investment makes sense so long as you can balance the skills of HUBZone residents with those of our existing highly skilled DevSecOps teams.
This is where things got a bit more complicated. If we are a company of highly skilled principals, with a desirable set-aside status, and the infrastructure to deliver, we should just win lots of government contracts right? Well it turns out it’s not quite that easy. While this 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 less technical work such as general administrative, construction, and custodial services. “What do you mean exactly when you say you are an IT focused HUBZone business? Are you a re-seller?” These are frequent questions asked by Contract Officers and large businesses alike.
This created doubt in my mind. Does this perception somehow decrease the value of our brand? Has the perception of high unemployment in high poverty areas lead to a bias in the types of procurements set-aside for HUBZone businesses? To investigate, I gathered all HUBZone designated obligation data for 2018 from the Federal Procurement Data System (FPDS).
Figure 1 - 2018 Calendar Year HUBZone Obligations
The data, in fact, tells a very different story. While there are hundreds of millions of dollars going to HUBZones for commercial building, highway, and street construction, technical services NAICS obligations actually add up to a much higher total. Further visualization is provided below to show that relative to commercial building and construction, computer related services in 541519 and 541512 NAICS actually dwarf all combined construction obligations!
Figure 2 - 2018 Calendar Year HUBZone Obligations Heat Map
So if plenty of money is coming to HUBZone companies for technical work, why the common misconception? Why do we not see more HUBZone set asides for IT? Why is 8a the only sole source in town when there are also HUBZone (and other socioeconomic designations) with the same or better capabilities? The answers lie, not within FPDS, but with government COs. In some 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. While a handful of agencies are looking to turn this around (the DISA small business advocate does a great job at this), many are still painfully unaware of the positive savings and social impact that is possible with a HUBZone contract award. This is why organizations such as the HUBZone Chamber of Commerce and US 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 2019 while affecting government cost savings and positive economic impact in our communities alike.