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Federal Market Intelligence for Small Business |
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HUBZone firms rise in number but HUBZone set-asides slumpHUBZone set-aside awards drop by half from 2017-2019Small businesses located in "HUBZones" are growing in number and being awarded more federal contracts, even though HUBZone set-asides are drastically shrinking. The value of federal contract awards won by small firms in Historically Underutilized Business Zones (HUBZones) has increased substantially, and the number of firms also has jumped, from fiscal 2017-2019. But at the same time, the value of the awards won by those firms through HUBZone set-asides has dropped dramatically, according to Set-Aside Alert’s analysis of data from USASpending.gov and the Small Business Administration. A similar sharp downward trend in the value of set-aside awards has affected all small business federal contractors during the 2017-2019 period, including those for small disadvantaged, women-owned and service-disabled veteran-owned firms, Set-Aside Alert has found (see June 19, Aug. 21, Sept. 4 and Sept. 18, 2020 issues). HUBZone goals not met The SBA began registering firms in the HUBZone program in 1999 with the goal of expanding commerce and reducing poverty in the hardest-hit geographic areas. There were 14,980 census tracts and 613 rural counties, as well as Indian lands, former military bases and other areas, designated as HUBZones as of 2018, the latest data available, according to a recent Congressional Research Services (CRS) report on HUBZones. The government aims to award 3% of procurements to small businesses in HUBZones, but that goal has never been met. The number of HUBZone small businesses hit a peak of 8,533 in May of 2011, then slumped for several years. The number of small firms registered as HUBZone firms has been rising for the last five years:
Those numbers indicate 20% growth in the number of HUBZone small businesses registered with the federal government from 2017-2019. HUBZone contract awards After several years of sequestration and tight budgets, total federal contract award spending boomed with a 25% increase from fiscal 2017-2019 (from USASpending.gov):
Total awards to HUBZone small businesses rose dramatically, by 56%, during the same period (SBA):
During the same period of time, the government came closer to, but did not meet, its HUBZone procurement 3% goal (SBA figures):
HUBZone set-asides While HUBZone small businesses got a major boost from the surge in federal contracting in the last three years, it was not due to HUBZone set-asides. HUBZone set-asides have shrunk dramatically during the period. The value of HUBZone set-aside awards (including sole-source awards) dropped by 52% from fiscal 2017-2019 (USASpending.gov):
The percentage of HUBZone set-aside awards that were competitive ranged from 92% to 96% in those years. SBA officials declined to comment for this article (see Spampinato story). Analysis Small firms located in HUBZones benefited from the huge upswing in federal contract awards in the 2017-2019 period, but HUBZone set-asides sagged during that period. Those trends suggest that HUBZone firms win federal awards primarily through other types of set-asides or in open competition. The CRS confirmed that pattern in its recent report, stating that about $6.7 billion was awarded to HUBZone small firms by utilizing another small business preference, and about $2.8 billion was awarded to HUBZone small firms in open competition, in fiscal 2019. Possible reasons for the reduction in HUBZone set-aside awards include:
More information:
CRS Report: https://bit.ly/3cKwglX
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