Publisher's Synopsis
The Small Business Administration (SBA) administers several programs to support small businesses, including the Historically Underutilized Business Zone Empowerment Contracting (HUBZone) program. The HUBZone program is a small business federal contracting assistance program "whose primary objective is job creation and increasing capital investment in distressed communities." It provides participating small businesses located in areas with low income, high poverty rates, or high unemployment rates with contracting opportunities in the form of set-asides, sole-source awards, and price-evaluation preferences. Firms must be certified by the SBA to participate in the HUBZone program. On November 20, 2014, there were 5,708 certified HUBZone small businesses. In FY2013, the federal government awarded 64,912 contracts valued at $6.54 billion to HUBZone-certified businesses, with about $1.87 billion of that amount awarded through a HUBZone set-aside, sole-source, or price-evaluation preference award. The program's FY2013 administrative cost was about $10.0 million. Its FY2014 appropriation is $2.25 million, with the additional cost of administering the program provided by the SBA's appropriation for general administrative expenses. Congressional interest in the HUBZone program has increased in recent years, primarily due to U.S. Government Accountability Office (GAO) reports of fraud in the program. Some Members have called for the program's termination. Others have recommended that the SBA continue its efforts to improve its administration of the program, especially its efforts to prevent fraud. This report examines arguments both for and against targeting assistance to geographic areas with specified characteristics, such as low income, high poverty, or high unemployment, as opposed to providing assistance to people or businesses with specified characteristics. It then assesses the arguments both for and against the continuation of the HUBZone program. The report also discusses the HUBZone program's structure and operation, focusing on the definition of HUBZone areas and HUBZone small businesses and the program's performance relative to federal contracting goals. It includes an analysis of the SBA's administration of the program and the SBA's performance measures. In addition, this report examines P.L. 111-240, the Small Business Jobs Act of 2010, which removed certain language from the Small Business Act that had prompted federal courts and GAO to find that HUBZone set-asides have "precedence" over other small business set-asides. It also briefly discusses H.R. 489, the HUBZone Expansion Act of 2013, its companion bill in the Senate (S. 206), and S. 2410, the Carl Levin National Defense Authorization Act for Fiscal Year 2015. These bills would expand the area eligible for HUBZone status as a result of a Base Realignment and Closure Act (BRAC) military base closure. S. 2410 would also extend these areas' HUBZone eligibility from five years to eight years. In addition, S. 259, the Assuring Contracting Equity Act of 2013, would increase the federal government's small business contracting goals, including the contracting goal for the HUBZone program. H.R. 4093, the Greater Opportunities for Small Business Act of 2014, and H.R. 4435, the Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015, would increase the federal government's contracting goal for small businesses generally from 23% to 25% and establish a subcontracting goal of 40% for small businesses generally.
