SBA measures economic impact on HUBZones

Small Business Administration officials have developed a new method for measuring the economic impact of small-business contracts on poor areas, SBA’s chief economist said today.

SBA officials want to measure the effect on employment and household incomes of people living in Historically Underutilized Business Zones compared with the amount of federal contract money that goes to HUBZone businesses, said Giuseppe Gramigna, SBA’s chief economist.

Officials will measure money that small businesses receive through:
--    SBA’s HUBZone program.
--    SBA programs not affiliated with HUBZone contracts.
--    Other contracts not associated with SBA.

SBA will measure the economic impact in a specific HUBZone area based on the estimated growth in median household income and a reduction in unemployment.

“As we crunch the numbers, we will learn” more about the HUBZone program and its effects on those areas, Gramigna said. “Once you have actual measurements, you can discuss policy.”

However, “to a great extent, this methodology will be restricted to measuring the economic impact of the HUBZone program and not judging the significance of the impact,” SBA notes in today’s Federal Register. That’s because Congress did not give SBA guidelines for determining the program’s significance.

The measurements will be complex. There are multiple agencies using three relevant procurement mechanisms, five classes of HUBZones and four different procurement databases that contain HUBZone contract information.

SBA’s methodology follows a June report from the Government Accountability Office, which stated that SBA needs to determine the HUBZone program’s effects. William Shear, director of financial markets and community investments at GAO, who wrote the report, recommended that SBA account for the characteristics of the HUBZone area and the contracts being counted in several socioeconomic categories.

“By not evaluating the HUBZone program’s benefits, SBA lacks key information that could help it better manage the program and inform Congress of its results,” Shear wrote.

Such an evaluation is particularly critical because of the expanding number of HUBZones, the potential for the erosion of the intended economic benefits from the expansion and the wide variation in the economic characteristics of these areas, he wrote.

Gramigna said SBA had no specific timeline of when it would have the results.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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