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###### Small Business Administration

# AGENCY:

U.S. Small Business Administration (SBA). 

# ACTION:

Notice of methodology for measuring the economic impact of the HUBZone Program. 

# SUMMARY:

In June 2008, the Government Accountability Office (GAO) issued its findings on the U.S. Small Business Administration (SBA) Historically Underutilized Business Zone (HUBZone) Program. One of GAO's findings is that the SBA does not assess the Program's economic impact. The GAO noted the importance of this given that the HUBZone Program is primarily defined by economic factors (household income, unemployment rate, and poverty rate). 

On June 6, 2008, the SBA responded to GAO's findings, and provided several steps to address them. One of these steps is to develop a methodology for assessing the Program's economic impact. 

This paper outlines the anticipated methodology for this assessment. The paper will provide a brief description of the different methodological options currently available for undertaking an impact assessment. It will then provide a basic description of the HUBZone Program. Finally, it will detail the specific methodology chosen for measuring the Program's economic impact. 

The complexity of assessing the Program's economic impact lies in that there are multiple government agencies using three relevant procurement mechanisms, and five classes of HUBZones. In addition, the required data for this assessment will be derived from four different databases. This multiple database feature, as well as other documented data issues of the HUBZone Program, increases the difficulty of correctly identifying the assessment's relevant data elements. This methodology assumes that these data issues will be addressed. 

                        This methodology will trace Federal contract dollars as they flow to the                               ( print page 46699)                            various HUBZone areas. It will then estimate the impact of these contract dollars on the HUBZone areas' employment and household income. To isolate the impact of the HUBZone Program, the methodology differentiates Federal contract dollar-flows in three ways: (1) Via the HUBZone Direct Mechanism, where Federal contract dollar-flows are directly attributable to the HUBZone Program; (2) Via the Non-HUBZone SBA Contract Mechanisms, where Federal contract dollar-flows are directly attributable to SBA programs, but exclude the HUBZone Program; (3) Via the Non-SBA Federal Contract Mechanisms, where Federal contract dollar-flows are not associated with any SBA program.                     

This differentiation addresses GAO's recommendation to develop measures that take into account factors such as (1) the economic characteristics of the HUBZone areas and (2) Federal contracts being counted under multiple socioeconomic subcategories. 

# DATES:

Comments must be received on or before September 10, 2008. 

# ADDRESSES:

You may submit comments by Mail, Hand Delivery/Courier: Giuseppe Gramigna, Office of Policy and Strategic Planning, U.S. Small Business Administration, 409 3rd Street, SW., Washington, DC 20416. 

# FOR FURTHER INFORMATION CONTACT:

                        Giuseppe Gramigna, Office of Policy and Strategic Planning, U.S. Small Business Administration, 409 Third Street, SW.,  Washington, DC 20416; Telephone (202) 401-3227;                         *giuseppe.gramigna@sba.gov*.                     

# SUPPLEMENTARY INFORMATION:

## Introduction 

                    In June 2008, the GAO issued its findings on the SBA HUBZone Program.[1]                                          One of GAO's findings is that the SBA does not assess the economic impact of the HUBZone Program. The GAO noted the importance of this given that the HUBZone Program is primarily defined by economic factors (household income, unemployment rate, and poverty rate).                 

                    On June 6, 2008, SBA responded to GAO's findings, and detailed several reforms to address them. One of these steps is to develop a methodology for assessing the Program's economic impact. 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. The primary reason for this restriction is that Congress only provided a contracting goal for the HUBZone Program: That as of fiscal year 2003, 3 percent of all Federal prime contract dollars should go to small firms located in HUBZone areas.[2]                                          However, this goal provides no guidance on how to assess the significance of the economic impact of this 3 percent Federal contracting goal. Lacking this guidance, the assessment can only provide a measurement of the Program's economic impact.                 

This paper outlines the anticipated methodology for this assessment. The paper will provide a brief description of the different methodological options currently available for undertaking an impact assessment. It will then provide a basic description of the HUBZone Program. Finally, it will detail the specific methodology chosen for measuring the Program's economic impact. 

This methodology will trace Federal contract dollars as they flow to the various HUBZone areas. It will then estimate the impact of these contract dollars on the HUBZone areas' employment and household income. To isolate the impact of the HUBZone Program, the methodology differentiates Federal contract dollar flows in three ways: (1) Via the HUBZone Direct Mechanism, where Federal contract dollar flows are directly attributable to the HUBZone Program. (2) Via the Non-HUBZone SBA Contract Mechanisms, where Federal contract dollar flows are directly attributable to SBA Programs, but excluding the HUBZone Program. (3) Via the Non-SBA Federal Contract Mechanisms, where Federal contract dollar flows are not associated with any SBA programs. 

This differentiation addresses GAO's recommendation to develop measures that take into account factors such as (1) the economic characteristics of the HUBZone areas and (2) Federal contracts being counted under multiple socioeconomic subcategories. 

The complexity of assessing the economic impact of the HUBZone Program lies in that there are multiple government agencies, each using three relevant procurement mechanisms, and five classes of HUBZones. In addition, the required data for this assessment will be derived from four different databases. This multiple database feature of the HUBZone Program increases the difficulty of correctly identifying the relevant data elements. 

                    Finally, the GAO report as well as an SBA Advocacy report found additional data identification issues.[3]                                          Both reports indicate that the various databases provide inconsistent data on HUBZone firms and HUBZone areas. These data inconsistencies can lead to misidentification of the contract dollar-flows to HUBZone areas, and can thus introduce errors in the assessment.                 

This methodology assumes that data inconsistencies will be addressed. The assessment will need to account for any inconsistencies remaining in the data. The criteria for this adjustment process have not yet been developed, as they will most likely be derived from a data analysis of the HUBZone Program. 

## Currently Available Impact Assessment Models 

                    There are several theoretical models for assessing the economic impact of a particular Federal government expenditures program at the national level. However, when it comes to assessing the economic impact of Federal expenditures on a specific geographic region—a state or a county for example—the options quickly narrow-down to a few variations of a singular theoretical approach: The Leontief Input-Output Model.[4]                                          The SBA found that the specific aspects of the HUBZone Program allow for a successful implementation of this methodological approach. Specifically, the HUBZone Program eligibility is largely defined by the economic concepts of employment and income.                           ( print page 46700)                        Fortunately, nearly all commercially available Input-Output models provide employment and income data at very detailed geographic and industry levels.                 

The SBA identified three sources that provide software and data for the practical application of this approach. A cursory analysis of these models indicates that, because they use the same basic methodology and data, the differences among them are not significant enough to materially alter the outcome of a particular assessment. Hence, the SBA will base the final choice among these applications on cost and ease of usability. 

These models include RIMS II (developed by the Bureau of Economic Analysis), IMPLAN (developed by the Minnesota Implan Group, MIG Inc, in Minnesota), and REMI (developed by Regional Economic Models, Inc. in Amherst, Massachusetts). 

## A Basic Description of the HUBZone Program 

The HUBZone Act of 1997 provides for a new Federal program designed to stimulate job creation and capital investment in distressed urban, rural and Native American areas. Through this Act, Congress provided a contracting goal for the HUBZone Program: That as of fiscal year 2003, 3 percent of all Federal prime contract dollars should go to small firms located in HUBZone areas. 

### HUBZone Areas 

                    Currently, there are five different definitions of HUBZone areas: [5] 

                    1.                     *Qualified Census Tract (QCT):*                     The Internal Revenue Service and the U.S. Department of Housing and Urban Development (HUD) define a Qualified Census Tract as having either 50 percent or more of their households with income below 60 percent of the median gross income, or have a poverty rate of at least 25 percent. There is a maximum cap specifying that the population of all of the census tracts that meet one or both of these criteria cannot exceed 20 percent of the area population; [6] 

                    2.                     *Difficult Development Area (DDA):*                     The definition of Difficult Development Area is similar to Qualified Census Tract in that it is based on an Internal Revenue Service provision for the Low Income Housing Tax Credit Program developed in conjunction with HUD. A characteristic of a DDA is that the locale has high construction, land and utility costs relative to the area median income; [7] 

                    3.                     *Qualified County:*                     The definition for qualified county is any county that, based on the most recent data available from the U.S. Census Bureau, is not located in a metropolitan statistical area, and in which the median household income is less than 80 percent of the median household income for the entire non-metropolitan area of its respective state. Alternatively, a qualified county is any non-metropolitan county that, based on the most recent data available from the Bureau of Labor Statistics (BLS), has an unemployment rate that is not less than 140 percent of the state average unemployment rate or the national average unemployment rate; [8] 

                    4.                     *Qualified Indian Reservation:*                     The definitions for qualified Indian reservations, which include lands covered by the phrase “Indian Country,” are those established and used by the Bureau of Indian Affairs. A more precise listing of properties included in this classification, besides reservations, is Indian trust lands (on and off the reservation), Indian dependant lands, and Indian service areas. In the state of Oklahoma, the HUBZone Program uses a determination arrived at by the Internal Revenue Service as the property is legally classified as a “former Indian reservations in Oklahoma”; [9] 

                    5. Base Realignment and Closure (BRAC): A military base closed under the Defense Base Realignment and Closure Act of 1990 (BRAC). Congress determined that former military bases closed because of BRAC qualify for HUBZone status for a five-year period from the date of formal closure. For those locations closed as of the date the legislation was signed into law, the five-year period began on the date the law became effective, Dec. 8, 2004.[10] 

The selection criteria for each HUBZone classification varies somewhat, to account for the different economic characteristic of the various HUBZone classes. However, for this specific methodological purpose, it is sufficient to state that six elements go into the criteria: 

1. Household income level; 

2. Unemployment rate; 

3. Poverty rate; 

4. BRAC; 

5. DDA; 

6. Classification as “Indian Country”. 

### HUBZone Firms 

The SBA HUBZone Program qualifies and periodically recertifies firms wishing to obtain or retain HUBZone status. The qualifying criteria for a HUBZone firm are based on having a specific level of operational activities within the geographic area of a HUBZone. Specifically, the firm must have its principal office located in a HUBZone Area, and at least 35% of its labor force must reside within a HUBZone Area. 

Federal Contract Mechanisms  Federal Contracting Officers have quite a few mechanisms to channel funds to a HUBZone Area. For example, some Federal contracting mechanisms are based on socioeconomic status such as service disabled veteran, while others are simply based on full and open competition. Some of these mechanisms are related to the HUBZone Program and some are not. Understanding and tracing the dollar flows of these specific mechanisms will be crucial for assessing the economic impact of the HUBZone Program. To effectively trace these contracting dollars, the model differentiates among the following contracting mechanisms: 

                    1.                     *HUBZone Direct Mechanism:*                     Federal contract mechanisms based on HUBZone Program mechanisms (i.e., HUBZone set-aside, HUBZone sole source, and HUBZone price preference in a full and open competition); [11] 
      ( print page 46701)    
                    2.                     *Non-HUBZone SBA Contract Mechanisms:*                     SBA contract mechanisms solely based on Non-HUBZone mechanisms (e.g., small business set-aside, service disabled veteran-owned small business set aside, 8(a) sole source award, 8(a) set aside);                 

                    3.                     *Non-SBA Federal Contract Mechanisms:*                     Competitive Federal procurement mechanisms based on full and open competition, and other contracting mechanisms available to small and ‘other than small' firms.                 

These differentiations allow for the incremental measurement of all Federal contract dollars flowing to HUBZones via the various kinds of Federal procurement mechanisms. Specifically: 
    - Mechanism 1 measures the dollar flow attributable the HUBZone Program;
    - Mechanism 2 measures the dollar flow attributable to Non-HUBZone SBA programs on the HUBZone areas;
    - Mechanism 3 measures the dollar flow attributable to Non-SBA Federal procurement contracts to HUBZone areas;
    - The summation of mechanisms 1, and 2, allows for the measurement of all the SBA's procurement contracts towards HUBZone areas;
    - The summation of mechanisms 1 through 3 allows for the measurement of all Federal contracts toward HUBZone areas.

## Statistical Characteristics of the Economic Impact Assessment Model 

                    It is commonly the case that the final analysis will include aspects not anticipated in the original methodology outline. This is a natural outcome of going through the entire exercise, and being able to identify subtleties not perceivable from the onset of the study. Hence, it may very well be the case that the actual assessment may include statistical and data elements not mentioned in this methodology. However, we anticipate using the following statistical and data elements to provide a quantitative description of the HUBZone Program.[12] 

1. The five HUBZone areas and their HUBZone participation (i.e., the number of HUBZone Business, Vendors, and Contract Dollars); 

2. The flow of contract dollars via the various HUBZone mechanisms over time; 

3. Industry concentration of HUBZone contracts (i.e., the number and dollar value of HUBZone contracts by NAICS industry); 

4. HUBZone participation by state (i.e., the number of HUBZone Businesses, Contractors, and Contract Dollars);

5. Employment Level; 

6. Unemployment Rate; 

7. Median Household Income. 

In addition, we anticipate utilizing the following statistical and data elements for each HUBZone Area: 

A. The number of sub-areas (mostly counties) in the HUBZone Area; 

B. The number of HUBZone Firms in the HUBZone Area; 

C. The number of HUBZone Contractors in the HUBZone Area; 

D. The number of HUBZone Contracts flowing into the HUBZone Area; 

E. HUBZone Contract Dollars flowing into HUBZone Area; 

F. Population in the HUBZone Area. 
    - Ratio 1: The number of HUBZone Firms divided by HUBZone Area
    - Ratio 2: The number of HUBZone Firms divided by HUBZone Area Population
    - Ratio 3: The number of HUBZone Contractors divided by HUBZone Area
    - Ratio 4: The number of HUBZone Contractors divided by HUBZone Area Population
    - Ratio 5: The number of HUBZone Contracts divided by HUBZone Area
    - Ratio 6: The number of HUBZone Contracts divided by HUBZone Area Population
    - Ratio 7: HUBZone Contract Dollars divided by HUBZone Area
    - Ratio 8: HUBZone Contract Dollars divided by HUBZone Area Population.

Data elements B through E measure the level of participation of a specific HUBZone Area. Ratios 1, 3, 5, and 7 measure the comparative rate of participation of a particular HUBZone Area. In addition, the population ratios (ratios 2, 4, 6, and 8) measure the comparative rate of participation on a per capita basis. 

These statistics and data elements will provide the basis for measuring the absolute level and the comparative rate of participation in each HUBZone Area. For example, they will provide contract data (i.e., the number of contracts, the dollar value of these contracts, and the types of mechanisms used to obtain these contracts) for a specific HUBZone Area. In addition, by dividing these contract data, say by population in a specific HUBZone Area, they provide a comparative measure of the importance of these contracts with respect to population. 

Other statistical analysis of the above data should provide additional quantitative understanding of the HUBZone Program. For example, it may be useful to derive some commonly used central tendency measures (i.e., mean, median, mode.) as well as some commonly used distribution measures (e.g., quartile, decile, standard deviation, etc.). 

## Estimating the Incremental and Total Economic Impact of the HUBZone Program 

Having provided a sufficient statistical description of the HUBZone Program, the model will then estimate the economic impact of the contract dollar flows attributable to the three contracting mechanisms. Specifically, the model will provide the following estimates: 

1. The economic impact directly attributable to the HUBZone Program; 

2. The economic impact of the Non-HUBZone SBA programs on HUBZone areas; 

3. The economic impact of other related Federal procurement programs affecting HUBZone areas. 

Economic impact will be measured by the estimated growth in median household income and employment (or a reduction in unemployment) in a specific HUBZone Area. 

                    The model will use a two-step process to arrive at these estimated growth rates. First it will apply a specific multiplier to the contract dollars flowing to a specific HUBZone Area via the three contract mechanisms.[13]                                          In a second step, the model will aggregate the results to the appropriate analytical level to measure the economic impact of the various dollar flows.[14] 

                    In order to accomplish these two steps, the model will employ the following types of equation:                           ( print page 46702)    

### The Employment Impact Equations 

                    1. HUBZone Direct Employment Impact = f (dollar flow to a HUBZone Area via the HUBZone Direct Mechanism multiplied by Employment Multiplier) [15] 

2. Non-HUBZone SBA Employment Impact = f (dollar flow to a HUBZone Area via Other SBA Mechanisms multiplied by the Employment Multiplier) 

3. Non-SBA Federal Employment Impact = f (dollar flow to a HUBZone Area via Non-SBA Federal contract Mechanisms multiplied by the Employment Multiplier) 

### The Income Impact Equations 

4. HUBZone Direct Income Impact = f (dollar flow to a HUBZone Area via the HUBZone Direct Mechanism multiplied by the Income Multiplier) 

5. Non-HUBZone SBA Income Impact = f (dollar flow to a HUBZone Area via Other SBA Mechanisms multiplied by the Income Multiplier) 

6. Non-SBA Federal Income Impact = f (dollar flow to a HUBZone Area via Non-SBA federal contract Mechanisms multiplied by the Income Multiplier) 

Equations 1 and 4 measure the economic impact directly attributable to the HUBZone Program. Equations 2 and 5 measure the economic impact attributable to the Non-HUBZone related SBA Federal procurement programs. Finally, equations 3 and 6 measure the Non-HUBZone and Non-SBA Federal procurement program on a HUBZone Area. 

Hence, the first set of equations (1 and 4) measure the economic impact of the HUBZone Program. The second set of equation (2 and 5) measure the economic impact of the Non-HUBZone related SBA procurement programs. The third set of equations (3 and 6) measure the economic impact of the Non-HUBZone and Non SBA Federal procurement program on a specific HUBZone Area. Summing the result of equations 1 through 6 will provide for a measurement of the entire Federal procurement program on a specific HUBZone Area. 

A comparison of these set of equations can place the economic impact of the HUBZone Program into perspective. For example, comparing the results of the first set of equations (1 and 4) to the results of the second set of equations (2 and 5) will compare the economic impact of HUBZone Program to the economic impact of the Non-HUBZone SBA programs. Likewise, comparing the results of the first set of equations (1 and 4) to the results of the third set of equations (3 and 6) will compare the economic impact of HUBZone Program to the economic impact of the Non-SBA Federal procurement programs. 

## Databases 

Based on our understanding, there are four databases necessary for the resolution of the model. Following is a basic description of each of these databases: 

### HUBZone Certification Tracking System (HCTS) 

This database is maintained by the SBA HUBZone Program. The data contained in this database is generated from the application, recertification and program examination processes of the HUBZone Program. The following relevant data elements can be found in this database: 
    - Firm Identification Elements (e.g., name, address, SBA Customer Number, HUBZone Application Number);
    - Firm Operational Elements (e.g., Employment, Revenue Size).

### Central Contractor Registration (CCR) 

The Central Contractor Registration (CCR) is the primary registrant procurement database for the U.S. Federal Government. CCR collects, validates, stores and disseminates data in support of agency acquisition missions. It is federally mandated that anyone who wishes to do business with the Federal government under a FAR-based contract must be registered in CCR before being awarded the contract. 

### The Federal Procurement Data System (FPDS) 

The Federal Procurement Data System-Next Generation (FPDS-NG) is maintained by the General Services Administration under the direction of the Office of Management and Budget. This database contains key data on all Federal appropriated procurement actions. The following relevant data elements can be found in this database: 
    - Contract Identification (e.g., contract value, and selection mechanism)
    - Firm Identification (e.g., DUNS Number, socioeconomic status [HUBZone, 8a, Open Competition])

### Census 2000 

                    While the HUBZone Program was established by congress in 1997, it became operational in 1999. Hence for simplicity purposes, we anticipate using the 2000 Census data.[16]                                          The 2000 Census data provides the following data elements:                 
    - Population;
    - Labor Force;
    - Unemployment Rate;
    - Poverty Rate;
    - Household Income.

## Defining the Data Elements 

So far we have identified the following data elements: 

1. Contracting Federal Agencies; 

2. Contracting Mechanisms; 

3. HUBZone Areas; 

4. HUBZone Firms; 

5. HUBZone Contractors. 

                    The next data element to be defined is “Contract Value”. To a certain extent our choice is limited by the availability of data found in FPDS. This database only records obligated funds. However, we have no information at which point in time these obligated funds were actually expended. Faced with this restriction, we assume that all the funds are spent in the year that they are obligated.[17] 

Given the above restrictions, we deduce the final data element required by our model: 

6. Contract Value is defined as prime, obligated dollars via any one of the three contract mechanisms. 

The final data elements to be specified in this model are the type of multipliers used for estimating incremental and total economic impact. As indicated in our basic description of the I-O Model, this decision is primarily based on the available data elements. Hence, given the above-described data elements, we anticipate using the final demand multiplier for output, income, and employment. Hence, we have the following additional data elements: 

7. Final Demand Output Multiplier; 

8. Final Demand Employment Multiplier; 

9. Final Demand Income Multiplier. 

                    A common aspect of all I-O models is that they provide final demand multipliers for many industries. For example, the RIMS II model provides final demand multipliers for 386 industries. Hence, we expect that it will be necessary to reduce the number of industry-specific multipliers. There are several options for narrowing this choice. For example, one could take a weighted average of the relevant multipliers, or one could simply choose a representative sample (say the largest                           ( print page 46703)                        two or three) multipliers. This decision will be based on weighing the effort versus the additional accuracy gained from employing additional multipliers.                 

Another common aspect of most I-O models is that they provide final demand multipliers at the county level. Given that there are several thousand counties, we expect to reduce the regional specification of our multipliers. Again we will weigh effort versus accuracy in making this choice. 

Authority:13 CFR part 126. 

Fay E. Ott, 

Associate Administrator for Government Contracting and Business Development.

# Footnotes

1.                             U.S. GAO. June 2008.                         *Additional Actions Are Needed to Certify and Monitor HUBZone Businesses and Assess Program Results.*                         Washington. Draft GAO-08-643.                    
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2.                             “The Government-wide goal for participation by qualified HUBZone small business concerns shall be established at not less than 1 percent of the total value of all prime contract awards for fiscal year 1999, not less than 1.5 percent of the total value of all prime contract awards for fiscal year 2000, not less than 2 percent of the total value of all prime contract awards for fiscal year 2001, not less than 2.5 percent of the total value of all prime contract awards for fiscal year 2002, and not less than 3 percent of the total value of all prime contract awards for fiscal year 2003 and each fiscal year thereafter.” 15 U.S.C. 644(g)(1).                    
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3.                             Henry Beale, (May 2008), The                         *HUBZone Program,*                         U.S. SBA Advocacy, Washington, DC.                    
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4.                             While the proliferation of methodologies for impact studies has grown over the years, the difference among them is primarily based on terminology and focus. Indeed, most methodologies for impact study can be traced to two theoretical economic approaches. The first is the General Equilibrium approach, and the other is the Static Input-Output Model. These two theoretical approaches have their common origins in the 1930's work of R. F. Kahn and John Maynard Keynes, and the 1940's-1950's work of Wassily W. Leontief. For more details see, R.  F. Kahn. (June 1931). The Relation of Home Investment to Employment.                         *The Economic Journal, Vol. 41*. pp. 173-198. John Maynard Keynes. (1936).                         *The General Theory of Employment, Interest and Money,*                         Macmillan Cambridge University Press, for Royal Economic Society, Wassily W. Leontief. (1951).                         *The Structure of American Economy 1919-1939*. 2d ed. Oxford University Press, Fair Lawn, NJ. Ultimately these works trace their origins to the 16th century French economist Françis Quesnay. See                         *Le Tableau Economique, 1758*.                    
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5.                             Please note that the original HUBZone designations were based upon the 1990 census. As a result of the 2000 census and OMB change in definition of metropolitan areas some HUBZone areas lost their eligibility. Consequently, Congress passed legislation to restore the eligibility of these areas, now referred to as Redesignated Areas.                    
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6.                             The definition for Qualified Census Tract is based on the Internal Revenue Service provision for the Low Income Housing Tax Credit Program that is developed in conjunction with the U.S. Department of Housing and Urban Development (HUD). The HUD Secretary designates Qualified Census Tracts by public notice in the                         **Federal Register**                        . Public Law 105-135, the HUBZone Act of 1997, was signed on Dec. 2, 1997 and is the source for using this designation.                    
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7.                             NOTE: By virtue of legislation, signed into law on August 10, 2005, the application of the DDA status for HUBZone consideration only applies to non-metropolitan counties in Alaska, Hawaii, and the U.S. territories and possessions, but not to the 48 contiguous states. The Secretary of HUD designates Difficult Development Areas by public notice in the                         **Federal Register**                        . Public Law 109-59, the Safe, Accountable, Flexible, Efficient Transportation Equity Act of the Department of Transportation Reauthorization for 2005, was signed on Aug. 10, 2005, and is the source for using this designation.                    
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8.                             Public Law 105-135, the HUBZone Act of 1997, was signed on Dec. 2, 1997, and is the source for using this designation.                    
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9.                             Both Public Law 105-135, the HUBZone Act of 1997, signed on Dec. 2, 1997, and Public Law 106-554, the HUBZone Act of 2000, signed on Dec. 12, 2000, are the sources for using this designation.                    
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10.                             Public Law 108-447, the HUBZone Act of 2004, was signed on Dec. 8, 2004 and is the source for using this designation.                    
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11.                             Both the GAO and the Advocacy report indicate that there are a certain number of HUBZone contracts that have more than one preference mechanism designation. Indeed, the legislation defining these mechanisms is rather complex. The current model does not account for this additional contract mechanism. Addressing for the existence of multiple contract mechanisms is largely data driven. If the data indicate that the                                                 occurrences of multiple mechanisms designation are insignificant, then it is reasonable to included them in the HUBZone Direct Mechanism. However, if there are significant occurrences of multiple mechanisms contracts, then the model will expand to explicitly include this additional contract mechanism, and will thus have four contract mechanisms.                    
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12.                             This section draws on the work of Henry Beale, (May 2008),                         *The HUBZone Program,*                         U.S. SBA Advocacy, Washington, DC.                    
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13.                             These multipliers will be provided by the specific Input-Output software chosen.                    
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14.                             We expect that the “appropriate analytical level” will capture the economic impact at the HUBZone Area category. However, it may also prove informative to analyze the HUBZone Program economic impact at a more granular level. For example, it may be useful to analyze the data at the individual HUBZone Area level. This granularity, for example, might shed light on how and why some HUBZone areas are more successful than others at attracting Federal contracts. Indeed, the Advocacy report does this. See SBA Advocacy (2000). Op. Cit. It may also be revealing to analyze the data at the firm type level to see what differentiates successful HUBZone contractors from other HUBZone firms. Whether it is feasible to analyze the data at this level of granularity will largely be a question of resources and privacy issues.                    
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15.                             All the multipliers in this analysis are Final Demand multipliers.                    
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16.                             The Census decennial population survey is the only source that provides socioeconomic data at the level required for this impact study.                    
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17.                             The extent that expenditures timing differ from allocation timing will increase model's error rate.                    
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 [FR Doc. E8-18441 Filed 8-8-08; 8:45 am] 

BILLING CODE 8025-01-P