[Federal Register Volume 73, Number 155 (Monday, August 11, 2008)]
[Notices]
[Pages 46698-46703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18441]


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SMALL BUSINESS ADMINISTRATION


HUBZone Program

AGENCY: U.S. Small Business Administration (SBA).

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

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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

[[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; 
<a href="/cdn-cgi/l/email-protection#5037392523352020357e3722313d39373e31102332317e373f26"><span class="__cf_email__" data-cfemail="d3b4baa6a0b6a3a3b6fdb4a1b2bebab4bdb293a0b1b2fdb4bca5">[email protected]</span></a>.

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).
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    \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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    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.
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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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    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.
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    \3\ Henry Beale, (May 2008), The HUBZone Program, U.S. SBA 
Advocacy, Washington, DC.
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    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.

[[Page 46700]]

Fortunately, nearly all commercially available Input-Output models 
provide employment and income data at very detailed geographic and 
industry levels.
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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 Fran[ccedil]is Quesnay. See Le Tableau 
Economique, 1758.
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    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\
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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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    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\
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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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    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\
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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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    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\
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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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    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\
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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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    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\
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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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    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\
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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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[[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:
    <bullet> Mechanism 1 measures the dollar flow attributable the 
HUBZone Program;
    <bullet> Mechanism 2 measures the dollar flow attributable to Non-
HUBZone SBA programs on the HUBZone areas;
    <bullet> Mechanism 3 measures the dollar flow attributable to Non-
SBA Federal procurement contracts to HUBZone areas;
    <bullet> The summation of mechanisms 1, and 2, allows for the 
measurement of all the SBA's procurement contracts towards HUBZone 
areas;
    <bullet> 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\
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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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    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.
    <bullet> Ratio 1: The number of HUBZone Firms divided by HUBZone 
Area
    <bullet> Ratio 2: The number of HUBZone Firms divided by HUBZone 
Area Population
    <bullet> Ratio 3: The number of HUBZone Contractors divided by 
HUBZone Area
    <bullet> Ratio 4: The number of HUBZone Contractors divided by 
HUBZone Area Population
    <bullet> Ratio 5: The number of HUBZone Contracts divided by 
HUBZone Area
    <bullet> Ratio 6: The number of HUBZone Contracts divided by 
HUBZone Area Population
    <bullet> Ratio 7: HUBZone Contract Dollars divided by HUBZone Area
    <bullet> 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\
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    \13\ These multipliers will be provided by the specific Input-
Output software chosen.
    \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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    In order to accomplish these two steps, the model will employ the 
following types of equation:

[[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\
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    \15\ All the multipliers in this analysis are Final Demand 
multipliers.
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    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:
    <bullet> Firm Identification Elements (e.g., name, address, SBA 
Customer Number, HUBZone Application Number);
    <bullet> 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:
    <bullet> Contract Identification (e.g., contract value, and 
selection mechanism)
    <bullet> 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:
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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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    <bullet> Population;
    <bullet> Labor Force;
    <bullet> Unemployment Rate;
    <bullet> Poverty Rate;
    <bullet> 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\
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    \17\ The extent that expenditures timing differ from allocation 
timing will increase model's error rate.
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    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

[[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.
 [FR Doc. E8-18441 Filed 8-8-08; 8:45 am]
BILLING CODE 8025-01-P


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