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8(A) Certification HubZone White Papers

HUBZone - the most Underutilized Certification

Jun 16 2016 12:07PM

For startup firms looking to break into the federal contracting space possibly the best mechanism to do so is the HUBZone Certification. This certification has the requirement that the business be located in a Historically Under Utilized Zone as well as meeting the condition that 35% of the employees of the firm reside within a HUBZone. The firm can be a startup as there is not a length in business requirement for this certification. If the firm does not have employees the owner of the firm generally qualifies as an employee for HUBZone.   HUBZone Trends 1. In the 2010 Census over 40% of HUBZone firms were removed when the HUBZone districts were redrawn. This caused the HUBZone program to go from Federal Spending of $12.1B in 2010 to $6.8B in 2015. This decline has created difficulty for most agencies to meet their congressional HUBZone spending goals. 2. As a result of 1, it has become much easier for HUBZone firms to obtain federal contracts as the number of bidders on HUBZone set-aside contracts has decreased. This has caused a recent trend in the federal marketplace whereby firms that are being setup for the sole purpose of doing business with the federal government are obtaining the HUBZone certification. For new HUBZone firms their duration in the program has lowered to on average 4 years. This is because as the firm grows it becomes increasingly difficult for firms such as consulting firms or IT firm to meet the location and employee residency requirements of the HUBZone Certification.   HUBZone Missed Opportunities 1. Firms located in HUBZone counties, especially manufacturing firms still lag behind in their use of the HUBZone certification. HUBZone firms in competitive bid situations received a 10% price preference. How this is viewed by the federal contracting officer: Example HUBZone firms win all ties therefore in the following case the HUBZone firm would win. 2.  Additionally even though HUBZone firms do not receive a price preference when selling goods on a GSA Schedule HUBZone firms typically outsell their peers also on GSA Schedule by 3x the amount.  It is possible that government buyers are making non-price justifications in order to utilized HUBZone firms in order to help them meet their congressional goals.   Here is a link to the HUBZone Map http://map.sba.gov/hubzone/maps/SimpleMap.aspx Here is a listing of HUBZone Counties file:///M:/SBA%20GSA/ez8a/HUBZone/Hubzone%20Certified%20Counties%202014.pdf

 

Unleash The Possibilities Of Getting Benefitted By Securing SBA HUBZone Certification

May 4 2016 1:05PM

To highlight the value and the lack of Utilization of the SBA HUBZone Certification I will take you through the example of the U.S. Territory Guam. The entire Island of Guam was at one point classified as a HUBZone. Parts of Guam have been Redesignated in light yellow meaning the HUBZone is coming to a sunset within the next three years.   Here are the Stats on Guam’s HUBZone for 2015 while it was 100% HUBZone. As you can see by the numbers only approximately 21% of firms located in Guam obtain their HUBZone certification.     Federal Spending Stats on Guam 2015     So basically the average Guam Hubzone firm does on average $1.1MM per year in federal contracts for all other firms all bets are off.  Now Guam is a HUBZone microcosm it illustrates the value of the HUBZone certification and how firms even though it can be very beneficial to their business don’t make HUBZone part of their business development strategy.

 

8(a) Certification + GSA Schedule Advantage

Apr 26 2016 9:28AM

A lot of 8(a) firms do not find out about the advantage of combining an 8(a) Certification with a GSA Schedule until they have already lost several years of their 9 years of 8(a) program eligibility. (Note: GC Construction firms are not eligible for a GSA Schedule). To highlight how a GSA Schedule gives an 8(a) firm an advantage over its 8(a) peers we will look at ground transportation as an example. There are 40 8(a) firms with the NAICS Code 485999 – All other transit and ground transportation. Here are the results of the comparison between the two groups.   # Firms in Category Total Spending Avg. Spend per Firm 8(a) + GSA Schedule 13 62,720,818 4,824,678 8(a) Only 27 56,719,730 2,100,731 Based on these results the average federal revenue for a firm with an 8(a) + GSA Schedule combination in this industry is 2.3x that of an 8(a) firm without. If we remove the 8(a) firms that recently received their 8(a) certification (9 firms are removed) the averages increase and the 8(a) + GSA Schedule combination is then 1.75x federal sales figure of the firms with only the 8(a) Certification.   # Firms in Category Total Spending Avg. Spend per Firm 8(a) + GSA Schedule 12* 62,720,818 5,226,734 8(a) Only 19* 56,719,730 2,985,248 This example clearly demonstrates the value of a GSA Schedule to an 8(a) firm which for firms with the NAICS code of 485999 is millions of dollars in federal revenue per year. Below is the data sets :

 

HUBZone States and Territory Spending

Mar 31 2016 10:03AM

The average HUBZone firm did $1.2MM in 2015. Firms in the DC/Virginia/Maryland are did on average $1.8MM which is roughly 50% better than the rest of the HUBZone field. With that said the correlation between HUBZone spending and the number of HUBZone firms in a US State or Territory is .93 which tells us that Hubzone spending is likely to increase with each additional HUBZone firm added to that state or territory. Conclusion: HUBZone firms are in such short supply that each additional HUBZone firm added increases HUBZone firm spending. Therefore the real HUBZone battle revolves around getting the certification and marketing yourself to the federal government more so than trying to compete directly or “duke it out” with other HUBZone federal contractors. Example: Guam an Island in the Pacific on the other side of the planethas 136 HUBZone firms doing on average of $1MM a year in federal contracts. If you placed Guam against the other 50 states Guam would be ranked 15th in total HUBZone spending. This is amazing given the federal budget differences between Guam and these 35 other states. But Guam has 136 HUBZone firms and therefore the federal government spends a lot of money with these firms.   See the table below of US States and Territories in terms of HUBZone spending : # State/Territory HUBZone Spending 2015 HUBZone firms Average Revenue 1 Rhode Island 16,496,630 6 2,749,438.33 2 Alabama 252,683,222 101 2,501,814.08 3 Massachusetts 104,300,791 52 2,005,784.44 4 DC 447,382,704 228 1,962,204.84 5 Utah 50,160,038 26 1,929,232.23 6 Tennessee 213,501,057 120 1,779,175.48 7 Virginia 691,362,007 391 1,768,189.28 8 New Mexico 139,091,871 84 1,655,855.61 9 California 800,326,500 494 1,620,094.13 10 Kentucky 108,481,200 67 1,619,122.39 11 Maryland 389,371,897 247 1,576,404.44 12 Indiana 45,215,662     13 Louisiana 162,504,373 110 1,477,312.48 14 Kansas 28,570,039 20 1,428,501.95 15 West Virginia 30,960,184 22 1,407,281.09 16 Oklahoma 446,009,729 321 1,389,438.41 17 Hawaii 95,544,784 71 1,345,701.18 18 Georgia 258,571,358 197 1,312,544.96 19 Iowa 19,659,754 15 1,310,650.27 20 South Carolina 126,561,808 99 1,278,402.10 21 Florida 285,335,267 234 1,219,381.48 22 Idaho 124,885,821 103 1,212,483.70 23 Ohio 136,974,634 115 1,191,083.77 24 North Carolina 187,362,769 172 1,089,318.42 25 Nebraska 34,423,003 32 1,075,718.84 26 Texas 287,815,066 273 1,054,267.64 27 New York 113,590,312 108 1,051,762.15 28 Arizona 95,900,462 93 1,031,187.76 29 Guam 135,553,263 136 996,715.17 30 South Dakota 16,222,766 17 954,280.35 31 New Hampshire 24,167,448 27 895,090.67 32 Washington 128,551,463 149 862,761.50 33 Illinois 79,372,413 93 853,466.81 34 New Jersey 39,223,146 46 852,677.09 35 Alaska 115,350,644 146 790,072.90 36 Mississippi 87,996,018 113 778,725.82 37 Delaware 3,084,397 4 771,099.25 38 Michigan 16,960,899 173 676,074.56 39 Wisconsin 21,553,842 37 582,536.27 40 Missouri 44,733,567 80 559,169.59 41 Nevada 24,672,653 46 536,362.02 42 Pennsylvania 37,308,017 71 525,465.03 43 North Dakota 9,354,688 18 519,704.89 44 Wyoming 7,115,569 14 508,254.93 45 Oregon 72,215,491 147 491,261.84 46 Puerto Rico 10,972,729 24 457,197.04 47 Maine 6,283,301 15 418,886.73 48 Vermont 4,090,263 11 371,842.09 49 Colorado 29,952,821 95 315,292.85 50 Montana 31,498,548 138 228,250.35 51 Minnesota 11,808,389 56 210,864.09 52 Arkansas 7,139,326 36 198,314.61 53 Connecticut 1,239,736 16 77,483.50 54 U.S. Virgin Islands 1,498,769 20 74,938.45 55 American Samoa 79,194 2 39,597.00 56 Northern Mariana Islands 121,219 8 15,152.38  

 

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