Preferential Contract Awards Add Value and Jobs to Underutilized Areas

Date: August 17, 2021

The Historically Underutilized Business Zone (HUBZone) program, part of the Small Business Administration (SBA), helps small businesses in low-income metropolitan or rural areas with high poverty and unemployment rates gain preferential access to federal procurement opportunities. Businesses obtain HUBZone certification in part by employing staff who live in a HUBZone and maintaining a “principal office” in one of these specially designated areas.

Optimal Solutions Group LLC (Optimal) evaluated the economic impact of the HUBZone program and found it has a moderate impact on the 30 counties studied. Optimal used an input-output model to assess the inflow of economic activity brought on by federal contracts won by HUBZone businesses to the distressed HUBZone communities. To estimate the program’s effect on each state and selected counties, the study estimated the total employment, earnings, value added, as well as gross output impacts of the identified contract awards to HUBZone firms.

Through the HUBZone program, federal procurement spending is directed into underutilized areas. Although the findings from the 30 selected counties are not representative of all contract awards to the universe of HUBZone firms, the findings are consistent in terms of the impact of the contract awards to HUBZone firms on large and small local economies. The HUBZone program has a moderate impact on all 30 counties in terms of value added and employment supported by contract awards to HUBZone firms.

Visit HUBZone program for more information.


Optimal Solutions Group, LLC

Founded in 2000, Optimal Solutions Group, LLC, is a nonpartisan public policy research and technical assistance firm that stands out for its quantitative expertise and innovative approaches to provide rigorous, data-driven research and technical assistance to government agencies, corporations, nonprofit organizations and philanthropic foundations. Located at the University of Maryland’s Discovery District in College Park, Optimal is a leader in driving real-time public policy research. Optimal has 60+ employees, including multidisciplinary researchers with backgrounds in economics, education, health, housing, sociology, statistics, information management and entrepreneurship. Optimal has four research centers—Health, Education, Housing and Workforce Development, and Social Policy—as well as an International Practice, Analytics Group, and Entrepreneurship and Innovation Center.