[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;
[email protected].
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:
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\
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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.
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\
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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:
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:
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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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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\
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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