August 7, 2006
Underused | Efforts seek to expand Maine's role in a program for federal contracts
By Chris Churchill
Quite often, when a civilian employee of the Department of the U.S. Navy has a concern about benefits, a phone rings in Machias. That's where Virginia-based Superlative Technologies Inc. has a call center contracted to answer such questions.
What made the arrangement possible? The HUBZone program, an eight-year-old government initiative that gives preferences for federal government contracts to small businesses located in so-called Historically Underutilized Business Zones. Chet Childs, director of the Superlative location in Machias, said it's inconceivable Department of Defense calls would be answered in Washington County without the program, adding that as many as 25 of his 37 employees are directly linked to the company's HUBZone agreement.
Now, there's an effort underway to expand the program to areas of Maine where it's currently unavailable. Maine's Congressional delegation is working to eliminate quirks in the
program that make areas such as the thriving Portland peninsula eligible for "underutilized" status, but bar high-unemployment areas such as Millinocket.
As the program is currently designed, it helps poor rural counties ˆ all of Maine's rim counties along the Canadian border are certified ˆ and inner-city census tracks. Yet it inexplicably excludes towns that might be struggling but are located in counties with relatively high income levels. That's why Millinocket has been ineligible, a frustration for officials there who have lobbied aggressively to change the rules.
If the effort in Congress succeeds, however, as most expect that it will, the program will be available in new areas of rural Maine. But the new availability probably won't have much of an economic impact, unless participation in the Small Business Administration program increases dramatically. Currently, just 111 Maine companies have registered for the program. "It's not enough," says Mary McAleney, director of the Maine SBA office, located in Augusta.
The program requires federal agencies to award at least three percent of its contracts to HUBZone qualified companies. To be eligible, a business must be located in a HUBZone, be owned by a U.S. citizen and have 35% of its employees living in a HUBZone. (All Indian reservations automatically are eligible.) Literally thousands of Maine businesses could qualify and could bid on contracts ˆ "The government buys everything from apples to zippers," McAleney says ˆ but few do so.
The low participation rate comes despite free registration help available from the state- and federally-funded Maine Procurement Technical Assistance Center, which calls itself "your gateway to government contracts," and enthusiasm from some state officials. "We sort of see it as an overlay to Pine Tree Zones," said Brian Dancourse, director of small business and enterprise at the Maine Department of Economic and Community Development, referring to a state program offering tax breaks in disadvantaged areas. "Typically businesses that would be eligible for Pine Tree Zones would be eligible for HUBZones, and vice versa."
Small companies, big contracts
Childs and others say Maine businesses likely don't register either because they are unaware of the program or because they think the hassles involved outweigh the potential benefits. McAleney concedes that for most small businesses, registering and bidding successfully "is not easy," mostly because the businesses must compete against bigger companies and prove they're able to complete the contract on time and on budget.
But advocates for the program say it's well worth it. Janet Toth of the Eastern Maine Development Corp. in Bangor said she encourages many of the businesses she works with to register for the program. She said the paperwork involved isn't as bad as most imagine it will be, adding that the government has dramatically streamlined the process in recent years. "What's the sense of having a HUBZone certified area if your businesses aren't able to take advantage?" she asked.
Advocates say the biggest advantage of the program is that it puts smaller businesses on view before federal decision makers, where bigger firms typically have better connections and are better able to market their services. That's the reason Presque Isle-based Northern Maine Bottling Company in mid-July registered for HUBZone status. Brian Hamel, a consultant for the company, said the operation has always had the technical ability to compete with bigger companies, but lacks the name recognition that other bottlers have. "It gives us a leg up on some of the larger bottling companies," Hamel said.
HUBZone status, said Deni Freihoff-Lewin, co-owner of Tactical Power Systems Corp. in Rangeley, "eliminates competition from great big companies, and it narrows the competition significantly. It's hard for a small business to get on that level and compete on that level."
Tactical Power Systems sells its power supply devices almost exclusively to the Department of Defense, said Freihoff-Lewin. Winning such contracts, she added, has been made significantly easier by Franklin County's designation as a HUBZone. In fact, she added, contracts under the program are responsible for 10 of the company's 17 employees. "In a town the size of Rangeley," she said, "that's a noticeable impact."
What made the arrangement possible? The HUBZone program, an eight-year-old government initiative that gives preferences for federal government contracts to small businesses located in so-called Historically Underutilized Business Zones. Chet Childs, director of the Superlative location in Machias, said it's inconceivable Department of Defense calls would be answered in Washington County without the program, adding that as many as 25 of his 37 employees are directly linked to the company's HUBZone agreement.
Now, there's an effort underway to expand the program to areas of Maine where it's currently unavailable. Maine's Congressional delegation is working to eliminate quirks in the
program that make areas such as the thriving Portland peninsula eligible for "underutilized" status, but bar high-unemployment areas such as Millinocket.
As the program is currently designed, it helps poor rural counties ˆ all of Maine's rim counties along the Canadian border are certified ˆ and inner-city census tracks. Yet it inexplicably excludes towns that might be struggling but are located in counties with relatively high income levels. That's why Millinocket has been ineligible, a frustration for officials there who have lobbied aggressively to change the rules.
If the effort in Congress succeeds, however, as most expect that it will, the program will be available in new areas of rural Maine. But the new availability probably won't have much of an economic impact, unless participation in the Small Business Administration program increases dramatically. Currently, just 111 Maine companies have registered for the program. "It's not enough," says Mary McAleney, director of the Maine SBA office, located in Augusta.
The program requires federal agencies to award at least three percent of its contracts to HUBZone qualified companies. To be eligible, a business must be located in a HUBZone, be owned by a U.S. citizen and have 35% of its employees living in a HUBZone. (All Indian reservations automatically are eligible.) Literally thousands of Maine businesses could qualify and could bid on contracts ˆ "The government buys everything from apples to zippers," McAleney says ˆ but few do so.
The low participation rate comes despite free registration help available from the state- and federally-funded Maine Procurement Technical Assistance Center, which calls itself "your gateway to government contracts," and enthusiasm from some state officials. "We sort of see it as an overlay to Pine Tree Zones," said Brian Dancourse, director of small business and enterprise at the Maine Department of Economic and Community Development, referring to a state program offering tax breaks in disadvantaged areas. "Typically businesses that would be eligible for Pine Tree Zones would be eligible for HUBZones, and vice versa."
Small companies, big contracts
Childs and others say Maine businesses likely don't register either because they are unaware of the program or because they think the hassles involved outweigh the potential benefits. McAleney concedes that for most small businesses, registering and bidding successfully "is not easy," mostly because the businesses must compete against bigger companies and prove they're able to complete the contract on time and on budget.
But advocates for the program say it's well worth it. Janet Toth of the Eastern Maine Development Corp. in Bangor said she encourages many of the businesses she works with to register for the program. She said the paperwork involved isn't as bad as most imagine it will be, adding that the government has dramatically streamlined the process in recent years. "What's the sense of having a HUBZone certified area if your businesses aren't able to take advantage?" she asked.
Advocates say the biggest advantage of the program is that it puts smaller businesses on view before federal decision makers, where bigger firms typically have better connections and are better able to market their services. That's the reason Presque Isle-based Northern Maine Bottling Company in mid-July registered for HUBZone status. Brian Hamel, a consultant for the company, said the operation has always had the technical ability to compete with bigger companies, but lacks the name recognition that other bottlers have. "It gives us a leg up on some of the larger bottling companies," Hamel said.
HUBZone status, said Deni Freihoff-Lewin, co-owner of Tactical Power Systems Corp. in Rangeley, "eliminates competition from great big companies, and it narrows the competition significantly. It's hard for a small business to get on that level and compete on that level."
Tactical Power Systems sells its power supply devices almost exclusively to the Department of Defense, said Freihoff-Lewin. Winning such contracts, she added, has been made significantly easier by Franklin County's designation as a HUBZone. In fact, she added, contracts under the program are responsible for 10 of the company's 17 employees. "In a town the size of Rangeley," she said, "that's a noticeable impact."
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