Small Businesses Employ Low-income Community Residents While Helping DLA Ensure Readiness and Lethality of Warfighters

WASHINGTON, Jan. 16 -- The U.S. Department of Defense's Defense Logistics Agency issued the following news:

By John R. Bell

Public Affairs

When the Defense Logistics Agency provides critical supplies and services to the warfighter, the Federal Emergency Management Agency, the Forest Service and other customers, it's not just crucial for those customers; it also means jobs for Americans across the nation -- many of them working for small businesses.

Many of those small businesses bring jobs to areas of the country with the help of the U.S. Small Business Administration's Historically Underutilized Business Zones Program. Through the HUBZone Program, created by Congress in 1998, small businesses in areas with high unemployment or poverty are eligible to compete for federal contracts reserved for competition among HUBZone firms, and they receive a price-evaluation preference in other acquisitions.

HUBZones also include American Indian reservations, recently closed military bases and disaster areas.

The SBA designates and manages the HUBZone regions, reviews applications and grants certification, tracks and reports the performance of the 24 participating federal agencies, and manages any changes resulting from new legislation or feedback from small businesses.

To qualify for HUBZone certification, the SBA requires that a business meet these criteria:

* be a small business.

* be at least 51 percent owned and controlled by u.s. citizens, a community development corporation, an agricultural cooperative, a native hawaiian organization or an indian tribe.

* have its main office in a hubzone.

* have at least 35 percent of its employees live in a hubzone.

HUBZone small businesses working with DLA are helping their employees, the warfighter and their communities.

Here are a few of their stories.

Connecting Warfighters, Jobs

Roanwell Corporation is on Park Avenue in New York. But this Park Avenue is in the South Bronx, a far cry from the skyscrapers of Manhattan or the rapidly redeveloping Brooklyn. The company is co-owned by an Army veteran and his wife. And its location means it also qualifies for HUBZone contracts.

Roanwell's relationship with the Department of Defense goes back to its 1948 founding, when Richard Howell and James Roantree began supplying the military with aviation headsets -- a product Roanwell invented, said Chelly Simon, vice president of sales for Roanwell.

Today the headsets are used on numerous military aircraft -- including Air Force One and Air Force Two, he noted.

From there, the company expanded its relationship with the government, eventually supplying NASA a variety of products -- including the microphone John Glenn used as he became the first American to orbit the earth.

Nowadays, the company works frequently with DLA Land and Maritime in Columbus, Ohio, and DLA Aviation in Richmond, Virginia, Simon said. He added that the HUBZone certification has given Roanwell a strong competitive advantage. "Within that particular [National Stock Number], if the other two [suppliers] are not HUBZone [certified], we have the edge," Simon said.

Roanwell manufactures different types of headsets, as well as two-way radio handsets and microphones, mostly for prime contractors who build DoD communication systems -- for example, those used in Virginia-class submarines, added Simon.

After starting in Manhattan, Roanwell moved to the Bronx in 2001, he said. Although this was the first step in earning HUBZone certification, the company had not yet heard of the program when it made the move.

When the management team realized the relocation could give Roanwell the new qualification, "There was some excitement," Simon recalled.

According to the U.S. Census Bureau, median household income in the Bronx was just over $35,000 per year in 2012-2016, and nearly 29 percent of residents had income below the federally designated poverty line.

"We've been able to employ a lot of people in the Bronx," Simon noted.

The company recently hired an additional 10 full-time employees in three months, for a total of 60, he explained. They work in areas such as manufacturing, quality assurance, distribution and customer service, on contracts for a variety of household-name defense companies, known as prime contractors.

"The more contracts you're awarded, the more people you can hire," Simon said.

One person who's proof of that is Yaneth Juarez, who joined the company in October as an assembly supervisor. She said joining Roanwell allows her to work a shift that gives her more time with her family.

"I love this job," Juarez said. "We feel like this is a family for us."

Tribe of Experts

Another HUBZone small business that works with DLA is part of a separate nation -- one whose citizens, as full-fledged American citizens, have fought and died in the U.S. military since the Civil War.

The Cherokee Nation is the largest American Indian tribe in the United States and employs about 11,000 people through a number of different businesses. One of those is Cherokee Nation Environmental Solutions, based in Tulsa, Oklahoma, said John Sparkman, the company's operations general manager for the environmental and construction sector.

CNES' services include soil testing; storm drainage assessment; remediation of above-ground and underground storage tanks; regulatory contracting; environmental consulting; waste-management services; and hazardous waste collection, treatment and disposal.

"The HUBZone certification has been a great tool to position our company and to ... stand apart from other companies," Sparkman explained. "We strive to provide the customer the widest variety of capabilities and tools we can to support their mission."

Using the certification also helps the Cherokee Nation provide good jobs for its citizens -- one of its primary goals, Sparkman said.

"For the business, it is an opportunity to generate revenue where 100 percent of the profit is either reinvested in job creation, through more work or business development, or to provide services for Cherokee Nation citizens," he said.

CNES is supporting DLA Disposition Services customers on two contracts for disposing of hazardous waste materials, he added.

In 2016, the contracting office for DLA Disposition Services approached CNES about a contract to recycle lamps and light fixtures in San Diego, California. CNES put a team together, developed a proposal and received an award for the work.

"DLA has a very stringent requirement for quality on their hazardous disposal contracts, and in the last 12 months, we have exceeded all metrics put in place by the contract," Sparkman said. "Working within these DLA programs has allowed CNES to expand its footprint both geographically and professionally."

He offered a few bits of advice for other small business leaders who might be considering taking steps to get HUBZone certification.

"The key is to fully understand the program," he said. "The HUBZone program can be a great tool, but it also requires a great deal of understanding. This program requires that you understand where your business is located, where your employees are located." In addition, "Your mix of employees has to be managed as you grow so you have to keep an eye on where and how you grow toward success," Sparkman said, adding that evolving reporting requirements mean staff will be needed to make sure the company maintains certification.

'Aero' on Target

A few hundred miles east, USAeroteam in Dayton, Ohio, is another HUBZone small business supporting DLA customers, producing ground-support equipment and critical components for jet engines and unmanned aerial vehicles.

For the F-16 "Fighting Falcon," USAeroteam provides center-line loaders -- structures ground crews use to load equipment and ammunition into the belly of the aircraft. For this effort, the company received a blue-ribbon certification from the Pentagon.

"It's a fairly engineering-oriented business," said Suhas Kakde, the chief executive officer of USAeroteam, who began his career as an engineer.

Kakde said his company, along with other small businesses, has helped the Dayton area recover from becoming a "ghost city" in the early 2000s, when large employers such as National Cash Register and Mead Paper Co. left for the suburbs. Others left the state altogether.

In addition, 2008 saw General Motors close its assembly plant in nearby Moraine, at the same site where The Dayton-Wright Company had built a bomber for the military starting nearly 100 years earlier, with local hero Orville Wright on the payroll as a consultant.

The GM plant at its peak employed about 4,700 people, according to the Dayton Business Journal.

When it closed, "Moraine got hit economically like you wouldn't believe," Kakde recalled. "Thousands of well-paid, skilled people were laid off or retired."

Dayton in 2012-2016 had a high rate of people living below the poverty line, at nearly 35 percent, according to Census data. The mean household income was just under $29,000.

USAeroteam now uses part of the building as its manufacturing facility -- employing local residents and enabling the company to qualify as a HUBZone small business. It received the certification in 2017, resulting in additional contracts with DoD, which allowed the company to make capital investments and grow its workforce.

"DLA is doing a great job in trying to identify us and helping us," Kakde said, adding that while the federal government as a whole could be more aggressive in seeking HUBZone businesses, some prime contractors have seen the advantage of working with HUBZone small businesses.

He recalled his company's success in providing a lever arm for the CFM56, a jet engine commonly used in military and civilian aircraft. The Air Force faced a backorder of the component, which Kakde said USAeroteam produced ahead of schedule and at a significant taxpayer savings.

He noted DLA Land and Maritime in Columbus helped the company "enormously" in this effort.

"DLA has a person who focuses on small, disadvantaged businesses and HUBZone companies, and we happen to be both," Kakde said, bringing up Donna Brino-Blackwell, a DLA small business specialist.

Kakde also praised the efforts of Heath Berkshire, DLA Land and Maritime's chief of supplier operations, who recently brought a busload of DLA colleagues to visit USAeroteam and tour the facility and discuss the company's goals and challenges. Kakde said he hopes to soon engage in a similar way with DLA Aviation to help the major subordinate command achieve similar taxpayer savings on other aviation parts.

Raising Readiness

DLA is doing its part to help these small businesses boost their communities and support the warfighter, said DLA Small Business Programs Director Chris Young.

"Serving those areas of the United States that are underserved is incredibly important," she said.

To that end, DLA in fiscal 2018 far exceeded its goal, she noted: Of the total dollar value of the contracts DLA awarded, 2.53 percent (over $980 million) were HUBZone small businesses.

"Most agencies find that achieving the HUBZone goal is the most challenging socioeconomic goal to achieve, so we were excited," Young said.

In fact, the governmentwide HUBZone goal has not been met for at least a decade, she noted.

DLA's high HUBZone performance also benefits the greater DoD mission, Young said.

"When we eliminate backorders, it helps increase readiness and the effort to maintain lethality. It's the multiplier effect ... DLA assists a small business in an area of economic distress, and they help us support the warfighter," she said. "It's just good business all the way around."

Potential Changes

The Small Business Administration proposed changes to the HUBZone program last October it says will make it easier for existing business to maintain their status.

Among other changes, the SBA would consider an employee of a HUBZone-certified business to be a resident of the HUBZone area for certification purposes, even if the employee moves or the area loses its HUBZone status because of rapid economic gains in the local area. "Smaller firms also have a hard time meeting this requirement because the loss of one employee could adversely affect [the company's] HUBZone eligibility," the notice states.

The rule would also "eliminate the burden on HUBZone small businesses to continually demonstrate that they meet all ... requirements at the time of each offer and award" of a HUBZone contract. Instead, firms would only recertify annually. This is important because for small businesses, the HUBZone certification has historically been the most challenging of the four certifications to meet, said DLA Small Business Programs Director Chris Young. The change, if adopted, would also align with the president's priority of reducing the regulatory burden for U.S. businesses, she added.

The SBA also proposed a change regarding the requirement for the percentage of employees who live in the HUBZone-certified area. Although the requirement would continue to be 35 percent, companies whose workforce drops below 20 percent residing the HUBZone area would be considered failing to maintain compliance and would lose HUBZone status.

Finally, the SBA proposed to define an "employee" as someone who worked at least 40 hours in the four weeks before the business applied for HUBZone certification.