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The Government Accountability Office (GAO) has released a report finding fraud and abuse within the Small Business Administration's Historically Underutilized Business Zone (HUBZone) initiative. The HUBZone program is designed to provide federal contracting assistance to small businesses located in economically distressed areas. In light of the GAO's findings about businesses getting HUBZone benefits who shouldn't, here is a quick refresher on who does qualify for access to HUBZone contracts.
The GAO report found that 19 companies in Texas, California and Alabama received nearly $30 million in HUBZone contracts, despite not meeting the program's eligibility guidelines. It highlighted instances of continued misrepresentations by companies in the program who clearly did not meet guidelines themselves, or who subcontracted the work out to non-HUBZone companies, in violation of HUBZone rules. The report expressed fear that "[a]s a result of SBA's control vulnerabilities, there are likely hundreds and possibly thousands of firms in the HUBZone program that fail to meet program requirements."
So then, what is required in order to become HUBZone certified? To be eligible for contracts through the HUBZone program, a business must:
The HUBZones themselves are areas specially designated by the government as deserving economic stimulus through contracting preferences for small businesses. You can use this tool to find any HUBZones near you.
Calls for reform of the HUBZone program could bolster previous calls for fixing leaks within federal programs designed to aid small businesses. As Chris Gunn recently described in the Huffington Post, over a dozen federal investigations released since 2003 have identified billions of dollars in contracts meant for small businesses instead diverted to Fortune 500 and other large companies around the world. With small businesses more than ever in need of opportunities, perhaps a more careful eye will watch the contracts our government intends for them.