<<Back to Article National Association of Government Contractors www.governmentcontractors.org SBA HUBzone verification questionable Aug 7, 2008 Unverified classification is still a problem for the Small Business Administration and its Historically Underutilized Business Zone program. Designed to provide federal contracting opportunities to businesses in low-income areas, the HUBZone program is vulnerable to unscrupulous business owners — or crafty auditors. During a recent investigation, Government Accountability Office auditors found numerous examples of SBA accepting ineligible companies into the HUBZone program. SBA’s attitude appears to be “sit back and hope and pray the company we’re doing business with isn’t ripping us off too badly,” said Bruce Causseaux, GAO senior-level specialist for forensic audits and special investigations. For example, auditors uncovered at least 10 small businesses in the Washington metropolitan area that have been certified but don’t belong in the HUBZone program. Since 2006, agencies have awarded more than $105 million to those companies for work as prime contractors on federal contracts, according to GAO. Investigators also ran a sting operation in which SBA certified four fake companies as HUBZone firms. In addition to concerns about cheating companies, GAO officials are alarmed that SBA doesn’t make more effort to verify applicants’ eligibility. Investigators used common data-mining technology to uncover the 10 Washington companies. “Any system that’s predicated on self-certified information with verification and validation is highly susceptible to fraud, particularly when millions — if not billions — of federal dollars are at stake,” Causseaux said. Article URL: http://www.governmentcontractors.org/articles/a.629.asp © Copyright 2005-2008 The National Association of Government Contractors