HUBZone revelations no surprise, experts say

The set-aside program that should be bringing jobs to poor areas has had a reputation for being unproductive, one contract expert said last week.

For years the Historically Underutilized Business Zone (HUBZone) program has fallen short of its goals of increasing employment in particular areas, said Stephen Sandherr, chief executive officer of the Associated General Contractors of America.

The trade group endorsed the Government Accountability Office’s recent investigation into how easily a company becomes a certified HUBZone-based business.

“The GAO report confirms the claims contractors have been making for years,” he said.

GAO investigators uncovered serious lapses in the Small Business Administration’s oversight of the program. By using fictitious employee information and fabricated documents, the investigators said they easily obtained SBA certification as small businesses in a HUBZone for four fictitious firms.

For example, GAO submitted one application for HUBZone status using the same address as a Starbucks coffee shop, George Kutz, GAO’s managing director of forensic audits and special investigations, testified before the House Small Business Committee.

“If SBA had performed a simple Internet search on the address, it would have been alerted to this fact,” Kutz said. 

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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