GAO offers tip line to detect fraud in small-biz programs

The Government Accountability Office is continuing to investigate fraud in small-business programs and has established an e-mail address to receive tips about instances of abuse.

The officials in GAO’s Forensic Audits and Special Investigations unit set up smallbizfraud@gao.gov for people to submit legitimate examples of fraud.

In a recent investigation, GAO auditors found numerous problems in the Small Business Administration’s Historically Underutilized Business Zone (HUBZone)  program. In addition to HUBZone, officials said they are now investigating SBA’s 8(a) small-business program and the program for companies owned by service-disabled veterans.

“If you’ve got the juice on somebody, contact us,” said Bruce Causseaux, a senior-level contract and procurement fraud specialist at GAO, in an interview with Federal Computer Week.

GAO investigated the HUBZone program at the request of the House Small Business Committee. The program allows agencies to reserve contracts for companies in designated business zones and receive credit toward an annual goal of spending a specific percentage of contract dollars with such companies.

Investigators uncovered numerous abuses and found they could easily defraud the system. They said at least 10 small businesses in the Washington, D.C., area that had been certified as HUBZone companies didn’t belong in the program. Since 2006, agencies have obligated more than $105 million to those firms for work as prime contractors on federal contracts, according to GAO’s investigation. Auditors also got SBA to certify four fake companies as HUBZone firms.

“It looked like an unplowed field” of abuses, said Gregory Kutz, managing director of forensic audits and special investigations at GAO.

Officials said the abuses stemmed mainly from a self-certification system that had few, if any, checks or penalties. Kutz and Causseaux said punishing companies for fraud, perhaps by suspending or even barring them from further work with the government, would decrease the abuses.

Penalties “send a message to people,” Kutz said.

He added that the new investigations have already begun, and he expects to have results by next spring.

About the Author

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

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