Skip to main content

HUBZone Program: SBA's Control Weaknesses Exposed the Government to Fraud and Abuse

GAO-08-964T Published: Jul 17, 2008. Publicly Released: Jul 17, 2008.
Jump To:
Skip to Highlights

Highlights

The Historically Underutilized Business Zone (HUBZone) program is intended to provide federal contracting opportunities to qualified small business firms in order to stimulate development in economically distressed areas. As manager of the HUBZone program, the Small Business Administration (SBA) is responsible for certifying whether firms meet HUBZone program requirements. To participate in the HUBZone program, small business firms must certify that their principal office (i.e., the location where the greatest number of employees work) is located in a HUBZone and that at least 35 percent of the firm's employees live in HUBZones. Given the Committee's concern over fraud and abuse in the HUBZone program, GAO was asked to (1) proactively test whether SBA's controls over the HUBZone application process were operating effectively to limit program certification to eligible firms and (2) identify examples of selected firms that participate in the HUBZone program even though they do not meet eligibility requirements. To perform its proactive testing, GAO created four bogus businesses with fictitious owners and employees and applied for HUBZone certification. GAO also selected 17 HUBZone firms based on certain criteria, such as receipt of HUBZone contracts, and investigated whether they met key program eligibility requirements.

Full Report

Office of Public Affairs

Topics

AccountabilityCertification and accreditationContract administrationDocumentationEligibility criteriaEligibility determinationsFraudInvestigations into federal agenciesLeasesPerformance measuresProgram abusesProgram managementReporting requirementsRequirements definitionSmall businessSmall business contractorsStrategic planningCorrective actionCost estimatesProgram goals or objectivesWaste, fraud, and abuse