SBA Urged to Shut Down HUBZone Program Due to Unqualified Companies Taking Advantage of the System

Posted by Nicole Rivera on March 26, 2009 under Small Biz News | Read the First Comment

Yesterday, USA Today published a story regarding unqualified companies abusing the HUBZone Program (Historically Underutilized Business Zone).  This is definitely something you might want to read if you are a small business owner, an entrepreneurial ′newbie′ or anything in between.  In a short re-cap:

• The Government Accountability Office found that 19 companies were improperly awarded nearly $30 million in federal contracts.
• The GAO reported that ″there are likely hundreds and possibly thousands of firms″ in the program that don′t meet its requirements.
• The committee′s chairwoman, Rep. Nydia Velázquez, D-N.Y., said she plans to urge the SBA to shut down the program until it can fix the problems.
• In July, the GAO reported that they found that 10 Washington D.C. area businesses were improperly part of the program. One company, for example, listed its office as a small room above a dentist′s office in a low-income area, while investigators found its main office was in the suburb of McLean, Va.
• It was determined that 7 of the 10 companies invested in the July report were ineligible.
• SBA officials told the GAO they are ″reengineering″ the program to make it more efficient and to do a better job of preventing and detecting fraud and abuse.

For qualified small businesses the HUBZone program can be an excellent opportunity to secure government contracts, help to empower communities, create jobs, and attract private investment.  What happens though, when small businesses are taking advantage of this program?

 As a small business owner, how do you feel about the millions of dollars given to these unqualified companies? What steps do you think the SBA can make in improving the HUBZone program and preventing such abuse?

Map of U.S. HUBZones

To read the full GAO report click here.