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Learning from History: Committee Examines HUBZone Program @ 20

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Washington, March 2, 2017 | comments

WASHINGTON – As the Small Business Administration’s Historically Underutilized Business Zones (HUBZone) program approaches the 20 year anniversary of its establishment, experts told the House Small Business Committee’s Subcommittee on Contracting and Workforce today that the program faces significant challenges with certification and reporting.

“When the HUBZone Program was first established, its goal was to create hope for ‘hundreds of thousands of underemployed or unemployed who long ago thought our country had given up on them,’” said Subcommittee Chairman Steve Knight (R-CA) in his opening statement. “I can think of no more important goal than bringing economic hope, independence, jobs, and businesses to neglected areas marked by high unemployment and poverty. To achieve this objective, the HUBZone Program must be run efficiently and effectively. That requires us to take a hard look backwards and learn from the past.”

“Vulnerable to Fraud and Abuse”

“We previously found that SBA’s challenges with its certification process made the HUBZone program vulnerable to fraud and abuse,” testified William Shear, the Director of Financial Markets and Community Investment for the U.S. Government Accountability Office (GAO). “For example, in July 2008 we testified that 10 HUBZone firms in the Washington, D.C., area had made fraudulent or inaccurate representations to get into or remain in the HUBZone program, and in a March 2009 report we found that another 19 firms in four other metropolitan areas had made fraudulent representations.”

“OIG has identified weaknesses in small business contracting programs and inaccurate procurement data as a top management challenge,” said Hannibal “Mike” Ware, the Acting Inspector General of the SBA.  “These weaknesses and inaccuracies undermine the reliability of contracting goal achievement reporting to Congress.”

“Although, they’ve made a lot of strides, a lot more work needs to be done,” added Ware.

An Economic Development Program with Challenges

“The HUBZone program was created with the intent of moving individuals into meaningful jobs in communities that have suffered from a lack of investment. It is unlike other SBA programs in that the focus is not on the company, but the community. It is an economic development program,” explained Ms. Shirley Bailey, who testified on behalf of the HUBZone Contractors National Council. “Since its inception, the program has underperformed. While Congress has addressed expansions of the program to certain places, it has been more than fifteen years since changes were made to the primary program structure. In order for the HUBZone program to reach its full potential as outlined in 1997, the program needs to be modernized.”

“The visibility was not there and it was a lengthy process,” said Dr. Mansooreh Mollaghasemi, the President & CEO of Atria Technologies LLC, in recounting part of her own experience with HUBZone certification. “I’ve had more questions answered today than I’ve ever been able to ask because of all the valuable advice that’s here.”

You can read full testimony from today’s hearing HERE and watch full video HERE.
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