According to a new report from the Government Accountability Office (GAO), ineligible companies continue to receive contracts under the Historically Underutilized Business Zone (HUBZone) program. This report, requested by House Small Business Committee Chairwoman Nydia Velazquez (D-N.Y.), is the latest in criticisms aimed at the handling of U.S. Small Business Administration’s contracting programs.

The HUBZone program provides federal contracting assistance to small businesses located in economically distressed areas, with the goal of spurring economic growth. However, as the GAO reports, due to a number of inconsistencies, firms that don’t meet the Congressionally-established qualifications have been allowed to participate, while some that do meet the qualifications have been kept out of the program.

One of the key issues highlighted by GAO was the map SBA features on its Web site to publicize HUBZone areas. That map was shown to contain areas that are not eligible for the program and excludes some eligible areas. GAO also cited SBA revisions to the statutory definition of HUBZone areas—allowing areas that cease to be qualified to continue in the program—as having the potential to water-down the benefits of the HUBZone program in economic development.

Another issue highlighted in the report is the certification process. Despite directives to agencies to verify the information they collect on HUBZone contracts, and SBA’s policy of verifying firms’ eligibility upon recertification, such verification is limited and not all firms are recertified every three years as directed.

The SBA has agreed with some of the concerns raised with the HUBZone program, both from the GAO as well as from an internal review of the program, and has launched efforts to address the problems. Implementing new leadership in the HUBZone program, notifying program participants that eligibility verification could be requested at any time, immediate decertification and debarment of HUBZone firms found to be fraudulent, and instituting site visits are a few of the ways SBA is working to address some of the issues raised.

To view the full report, please click here.