Audit Report 14-03: Opportunities Exist to Further Improve Quality and Timeliness of HUBZone Certifications

On November 19, 2013, the OIG issued Audit Report 14-03, Opportunities Exist to Further Improve Quality and Timeliness of HUBZone Certifications. This report presents the results of the OIG’s audit to determine whether the Small Business Administration’s (SBA) HUBZone program certification process provides assurance to limit program certification to eligible firms.

The OIG found that in recent years, the HUBZone certification process has been reengineered from self-certification to a full document review and we found that SBA properly certified 9 of 12 firms reviewed. However, the OIG identified three firms the SBA certified even when the firms did not meet all of the eligibility criteria. Ineligible firms that obtained certification distorted the small business HUBZone goaling numbers by at least $1.3 million and possibly took contracting opportunities away from eligible firms. Additionally, certifying ineligible firms detracted from the economic benefits the program intends to promote in the disadvantaged HUBZone areas. The SBA also did not meet the required 30-calendar day timeline for any of the 12 firms we reviewed, nor did it meet the proposed deadline of 90 days for five firms. For firms who are certified, the amount of time the SBA takes to review the application directly inhibits their opportunities to obtain federal contracts. The OIG recommended three actions directed to the Office of Government Contracting and Business Development to improve the HUBZone certification process and decrease the likelihood of ineligible firms receiving HUBZone certification.