SBA’s HUBZone Certification Process

This report presents the results of our audit of the Small Business Administration’s (SBA’s) Historically Underutilized Business Zone (HUBZone) certification process with the objectives to determine whether (1) SBA’s oversight ensured that only eligible firms were certified into the HUBZone program and (2) SBA performed certification reviews timely. The purpose of the HUBZone program, administered by SBA’s Office of the HUBZone Program (Program Office), is to provide small businesses that are located in economically challenged areas access to federal contracting opportunities to stimulate their local economies.

 We found that SBA program officials’ oversight did not ensure that only eligible firms entered the HUBZone program. Of the 15 firms we reviewed, the Program Office certified 2 firms that did not meet the principal office eligibility requirement and 1 firm with insufficient documentation that it met the HUBZone employee residency requirement. These firms received approximately $589,000 in HUBZone contract obligations. Ineligible firms undermine the integrity of the HUBZone program and divert HUBZone contract opportunities from eligible firms. Additionally, the Program Office did not perform certification reviews timely, delaying firms’ ability to compete for HUBZone contracts and impeding the program’s purpose of contributing to economic development of HUBZones.

 OIG recommended that SBA update and implement HUBZone guidance based on the current certification process and made four additional recommendations to improve the quality and timeliness of the HUBZone certification process. SBA management’s planned actions resolve all the recommendations.