SBA’s Oversight of HUBZone Program Participants’ Continuing Eligibility

This U.S. Small Business Administration Office of Inspector General (SBA OIG) report presents the results of our audit of the U.S. Small Business Administration’s (SBA) oversight of the Historically Underutilized Business Zone (HUBZone) program. The program provides small businesses that are located in economically distressed communities access to federal contracting opportunities to stimulate their local economies. In fiscal year (FY) 2022, SBA reported that federal agencies awarded over $16.3 billion, or 2.7 percent of prime federal contracting dollars, to 5,818 HUBZone businesses.

We found SBA completed almost all 1,252 triennial program examinations timely and correctly validated 18 of the 20 firms we reviewed (90 percent) met eligibility requirements. Notwithstanding, we have identified some opportunities to further improve eligibility review practices and enhance functionality of the HUBZone information system that notifies participants of their annual recertification requirements.

We made four recommendations for SBA to establish authoritative guidance for verifying that firms met eligibility requirements at the time of the triennial program examinations and improve system functionality for sending timely recertification notifications to all HUBZone firms. The agency partially agreed with three recommendations and disagreed with one.