“It’s tougher to get a library card than it is to get into the HUBZone program. All you need is a bit of White-out. It’s absolutely shameful.”– Rep. Nydia Velazquez (D-N.Y.)

From Construction News blog:

An investigation by the Government Accountability Office of a federal economic development program known as the HUBZone program has found that lax oversight has left it rife with fraud.

In the six month long investigation, which ended in June 2008, the GAO obtained HUBZone certification from the Small Business Administration for four fake businesses. Certification qualifies the businesses for federal contracts under the Historically Underutilized Business Zone (HUBZone) program.

Sen. Kit Bond (R-MO), wrote the 1997 bill that created the HUBZone program to promote economic development and employment growth in distressed rural and urban areas by giving small companies located in those areas preference in Federal contracting opportunities. Since then, he has pushed federal agencies to increase contracting through the program. A year ago, he criticized federal agencies for falling far short of meeting the goal set by Congress of awarding three percent of prime contracts to HUBZone companies.

To qualify for HUBZone certification, a firm must be owned and controlled by at least one U.S. citizen, 35 percent of its full-time employees must reside in a HUBZone, and the firm’s principal office must be in a HUBZone area.

The GAO estimated that $8 billion in federal spending flow to the 14,000 firms in the program. HUBZone firms are supposed to get a 10 percent price preference when competing against large businesses for contracts. In other words, HUBZone firms can charge up to 10 percent more than their non-HUBZone competitors and still get the federal contract. Read more…

Related:

STL Post Dispatch (10/05/08) Bond tried to oust regulator during Fannie Mae probe

Comments

comments