Washington, D.C. – U.S. Senate Committee on Small Business and Entrepreneurship Ranking Member Olympia J. Snowe (R-Maine) and Chair Mary L. Landrieu (D-La.) were joined by former Committee Chair Kit Bond (R-Mo.) and U.S. Senator Jeff Merkley (D-Ore.) today in introducing legislation to make improvements to the Historically Underutilized Business Zone – or HUBZone – program.  Their bill, the HUBZone Improvement Act of 2010, addresses the Government Accountability Office’s (GAO) recommendations for improving the Small Business Administration’s (SBA) management and oversight of the HUBZone program, which provides contracting assistance to small businesses located in economically distressed regions.

“Let there be no doubt that with the federal government contracting for over $500 billion in goods and services in Fiscal Year 2009 alone, we must have a robust and transparent HUBZone program for small businesses to continue generating jobs in our nation’s most economically distressed communities,” said Senator Snowe.  “While the SBA has taken several critical steps to reduce fraud within this critical program, the GAO reports underscore that further improvements are necessary if the agency is to eliminate mismanagement and abuse.  The purpose of this legislation is to ensure that only eligible firms participate in the HUBZone program by providing the SBA a clear roadmap to improve the management, oversight and evaluation of the program.”

“The HUBZone Improvement Act helps to create jobs and level the playing field for small firms by making sure the HUBZone program works as intended,” said Senator Landrieu. “By providing needed oversight, this bill ensures that federal contracting dollars are spent wisely on the small businesses that need help and have the greatest potential to grow our nation’s most economically distressed areas.”

“The HUBZone Improvement Act is an important step in reforming a program that has become a vital tool in creating jobs and revitalizing the communities that need it most,” said Senator Bond.  “I’m proud to join this bipartisan group of Senators to help small businesses continue to rebuild, revitalize and bring hope to so many of our neighborhoods.”

“HUBZones are valuable economic empowerment tools for distressed communities,” said Senator Merkley.  “But they are not as flexible and responsive to changing economic conditions as they should be.  This bill is an important first step to improve the HUBZone programs but it will not be the last.  I will continue to work with my colleagues to ensure that we are doing everything possible – as quickly as possible – to help communities get back on their feet.”

This critical legislation comes on the heels of several GAO reports critical of the SBA’s oversight of the program, including two June 2008 reports and an additional report released on March 25, 2009.  Specifically, the GAO found that mechanisms the SBA uses to certify and monitor HUBZone firms provide limited assurance that only eligible firms participate in the program.  The GAO also stated that the “SBA’s control weaknesses exposed the government to fraud and abuse.”  Furthermore, the agency expressed concerns that the SBA had no proper means to adequately assess program results.

The bill, which is similar to Senator Snowe’s HUBZone Improvement Act of 2008 (S.3699) from the 110th Congress, would require the SBA to:

  • maintain a correct, accurate and updated map to identify HUBZone areas;
  • implement policies that ensure only eligible firms participate in the program;
  • employ appropriate technology to control costs and maximize efficiency;
  • notify the Congressional Small Business Committees of any backlogs in applications and/or recertifications with plans and timetables for eliminating the back log;
  • implement plans to access the effectiveness of the HUBZone program; and
  • ensure small businesses meet the 35 percent HUBZone residency requirement at the time of bid as well as contract award.