IG on HUBZ Worker residency concerns

      The Small Business Administration’s Inspector General remains concerned that the agency’s employee residency requirements in a 2019 final rule are contrary to the statutory requirements set by Congress in the HUBZone law. The IG outlined those problems in an October 2021 report on management challenges at the SBA.

      The SBA’s subsequent “FAQ” document in 2021 attempting to clarify the employee residency requirement has not removed those concerns, according to Sheldon Shoemaker, a spokesman for the Office of Inspector General.

      On Feb. 16, Shoemaker released the following emailed statement to Set-Aside Alert from the Office of Inspector General:

      “SBA has not made any changes to the employee residency requirement since issuing the final rule in November 2019.”

      “SBA's rule change, which went into effect in December 2019, allowed for certified businesses to include employees who are no longer current HUBZone residents in the count toward the residency requirement. As a result, an employee counts as a HUBZone resident throughout that employee's unbroken tenure with the company, as long as that employee lived in a HUBZone when first used for certification purposes and remained in the residence for 180 days afterward.”

      “HUBZone businesses could theoretically have no employees currently residing in the HUBZone but continue to be qualified under this rule. Allowing continued certification of concerns without current HUBZone residents and no requirement that the company hire such residents in the future, appears inconsistent with the agency's legislative authorization for this program.”

      “OIG is aware of SBA's FAQ document. The FAQ document does not alleviate the concerns noted in our (October 2021) Report on the Most Serious Management and Performance Challenges Facing SBA in FY 2022,” the OIG statement stated.

      An SBA spokeswoman said she has reached out to the HUBZone office for comment on the issue.

More information:
See: Set-Aside Alert Feb. 18, 2022 edition

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