SBA Moves to Boot Ineligible Companies SBA’s chief says the agency is moving more aggressively to kick ineligible companies out of small business contracting programs. Responding to Governmental Accountability Office findings of fraud in the service-disabled veterans and HUBZone programs, SBA Administrator Karen Mills said she has instituted new policies to strengthen oversight on the front end, when a company is certified, and enforcement on the back end, when companies are found to be ineligible for contracting preferences. One a company is found ineligible as a result of a bid protest, she said SBA gives the offender 30 days to remove its listing from the Central Contractor Registration. “If they don’t do it, we will, so an ineligible firm can’t stay on there,” she told the House Small Business Committee April 21. GAO documented cases in both the HUBZone and SDV programs where companies continued to receive set-aside contracts even after they were found to be ineligible. SBA Inspector General Peggy Gustafson said the agency in the past waited for the cumbersome suspension and debarment process or for a criminal conviction—two things that rarely if ever happened—before revoking a company’s eligibility. Gustafson said prosecutors will seldom pursue a case involving a false claim of small business status because the case might take months “and the guy is gonna get probation” under federal sentencing guidelines. “It’s important to be kicking people out of the program before they go to jail,” she testified. Gustafson said SBA has relied too heavily on bid protests to police ineligible companies, especially in the HUBZone program. She said a losing bidder is unlikely to be able to prove that the winning company violated the program’s complex rules. Mills said SBA is also tightening certification requirements and conducting more site visits to verify a company’s eligibility. In the SDV program, she said the Veterans Affairs Department has agreed to share its database of eligible companies. However, most companies in the VA database self-certify. GAO found self-certification left the program open to fraud. In the HUBZone program, Mills said SBA will conduct 1,000 site visits this year, compared with 900 in 2009 and less than 100 the year before that. The IG suggested SBA should require documentation rather than accepting a company’s word that it is eligible for one of the socioeconomic programs. SBA’s proposed set-aside for woman-owned firms will require business owners to submit documents such as incorporation papers and birth certificates. For these initiatives to work, Gustafson cautioned that SBA needs to change its mind-set. “It really is going to be a big change for the agency to see themselves as a strong enforcement authority,” she testified.