SBA Cites Progress In Combating HUBZone Fraud and Abuse SBA administrator Karen Mills said the agency has tightened controls over the HUBZone program after congressional auditors found evidence of widespread fraud. Testifying before the House Small Business Committee on July 29, she said SBA has conducted more than 600 site visits to verify the eligibility of HUBZone firms. Other agency officials had testified earlier that only seven site visits were conducted in the first three months of this year. The Government Accountability Office found that many HUBZone companies did not maintain their headquarters in a HUBZone or did not employ 35% HUBZone residents, as required by the program’s rules. Of nineteen ineligible companies cited by GAO in March, Mills said seven have been decertified, six have been proposed for decertification, five have dropped out of the program and one was found to be in compliance with the rules. Last year GAO reported it was able to gain HUBZone certification for four nonexistent companies with fictitious officers. Mills said SBA has launched a “start to finish re-engineering” of the certification process. “We have tightened it up,” she added. But committee chairwoman Nydia Velazquez, D-NY, told her, “It has taken a lot of time to implement some of the recommendations” GAO made last year. Velazquez had earlier threatened to shut down the program if SBA could not fix it. In two reports, in July 2008 and March 2009, GAO said SBA’s supervision of the 11,000 HUBZone-certified companies was so lax that company executives had no fear of being caught in violation of the rules. The auditors found “a complete lack of internal control,” said William Shear, GAO’s director of financial markets and community investment. The auditors are also reviewing the 8(a) and service-disabled veterans contracting programs for signs of fraud and abuse. Mills said an overhaul of 8(a) program rules is nearly complete.