GAO Investigators Probe 8(a), SDV Contracting The Government Accountability Office is investigating possible fraud and abuse in the 8(a) and service-disabled veterans contracting programs. The House Small Business Committee asked for the probes after GAO uncovered evidence of fraud and mismanagement in the HUBZone program last year. GAO, the investigative arm of Congress, has received some complaints about ineligible 8(a) and SDV companies through its fraud hotline, said Gregory Kutz, managing director of the forensic audits and special investigation team. A new hotline has been created for people to report information about those programs: smallbizfraud@gao.gov. “We want to hear from individuals who may know about fraud or abuse,” Kutz told Set-Aside Alert. GAO’s HUBZone investigation found the program “clearly is very susceptible to fraud,” Kutz testified at a Small Business Committee hearing in July. “Anybody with a computer and a mailbox that’s willing to lie to the SBA can become a HUBZone company,” he said. GAO investigators registered four phony companies with fictitious officers as HUBZone firms, and all were granted certification within a few weeks through SBA’s online application system. In addition, the investigators found 10 ineligible HUBZone companies in the metropolitan Washington area had been awarded $105 million in contracts. None of the companies had its principal place of business in a HUBZone, as the law requires. Kutz said GAO is expanding its examination of the HUBZone program to check the eligibility of companies outside the national capital area. GAO’s William Shear told the committee the program “relies too heavily on self-reported information that is not verified, without site visits, too much on self-policing.” GAO warned that hundreds or thousands of certified companies might not be eligible. Because SBA allows service-disabled veteran-owned companies to self-certify, it is also vulnerable to cheats, Kutz said. Applications for 8(a) certification are accepted online. Past investigations of 8(a) businesses have centered on whether they were serving as fronts for large companies. Kutz said the taxpayer is not the only loser when ineligible companies win federal contracts. “The loser is, of course, the qualified (company) that did not get the contract.” If fraud and abuse are found, he said GAO will look at “Why did it happen? Are there added controls that could be in place?” GAO recommended that SBA increase the number of site visits to HUBZone companies and strengthen monitoring of other aspects of the program. Kutz said his team will follow up to determine what SBA has done. He expects to present the first reports on the investigations to the new Congress early next year.