Stauber: “A Review and Assessment of the SBA HUBZone Program”
Washington, July 14, 2022
WASHINGTON, D.C. – Today, the House Small Business Subcommittee on Contracting and Infrastructure held a hybrid hearing on “A Review and Assessment of the SBA HUBZone Program.”
Acting Subcommittee Ranking Member Pete Stauber’s opening statement as prepared for delivery:
Thank you, Mr. Chairman, and thank you for calling today’s hearing.
I want to thank all of today’s witnesses for joining us this morning to discuss the Small Business Administration’s Historically Underutilized Business Zones Program or HUB Zone Program.
The HUB Zone Program’s core mission is to bring economic hope, independence, jobs, and businesses to economically distressed areas marked by high unemployment and poverty. To accomplish this, the program utilizes a valuable government resource, a government contract. Through the use of federal contracting preferences, the program works to encourage small businesses to locate in an economically distressed area and employ people within that area. These government contracts to HUB Zone small businesses can translate into thousands of job opportunities for individuals in these areas who are either unemployed or underemployed.
Since inception over two decades ago, the program has undergone significant changes. In 2017, this Committee held hearings, assessed the programs success, and advanced bipartisan reforms to ensure continued forward progress. Following Congress’ passage of these legislative reforms, the Small Business Administration published additional regulatory reforms to the program. All of these reforms were intended to reduce the burden on participating small businesses and encourage the participation of even more small businesses.
Just as we work to assess this program, the Government Accountability Office and the SBA Office of Inspector General have also examined the HUB Zone program for over two decades now. In each of the reports from these agencies throughout the years, there are several recurring themes. One of these is regarding technological and communication issues within the program. From publicizing accurate HUB Zone area data, to streamlining the online certification process, to effectively communicating with current HUB Zone participants, the HUB Zone program has consistently struggled in this area.
Another persistent challenge within the program, and frankly one that we have seen throughout the SBA’s programs recently, is the lack of adequate assessments to measure the program’s effectiveness. While I have no doubt we have success stories from the program with us today, adequate assessment metrics are essential to measuring the overall success of any program and should be especially important for this one.
Finally, there is the issue of potential fraud within the program and the effectiveness of SBA’s fraud mitigation tactics. Watchdog reports have found that deficiencies in internal controls have resulted in a lack of reasonable assurances that firms within the program are actually eligible to participate. If and when fraud does occur, there are also questions as to whether the SBA is adequately utilizing its suspension and debarment powers, its primary tool for deterring fraudulent actors.
From recent legislative and regulatory changes to persistent challenges within the program, I look forward to hearing from our witnesses about their unique experiences with this important program.
Given the current inflationary pressures impacting small businesses, hearings like these are paramount.
With that Mr. Chairman, I once again thank you for calling today’s important hearing and I yield back.