We’ve written quite a few posts about how contractors can adapt and deal with the changes caused by the COVID-19 pandemic. Some small businesses federal contractors, however, face unique challenges. This is particularly true of participants in the HUBZone Program. Specifically, while the OMB has encouraged agencies to allow contractor employees to telework, how will this affect HUBZone entities, where the location of their employees is key to maintaining their HUBZone status?
Well, the SBA has the answer in some recent guidance, and it’s something we could all probably do with a little more of–flexibility. Flexibility, in this case, means that SBA realizes complying with the principal office and employee residency requirements may be tough during a time when all people are encouraged to telework. The flexibility applies to a few of the HUBZone rules.
Can a business seeking HUBZone status give employees bonuses or higher wages to entice them to live in a HUBZone?
According to new guidance published by the U.S. Small Business Administration, yes. But that’s not the only question addressed in the guidance.
Last week, the SBA released a proposal to overhaul the HUBZone Program. The proposed rule will make major changes to almost all aspects of the HUBZone Program, and my colleagues are covering those changes in a series of two posts on SmallGovCon.
But while the proposed HUBZone Program rule changes will garner most of the headlines, the SBA also has used the proposed rule as an opportunity to clear up a few very common HUBZone Program misconceptions–such as the notion that so-called “jobsite employees” don’t count toward the 35% HUBZone residency requirement.
Here are three of the most important clarifications SBA offered in the proposed HUBZone rule.
A small business and its owner have agreed to pay $250,000 to resolve HUBZone fraud allegations, including a claim that the company’s HUBZone office was a “virtual” location where no employees actually worked.
According to a Department of Justice press release, Air Ideal, Inc. and its majority owner have also agreed to pay the government five percent of the company’s gross revenues over the next five years.
A HUBZone contractor has been accused of HUBZone program fraud for allegedly falsely claiming to be located in a HUBZone, when in fact the office in question was a “virtual office” where no employees worked.
According to a Department of Justice press release, the contractor not only misrepresented its principal office location, but submitted a fabricated lease to the SBA as part of its HUBZone application.
The Department of Justice has filed a complaint accusing an Ohio construction contractor and its owner of fraudulently obtaining HUBZone certification and HUBZone set-aside contracts.
According to a DOJ press release, the government is alleging that William Richardson, the owner of TAB Construction Co. Inc., made false statements regarding TAB’s principal office to obtain HUBZone certification, then used that certification to win millions of dollars in HUBZone set-aside contracts.
Two Kentucky-based government contractors and their owners have agreed to pay $6.25 million to settle HUBZone fraud claims, according to a U.S. Department of Justice press release.
The costly settlement puts an end to a saga involving DOJ claims of a vacant “principal” office, undisclosed affiliation, and fraudulent statements made to the SBA and and the U.S. Army.