HUBZone Fraud: Government Alleges “Virtual Office” Scheme

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.

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HUBZone Certifications Averaging 116 Days–And Other Tidbits From The SBA OIG HUBZone Report

HUBZone certifications are averaging 116 days from the date of application to the date of certification, according to a fascinating SBA Office of Inspector General Report on the HUBZone certification process.  The 116-day time frame is considerably longer than the SBA’s goal of 90 days.  However, in a majority of cases, the SBA does complete the certification process within 90 days of receiving all of the applicant’s supporting documentation.

In addition to an overview of the time frames associated with a HUBZone certification (a question I am often asked), the SBA OIG report concludes that the SBA’s HUBZone application procedures need updating–and that three potentially ineligible firms were certified in 2012.

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HUBZone Certification Not Required At Solicitation Issuance, Says GAO

A Treasury Department solicitation did not require contractors to be certified HUBZone participants at the time the solicitation was issued, despite language in the solicitation arguably requiring just that in order to receive a high rating for socioeconomic status.

In a recent GAO bid protest decision, the GAO held that the agency properly interpreted the solicitation to require HUBZone certification at the time proposals were due, not the time the solicitation was issued.  The GAO’s ruling comports with the HUBZone program regulations, which do not require contractors to be certified at the time a solicitation is issued in order to be considered HUBZone participants for purposes of that solicitation.

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