SBA Lacks Means to Communicate HUBZone Changes Timely

Approximately 600 small contractors will lose their set-aside status in 2015 — and might not know it

By Jill R. Aitoro    February 17, 2015

Nearly 600 small businesses will lose a set-aside status in 2015 — and the Small Business Administration isn’t so sure they even realize it yet.
That was among the findings from a report released by the Government Accountability Office Feb. 13 assessing the SBA’s contracting program for small businesses located in designated, highly underutilized business zones, or HUBZones.Areas are designated as HUBZones based on demographic data including unemployment and poverty rates. The problem, according to the GAO, is the SBA lacks an effective way to communicate program changes to small businesses that participate in the program, which allows them to bid on contracts set aside for small businesses located in HUBZones. And because areas can lose their qualifying status due to changes in economic conditions, resulting in a three-year transition period before the status is stripped entirely, communication with participating small businesses is crucial.In 2015, 3,417 areas that were redesignated, mostly as a result of census results a few years ago, will lose their HUBZone status. There are 578 firms in those areas. Not specified by the GAO is where the affected small businesses are located, but as of June 2014, Virginia, Maryland and D.C. were among the states with the most certified HUBZone small businesses, with 242, 161 and 155 respectively. The SBA’s website has an interactive HUBZone map, showing areas that qualified, didn’t qualify and redesignated, but it’s challenging to maneuver and not terribly intuitive.Indeed, the SBA relies on website updates and broadcast emails to inform firms about program changes and redesignations that affect area status; but according to SBA officials, the most current notification letter about program changes includes links to the program’s website and regulations, but it does not include information on whether the firm is in a redesignated area or when that status will expire. The only time a firm would be directly notified that it was located in a redesignated area would be when it received a notice of proposed decertification from the program after the status of the area expired.

The result is some firms that fail to keep up on changes in the program could be unaware the changes may affect their eligibility, the report noted.



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