	Background

The Historically Underutilized Business Zone (HUBZone) Act of 1997 established a program to provide assistance in securing federal contracts to small businesses located in HUBZones. The purpose of the HUBZone program is to increase employment opportunities, investment, and economic development in these areas. Reported HUBZone Program Contracting Achievements Are Inaccurate

The data that federal agencies reported on fiscal year 2000 HUBZone contracting achievements is significantly inaccurate. The inaccuracies were due to data entry errors and insufficient guidance for federal contracting personnel on how to complete the forms used to submit data to FPDC. First, there is a relatively small number of certified HUBZone firms. SBA cited a letter the agency sent to Senator Bond dated August 17, 2001, which states that there is parity between the 8(a) program and the HUBZone program, although “regulatory language could be read to give priority to awards to the 8(a) program over HUBZone awards.” We noted in our report that regulations allow contracting officer’s discretion in deciding on whether to use the 8(a) or HUBZone programs when awarding contracts. To determine whether federal agencies are having difficulty implementing the HUBZone program to award contracts to certified HUBZone firms, and if so, the reasons for the difficulty, we reviewed the HUBZone Act of 1997 and other pertinent legislation; and HUBZone program implementation guidance contained in Title 13, Code of Federal Regulations (CFR), Part 126 (13 CFR 126), contracting guidance contained in the Federal Acquisition Regulation (48 CFR Chapter 1), and other relevant guidance issued by SBA, FPDC, and the ten program implementing agencies (listed in appendix I). Appendix II: Comments From the Small Business Administration
What GAO Found

Congress created the Historically Underutilized Business Zone (HUBZone) program to stimulate economic development and create jobs in distressed urban and rural areas. To achieve these goals, the HUBZone program provides small businesses with greater access to federal contracting opportunities. Reported HUBZone program achievements for fiscal year 2000 were inaccurate because of data entry errors and insufficient guidance on how to report agency data. Federal agencies are having difficulty implementing the HUBZone program. The primary reasons that federal contracting personnel gave for not using the HUBZone program to award contracts were (1) the small number of Small Business Administration (SBA) certified HUBZone firms, (2) difficulty identifying certified firms with the capabilities needed by federal agencies, (3) SBA's guidance that emphasizes the 8(a) program over the HUBZone program, and (4) easier and quicker procedures to award contracts under the 8(a) program.