[Congressional Record Volume 154, Number 176 (Wednesday, November 19, 2008)]
[Senate]
[Pages S10661-S10663]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE:
  S. 3699. A bill to direct the Administrator of the Small Business 
Administration to reform and improve the HUBZone program for small 
business concerns, and for other purposes; to the Committee on Small 
Business and Entrepreneurship.

[[Page S10662]]

  Ms. SNOWE. Mr. President, I rise today in support of the passage of 
the HUBZone Improvement Act of 2008. This vital legislation would 
address the Government Accountability Office's recent recommendations 
to improve the Small Business Administration's administration and 
oversight of the Historically Underutilized Business Zone, HUBZone, 
program and ensure that only eligible firms participate in this crucial 
program.
  As former chair and now ranking member of the Senate Committee on 
Small Business and Entrepreneurship, I have been a longstanding 
champion for small business programs such as the HUBZone program. The 
HUBZone program provides Federal contracting assistance to small firms 
located in economically distressed areas, with the intent of 
stimulating economic development. According to the GAO, as of February 
2008, 12,986 certified businesses have participated in the HUBZone 
program since its inception. And in fiscal year 2007, over 4,200 
HUBZone firms obtained approximately $8.1 billion in Federal contracts. 
In these troubling economic times, the HUBZone program is something our 
country needs now more than ever.
  The mechanisms that the SBA uses to certify and monitor HUBZone firms 
provide limited assurance that only eligible firms participate in the 
program. Unfortunately, according to a recent GAO report and analysis 
of 125 applications submitted in September of 2007, the SBA only 
requested supporting documentation, which helps to clarify the status 
of the business, for 36 percent of the applications and only conducted 
a single site visit for all 125 applicants. While the SBA's policies 
and procedures require program examinations, the agency only conducts 
them on 5 percent of certified HUBZone firms each year. This is a 
glaring lack of oversight that must be rectified.
  The legislation I introduce today, the HUBZone Improvement Act of 
2008, would take immediate steps to correct the lack of effective 
administrative oversight by requiring more routine and consistent 
supporting documentation during the program's application process. In 
its report, the GAO found that the SBA relies on Federal law to 
identify qualified HUBZone areas, but the map it uses to publicize 
HUBZone areas is inaccurate, and the economic characteristics of 
designated areas vary widely. My bill would require that the SBA take 
immediate steps to correct and update the map that the SBA uses to 
identify HUBZone areas and implement procedures to ensure that the map 
is updated with the most recently available data on a more frequent 
basis.
  The GAO also found that the mechanisms that SBA uses to certify and 
monitor firms provide limited assurance that only eligible firms 
participate in the program. The GAO found that more than 4,600 firms 
that had been in the program for at least 3 years went unmonitored. My 
legislation would require the SBA to develop and implement guidance to 
more routinely and consistently obtain supporting documentation upon 
application and conduct more frequent site visits, as appropriate, to 
ensure that firms applying for certification are eligible. These 
commonsense achievable steps would help to eliminate participant fraud 
and misrepresentation, and ensure that firms applying for HUBZone 
certification are truly lawful and eligible businesses.
  In its report, the GAO illustrates the SBA lack of a formal policy on 
how quickly it needs to make a final determination on decertifying 
firms that may no longer be eligible for the HUBZone program. According 
to the GAO, of the more than 3,600 firms proposed for decertification 
in fiscal years 2006 and 2007, more than 1,400 were not processed 
within 60 days--the SBA's targeted timeline. As a result of these 
weaknesses, there is an increased risk that ineligible firms have 
participated in the program and had opportunities to receive Federal 
contracts based on their HUBZone certification. My legislation would 
require the SBA to formalize and adhere to a specific timeframe for 
processing firms proposed for decertification in the future, as well as 
require further developed measures in assessing the effectiveness of 
the HUBZone program.
  Moreover, the Federal Government must strive to continue to provide 
additional contracting opportunities to those who are legitimate 
HUBZone firms. I am dismayed by the innumerable ways that government 
agencies have time and again egregiously failed to meet most of their 
small business contracting goals. I am alarmed that only one Federal 
small business contracting program--the small disadvantage business 
program--has met its statutory goal, and that the three other small 
business goaling programs have all fallen drastically short. For 
example, in fiscal year 2007, the HUBZone program met only 2.2 percent 
of its three percent government-wide goal. The Federal Government can 
and must provide more to our country's hardworking small businesses.
  In my home State of Maine, only 118 of 41,026 small businesses are 
qualified HUBZone businesses. HUBZones represent a tremendous tool for 
replacing lost jobs for our Nation's declining manufacturing and 
industrial sectors--clearly, this program should be better utilized.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3699

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``HUBZone Improvement Act of 
     2008''.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the terms ``Administration'' and ``Administrator'' mean 
     the Small Business Administration and the Administrator 
     thereof, respectively;
       (2) the terms ``HUBZone'' and ``HUBZone small business 
     concern'' have the meanings given such terms in section 3 of 
     the Small Business Act (15 U.S.C. 632); and
       (3) the term ``recertification'' means determining whether 
     a business concern that was previously determined to be a 
     qualified HUBZone small business concern is a qualified 
     HUBZone small business concern under section 3(p)(5) of the 
     Small Business Act (15 U.S.C. 632(p)(5)).

     SEC. 3. PURPOSE; FINDINGS.

       (a) Purpose.--The purpose of this Act is to reform and 
     improve the HUBZone program of the Administration.
       (b) Findings.--Congress finds the following:
       (1) The HUBZone program was established under the HUBZone 
     Act of 1997 (Public Law 105-135; 111 Stat. 2627) to stimulate 
     economic development through increased employment and capital 
     investment by providing Federal contracting preferences to 
     small business concerns in economically distressed 
     communities or HUBZone areas.
       (2) According to the Government Accountability Office--
       (A) as of February 2008, 12,986 certified firms have 
     participated in the HUBZone program since its inception; and
       (B) in fiscal year 2007, over 4,200 HUBZone small business 
     concerns obtained approximately $8,100,000,000 in Federal 
     contracts.
       (3) The Government Accountability Office also identified 
     numerous concerns with the HUBZone program, including that--
       (A) the Administration verifies the information received by 
     the Administration from HUBZone small business concerns in 
     limited instances and has limited assurances that only 
     eligible firms participated in the HUBZone program;
       (B) by not obtaining documentation and conducting site 
     visits on a more routine basis during the certification 
     process, the Administration cannot be sure that only eligible 
     firms are part of the HUBZone program; and
       (C) although the examination process of the Administration 
     involves a more extensive review of documentation, the 
     examination process cannot be relied upon to ensure that only 
     eligible firms participate in the HUBZone program because the 
     examination process involves only 5 percent of firms in any 
     given year.

     SEC. 4. HUBZONE IMPROVEMENTS.

       The Administrator shall--
       (1) as soon as is practicable, correct and update the map 
     that is used by the Administration to identify HUBZones and 
     implement procedures to ensure that the map is updated with 
     the most recently available data on a more frequent basis;
       (2) develop and implement guidance for determining whether 
     an applicant is a qualified HUBZone small business concern 
     under section 3(p)(5) of the Small Business Act (15 U.S.C. 
     632(p)(5)), including more routinely and consistently 
     obtaining supporting documentation from an applicant and 
     conducting more frequent site visits, as appropriate;
       (3) establish a date by which the Administrator shall 
     eliminating the backlog of applications for recertification;
       (4) ensure that the Administration eliminates the backlog 
     described in paragraph (3) by the date established under 
     paragraph (3), using officers and employees of the 
     Administration or by entering into a contract with a private 
     entity;

[[Page S10663]]

       (5) establish and implement a time period for completing a 
     recertification; and
       (6) develop measures and implement plans to assess the 
     effectiveness of the HUBZone program that take into account--
       (A) the economic characteristics of the HUBZone; and
       (B) contracts being counted under multiple socioeconomic 
     subcategories.

     SEC. 5. REPORT.

       Not later than 2 years after the date of enactment of this 
     Act, the Comptroller General of the United States shall 
     submit to the Committee on Small Business and 
     Entrepreneurship of the Senate and the Committee on Small 
     Business of the House of Representatives a report regarding 
     the implementation of this Act.
                                 ______