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Each year, the federal government procures more than $400 billion in goods and services from businesses around the country through government contracts. 

The Historically Underutilized Business Zone Program—or HUBZone program—was created in 1997 to provide federal assistance to firms located in economically-distressed areas. By lowering barriers to entry into the federal marketplace for these firms, the HUBZone program has fostered competition while helping rebuild communities.

Businesses in HUBZones play a large and vital role in our nation’s economy because they create jobs for those residing both inside and outside of these economically distressed areas. However, since its implementation, the HUBZone program has not reached its full potential. From ensuring that only certified businesses enter the program to being able to present evidence that the program is meeting its mission—SBA has largely failed in the basic operation of this program.

This Committee has heard from the GAO on a number of occasions. Each time, they report on the program’s problems. Most disappointing to me was the poor oversight that allowed GAO investigators to get fake businesses certified even though they did not meet eligibility requirements. In most instances, those certifications could have been verified by SBA simply asking for additional information on the location of the business. 

While GAO’s most recent report shows that there have been improvements in the certification process, these changes are not enough to ensure that businesses are adhering to the program’s requirements. This shows a clear need for legislation.

That’s why I introduced H.R. 3294, the HUBZone Uniformity and Business Stability Act of 2017—or HUBS Act— along with Chairman Chabot. This bill will help ensure that small firms in underutilized business areas have fair and equal access to the federal marketplace. 

Many areas will likely lose status this year because of changing data, crippling many rural economies.  H.R. 3294 would forestall this change in many affected areas.  

The HUBS Act would establish a 5-year cycle for determining the geographic boundaries of HUBZones, creating greater certainty for companies. 

It would also change the calculations for how certain geographic areas qualify for the program -- potentially adding as many as 1,000 rural and non-urban counties. This alone has the potential to help more businesses avail themselves of the HUBZone initiative’s benefits. 

Most importantly, the legislation includes new performance metrics to ensure the data collected by the SBA will allow us to measure the program’s success and economic impact. 

I look forward to hearing from our witnesses today about how the proposed legislation can improve the HUBZone program and provide sufficient oversight for initial certification, recertification, and business development to ensure new businesses enter the program.

Nearly 90 percent of HUBZone areas still do not have a business participating in the program.  This low participation rate has resulted in the failure to meet the 3 percent prime and 3 percent subcontracting goals.

The dollars and actions awarded through this program have continually decreased since Fiscal Year 2008.  Only 82,000 actions worth $6.8 billion – 1.67 percent of prime contracting dollars – were awarded to HUBZone firms in Fiscal Year 2016.  

It is my hope that this Committee can work together to reverse this trend.  

I thank the witnesses for being here to offer their insights on making the program more effecting and helping economically challenged areas.