WASHINGTON, July 17, 2008
Companies Defraud Government For Millions
Businesses Falsely Claim Head Offices In Poor Areas To Win Huge "HUBZone" Contracts
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(AP Graphics)
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Billions more remain at risk because the Small Business Administration doesn't usually check paperwork, rarely conducts audits and is slow to kick out firms that are no longer eligible for the $8 billion in special contract set-asides for small businesses, the Government Accountability Office said.
A pair of GAO reports, obtained Wednesday by The Associated Press, examined SBA's Historically Underutilized Business Zone, or HUBZone, program, which was created in 1997 to help thousands of small firms in distressed areas.
To be eligible, companies fill out applications affirming that their principal office - where the greatest number of employees work - is in a designated HUBZone and that at least 35 percent of the firm's full-time employees live in that area.
The GAO's review of 125 applications submitted in September 2007 found the SBA asked for supporting evidence of a firm's eligibility claims only one-third of the time; the agency conducted a site visit only once to verify whether an office actually existed.
In all, the SBA conducted audits on 5 percent of the total 13,000 HUBZone firms from 2004-2007; when it did conduct an audit, more than half of the firms on average were deemed ineligible.
In the Washington, D.C., area, the GAO found 10 out of 17 certified HUBZone firms it investigated failed to maintain minimum employee requirements or falsely claimed principal locations in places such as a dentist's office. Those firms, providing services such as engineering and information technology, were awarded $105 million in preferential contracts in 2006-2007 from the Pentagon, Veterans Affairs and Health and Human Services - based at least in part on their HUBZone status.
Also improperly certified were four bogus firms set up by the GAO claiming fake principal locations in HUBZone areas that were actually a Starbucks coffee shop, ineligible P.O. box addresses, or "virtual offices" consisting of part-time space.
The SBA approved each of the four firms with few questions within two to five weeks.
"You have to wonder about the Bush administration and its commitment to disadvantaged communities, when all it takes for wealthy individuals to access billions of dollars in federal contracts is a $10 P.O. Box and a bottle of Wite-out," said Rep. Nydia M. VelDazquez, D-N.Y., who chairs the House Committee on Small Business and requested the reports.
Her committee plans to hold a hearing Thursday examining the HUBZone program.
Responding, the SBA agreed with the GAO's findings and said it was undergoing a complete review of its HUBZone program to identify ineligible companies and suspend those that falsely represented themselves. For example, the agency was asking staff to take a second look at all HUBZone firms that won government contracts and to conduct onsite visits as necessary.
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Companies are being sent letters notifying them that they may be subject to random checks to recertify status. SBA also will now be requiring firms when they apply for HUBZone status to submit supporting documentation, Fay E. Ott, SBA's associate administrator of government contracting, said in a telephone interview.We're holding our staff accountable and holding HUBZone firms accountable.
Fay E. Ott, Small Business AdministrationOtt said the agency would adopt new staff guidance as to when to seek supporting paperwork, hire more people to help conduct checks and conduct a nationwide audit to determine if ineligible firms outside the D.C. area improperly received contracts.
"We're holding our staff accountable and holding HUBZone firms accountable," she said.
The GAO said it had referred the 10 cases it found ineligible to the SBA's inspector general. Among those cited by the investigators:
"We found that all 10 of these case-study firms continued to represent themselves ... as eligible to participate in the HUBZone program. Because the 10 case-study examples clearly are not eligible, we consider each firm's continued representation indicative of fraud," investigators wrote.
Audrey L. Price, president of Quantum, acknowledged that the company no longer maintains a primary HUBZone office in the District of Columbia. She said that was because the office was moved to another HUBZone area in Macon, Ga., in 2007 after the firm won a government contract.
Price acknowledged she did not inform the SBA of the address change and that the firm's Web site may not yet reflect the new information but said she recently submitted the official paperwork to SBA.
"We work hard to ensure compliance," Price said. "We made some mistakes, but it was just in failing to notify SBA of a change of address."
Messages left at Platinum One were not immediately returned Wednesday.
The GAO reports are the latest to document problems in the awarding of contracts and government aid to small businesses
Previous audits have highlighted problems in which large companies receiving contracts were improperly coded as small firms, skewing government statistics to suggest a better outcome. A report by the SBA inspector general as early as 2003 reported that the agency's internal controls were inadequate to ensure that only eligible firms were allowed to participate in the HUBZone program.
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See all 38 CommentsThey are well-known for lying to the governemnt and forging paperwork; why shouldn''t they try to make a few dollars more off of the U. S. taxpayers!
There is no level to which Scumbag Neocon Corporate Criminals will stoop to Bleed the American Taxpayers Dry of every last Cent. Time for some Public Hangings of Corporate Criminals and their Government Toadies.
Congress is famous for setting up programs and then refusing to fund oversight to see that they are properly carried out.
Posted by diatreme
If he did that, he''d lose is stature, his zionist friends at AIPAC and many other friends of his in D.C.
It''s in the news today finally, around 100 billion dollars are tax evaded by a few of the super rich. Texas Phil Graham who called americans whiners recently is a chairman of Swiss bank UBS one of the institutions that has facilitated the means by which the super rich can commit tax evasion fraud against the people of the United States, draining the economy at the expense of the masses and the the benefit of a few. The United States has become a nation ruled by oligarchs. Our vote means little or nothing and the brazen narcissism is so profound that the election process is openly corrupt without intervention. Large companies like Diebold have played a significant role.
No basic equal justice is maintained in this dying empire. Credibility and trust have been lost for the honest. Others are complacent and indifferent accepting of living in a nation of corruption. Latinos should fair well in the new america as they''ve had good training in their own countries.
Posted by mcdonaj3 at 10:44 AM : Jul 17, 2008
Someday WE the PEOPLE have to understand and accept that the PUBLIC good comes before a Rich Jerks Wallet! THAT''s what we have to understand. IF we need more people to audit this NECESSARY Program then we do it. This program is SUPPOSE to help people start their own Business and is needed. Sieg Heil Bush
Posted by diatreme at 11:03 AM : Jul 17, 2008
YOU are a LIAR sir and EVERYONE reading this site KNOWS it. NEVER in MY entire LIFETIME has this Government been THIS bad and it is NOT the workers! It has been shown OVER and OVER and OVER again that Bush has put INCOMPETENT people in CHARGE of just about the entire Government. In fact he put Lawyers from your fuhrer, Pat Robertson''s, Law School in the Justice Department... what is that law school ranked?? Somewhere around 500th? It''s considered a FOURTH rate Law Firm by the American Bar. It''s time you fascist stopped caring ONLY about your "Party"... we have a NATION and EVERY TIME something like this happens someone HURTS!! Now let''s hear ya!! Sieg Heil and Amen!!
We took a number and waited our turn. When finally reached, we were waited on by an extremely rude lady. She was about to enter our request wrongly and I had to ask her to revisit the requested change before she got it right. Something so vital as our Social Security information should not be entrusted to a lack of or inept federal workers. Yes, we need to fund our federal offices with tax revenues. We could more aptly do that if we could stop spending 100 billion dollars every month in Iraq. Why are we helping some other country instead of helping ourselves? The situation has grown ridiculous!
Chump-Change
Halliburton defrauded the taxpayer out of $3000 Million dollars ($3 billion) through undelivered goods and services in Iraq.
And most likely, their "workers" were located in India.
I find it amazing that people shut their eyes and ears when their party is the source of all crime and immorality, and try to diverge attention from scrutiny thats SUPPOSED to be there, but as in all aspects of the Bush administration, more regulatory and oversight has gone out the window and more taxpayer money that essentially is more Corporate "Entitlement" payments or Corporate Welfare more appropriately.
Republicans always Whine and Complain about Medicare and social security, when those two entities actually help more people in need, more elderly, more disabled, more humanity, and more efficiently and less costly than any Private enterprise thats ever existed, and of course helping people in need is a Christian value. Yet, they do everything they can to destroy the programs, criticize them, cut fundin, cut payments, cut benefits, cut raises from inflation, and divert its funds to their pet projects and take away the Government''s Policing abilities to keep their cronies and colleagues from frauding the government, stealing the resources, and committing crime after crime against the people for personal wealth and Greed.
This is the Republican party at its typical mindset and behavior, and Results.
We''ve seen the bloated waste, fraud, mismanagement, and horrible results from theft all the way to Dead US citizens.
The crooked Repubs are about to be flushed from the Whitehouse!
Pay attention to the story when the fear mongers bring up 9-11 or terrorists! That is the real story as they love to us fear to distract you from the truth! Any idiot that mentions 9-11 as a smoke screen and uses fear as a tool of distraction needs their dumb as dirt, redneck a.. whipped!
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