HUBZone contractors play key role in policing industry, identifying and reporting potential fraud

October 8, 2018, Washington D.C. – Today, the national law firm Baron & Budd announced that it is dedicating significant resources from its whistleblower practice to investigate allegations of fraud among Small Business Administration (SBA) certified HUBZone Companies. While the HUBZone program was designed to provide legitimate small businesses in economically challenged areas with special assistance with government contracts, it has become a prime target for fraud. This most frequently happens when larger companies attempt to use a HUBZone-certified business as a pass-through to gain access to set-aside contracts that would otherwise be unavailable.

On October 11, 2018, hundreds of HUBZone-certified businesses will travel to Chantilly, Virginia to participate in the National HUBZone Conference. The annual event, and other conferences like it, are designed to provide HUBZone business owners and corporate executives with the opportunity to learn about HUBZone requirements and federal regulations, as well as network and identify potential partners that may lead to a federal government contract. Unfortunately, this gathering, and possibly others like it, may also attract some corporate representatives who do not fully understand HUBZone regulations and, as a result, knowingly or unknowingly put HUBZone businesses at high risk for committing fraud against the U.S. government. Visit Baron & Budd’s website for a list of the most common fraudulent activity in HUBZone contracting.

The SBA created the HUBZone program to give small businesses in “historically underutilized business zones” a leg up in obtaining government contracts. HUBZones are urban and rural areas with low income, high poverty, high levels of unemployment or are near a recently closed military base or natural disaster area. The federal government’s goal is to award at least three percent of all federal contracting dollars — or roughly $15 billion — to HUBZone certified businesses annually. To accomplish this, the government limits competition for certain contracts to businesses located in these areas and gives them preferential consideration in full and open competition.

“The combination of billions of dollars in contracts set aside for HUBZone companies and bad actors looking to take advantage of inexperienced small business owners is a potential recipe for fraud,” said Andrew Miller, shareholder and member of Baron & Budd’s whistleblower group. “When small businesses are unable to meet all the needs of a federal contract on their own, they can partner with larger companies. There are perfectly legitimate ways to engage in such a partnership and the SBA provides extensive guidance in how to do so. But, not infrequently, HUBZone businesses are approached with a proposal to commit fraud.”

Participating in fraudulent schemes can cause a small business to lose its HUBZone certification, face criminal prosecution and/or be financially liable for damages in civil actions brought by whistleblowers under the Federal False Claims Act.

If you are aware of fraud involving a HUBZone-certified business or if you are the owner of a HUBZone-certified business who has been approached with a proposal to commit fraud, you may qualify to serve as a whistleblower. If the allegations you bring to light are successfully prosecuted by the federal government, you may be entitled to a monetary reward. Please call if you would like more information.

ABOUT BARON & BUDD, P.C.

Baron & Budd, P.C. is among the largest and most accomplished plaintiffs’ law firms in the country. With more than 40-years of experience, Baron & Budd has the expertise and resources to handle complex litigation throughout the United States. As a law firm that takes pride in remaining at the forefront of litigation, Baron & Budd has spearheaded many significant cases for hundreds of entities and thousands of individuals. Since the firm was founded in 1977, Baron & Budd has achieved substantial national acclaim for its work on cutting-edge litigation, trying hundreds of cases to verdict and settling tens of thousands of cases in areas of litigation as diverse as dangerous pharmaceuticals and defective medical devices, asbestos and mesothelioma, environmental contamination, fraudulent banking practices, motor vehicles, employment, and other consumer fraud issues.