Bush Leaves Legacy of Fraud and Abuse At Small Business Administration

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


It’s been a rough decade for the Small Business Administration. The Bush administration slashed its budget by more than half, and many of its most experienced and knowledgeable employees were let go. To make matters worse, multiple investigations have found evidence of waste, fraud, and abuse at the agency, which is supposed to help small businesses drive economic growth. On Wednesday, the embattled agency was dealt another blow when the Government Accountability Office revealed that the SBA’s $8 billion program designed to funnel government contracts to small businesses in poor areas gave millions to companies that did not meet the legal requirements, including one that was “headquartered” in a trailer home occupied by someone unrelated to the company. Some of the owners of the “small businesses” in question admitted straight-out to the GAO that they were defrauding the SBA’s HUBZone program by funnelling money to big businesses or businesses outside the zones.

In total, the GAO found 19 businesses that did not meet the HUBZone requirements received some $30 million in federal contracts despite their non-compliance. One firm that collected $900,000 was particularly egregious in its rulebreaking:

[O]ur investigation found that the purported principal office was in fact a residential trailer occupied by someone not associated with the company. The company had represented its office as located in “suite 19,” when in reality, the address was associated with trailer 19 in a residential trailer
park. The two employees of the firm—a father and a son—lived in non-
HUBZone areas that are located about 90 miles from the trailer park. This
firm also subcontracted most of its HUBZone work to non-HUBZone firms.

Chris Gunn, a spokesman for the American Small Business League, has been bird-dogging the SBA for years. He says that since the underfunded and overwhelmed agency was gutted by the Bush administration, “it’s not necessarily surprising that we see this amount of fraud and abuse.”

Rep. Nydia Velasquez (D-NY), the chair of the House small business committee, has talked of shutting down the HUBZone program entirely. But Gunn says far more drastic measures need to be taken. “If the best they can come up with is to end the program then we’re all in trouble,” Gunn says. His organization is working on legislation with Rep. Hank Johnson (D-Ga.) to preclude publicly-traded companies from being counted towards the government’s small business procurement goals. That move that would keep companies like Raytheon, Honda and 3M (and their subsidiaries), which have received federal small business contracts in the past, from receiving them in the future.

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate