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24–330 2017

LEARNING FROM HISTORY: IDEAS TO 

STRENGTHEN AND MODERNIZE THE HUBZONE 

PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

MARCH 2, 2017 

Small Business Committee Document Number 115–006 

Available via the GPO Website: www.fdsys.gov 

SBREP-219A with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

VACANT 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Staff Director 

JAN OLIVER, Chief Counsel 

ADAM MINEHARDT, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Knight ................................................................................................... 1 

Hon. Stephanie Murphy .......................................................................................... 2 

WITNESSES 

Mr. William B. Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office, Washington, DC ..... 4 

Mr. Hannibal ‘‘Mike’’ Ware, Acting Inspector General, United States Small 

Business Administration, Washington, DC ....................................................... 6 

Ms. Shirley Bailey, Co-Owner-Executive Vice President and Chief Operating 

Officer, GCC Technologies, LLC, Oakland, MD, testifying on behalf of the 

HUBZone Contractors National Council ............................................................ 7 

Mansooreh Mollaghasemi, Ph.D., President & CEO, Atria Technologies LLC, 

Orlando, FL .......................................................................................................... 9 

APPENDIX 

Prepared Statements: 

Mr. William B. Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office, Washington, DC ..................................................................................................... 20 

Mr. Hannibal ‘‘Mike’’ Ware, Acting Inspector General, United States 

Small Business Administration, Washington, DC ..................................... 40 

Ms. Shirley Bailey, Co-Owner-Executive Vice President and Chief Operating Officer, GCC Technologies, LLC, testifying on behalf of the 

HUBZone Contractors National Council ..................................................... 48 

Mansooreh Mollaghasemi, Ph.D., President & CEO, Atria Technologies 

LLC, Orlando, FL .......................................................................................... 59 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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SBREP-219A with DISTILLER

(1) 

LEARNING FROM HISTORY: IDEAS TO 

STRENGTHEN AND MODERNIZE THE 

HUBZONE PROGRAM 

THURSDAY, MARCH 2, 2017 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:01 a.m., in Room 

2360, Rayburn House Office Building, Hon. Steve Knight, [chairman of the Subcommittee] presiding. 

Present: Representatives Knight, Chabot, Gonza ́lez-Colo ́n, Evans, 

and Murphy. 

Chairman KNIGHT. Good morning. It has been an interesting 

morning already, but we are ready to go. 

Welcome to the first hearing of the Subcommittee on Contracting 

and Workforce for the 115th Congress. 

This hearing will come to order. Before we begin, I would like to 

take a moment to thank the returning members for their continued 

service and welcome our new members, particularly Ranking Member Stephanie Murphy. This Subcommittee has enjoyed a long history of bipartisanship, and I look forward to working with Ms. 

Murphy and all of our members as we begin this new Congress. 

I would also like to sincerely thank everybody for being with us 

today, with a special thanks to each of our witnesses. I appreciate 

your willingness to take time out of your schedule and appear before this Subcommittee to share your expertise and insight. 

As we approach the 20th anniversary this year, today we will examine the Small Business Administration’s Historically Underutilized Business Zones, more commonly known as HUBZone Program. 

When the HUBZone Program was first established, its goal was 

to create hope for hundreds of thousands of underemployed or unemployed who long ago thought our country had given up on them. 

I can think of no more important goal than bringing economic hope, 

independence, jobs, and businesses to neglected areas marked by 

high unemployment and poverty. To achieve this objective, the 

HUBZone Program must be run efficiently and effectively. That requires us to take a hard look backwards and learn from the past. 

Over the past 20 years, the Government Accountability Office 

and the Small Business Administration’s Office of Inspector General have conducted several audits and investigations identifying 

shortfalls in the program that have invited fraud and abuse. A 

SBREP-219A with DISTILLER

2 

number of recommendations were made, and many were adopted 

by SBA. However, some have not. 

The program was improved significantly throughout the years, 

but there is still room to improve. We are very fortunate to have 

a panel of experts with us this morning who have either studied 

or participated in the HUBZone Program. The testimony we hear 

today will provide us with a launching point from which we can 

further examine the intricacies of the program and determine 

whether adjustments are needed to ensure that the program performs as intended and benefits the small businesses and communities most in need. 

Again, I want to thank each of our witnesses for taking the time 

to be with us today. I look forward to hearing your testimony, and 

now I yield to the Ranking Member Murphy for her opening statement. 

Mrs. MURPHY. Thank you, Mr. Chairman. I look forward to 

working with you and the rest of our colleagues to craft bipartisan 

legislation that will help our small businesses succeed and our 

economy grow. 

Each year the Federal Government procures more than 400 billion in goods and services from businesses around the country 

through the vehicle of government contracts. Recognizing the benefit that these contracts bring to our local communities in terms of 

economic development and job creation, Congress created a small 

business contracting program in 1997 aimed directly at helping underserved regions with low employment and high poverty. 

The Historically Underutilized Business Zone Program, or 

HUBZone Program, provides Federal assistance to firms located in 

economically distressed areas by lowering barriers to entry into the 

Federal marketplace for these firms. Ideally this would not only 

provide an incentive for selling goods and services to the government, but it would also create jobs and bring revenue to these 

struggling areas. 

However, since its implementation, the HUBZone Program has 

not quite filled its potential. From ensuring that only certified businesses enter the program and maintain their eligibility, to informing businesses of their HUBZone status in a timely manner, to 

even being able to present evidence that the program is meeting its 

mission, SBA has lagged behind in meeting these basic tasks. 

In fact, at one point in time oversight of the certification process 

was so poor that the GAO investigators were able to certify fake 

businesses that they created where the principal office locations 

were in ineligible locations, including the Alamo landmark in Texas 

and a Starbucks down the street from the White House. Additionally the SBA Office of Inspector General found three firms that 

were certified under the reengineered certification process that did 

not meet all of the program eligibility criteria. 

In addition, for many years the program’s portfolio consisted of 

businesses that were eligible only because of a grandfathering 

clause. Once this expired and other areas lost their HUBZone designation, close to 6,000 businesses were decertified. While GAO’s 

most recent report shows that there have been improvements in 

the certification process, these improvements are not far enough 

along to ensure that the businesses are adhering to the program’s 

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3 

requirements. The recertification process has for the most part become a self-certification with little outreach or follow-up from SBA. 

I look forward to hearing from our witnesses today about ways 

in which the program can be improved to provide sufficient oversight for initial certification, recertification, and business development. 

Additionally SBA’s outreach efforts have been unsuccessful in 

getting new businesses to enter the program. Nearly 90 percent of 

the 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 with only 71,000 actions 

worth $6.4 billion, or 1.82 percent of prime contracting dollars 

awarded to these firms in fiscal year 2015. Even then the program 

was vastly underutilized since only 25 percent of these actions were 

awarded through a HUBZone set-aside or a sole source contract. 

I know that last year the full committee held a hearing on 

HUBZones that shed light on the inadequacies of the program and 

made clear that reforms are necessary to get the program on track. 

Today’s hearing will provide the background and ideas needed to 

guide the committee as we draft legislation to address these deficiencies. 

I thank the witnesses for being here and look forward to gaining 

more insight as to how we can make the HUBZone Program more 

effective in meeting its mission. Thank you, and I yield back. 

Chairman KNIGHT. Thank you very much. I would like to now 

introduce our witnesses, and I think what we will do is we will introduce all four, and then we will start and go down. 

Our first witness today is Mr. William Shear, Director of the Financial Markets and Community Investment Team at the Government Accountability Office. That is an acronym. Mr. Shear is a familiar face, appearing before the Small Business Committee on a 

number of occasions, most recently at our September 7th full committee hearing last year. GAO has issued several reports on the 

HUBZone Program. We welcome Mr. Shear back today to discuss 

the themes GAO has identified in its body of work. 

Our second witness today is Mr. Hannibal ‘‘Mike’’ Ware. Mr. 

Ware serves as an acting inspector general for the U.S. Small Business Administration Office of the Inspector General. The OIG is responsible for independent oversight of SBA’s programs and operations. Mr. Ware has served as the SBA Director Deputy Inspector 

General since last April. Prior to joining SBA OIG, Mr. Ware 

served for 26 years for the Department of Interior OIG, most recently as the Deputy Assistant Inspector General For Management. 

Similar to GAO, the SBA OIG has also conducted several reviews 

of the HUBZone Program. We look forward to hearing Mr. Ware’s 

testimony on that body of work. 

Our third witness is Ms. Shirley Bailey. Ms. Bailey is testifying 

today in her capacity as board chair of the HUBZone Contractors 

National Council. The HUBZone Council is a nonprofit trade association providing information and support for HUBZone-certified 

and other small businesses, prime contractors, professionals, agencies, and organizations interested in the HUBZone Program. Ms. 

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4 

Bailey has been deeply involved in the HUBZone Program for 

many years, both in her service as HUBZone Council board member, and in her personal experience as a small business owner. Ms. 

Bailey is the co-owner, Executive Vice President, and Chief Operating Officer of GCC Technologies, LLC, a successful HUBZone-certified small business located in Garrett County, Maryland. We are 

pleased to welcome Ms. Bailey before the committee today. 

I would like to now yield to the ranking member to introduce our 

fourth witness. 

Mrs. MURPHY. Thank you, Chairman Knight. It is my pleasure 

to introduce Dr. Mansooreh Mollaghasemi. She is the founder of 

Atria Technologies, LLC, a small business located in my district in 

Orlando and one of 17 firms in Central Florida that are HUBZone 

certified. Atria Technologies provides professional services in engineering, program management, and technology and system integration to government agencies and prime contractors. She is also the 

founder and CEO of Productivity Apex, an engineering company 

that focuses on using technology to improve the productivity of 

public and private organizations. Additionally she is an Associate 

Professor in the College of Engineering at the University of Central 

Florida where she has been teaching and conducting research for 

more than 25 years. 

And, Chairman Knight, if you will allow me just a moment of 

personal privilege, I should note that Orlando has just been recognized by the American City Business Journal as the twelfth best 

metro area in the country for small business vitality, and I know 

entrepreneurs like Dr. Mollaghasemi helped Orlando achieve that 

recognition. 

Thank you for joining us today, and we look forward to hearing 

your testimony. 

Chairman KNIGHT. Thank you, Ms. Murphy. 

Okay. If committee members have an opening statement prepared, I ask that they be submitted for the record. 

I would like to take a moment to explain how the lights work. 

You will each have 5 minutes. It will go yellow, and then it will 

go red. If it goes red, I will give you a little time, but just kind of 

be aware that it is going red, and we will get through this. 

Five minutes is a pretty good time, and we will start off with Mr. 

Shear, and the floor is yours, sir. 

STATEMENTS OF WILLIAM B. SHEAR, DIRECTOR, FINANCIAL 

MARKETS AND COMMUNITY INVESTMENT, UNITED STATES 

GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, 

D.C.; HANNIBAL ‘‘MIKE’’ WARE, ACTING INSPECTOR GENERAL, UNITED STATES SMALL BUSINESS ADMINISTRATION, 

WASHINGTON, D.C.; SHIRLEY BAILEY, CO-OWNER-EXECUTIVE 

VICE PRESIDENT AND CHIEF OPERATING OFFICER GCC 

TECHNOLOGIES, LLC, OAKLAND MD, TESTIFYING ON BEHALF OF THE HUBZONE CONTRACTORS NATIONAL COUNCIL; AND MANSOOREH MOLLAGHESAMI, PH.D., PRESIDENT & 

CEO, ATRIA TECHNOLOGIES LLC, ORLANDO, FL 

STATEMENT OF WILLIAM B. SHEAR 

Mr. SHEAR. Thank you. 

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5 

Chairman Knight, Ranking Member Murphy, and members of 

the committee, I am pleased to be here today to discuss our work 

on the SBA’s Historically Underutilized Business Zone Program. 

Congress established the HUBZone Program to stimulate economic development in economically distressed communities. The 

program provides Federal contracting preferences to small businesses located in HUBZone-designated areas that also employ residents of the areas. 

In this statement I will discuss the evolution of the HUBZone 

Program based on our body of work issued between June 2008 and 

September 2016. In addition, we met with SBA officials one week 

ago to discuss the status of open recommendations. Among other 

things, I will discuss areas of weaknesses that we have previously 

identified in performance audits and fraud investigations, related 

recommendations, and SBA’s actions to address them. 

While weaknesses remain, SBA has taken some steps to enhance 

program processes to varying extents. I will refer to the following 

examples. First, the certification process. In response to a recommendation in our June 2008 report based on the limited 

verification of the information firms reported, since 2009 SBA has 

required firms to provide supporting documentation for applications. 

Second, susceptibility to fraud and abuse. In response to recommendations made in a series of investigations in 2008, 2009, and 

2010, SBA officials told us the agency began conducting site visits 

to 10 percent of certified firms. 

Third, recertification process. In 2015, we found that SBA had 

not required firms seeking recertification to submit any information to verify continued eligibility and instead simply relied on 

their attestations of continued eligibility. As of February 2017, SBA 

has not yet implemented our recommendation to reassess its recertification process and add additional controls. SBA officials told us 

that the agency continues to develop a technology solution to help 

address our recommendation. 

Fourth, communications with firms about designations. In 2015, 

we found that SBA’s communications to firms about programmatic 

changes, including redesignation, generally were not specific to affected firms, and thus some firms might not have been informed 

they would lose eligibility. SBA revised its letters to newly certified 

firms, and as of February 2017, SBA was implementing additional 

steps to ensure that all currently certified firms would be notified 

of changes that could affect their program eligibility. For this recommendation as well, SBA officials told us that the agency continued to develop a technology solution to help address our recommendation. We will continue to monitor SBA’s implementation 

of this activity. 

Finally, in our 2008 and 2015 reports, we presented statistics on 

economic conditions in HUBZone qualified and redesignated 

HUBZone Census tracts, and in nonmetropolitan areas. And in this 

statement we have updated statistics on economic conditions. We 

continue to find that economic distress has been more severe in 

designated HUBZone areas than in redesignated areas. 

Chairman Knight and Ranking Member Murphy, this concludes 

my prepared statement. I would be happy to answer any questions. 

SBREP-219A with DISTILLER

6 

Chairman KNIGHT. Thank you very much, Mr. Shear. We will 

go on to Mr. Ware. 

STATEMENT OF HANNIBAL ‘‘MIKE’’ WARE 

Mr. WARE. Chairman Knight, Ranking Member Murphy, and 

distinguished members of the subcommittee, thank you for the opportunity to be here today and for your continued support of the 

Office of Inspector General. 

As Acting Inspector General, I am proud to represent the dedicated men and women of my office. As an independent office, OIG 

conducts and supervises reviews and investigations relating to SBA 

programs and supporting operations. Today I am happy to discuss 

the work we have done to combat fraud, waste, and abuse in SBA’s 

HUBZone Program. 

Before I discuss our oversight of the HUBZone Program, I want 

to provide the subcommittee with a bit of context to illustrate how 

the risks within the HUBZone Program factor into our top management challenges. Our independent reviews, along with an ongoing 

dialogue with SBA program officials and external oversight entities 

such as GAO, guide the identification of these challenges facing 

SBA. Pertinent to today’s hearing, we have identified weaknesses 

in small business contracting programs and inaccurate procurement data as a top management challenge. 

Our work in overseeing the HUBZone Program continues to substantiate this challenge. We issued two reports in recent years specific to the HUBZone Program, one in November 2013 and one in 

September of 2014. Those scopes and methodologies differed. In 

both reviews, our findings called into question the accuracy of 

Goaling reporting as it pertains to the governmentwide Federal 

contract and Goaling results. We also found SBA had certified 

firms that did not meet all of the eligibility criteria, and ineligible 

firms had received contract awards. 

For the HUBZone Program, these findings indicate there may be 

distortions in the governmentwide Goaling results, and the intended economic benefits of the program are not realized when ineligible businesses receive HUBZone preferential contract awards. 

SBA has taken corrective action to close the five recommendations 

that were associated with those reports. 

In terms of substantiating the management challenge of weaknesses in Small Business contracting programs, we also are aware 

of work published by GAO which we factor into our oversight planning purposes to ensure we are not duplicating efforts. We intend 

to initiate a new review in the HUBZone Program in 2018. 

On a more granular level, our office continues to receive complaints on the hotline involving allegations of wrongdoing in the 

HUBZone Program. In fiscal year 2016, we received over a thousand complaints, with 18 being pertinent to the HUBZone Program. These allegations and other leads developed directly by our 

investigations division are thoroughly reviewed and processed for 

action by appropriate offices within and external to OIG, which can 

include criminal investigation. 

Since fiscal year 2014, our office has opened 13 investigations involving the HUBZone Program, resulting in 13 indictments or inSBREP-219A with DISTILLER

7 

formations, 12 convictions or guilty pleas, about $12 million in dollar accomplishments, and $35 million of cost avoidances. 

In the course of our mission, we also promote suspensions, 

debarments, and similar administrative enforcement actions. Last 

year, for example, we sent 75 suspension and debarment referrals 

to the SBA. Seven involved the HUBZone Program. The year before 

that we sent six that involved the HUBZone Program. And in 2014, 

we referred 50 matters with two involved in the HUBZone Program. 

While the OIG is committed to rooting out the fraud, waste, and 

abuse, it cannot be overstressed that SBA’s role in implementing 

proper controls and enforcing regulations on the front end is key 

to the viability of not only the HUBZone Program, but also of its 

Federal contracting programs. The regulatory oversight is especially important given SBA’s attempting to tackle the competing interests of expanding the number of firms certified for HUBZone 

Program participation. Due diligence to ensure only eligible participants are certified and recertified is vital, as is the need for continued vigilance through on-site inspections. 

We will continue to focus on this important Federal contracting 

program as well as the most critical risks facing the SBA. 

Thank you for the opportunity to speak to you today. I look forward to your questions. 

Chairman KNIGHT. Thank you, Mr. Ware. And we will go on to 

Ms. Bailey. 

STATEMENT OF SHIRLEY BAILEY 

Ms. BAILEY. Good morning, Chairman Knight, Ranking Member 

Murphy, and members of the subcommittee. 

I want to thank you for the opportunity to testify on behalf of 

the HUBZone Contractors National Council. 

My name is Shirley Bailey, President and Board Chair of the 

HUBZone Council, and co-owner of GCC technologies, LLC, a certified HUBZone company located in Garrett County, Maryland. 

The Council strives to contribute to the economic development of 

disadvantaged communities by helping HUBZone certified firms 

maximize their success in earning Federal contracts. The underlying principal behind the HUBZone program, which was established 19 years ago, remains relevant today: to decrease unemployment and revitalize low-income and economically distressed communities by encouraging businesses to located in these HUBZone 

areas. 

Congress in its creation of the program wrote: Creating new jobs 

in economically distressed areas has been the greatest challenge for 

many of our Nation’s governors, mayors, and community leaders. 

The trend is for businesses to locate in areas where there are customers and a skilled workforce. Asking a business to locate in a 

distressed area often seems counter to its potential to be successful. 

But without businesses in these communities, we don’t create jobs, 

and without sources of new jobs, we are unlikely to have a successful revitalization effort. 

The question before this subcommittee is how this program can 

live up to its potential, and the numbers suggest that this program 

has room for growth. As of February 2017, there were only 6,026 

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certified firms, which represents a loss of over a third of the 

HUBZone firms since the 2010 Census. Yet these businesses have 

had substantial impact on their communities. An average 

HUBZone company is awarded over a million dollars in Federal 

contracts, a critical revenue threshold in business sustainability. 

Federal contracts awarded to HUBZone companies directly support 

more than 40,000 jobs every year, of which a minimum of 35 percent of these jobs are HUBZone employees. 

Our written statement goes into a full history of the program, 

but I would like to use my time today to address the changes we 

believe would increase participation in the program and ultimately 

help the communities that would benefit. There are two themes 

that should guide changes to the program, business certainty and 

program modernization. 

With respect to business certainty, we make the following recommendations. The first one is to increase or consider the increase 

in the redesignation period from 3 to 7 years. To determine program eligibility, SBA uses data from the decennial Census and the 

American Community Survey. While Census data is updated every 

10 years, ACS data is updated every 5 years. For certain areas, 

this means minor changes in economic data can lead to a community’s eligibility to change annually as they go through those evaluations. 

When a track or county ceases to meet the qualifications for 

HUBZone status due to changes in income, unemployment, or poverty data, it becomes a redesignated area. As a redesignated area, 

it qualifies as a HUBZone designated area for an additional period 

of 3 years. To create business certainty, we recommend increasing 

the current 3-year redesignation period to 7, which will allow firms 

to make more substantial, long-term investments without the fear 

of losing their status before the business has had an opportunity 

to succeed or mitigate potential financial impacts resulting from 

the loss of their HUBZone status. 

Two, consider supporting the capital investment of a company’s 

principal office. Many firms make significant capital investments to 

locate their principal office in a HUBZone, such as signing longterm leases or buying and renovating buildings. In order to 

incentivize the company to stay in the distressed area even if the 

area loses its HUBZone designation, we recommend the principal 

office requirement remain fulfilled regardless of redesignation until 

the firm relocates or no longer meets other requirements of the program, such as the employee residency requirement or Small Business size standard. This will encourage long-term investment by 

providing business with certainty. 

Three, simplify employee residency requirements for the smallest 

businesses. By changing the current residency requirement from a 

35 percent threshold to 33, 1 in 3 employees would be required to 

reside in a HUBZone. In addition to simplifying the calculation for 

employers, this also helps small firms ensure that they meet the 

requirements after the unforeseen departure of one employee. 

With respect to program modernization, we recommend the following: increased participation in the rural communities. Fewer 

than expected nonmetropolitan counties qualify for the HUBZone 

Program due to having more burdensome requirements for median 

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9 

income and unemployment than metropolitan areas. While rural 

areas tend to have lower median income and higher unemployment, nonmetropolitan counties are not homogenous. Certain county areas may be better off due to the presence of a single employer, 

such as a hospital or college—this is the case that we have in Garrett County, Maryland—and cause the county to be ineligible. We 

recommend the nonmetropolitan county qualification levels be reexamined to account for the diversity in these areas. 

In closing, let me be clear that the Council is advocating for 

strengthening and modernizing the program. However, it should 

not come at the expense of effective compliance efforts by the SBA. 

Fraud penalizes those companies that have gone through the proper procedures of certification and met the requirements. In order 

to achieve the desired rulings of an effective program, Congress 

should provide the funding necessary to allow for expeditious processing of applications and the required steps recommended by the 

GAO. 

It is disingenuous to fault SBA for failing to administer the program without appropriating funds to adequately meet the directives. By working together, distressed communities can attract 

businesses which will create jobs and investment. To continue on 

the current path will result in underutilization of the program. Our 

goal should be to encourage businesses to locate and create jobs in 

these communities, and we stand ready to help. 

And thank you again for your time and consideration. 

Chairman KNIGHT. Thank you, Ms. Bailey. We are going to put 

a bookmark right here, Doctor. We have votes. Votes are called. We 

have about 7 and a half minutes left to vote, so I want to make 

sure that all the members have a chance to get down. 

So we will take a recess right now, and we will reconvene with 

Dr. Mollaghasemi when we return. 

[Recess.] 

Chairman KNIGHT. We are back in, and I appreciate you all 

staying around. 

We did have the chairman of the full committee who was here 

earlier, and I appreciate Chairman Chabot being here. He has been 

an exceptional chairman and we appreciate when he can come to 

our subcommittee hearing. 

So when we left off, we had Ms. Bailey. I appreciate your testimony. And now we are going to go to Dr. Mollaghasemi for 5 minutes. 

STATEMENT OF MANSOOREH MOLLAGHASEMI, PH.D. 

Ms. MOLLAGHASEMI. Good morning. Chairman Knight, Ranking Member Murphy, and members of the subcommittee, thank you 

for the opportunity to testify at this hearing. 

I am honored to share my experience as an entrepreneur and 

highlight the critical role of the program such as HUBZone in the 

growth of our economy. My name is Mansooreh Mollaghasemi, and 

I am the founder and President of Atria Technologies, an engineering company based in Orlando, Florida. 

Please allow me to first provide some context on the role of small 

business in fostering innovation in the United States. All of today’s 

household names like Google, Amazon, Apple, Facebook, and many 

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more were all small businesses, in the early years, with an incredible vision and an unmatched team, and they did not spring forward from within large organizations. But how can we infuse this 

innovation from small business into our Federal Government? 

These SBA programs can provide a mechanism for entry, and 

without them, frankly these barriers are often insurmountable. To 

give you a firsthand account, please allow me to share my story. 

Right after I finished my Ph.D. in industrial engineering, I became 

an Assistant Professor in the Department of Industrial Engineering 

at the University of Central Florida. Don’t get me wrong. I love 

teaching. I love doing research, managing my grants, and graduating graduate students and mentoring them. But there was always something missing. I wanted to solve real-world problems and 

apply my research to more impactful real world problems. 

So years later I finally took the leap and started a business focused on using technology to improve the productivity and efficiency of private and public organizations. I remember how naive 

I was, thinking if I could offer a solution to a government organization, of course they are going to use me. So I started down that 

path, but the meetings went generally like this. I would go; I would 

listen to their problem; I would talk to them about our core competencies and offer a solution; We would brainstorm, and then the 

conversation would go something like this: We like what you do. 

We think it would be useful to our organization, but we have no 

mechanism to come to you. First time I heard that, mechanism, 

what is a mechanism? 

So then I started researching. My research uncovered multiple 

things. I learned about the 8a program, more so than the 

HUBZone, but I knew that it existed. And I was already in a lease, 

that was not in a HUBZone, so I went down the path of 8a certification. Needless to say the process and its requirements were 

daunting, and I was advised to hire a firm to help me. So I paid, 

years ago, $4,000 in consulting fees and a lot of hours of my own 

time, and luckily because of paying attention to details, I got certified. And another thing I should mention is that I had no visibility into the application process. I didn’t even know whether it 

was moving from one step to another or whether I would be ultimately certified or not. 

While I was able to in the meantime, while I was going through 

that, acquire and retain high-profile commercial clients and competitive government contracts, the 8a program really was the key 

that opened a lot of opportunities for me. I should mention that 

through one of those 8a contracts with NASA, I developed, with my 

team, the first ever supply chain model of earth to Mars, arguably 

the longest supply chain known to mankind. In another contract, 

we built a highly sophisticated optimization tool to help USDOT to 

move freight more efficiently that with internal R&D I was able to 

develop a commercial tool out of it. 

Fast forward to 10 years later when I founded Atria Technologies. I was surprised to experience the same lack of visibility 

and long lead time in the application process, which was over 7 

months. So there are certainly opportunities for improvement in 

the application and the certification process. 

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But let me also share with you the positives that I have observed 

about the HUBZone Program. Aside from providing the small business with much needed past performance and experience to compete for larger opportunities, I am not aware of any other program 

with such significant social impact. This program provides, as you 

know, distressed areas with sustainable and meaningful jobs, leading to economic development of these communities and reduction of 

unemployment, and as Ms. Bailey mentioned, reduced homelessness. 

Personally, while I have always strived to provide mentorship to 

various groups, especially women, prior to owning a HUBZone company, it never dawned on me to go specifically seek out people that 

live in specific areas. This program forces you to do that and do 

something good and have a social impact in the process. 

So in summary I would like to leave you with three thoughts: 

small business in America is an engine of innovation that is unmatched in any other economy in the world. Second, programs like 

HUBZone are the essential keys to bringing the benefit of this innovation to the government of the American people through Federal contract awards and spurring economic development in distressed areas. And, third, opportunities exist to streamline the application and oversight process for these programs to enable their 

more efficient and effective use. 

It is truly an exciting time to be the leader of a small business. 

We are the envy the world and rightly so. The Federal programs 

we are discussing today are vital to enabling the bright light of 

small business innovation to shine on the services provided by our 

Federal agencies. 

Thank you for your time today. 

Chairman KNIGHT. Thank you very much. 

We will now go into questions. I have a few of my own. We will 

take about 5 minutes each, and I am sure the ranking member has 

questions. 

Quickly, Mr. Shear, we have got, according to GAO, the SBA has 

not implemented the procedure measures, the effectiveness of the 

HUBZone Program. What do you think are the most important 

metrics that SBA needs to start collecting and tracking? And before 

you answer that, I am going to take a couple of the comments that 

you made that it looks like the GAO has made recommendations. 

And one of the questions outside of this that I kind of jotted down 

was how do you lose eligibility, and if you do lose eligibility, what 

happens? Is it pulled from you, or is there some sort of enforcement 

mechanism? How do we go about that? I know there is three or 

four questions there. 

Mr. SHEAR. I think the answer to your question on eligibility is 

what happens to businesses subject to decertification. There is a 

process where businesses can become decertified from the program, 

even though we have said—and sometimes this gets kind of confusing, and I know I have asked a lot of questions of it as we have 

done our work—recertification is almost like a self-certification. So 

we say, well, why would there be a backlog and things like that? 

Well, the question becomes if a firm becomes identified to be decertified, there is a process for that, but there is a decertification process, and there are firms that are decertified. 

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Some of the companies are being decertified that are asked to 

self-certify and provide documentation, and they don’t do that, so 

some will withdraw on their own. But there is a process where 

there are businesses that lose their certification, and that might be 

a question for the HUBZone Council as well. 

Going back to evaluation, I will just say generally SBA’s track 

record of evaluating its programs, including pilot programs— 

HUBZone isn’t one—but evaluating programs and using evaluations in their strategic planning and to inform how programs could 

be improved, is something that SBA comes up short on. So in terms 

of what we are looking for, and I know we had extensive interactions, SBA hired an economist after our 2008 report to work on 

an evaluation—— 

Chairman KNIGHT. And I will stop you right there because I 

have got Mr. Ware here shaking his head a little bit, and I want 

to kind of delve into this, because I think part of what we are going 

to be doing, in this subcommittee, is making sure that if a program 

is in place, we want it to be in place to help and to enhance opportunities. 

But if there is a problem and the problem is not being looked at 

or not being solved, then that might be someplace that we want to 

take a harder look at and structure some sort of work that way. 

Mr. SHEAR. And so let me finally kind of get to the issue on 

evaluation. Evaluations can start out as simple. It is looking in 

specific districts. I mean, sometimes it can just start with let’s look 

at the HUBZone map. I have a rough HUBZone map here for your 

district. 

Chairman KNIGHT. I have seen it. 

Mr. SHEAR. And for Orlando. And you just see the way they are 

configured. And the question is, you look at the map and you just 

even start to ask questions about how does this program play out? 

It can involve the role of district offices. 

But when we talked about evaluation here, we were talking 

about what is it about the HUBZone Program; how can you measure its impact on local economies? So part of it is collecting metrics 

other than how many firms are you certifying? It is not a matter 

of counting up jobs that those firms employ. It is a matter of trying 

to come up with some kind of benchmarks, and let’s try to look at 

where you have HUBZone activity. 

What do you see what is happening to those local economies in 

terms of what it is—it can be jobs. It can be looking at just improvements in economic conditions, but there are a number of 

metrics you could use, but the idea is whether you start at a case 

study level or you are using systematic, economic modeling. There 

are ways to assess programs like this, and this is what we were 

sharing with SBA at that time—— 

Chairman KNIGHT. Okay. And I am going to go to Mr. Ware 

here real quick. We talk about this at the State level, too, and I 

am sure that Florida and California and all of the other States 

have their own programs that try and enhance and try to give businesses opportunities inside a zone, whether it be an enterprise zone 

or a free-trade zone or something like that. 

Mr. Ware, let me kind of get to the crux of this. Is there something more that the SBA should be doing? Because I am seeing 

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these numbers from 2006, from 2007, all the way up to 2015 and 

2016, of numbers that are not alarming, but it doesn’t seem like 

they are correcting. 

Mr. WARE. Thank you. And I think that is a very good question 

and actually one being relatively new to SBA that I asked coming 

through the door as I started to review more of our work. And that 

question was, are we really measuring the right things to make 

sure that the programs are really having the type of economic impact in the communities that they are supposed to be having? And 

I am not sure, based on the body of work that I have seen, that 

that is how we are working towards answering—those are the answers that we are measuring and trying to come to. But—— 

Chairman KNIGHT. So, those are always going to be the questions though, and I know I am taking a little extra time here, but 

the metrics of how you measure a program are always the key to 

the program. If you can’t measure if it is doing something, or if it 

is providing what you initially constructed, then we don’t know, 

and that is a bad thing. 

Mr. WARE. Yeah. But the agency has done quite a bit to 

strengthen the program and to do things, and the findings of both 

my office and Mr. Shear’s is it generally wraps around those types 

of, the same type of things all the time as you saw by just going 

forward and reading the reports. It is basically with certification or 

recertification or with how we measure and report on the numbers 

and everything else. Although they have made a lot of strides, a 

lot more work still needs to be done. 

Chairman KNIGHT. Very good. I am going to go to the ranking 

member for her questions. 

Mrs. MURPHY. Thank you for all of your testimony. 

My first question is for Dr. Mollaghasemi. You know, a major 

purpose of this hearing is for us to get a better understanding of 

how this program works for small businesses and within the community. Could you elaborate a little bit on what your experience 

with the HUBZone certification process looked like? 

Ms. MOLLAGHASEMI. Sure. So the answer that I will give you, 

I will try not to do it too much, but when you have a data point, 

you tend to go to that, so I am going to compare it to the 8a certification because I have gone through both. 

The application process was not bad, you know, the requirements. It wasn’t as daunting as the 8a certification. I was really 

happy to find it online because when I was doing 8a certification, 

a folder like this had to be mailed, and you always worried will papers get misplaced and so forth. So I liked that part of it, the online format of it. 

The problem came in when, again, you had no visibility into 

where it is? Am I moving in the process? And the help desk was 

extremely cordial every time I asked for status. While they were 

very quick to get back with me, this sort of form email came out 

that within 30 days you are going to be assigned a rep, and then 

within 90 to 160 days you should be certified. So, that is a very 

lengthy process. That is an eternity for a small business. So the 

visibility was not there, and it was a lengthy process. 

And I have had more questions answered today than I have ever 

been able to ask because of all the valuable advice that is here. 

SBREP-219A with DISTILLER

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And there is really no, I haven’t found, other than my local SBDC 

office, that resource is extremely valuable, as you know, in the entrepreneurship sense. I have them on speed dial if I have a question. So that has been my experience. 

But in terms of recruiting, as you know, right by UCF there is 

a HUBZone. I am extremely fortunate, although I am extremely 

small now, I am very fortunate to have one very high-tech woman 

engineer that occupies one of the full-time HUBZone positions. But 

I am able to augment the part-time 40 hour a month from the surrounding University with students, so I can mentor them and give 

them experience. 

Mrs. MURPHY. Just as a follow-up to the recruitment piece, in 

your experiences, do small businesses incur additional costs when 

they are located in and employ workers who reside in economically 

distressed areas? Is it harder for you to find and recruit and train 

workers? 

Ms. MOLLAGHASEMI. In my case no, but I suspect going forward, because I have a high-tech business, I am not going to be 

able to staff up full-time employees. As you know, these are highpaying jobs, and the likelihood of living in a HUBZone area is slim. 

So because of the location that I am, I can hire part-time people, 

but remember that in a high-tech business if they are part-time 

students, for example, what does that do? That just increases your 

rates because they become overhead for the most part. So I don’t 

foresee for a technical engineering, high-tech company that this 

would be fast growing without me finding other types of service 

contracts to be able to do, which I haven’t done yet. 

Mrs. MURPHY. Great. Thank you. 

And then my second question for Mr. Shear, you talked extensively in your testimony about some of the status of how SBA has 

followed through or not on the implementation of the recommendations. Can you talk a little bit more about why you think it is that 

the SBA has been incomplete in their effort to evaluate the program? And also specifically you had mentioned a technology solution that was in process. Can you tell me a little bit more about 

that? 

Mr. SHEAR. Yes. Let me start with the second first on technology. In response to recommendations we made, actually for both 

the 8a program and HUBZone a number of years ago, SBA embarked on a technology solution to help assist with those programs, 

and it was called OneTrack, and it ended in failure. It was never 

implemented. 

And SBA generally, from our management review we did at the 

request of the full committee, we just observed a lot of turnover at 

the CIO level and an agency that is challenged in implementing 

technology. 

So now let me bring that to the HUBZone Program. There is a 

recognition, and rightly so, that SBA is now developing a new technology for the HUBZone Program. So like when we spoke with 

them last August, it seemed to be a very vague idea, but they said, 

well, we will have it up and running in the spring. And we never 

thought that that was possible, and it wasn’t. So speaking with 

them last week, they spoke with much more detail; they have 

SBREP-219A with DISTILLER

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thought a lot more about this technology solution, and they are 

now more realistic about the timelines. 

It should be something that businesses can use, hopefully by the 

end of the fiscal year, and that SBA could use for its own analysis 

of the program by the end of the calendar year. So we just hope 

that by the end of the calendar year they will have something that 

is actually usable. 

So now let’s talk about that technology. The idea is that you 

would have data that would be for each of the HUBZone firms 

where you could do queries on where are they located? Where are 

they generating economic activity? You can use it for data mining 

for looking at places where fraud might be most prevalent. So you 

can use it for a number of things. So they have said, well, they will 

use it for recertification. They will use it to notify firms because it 

is very difficult to do without that. 

So they are proposing a technology solution, and I hope they can 

get it to work because then you can also have queries again for 

firms that end up in redesignated areas. Where are they? I was 

just showing, Dr.—and I am sorry, I can’t pronounce your name, 

a map of Orlando, and you just see the way HUBZones are spread 

out. If you just have, if you can make informed decisions about 

where the activity is occurring and just try to say what is happening in the areas where the activity is occurring compared with 

other similarly situated places. When we spoke to the economist 

that was hired by SBA in 2009 to try to develop an evaluation, we 

shared these ideas without saying how he should do his evaluations. 

But to go back to what Chairman Knight said, we actually had 

a mandate, a number of years ago, to evaluate the Empowerment 

Zone Program. And so we shared with the SBA economist how that 

was done, but it requires data on where activity occurs. So from a 

standpoint of conducting evaluations; making it easier for firms by 

notifying them; and by dealing with the recertification process by 

doing queries where you can try to identify, in a risk-based way, 

where might you have to go do a site visit, or where you might 

have to follow up and get more information from firms from the internal control standpoint—the technology solution coudl be useful. 

And then again, where is the activity going on? What happens 

at this location? Are they decertified firms? Are they firms that are 

in redesignated areas? Are they isolated places, or are they adjacent to areas with depressed economies, just looking at the map 

can be useful. So it is promising if SBA can pull it off, but let me 

just flip to the other side. 

Supposedly the district offices are the boots on the ground, and 

in our work, now in Puerto Rico we are including the district office 

in a very big way, but in the past we didn’t go through what the 

district offices are doing. We went to business groups, and we went 

to chambers of commerce and local economic development entities 

to kind of see from their standpoint what is SBA doing to help encourage this program? 

So when you don’t have technology in place, it becomes more important to really have a presence in a community and have resources committed to that. And so from the lens that we have 

SBREP-219A with DISTILLER

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looked at that, it doesn’t seem like SBA really has a presence in 

those local jurisdictions. 

So there is a number of ways to do some of these things that involve, people, like site visits are very expensive, that involve people 

in the absence of technology, but it is like neither side of that, 

there is not enough of that occurring on either the people or technology side. 

Mrs. MURPHY. Thank you. 

Chairman KNIGHT. Thank you very much. 

I have to go in to get my driver’s license renewed tomorrow and 

change the address, so I know, Doctor, what you are going through 

because I have looked online, and they said I come in, and it will 

take them 90 days to send me my driver’s license. When I have to 

go in, to be there to take care of all this, I don’t know why it would 

take 90 days, but that is the department of redundancy department 

that I am going to. 

So, Ms. Bailey, I have one final question. Are you aware of any 

economically distressed communities that have experienced significant economic improvement due to the HUBZone Program, and 

does the SBA highlight these communities? 

And the reason I ask this, and I will give you a little bit of a follow-up here, is because I think that some of these zones that we 

have talked about before that are trying to help, that are trying to 

give this effort in, and I agree, Mr. Shear, it has got to be easier 

to check and make sure that things are working, and if we are 

going to talk about fraud and abuse and things like that, I always 

say that the business has to be a partner in this, but the HUBZone 

has to be as easy as possible to make sure that the business can 

get through this. 

So if we are going to ask the business to do something, then it 

should be a very easy process, and that is why I bring up the DMV. 

It should be a very easy process for me to go through a very simple 

step. And yet 3 months later is when the step is going to be completed. That doesn’t seem very simple, even though you are asking 

me to come in and take care of this, and that is fine. That is not 

what government should be doing. Government should be the partner, and then if you are doing something wrong, we should be able 

to come back and say you are doing something wrong and we are 

going to ask you to correct it. And if you can’t correct it, then we 

are going to ask you to leave. That is the way, in my opinion, it 

should work. 

Ms. BAILEY. And that is true, and the question was is do we 

know of HUBZones that have actually shown some economic improvement as of this program? And, yes, we have ones that are 

going in and out, but the definition of what is that improvement? 

How much is that improvement? 

The example of Garrett County, Maryland, we moved in to Garrett County, Maryland in 2007, and the way we ended up doing 

that, we were first in Allegany County. Went in, renovated a building. It got redesignated, so we had to look for another area that 

would have the HUBZone Program. So we looked around with Garrett County. 

When we went to Garrett County, we had 14 people. We now 

have over 200 with over about 75 in Garrett County alone. When 

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we looked at that, when we first went in, there was probably only 

two or three of our companies in there that were HUBZones. Now 

we have over 11. Garrett County for the first time since the inception of this program is now redesignated. Do we consider it to be 

a significant improvement? Probably not, but we have gone over 

those thresholds that were considered to be the 80 percent, and we 

are now at 88, which isn’t a whole lot, and then 125 versus the 

140. 

So we saw this improvement. But when we went into that area, 

we were about at 180, and probably income was probably about 60, 

65 or something like that, so there has been significant improvement. But there are several organizations that did come into there, 

made a significant impact. These organizations are very community 

oriented. They focus, they have active community involvement programs, those types of things. They have connections with the commissioners, the economic development groups, the colleges. And we 

find that these areas that are very successful have those types of 

toolkits in their pocket, that they are a working unity that are all 

going through and trying to propel the HUBZone Program. 

Garrett County puts out as the HUBZone Program as one of 

their major economic development tools. So looking at this, there 

are certain areas, we know that there are areas like in Page County, Virginia, those areas that are outside about the 200-mile radius 

of the D.C. they have to have a different type of mechanism to be 

able to pull all of these units together and be able to get these dollars into those areas. And that is what is key here. 

The key is to get the dollars and the contracts being performed 

in these areas so you get the maximum multiplier effect. It doesn’t 

do any good to issue a contract to a contractor who has an principal 

office in these areas and all the work being done in Washington, 

D.C. 

So the more that we can concentrate on being able to do that, 

you are going to see a greater impact in these areas. And that is 

a perfect example. And I will go back, you know, using our company as an example. When we went out to Garrett County, one of 

our first contracts was to help the SBA in 2008 with doing the 

HUBZone Program. And we talked to SBA. Originally our contract 

was to be performed in D.C. And after months and months of conversation, we convinced them, let us do this in Garrett County. 

And we ultimately were able to do that, expand that contract, and 

be able to support them from Garrett County, Maryland. 

We were subsequently able to do that with the VA verification 

support as well, which is still being done in Garrett County, Maryland. So it shows that this type of work can be done outside of the 

Washington, D.C. area, and you are going to get the biggest impact 

when you can do that. So the greatest thing that we can do is try 

to figure a way to get these contracts out to these areas. And the 

further out we go into the Midwest, into those areas that don’t 

have these straight government installations right in their back 

door, those are the ones we can have the biggest impact on as well. 

Chairman KNIGHT. Well, thank you very much. We always appreciate entrepreneurs and business owners that come in and have 

provided jobs and opportunities for people. That will always about 

SBREP-219A with DISTILLER

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our mantra around here, that we do believe in opportunities and 

the ability to create. So, Ms. Murphy? Do you have any more? 

Mrs. MURPHY. Just one final question. So in 2008 and 2009, we 

have discussed how the GAO investigators have identified 29 firms 

that were participating in the SBA HUBZone programs that were 

not in compliance with the program requirements. And then in 

2013, SBA OIG found three firms that the SBA certified that were 

not in compliance with the eligibility criteria. And the example we 

talked about was the one firm who had the HUBZone in Washington, D.C., whose primary location was in a HUBZone in Washington, D.C., but its actual location was in an affluent suburb. 

Mr. Ware, from your perspective, what adverse outcomes can 

occur when participating businesses are not in compliance, and 

what proactive strategies can SBA use to mitigate any negative impact. 

Mr. WARE. Well on the first part—could you repeat that first 

question? The first question was—maybe I should have just taken 

the second one, but go ahead. 

Mrs. MURPHY. Just from your perspective, what adverse outcomes can occur when participating businesses are not in compliance? And then what proactive strategies can the SBA use to mitigate the negative impact? 

Mr. WARE. Thank you very much. 

The adverse outcomes, when firms are in that should not be in, 

that means that a firm that could have gotten that contract did 

not. So definitely that is, in my opinion, the most major part, and 

then on top of it, all the Goaling numbers that we are so interested 

in for good reason, they are thrown off as well. So those are the 

two major reasons for it. 

And in terms of proactive strategy, we have long been talking 

about the need to definitely leverage more of information technology resources, and piggybacking off of what Mr. Shear said, I 

mean, we are saying the same things. 

In terms of some of their legacy systems, that system they have 

currently is about 17 years old. It is archaic. It is not working. 

Things are still stovepiped, so it causes a lot of delay and everything else. But makes the need for more boots on the ground in 

terms of doing a stronger review and incorporating the work of contracting officers as well because they also play a role in this in 

terms of raising red flags when they see it because they are the 

ones getting it first. And if they were kind of brought into the 

equation to help out in that regard, those are some of the things 

that could definitely strengthen it and be a proactive stance, a 

proactive approach instead of everything being so reactionary with 

us coming in after the fact with the finding. 

Mrs. MURPHY. Thank you. 

Chairman KNIGHT. I would like to thank all of our witnesses 

for coming in, and this is our first committee. 

I can tell you we will have a fairly bold agenda talking about the 

issues that come in front of us. I think that, I am not speaking for 

the rest of the committee, but we do believe in opportunities. I am 

sure I am speaking for everyone when I say we do believe in opportunities, and we do believe that businesses should thrive. If there 

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ship with government, then we want that partnership to be a lot 

clearer and a lot easier for both parties. 

SBA’s HUBZone Program was created to combat poverty, increase economic independence and provide stability. As we have 

learned today, the HUBZone Program has faced some challenges in 

the past. SBA has made some improvements. However, we need to 

continue working to ensure the program operates at the highest 

level to help both our small businesses and our communities most 

in need. 

I encourage SBA to continue on this path forward collaborating 

with GAO and OIG to resolve any outstanding recommendations, 

and I believe we will be following up and seeing, because I would 

hate to have this panel back next year and be talking about the 

exact same things. That is not our goal. Our goal is always to be 

better and to correct deficiencies. 

So I look forward to working with each and every one of you to 

make the HUBZone Program one that works for our small businesses and our communities. 

I ask unanimous consent that members have 5 legislative days 

to submit statements and supporting materials for the record. 

Without objection, so ordered. This hearing is adjourned. 

[Whereupon, at 11:53 a.m., the subcommittee was adjourned.] 

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1 USA Spending. https://www.usaspending.gov/transparency/Pages/OverviewOfAwards.aspx. 

Publication date unavailable. Updated 2017. Accessed February 21, 2017. 

Chairman Knight, Ranking Member Murphy and members of the 

Committee on Small Business Subcommittee on Contracting and 

Workforce, thank you for allowing me the opportunity to testify at 

the hearing entitled ‘‘Learning from History: Ideas to Strengthen 

and Modernize the HUBZone Program.’’ 

My name is Dr. Mansooreh Mollaghasemi and I am the Founder 

& President of Atria Technologies which provides professional services in engineering, program management, and technology & system integration. I’m pleased to share my experiences as an entrepreneur and small business owner in the United States, and highlight the critical role of programs such as the HUBZone program 

in the growth of my business—and many others like mine. 

But first I would like to provide some context on the role that 

small businesses play in the unique innovation of American business. Google, Amazon, and Apple are all household names today 

with a market cap of $1.7 Trillion. The common theme among all 

of them is that growth was achieved primarily in the business-tobusiness or business-to-consumer space in the US first, with dramatic expansion to worldwide presence shortly thereafter. 

Note that these companies did not spring forward from within 

large corporations. They were all small businesses in their early 

years, staffed with employees with an unmatched fire for the 

achievement of an incredible vision. And succeed they did! This is 

American business at its core. The bottom line is that there is no 

other country in the world that has shown the same ability to innovate. 

But what is missing from this picture? What is missing, is a commensurate infusion of this unparalleled innovation from small business into the requirements of our Federal government. The 

HUBZone program provides one mechanism to transfer this innovation from a small business to solve the problems faced by our 

Federal government. 

Last year, Federal government spending reached $1.1 trillion dollars in contacts and grants 1 with approximately 75% of that funding awarded to businesses. The lion’s share of that funding is 

awarded to large businesses and one key reason lies in the risk 

aversion of the government. Agencies generally look for three 

things in selecting contractors: past performance, ‘‘back reach’’, and 

financial security/depth. To meet all three criteria, large business 

is almost always preferred, with ‘‘second place’’ going to those medium and small business that have managed to find a way to gain 

experience and past performance with federal contracting. 

So the ‘‘catch 22’’ here is that the experience with federal contracts that small businesses need to demonstrate successful past 

performance, depth of staff with federal program track records, and 

the financial depth from contract wins—that ver experience, or 

rather the lack of it, is the major roadblock to their ability to contribute their innovative capabilities to government efforts. 

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Finding that mechanism to enable them to gain experience with 

federal contracting is precisely the value that these small business 

vehicles like the HUBZone program provide to those small businesses who seek to provide their goods and services to the Federal 

government. Without these programs, the barriers to entry can be 

insurmountable. 

Why is this? Please allow me to use my own story as an example.... 

After receiving a Ph.D. in Industrial Engineering, I began my career as an assistant professor at the University of Central Florida. 

While I greatly enjoyed teaching graduate and undergraduate 

classes, conducting research, and mentoring and directing graduate 

students, I often longed for applying my research to more impactful 

real world problems. To that end, I finally took the leap in 2001 

and started a business to focus on using technology to improve the 

productivity and efficiency of private and public organizations. I am 

extremely fortunate to have agencies like NASA and US Department of Transportations (USDOT) as well as Lockheed Martin, Disney, and Universal Studios among my clients. But the road to success has not been easy. 

There are numerous challenges facing an entrepreneur, the least 

of which are the long hours, recruiting and retaining quality employees, and the constant pressure to make payroll. 

I knew that we had services that would be of value to Federal 

government agencies. And I remember how naive I was at the 

start, thinking that if I could offer a solution to a government agency’s problem, they would, of course, want to procure my small business services! But the meetings generally went along these lines: 

I would listen to their particular problem, present what our core 

competencies were and offer a solution to their problem, and have 

a brainstorming discussion. Then would come the response... ‘‘we 

like what you do... we think it would be useful to our organization... but there is no mechanism for us to procure your services.’’ 

So I began researching the various mechanisms. I learned about 

the HUBZone program and the 8a certification and the benefits of 

each problem as well as the difficulty attaining the certifications. 

At the time, my office was not in a HUBZone location and because 

I was already committed to a lease, I decided to pursue the 8a certification. The process and its requirements seemed daunting; so I 

hired an experienced firm and paid over $4,000 in early 2003 to 

help me with the application preparation. The process was every 

bit as time consuming as I had been warned about but luckily paying attention to details and providing the requisite documentation 

helped me to get 8a certified one year later. It is worth noting that 

I had no visibility into the application evaluation process and no 

idea if my application was even moving through the process, and 

whether it would ultimately be accepted or denied. 

While I was able to acquire and retain many high profile commercial clients and won some competitive grants, the 8a program 

was the key that opened the door to major opportunities for us to 

serve the needs of our Federal government. 

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• Through one of our 8a contracts with NASA, my company 

developed and analyzed the first every supply chain model of 

Earth to Mars, arguably the longest supply chain known to 

mankind. 

• In another contract, we built a highly sophisticated optimization tools to help USDO to pilot solutions for moving freight 

more efficiently. With additional infusion of internal R&D 

funds, this tool served as the genesis for the development of a 

commercial tool. 

As we built our past performance and developed intellectual 

property, additional opportunities came about that spurred our 

growth further. 

Years later, when I decided to start Atria Technologies, I was 

surprised to experience the same lack of visibility and long lead 

time in the application process. 

In 2013, I founded Atria Technologies to meet the needs of local 

prime contractors to fulfill HUBZone requirements. I learned that 

many small businesses have difficulty attaining and/or maintaining 

their certification. This may be due to redesignation of HUBZone 

areas, difficulty in meeting the 35% HUBZone employee requirement, or lack of experience in running a business, in general. 

Although I already had an existing business, very few of my 

nearly 30 employees who were engaged in multiyear projects lived 

in a HUBZone. With Atria Technologies, there was an opportunity 

to start with a clean slate, pursue and hire full time employees 

that live a HUBZone, and find and mentor part time HUBZone employees who happen to be students at the university. 

I acquired an office in a HUBZone location, hired my first 

HUBZone employee who was a student at the university and applied for HUBZone certification for Atria Technologies a few 

months later. While I was pleased to find the application process 

fully on line, the certification process was not much different from 

what I had experienced in 2003 while pursuing 8a certification. 

During what turned out to be a full 7-month certification process, 

I made several inquiries into the status of the application. While 

the email correspondence with the HUBZone helpdesk was extremely cordial and I received a prompt response generally within 

a day, the helpdesk team was unable to provide a time frame for 

processing my application. 

For any business in the 21st Century, seven months is a long 

time—as long as the life of many products. Please believe me when 

I say that for a small business, a seven-month wait for paperwork 

to be approved is an enternity. It is worth noting that by the time 

I received certification, I had already spent over $15,000 without 

a single contract. 

While my other business focuses on developing software tools to 

put in the hands of end users, Atria Technologies focuses on professional services to serve government agencies and prime contractors. 

Almost all federal contracts won by large companies include a 

small business contracting plan that includes 1 to 3% HUBZone 

certified small business requirement. This will provide small busiSBREP-219A with DISTILLER

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nesses with the much needed past performance to compete for larger opportunities while contributing to jobs and economic development in distressed areas. 

Today, Atria Technologies is a subcontractor to a large Prime 

contractor on a multi-year Air Force contract in Systems Engineering, has 4 employees with 2 residing in a HUBZone. One of the 

HUBZone employees is a full time engineer and the other is a student who works 40 hours per month. The ability to hire part time 

HUBZone employees on a 40 hour basis is one of the regulations 

that I find beneficial. This not only allows the small business to 

meet the requirement of the program but most importantly provides an opportunity for the part time employees to gain experience, build their resume, and make additional income. 

So what is the takeaway? These SBA programs are critical for 

enabling small businesses to take their first steps into serving the 

needs of our Federal government and as a result contribute to 

growth and economic development. Specifically, the HUBZone program helps the small business program participants earn their 

track records for ‘‘past performance’’ that enable them to stand up 

and compete on their own for larger opportunities while infusing 

further investment and jobs in distressed areas. 

But as beneficial as these programs are, there are ways that they 

can be improved, primarily in the removal of ‘‘red tape’’ and barriers to entry for small business leaders. For example, it would be 

extremely valuable to provide visibility into the application process. 

Existing technology can be effectively used to streamline the approval process, and historical data can be mined to predict the time 

required to process applications based on their complexity. Moreover, once HUBZone certified, small business owners would greatly 

benefit from having a resource that can provide guidance and answer questions about the program. I have been fortunate to find 

such a resource at our local SBDC office whom I have contacted on 

several occasion to clarify rules and seek guidance. 

So, in summary I would like to leave you with three thoughts: 

• Small business in America is an engine of innovation that 

is unmatched in any other economy in the world, 

• Programs like HUBZone are the essential keys to bringing 

the benefits of this innovation to the government of the American people through federal contract awards and spurring economic development in distressed areas, 

• Opportunities exist to streamline the application and oversight process for these programs to enable their more efficient 

and effective use. 

It is truly an exciting time to be the leader of a small business. 

We are the envy of the world, and rightly so. The federal programs 

we are discussing today are vital to enabling the bright light of 

small business innovation to shine on the services provided by our 

government agencies. 

Thank you for your time today. 

Æ 

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