There are four types of HUBZones. Initially, the HUBZone Act of 1997 (which established the HUBZone program) identified qualifying areas as qualified census tracts, which are determined by the area’s poverty rate or household income; qualified nonmetropolitan counties, which are determined by the area’s unemployment rate or median household income; and lands within the external boundaries of an Indian reservation, based on the areas meeting certain criteria. In subsequent years, Congress expanded the criteria for HUBZones to add bases closed under various base closure acts and include counties in difficult development areas outside of the continental United States as part of the qualified nonmetropolitan counties. To be certified to participate in the HUBZone program, a firm must meet the following criteria: when combined with its affiliates, be small by SBA size standards; be at least 51 percent owned and controlled by U.S. citizens; have its principal office—the location where the greatest number of employees perform their work—located in a HUBZone; and have at least 35 percent of its employees reside in a HUBZone. HUBZone designations can change with some frequency. However, SBA’s communications to firms about programmatic changes, including changes to the HUBZone map (area designations), generally have not been targeted or specific to individual firms that would be affected by the changes. SBA updates the HUBZone designations regularly based on whether they meet statutory criteria (such as having certain income levels or poverty or unemployment rates). SBA generally uses data from other federal agencies to determine if areas still qualify for the HUBZone program. SBA reassesses the status of nonmetropolitan counties more frequently than it reassesses the status of census tracts. For example, SBA updates the nonmetropolitan county designations each January to incorporate median household income data generated from ACS and each May to incorporate updated unemployment rates from BLS. In contrast, SBA historically has reassessed the status of qualified census tracts at multiyear intervals, such as every 5 years, using the census tract designations that the Department of Housing and Urban Development (HUD) uses for another program. See appendix II for more information about the specific criteria for each type of HUBZone area. In 2001, Congress extended the eligibility of census tracts and nonmetropolitan counties that lost HUBZone eligibility because of changes in income levels or poverty or unemployment rates. These areas—labeled redesignated areas—remain eligible for 3 years after “the date on which the census tract or nonmetropolitan county ceased to be so qualified.” During the 3-year period, firms in those areas can continue to apply to and participate in the program and receive contracting preferences. In 2004, Congress revised the definition of redesignated areas to allow areas to retain eligibility for 3 years or until the public release of data from the 2010 decennial census, whichever was later. Consequently, all of the areas that were redesignated between 2001 and October 2008 received an extension of their 3-year redesignation period. With the release of 2010 Census data in October 2011, a large number of previously redesignated HUBZone areas that had received the extensions lost their designation, including 333 nonmetropolitan counties. In total, 2,396 of the more than 8,000 HUBZone certified firms at the beginning of fiscal year 2012 were decertified when these changes took effect because their principal office was no longer located in a HUBZone. (We discuss decertification in more detail later in this report.) The redesignations for 3,417 HUBZones will expire in 2015, largely because of the end of the approximately 3,400 census tracts that were redesignated in 2012. Finally, redesignated areas also may requalify for the program during their extended eligibility period. For example, after receiving the most recent unemployment data from BLS, SBA may change a nonmetropolitan county’s designation from redesignated to qualified. Qualified and redesignated areas generally are spread throughout the United States (see fig. 1). The map suggests that more qualified HUBZones are in the West and Southwest, but that is in part reflective of the larger geographic size of the nonmetropolitan counties in those regions. The map also suggests a higher concentration of areas within redesignated HUBZones in the East Coast and Midwest. For information about the characteristics of the HUBZones and differences in economic conditions (for example, as indicated by poverty and unemployment rates) among redesignated, qualified, and nonqualified areas, see appendix II. According to our analysis, 83 percent of certified firms are located in a qualified area (see table 1). Most of the firms (578) that are located in a redesignated HUBZone are located in areas that will have their designations expire in 2015. When the redesignation status of an area expires, HUBZone firms in that area lose their program certification unless they relocate their principal office or, in some cases, their employees move to another HUBZone. Generally, SBA relies on information posted on its website to communicate with interested parties about the HUBZone program. For instance, the HUBZone website includes links to the HUBZone map, frequently asked questions, and guidance to help firms apply for and maintain their certification. Firms can use the map of HUBZone areas to determine if an address or a particular area is designated as a HUBZone. More specifically, the website contains links to underlying data tables for the HUBZone map, and provides a potential applicant or program participant the ability to determine if a specific address is in a qualified HUBZone. Firms also can access a help desk by e-mail to get status information, help in resolving technical difficulties, or individualized assistance; obtain eligibility assistance through a twice-weekly interactive forum; and request a 15-minute appointment with a HUBZone analyst to discuss topics such as HUBZone policies and procedures, initial documents, or HUBZone applications. However, according to SBA officials, firms are primarily responsible for keeping themselves informed about the program so that they can remain eligible. In our June 2008 report, we found that SBA’s HUBZone map contained ineligible areas and had not been updated to include eligible areas. As a result, ineligible small businesses had participated in the program, and eligible businesses had not been able to participate. Consequently, we recommended that SBA take steps to correct and update the map used to identify HUBZone areas and implement procedures to ensure that the map would be updated with the most recently available data on a more frequent basis. In response to our recommendation, SBA modified its contract with its mapping vendor to enable more frequent updating of the HUBZone map (annually). SBA officials stated that the accuracy of the map is checked twice after each upgrade, first by the mapping vendor and second by an SBA employee. SBA’s communications to firms about programmatic changes, including changes to the HUBZone map (area designations), generally have not been targeted or specific to individual firms and may not have reached all affected firms. Since February 2013, SBA has used a broadcast e-mail (which simultaneously sends the same message to multiple recipients) to distribute information about the program, including changes to the HUBZone maps. According to SBA officials, the e-mail list initially included all certified firms, but firms certified since the list was created have not been automatically added to the list. They and other interested parties must sign up (subscribe) to receive the e-mails through SBA’s website, and as a result not all certified firms may have done so. Through fiscal year 2014, SBA sent 13 e-mails through the system, covering topics such as changes made to the maps or the expiration of redesignated nonmetropolitan counties. Of the 13 e-mails, 9 focused on map-related issues. For example, a September 2014 e-mail notified subscribers that redesignations for 102 nonmetropolitan counties would expire on October 1, 2014. SBA also noted that there were 109 firms with principal offices in a county with expiring status. The e-mail included a link to the HUBZone map and a spreadsheet that showed the status of every county in January and May 2014, and encouraged firms to check their area’s status. However, the e-mail did not identify the firms with principal offices in the counties that would lose redesignated status or identify the specific counties. Furthermore, according to SBA officials, SBA began using a revised certification letter in October 2014 that includes links to the program’s website and regulations, but unlike the previous certification letter that SBA sent to firms it does not include information on whether the firm is in a redesignated area or when that status will expire. According to HUBZone program policy, the approval letter should include language notifying the newly qualified firm of the possible expiration of the HUBZone. According to SBA officials, the only time that a firm would be directly notified that it was located in a redesignated area would be when it received a notice of proposed decertification after the status of the area expired. (We discuss the certification process later in the report.) Federal internal control standards require that management ensure there are adequate means of communicating with, and obtaining information from, external stakeholders that may have a significant impact on the agency achieving its goals. In a May 2008 report, SBA’s Office of Advocacy stated that although HUBZone staff had been described as helpful and informative, there did not seem to be any systematic outreach or promotion of the program beyond responding to inquiries. In October 2014, SBA announced the development of a new initiative (Destination: HUB) that is intended to promote and support HUBZone firms in federal contracting opportunities.