According to the Washington Post, a new GAO report identifies over $100 million in Small Business Administration contracts that have improperly been given to businesses falsely claiming to be located in economically distressed zones.
Usually the businesses just set up a fake storefront in the zone, even if their real operations are thousands of miles away. However, the GAO submitted several test applications with completely bogus information, some listing a Starbucks shop for the main company address. Several of these contracts were approved.
According to the article:
SBA officials said they would work on their internal systems to improve the verification process. Last year, administration officials quashed legislation that would have required on-site visits of applicants and other measures to ensure businesses’ eligibility, calling them “burdensome or undesirable.”
Incompetence and fraud at the SBA is nothing new under the Bush Administration. For a catalog of similar shenanigans from 2002-2005, see Christopher Moraff’s The Incredibly Shrinking Company from our Jan/Feb 2006 issue.