GAO-04-451, Small and Disadvantaged Businesses: Most Agency Advocates View Their Roles Similarly

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Report to the Committee on Small Business and Entrepreneurship, U.S.
Senate:

March 2004:

SMALL AND DISADVANTAGED BUSINESSES:

Most Agency Advocates View Their Roles Similarly:

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-451]:

GAO Highlights:

Highlights of GAO-04-451, a report to the Committee on Small Business
and Entrepreneurship, U.S. Senate

Why GAO Did This Study:

The Small Business Act is one of several laws designed to enhance the
participation of small and disadvantaged businesses in federal
procurement—a market that reached more than $200 billion in fiscal
year 2002. Section 15(k) of the act requires that all federal agencies
with procurement powers establish an Office of Small and Disadvantaged
Business Utilization (OSDBU) and specifies eight functions that OSDBU
directors are responsible for carrying out in their roles as advocates
for small businesses. GAO surveyed OSDBU directors at 24 agencies to
obtain information on the extent to which the respondents (1) viewed
the functions listed in section 15(k) as functions of their offices,
(2) viewed other potential activities as OSDBU duties, and (3) saw
potential challenges to carrying out their functions.

What GAO Found:

At least 19 OSDBU directors, or almost 80 percent, said that they
viewed five of the eight functions identified in section 15(k) as
their duties. A smaller majority of OSDBU directors (from 13 to 17)
viewed the remaining three functions as responsibilities of their
offices. However, the extent to which respondents said they carried out
these functions varied. Directors who did not view all of the
functions as responsibilities of their offices provided explanations.
For example, the OSDBU directors at the Departments of the Army and
the Navy explained that their role is one of developing policy for
small business programs at their agencies.

Most of the OSDBU directors responded that they also viewed functions
other than those listed in section 15(k) as their responsibilities.
These functions included outreach activities, such as holding meetings
and hosting conferences for small businesses and trade associations,
and reviewing plans for how prime contractors would use small
businesses as subcontractors. A much smaller number of respondents
reported that they viewed participating in their agencies’ procurement
process as one of their duties.

While most OSDBU directors reported experiencing few challenges in
carrying out their responsibilities, some reported challenges in three
areas—lack of influence in the procurement process, limited budgetary
resources, and lack of adequate staffing levels.

Survey Results from 24 OSDBU Directors on Section 15(k) Functions:

Section 15(k) functions: Supervisory authority over personnel with the duties and functions of the OSDBU;
Number of OSDBU directors viewing function as a current duty: 22.

Section 15(k) functions: Attempting to identify solicitations that involve bundling of contract requirements;
Number of OSDBU directors viewing function as a current duty: 21.

Section 15(k) functions: Facilitating small business participation as subcontractors to bundled contracts;
Number of OSDBU directors viewing function as a current duty: 19.

Section 15(k) functions: Assisting small businesses to obtain payments from your agency;
Number of OSDBU directors viewing function as a current duty: 20.

Section 15(k) functions: Assisting small businesses to obtain payments from prime contractors;
Number of OSDBU directors viewing function as a current duty: 17.

Section 15(k) functions: Determining/Reviewing individual acquisitions for small business set-asides;
Number of OSDBU directors viewing function as a current duty: 17.

Section 15(k) functions: Assigning a small business technical advisor[A];
Number of OSDBU directors viewing function as a current duty: 13.

Source: GAO analysis of survey data.

[End of table]

www.gao.gov/cgi-bin/getrpt?GAO-04-451.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact David G. Wood at (202)
512-8678 or woodd@gao.gov.

[End of section]

Contents:

Letter:

Background:

Results in Brief:

Almost All of the OSDBU Directors Viewed Most Section 15(k) Functions
as Duties of Their Offices:

OSDBU Directors Reported Performing Additional Activities as Well as
Their Section 15(k) Functions:

Most OSDBU Directors Saw Few Challenges to Carrying Out Their
Responsibilities:

Scope and Methodology:

Agency Comments and Our Evaluation:

Appendixes:

Appendix I: Twenty-four Agencies Surveyed on OSDBU Roles and Functions:

Appendix II: Summary of GAO Survey Results from 24 OSDBU Directors:

Introduction:

OSDBU Roles in Agency Procurement:

Appendix III: GAO Contact and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Figures:

Figure 1: Survey Results from 24 OSDBU Directors on Section 15(k)
Functions:

Figure 2: Level of OSDBU Activity on Contract Bundling Functions:

Figure 3: Level of OSDBU Activity of Reviewing Individual Acquisitions
for Small Business Set-asides:

Figure 4: Level of OSDBU Director Cooperation and Consultation with
SBA:

Figure 5: OSDBU Directors' Reporting Challenges:

Abbreviations:

DLA: Defense Logistics Agency:

DOD: Department of Defense:

DOT: Department of Transportation:

FAR: Federal Acquisition Regulation:

GSA: General Services Administration:

HUD: Department of Housing and Urban Development:

NASA: National Aeronautics and Space Administration:

OMB: Office of Management and Budget:

OPM: Office of Personnel Management:

OSDBU: Office of Small and Disadvantaged Business Utilization:

SBA: Small Business Administration:

SSA: Social Security Administration:

USAID: U.S. Agency for International Development:

Letter March 22, 2004:

The Honorable Olympia J. Snowe:
Chair:
The Honorable John F. Kerry:
Ranking Minority Member:
Committee on Small Business and Entrepreneurship:
United States Senate:

During the last 25 years, Congress has enacted several laws designed to
foster small business participation in federal procurement--a market
that reached more than $200 billion in fiscal year 2002. One of these
laws, Public Law 95-507, enacted in 1978, amended section 15 of the
Small Business Act (15 U.S.C. § 644) to require that all federal
agencies with procurement powers establish an Office of Small and
Disadvantaged Business Utilization (OSDBU) and appoint a director to
head the office. Under this act, the OSDBU is responsible for helping
to oversee the agency's functions and duties related to the awarding of
contracts and subcontracts to small and disadvantaged businesses.
Paragraphs (4)-(10) of section 15(k) of the act specify a number of
functions that OSDBU directors are responsible for carrying out in
their roles as advocates for small businesses.

On September 4, 2003, we issued a report to you assessing federal
agencies' compliance with section 15(k)(3) of the Small Business Act,
which requires that the OSDBU director be responsible to and report
only to agency heads or deputy heads. The report covered the 24 federal
agencies that procured at least $200 million or more in goods and
services in fiscal year 2001.[Footnote 1] As requested, this current
report provides additional information on the views of the OSDBU
directors regarding their functions within the agencies. Specifically,
we obtained information on the extent to which the OSDBU directors (1)
viewed the functions listed in section 15(k) as the duties of their
offices, (2) viewed other potential functions as OSDBU duties, and (3)
saw any potential challenges to their ability to carry out their
duties.

To address these objectives, we administered a Web-based questionnaire
to 24 OSDBU directors between May 2003 and September 2003.[Footnote 2]
The questionnaire asked the directors about their functions in three
areas: (1) participation in the agency procurement process, (2)
facilitation of small business participation in agency contracting, and
(3) interaction with the Small Business Administration (SBA). The three
areas covered OSDBU functions listed in section 15(k) of the Small
Business Act as well as functions mentioned by OSDBU directors during
our preliminary interviews with them. In addition, the questionnaire
asked the directors what challenges they faced in carrying out their
responsibilities. All 24 OSDBU directors responded to the
questionnaire.[Footnote 3] In order to understand the basis of their
responses, we conducted follow-up interviews with those directors who
indicated that one or more of the functions listed in section 15(k)
were not functions of their OSDBU. However, we did not assess the 24
agencies' compliance with the provisions of section 15(k). We conducted
our work in accordance with generally accepted government auditing
standards.

Background:

The federal government purchases billions of dollars in goods and
services each year in a structured process regulated by the Federal
Acquisition Regulation (FAR). The FAR establishes uniform policies and
procedures for the acquisition of supplies and services. For the
purpose of our survey, we divided the procurement process into four
steps:

* Acquisition planning involves developing an overall management
strategy for the procurement process for a potential contract. It takes
place well in advance of a contract's award date and generally involves
both a close partnership between the program and procurement offices
and the involvement of other key stakeholders.

* Solicitation development is the process of preparing requests for
vendors to submit offers, or bids. Solicitations can be conducted using
various procedures, such as sealed bids, negotiation, or a simplified
acquisition.[Footnote 4]

* Proposal evaluation occurs after potential contractors submit
proposals that outline how they will fulfill the solicitation
requirements. Contracting officers evaluate quotations and award the
contract.

* Monitoring, also known as surveillance, helps to determine a
contractor's progress and identify any factors that may delay
performance.

The federal government's long-standing policy has been to maximize
procurement opportunities for small, small disadvantaged, and women-
owned businesses. To ensure that small businesses receive a share of
federal procurement contract dollars, Congress has mandated that SBA
negotiate annual procurement goals with each federal agency. Congress
has also amended the Small Business Act several times to increase small
business participation in the federal procurement marketplace. For
example, the Business Opportunity Reform Act of 1988 amended the Small
Business Act to require the President to establish an annual
governmentwide goal of awarding not less than 20 percent of prime
contract dollars to small businesses.[Footnote 5] The Small Business
Reauthorization Act of 1997 further amended the Small Business Act to
increase the goal to not less than 23 percent. To help meet this goal,
SBA annually establishes prime contract goals for all categories of
small businesses for each federal agency.[Footnote 6] Although SBA is
responsible for coordinating with executive branch agencies to prompt
the federal government toward this mandated goal, agency heads are
responsible for achieving the small business goals within their
agencies.

Section 15(k) of the Small Business Act describes eight functions of
OSDBU directors as follows:[Footnote 7]

* Identifying solicitations that involve bundled contract
requirements.[Footnote 8]

* Working with agency procurement officials to revise bundled contracts
to increase the probability of participation by a small business.

* Facilitating the participation of small businesses as subcontractors
for bundled contracts.

* Assisting small businesses in obtaining payments from an agency with
which it has contracted.

* Helping small businesses acting as subcontractors to obtain payments
from prime contractors.[Footnote 9]

* Making recommendations to agency contracting officers regarding
whether a particular contract should be awarded to a small
business.[Footnote 10]

* Maintaining supervisory authority over OSDBU personnel.

* Cooperating and consulting on a regular basis with SBA in carrying
out OSDBU functions and duties, and assigning a small business
technical advisor to each office where SBA has appointed a procurement
center representative.[Footnote 11] (A procurement center
representative is an SBA staff member assigned to a federal agency's
contract administration office to carry out SBA policies and
programs.):

In addition to these eight functions, OSDBU directors have working
relationships with SBA and the agency procurement staff. However, OSDBU
directors are not the only officials responsible for helping small
businesses participate in federal procurement. The FAR establishes a
number of responsibilities for SBA and agency procurement staff in
implementing small business programs. The FAR provides that, among
other things, SBA may assign one or more procurement center
representatives to any agency's contracting activity or contract
administration office to carry out SBA policies and programs. A
procurement center representative's responsibilities include:

* increasing small businesses' share of federal procurement awards by
initiating small business set-asides,

* reserving procurements for competition among small business firms,

* providing small business sources to federal agencies, and:

* counseling small firms.

At the agency level, the heads of procurement departments are
responsible for implementing the small business programs at their
agencies, including achieving program goals. Generally, staff within
agency procurement departments who are assigned to work on small
business issues, or small business specialists, coordinate with OSDBU
directors on their agencies' small business programs.

Results in Brief:

Almost all of the 24 OSDBU directors reported that they viewed most of
the section 15(k) functions we asked about as current responsibilities
of their offices. Specifically, at least 19 of the 24 directors
reported that they viewed five of the eight as functions of their
office. These five functions included the three relating to contract
bundling; the other two were helping small businesses obtain payments
from the agencies and maintaining supervisory authority over OSDBU
staff. A smaller majority (from 13 to 17) of OSDBU directors viewed the
remaining three functions--helping small businesses obtain payments
from prime contractors, reviewing individual contracts for small
business set-asides, and appointing a small business technical advisor
to offices with an SBA representative--as their responsibilities.
However, the extent to which respondents said they carried out these
functions varied. For example, 17 of the 24 directors reported that
they attempted to identify solicitations that involve contract bundling
to either a great or very great extent, but fewer than half reported
helping small businesses with payment problems to a great or very great
extent. Directors who did not view all of the functions as
responsibilities of their offices provided reasons for their responses.
For example, the OSDBU directors at the Departments of the Army and the
Navy explained that their role is one of developing policy for the
small business programs at their agencies, and that the 15(k) functions
are generally carried out by the Army's and Navy's small business
specialists.

Most of the OSDBU directors responded that they also viewed functions
other than those listed in section 15(k) as their responsibilities. For
example, a majority of the directors reported that they viewed outreach
activities, such as holding meetings and hosting conferences for small
businesses and trade associations, as their functions, and 20 reported
having hosted such events in the last 2 years. In addition, almost all
(21) of the OSDBU directors agreed that one of their functions was
reviewing subcontracting plans that show how prime contractors would
use small businesses as subcontractors. A much smaller number of OSDBU
directors reported that they viewed participating in the various steps
of their agencies' procurement process as one of their functions. For
example, only 9 directors cited developing proposed bid solicitations
as a function, and 8 cited evaluating bid proposals.

Most OSDBU directors reported experiencing few challenges in carrying
out their responsibilities. Of the seven potential challenges
identified in our survey, more than half of the directors viewed three
issues--lack of influence in the procurement process, limited budgetary
resources, and lack of adequate staffing levels--as challenges to at
least some extent.

We sent a draft of this report to all 24 agencies in our study and SBA
for their comments. Of these agencies, we received comments from the
Department of Defense (DOD), the Department of Transportation (DOT),
the National Aeronautics and Space Administration (NASA), and SBA. The
comments were largely technical, and we incorporated them as
appropriate. DOD also commented that the draft contained statements
attributed to the Navy OSDBU director that were incorrect. Because our
draft accurately characterized the statements made by the director, we
did not change them. However, we added language to the report to
reflect DOD's reasons, as stated in its comments, for viewing the
information as incorrect.

Almost All of the OSDBU Directors Viewed Most Section 15(k) Functions
as Duties of Their Offices:

Almost all of the 24 OSDBU directors that we surveyed reported that
they viewed most of the functions outlined in section 15(k) of the
Small Business Act as current duties of their offices. At least 19
OSDBU directors, or almost 80 percent, said that they viewed five of
the eight functions identified in 15(k) as their duties, and a smaller
majority (13 to 17) saw the remaining three functions as their
responsibilities (fig. 1). In cases where we asked respondents about
the extent to which they carried out these functions, responses varied.
For example, a large majority of the OSDBU directors reported that they
identified solicitations for contract bundling to either a great or
very great extent. In contrast, only 5 OSDBU directors reported helping
small businesses to obtain payments from agencies to either a great or
very great extent. Some directors did not view all of the functions as
their responsibilities, but in follow-up interviews these directors
provided explanations for their responses.

Figure 1: Survey Results from 24 OSDBU Directors on Section 15(k)
Functions:

[See PDF for image]--graphic text

Section 15(k) functions: Supervisory authority over personnel with the
duties and functions of the OSDBU;
Number of OSDBU directors who answered: Yes, this function is a duty of
the OSDBU director: 22;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 2.

Section 15(k) functions: Working with agency acquisition officials to
revise procurement strategies for bundled contract requirements to
increase small business participation;
Number of OSDBU directors who answered: Yes, this function is a duty
of the OSDBU director: 22;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 2.

Section 15(k) functions: Attempting to identify solicitations that
involve bundling of contract requirements;
Number of OSDBU directors who answered: Yes, this function is a duty
of the OSDBU director: 21;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 3.

Section 15(k) functions: Facilitating small business participation as
subcontractors to bundled contracts;
Number of OSDBU directors who answered: Yes, this function is a duty of
the OSDBU director: 19;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 4.
No answer: 1.

Section 15(k) functions: Assisting small businesses to obtain payments
from your agency;
Number of OSDBU directors who answered: Yes, this function is a duty
of the OSDBU director: 20;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 4.

Section 15(k) functions: Assisting small businesses to obtain payments
from prime contractors;
Number of OSDBU directors who answered: Yes, this function is a duty
of the OSDBU director: 17;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 7.

Section 15(k) functions: Determining/Reviewing individual acquisitions
for small business set-asides;
Number of OSDBU directors who answered: Yes, this function is a duty of
the OSDBU director: 17;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 7.

Section 15(k) functions: Assigning a small business technical
advisor[A];
Number of OSDBU directors who answered: Yes, this function is a duty of
the OSDBU director: 13;
Number of OSDBU directors who answered: No, this function is not a
duty of the OSDBU director: 7;
No answer: 4.

Source: GAO analysis of survey data.

[A] According to the OSDBU directors, SBA had not assigned a
procurement center representative to 3 of the 24 agencies in our study-
-the Department of the Interior, the Office of Personnel Management,
and the U.S. Agency for International Development. Therefore, the OSDBU
directors at these agencies were not required to assign a small
business technical advisor.

[End of figure]

The Extent to Which OSDBU Directors Carried Out Some Section 15(k)
Functions Varied:

We asked OSDBU directors about the extent to which they carried out
several of the section 15(k) functions. Of those directors who saw the
contract bundling functions as responsibilities of their OSDBUs, more
than half reported carrying out these duties to a great or very great
extent (fig. 2). For example, 17 of the 21 OSDBU directors who viewed
identifying solicitations that involved contract bundling as a function
reported doing so to a great or very great extent, as did more than
half (13) of the 22 directors who viewed working with agency
acquisition officials to revise procurement strategies for bundled
contracts as a duty. For example, 1 OSDBU director wrote: "When and if
a program office announces its intention to bundle, the OSDBU works
with it to ensure that the small business market share does not
suffer." Another OSDBU director stated, "We are reviewing previously
bundled contracts in order to unbundle them. We're also developing
questions for the [contracting] personnel to answer regarding past
contract awards.":

Eleven of the 19 OSDBU directors who viewed facilitating small business
participation as subcontractors on a bundled contract as a duty said
that they carried out the function to a great or very great extent. In
their written comments, several directors noted that they worked with
the acquisition officials on large contracts to increase subcontracting
for small businesses. One director wrote the following:

"…the Director reviews major acquisitions and other acquisitions that
have agencywide impact. These venues provide the OSDBU with
opportunities to ensure that acquisitions are not unnecessarily
consolidated, and to influence the establishment of aggressive proposal
evaluation factors and subcontracting goals to encourage small business
opportunities.":

Another OSDBU director commented, "OSDBU works with acquisition
officials on large dollar contracts to encourage contracting officers
to include increased subcontracting incentives in solicitations.":

Figure 2: Level of OSDBU Activity on Contract Bundling Functions:

[See PDF for image]

[End of figure]

Our survey occurred after the Office of Federal Procurement Policy, an
office within the Office of Management and Budget (OMB), issued new
guidance on limiting the use of contract bundling. In October 2002, OMB
issued a plan entitled Contract Bundling: A Strategy for Increasing
Federal Contracting Opportunities for Small Business. The aim of the
plan was to eliminate unnecessary contracting bundling and to mitigate
the effects of necessary contract bundling. Under the plan, OSDBUs were
to be required to conduct periodic reviews and submit their assessments
to OMB.[Footnote 12] By giving the issue of contract bundling more
prominence, the guidance in this plan may have affected how the OSDBU
directors saw their role in contract bundling. In written comments on
contract bundling, several OSDBU directors referred to OMB's guidance.
One OSDBU director wrote, "We are changing our procurement review
function as a result of the recent OMB guidance so we will become more
involved more than currently." Similarly, another director commented,
"…under OMB's renewed interest in his area, OSDBU is very active in
identifying and taking action to avoid unnecessary contract bundling.":

Twenty OSDBU directors viewed assisting small businesses to obtain
payment from agencies as an OSDBU function, but only 5 reported doing
so to a great or very great extent. Eleven reported that they carried
out this function to a moderate level or less. In written comments and
follow-up interviews, a majority of the OSDBU directors who viewed this
assistance as a function stated that the problem of nonpayment to small
business had arisen only occasionally. Moreover, the directors
explained that although they will assist small businesses with payment
problems whenever they are contacted, the issue is more clearly
administrative and thus more likely be handled by other agency
personnel. Several OSDBU directors reported that they typically refer
such matters to contract administrators, and 1 director noted that his
office worked with the agency's Vendor Claims Division on payment
issues. Another director said that the agency's Office of Acquisition
Management was responsible for ensuring payment for all vendors, large
and small, but that the OSDBU acted as a mediator when necessary.

A slightly lower number (17) of respondents viewed helping to obtain
payments from prime contractors as an OSDBU function. Slightly less
than half (8) of the 17 OSDBU directors reported that they carried out
this function to a moderate extent or less; only 3 said they had
carried out the function to either a great or very great
extent.[Footnote 13]

Seventeen OSDBU directors reported that they viewed reviewing or
determining individual contracts that should be set aside for a small
business as an OSDBU function. As figure 3 shows, 8 of the 17 OSDBU
directors stated that they reviewed proposed small business set-asides
for individual acquisitions in all or most cases, and another 8 carried
out this function in some or a few cases. An additional 3 OSDBU
directors reported that determining small business set-asides for a
class of acquisitions was a function of their OSDBU.

Figure 3: Level of OSDBU Activity of Reviewing Individual Acquisitions
for Small Business Set-asides:

[See PDF for image]

[End of figure]

The process of setting aside contracts for small business programs is a
responsibility that is shared among SBA, the agencies' contracting
staff, and the OSDBU. The OSDBU director's role in the process,
according to the FAR, consists of making recommendations on whether
particular contracts can be set aside. In their written comments,
several OSDBU directors stated that they reviewed contracts above the
threshold for simplified acquisitions (generally $100,000), and then
they either concurred or did not concur with the contracting officers
that the contracts should be set aside. One OSDBU director wrote the
following:

"For acquisitions valued over $100,000, contracting officers are
required to submit small business set-aside clearance review forms to
the OSDBU via the bureau's small business specialist. The clearance
forms document the acquisition planning activities and strategies for
individual contract actions. The OSDBU works with the contracting
officers to create acquisition strategies for full and partial set-
asides.":

We also asked OSDBU directors to indicate the extent to which they
cooperated and consulted with SBA in carrying out their
responsibilities. Twenty-three directors reported that they cooperated
and consulted with SBA on small business matters, 16 of them to a great
or very great extent (fig. 4). For example, in commenting on their
working relationship with SBA staff, 1 OSDBU director wrote, "We work
closely with various SBA district offices that manage the portfolios of
our various 8(a) contractors. We also participate on the Small Business
Procurement Advisory Council, which is co-chaired by SBA and meets
monthly.":

Figure 4: Level of OSDBU Director Cooperation and Consultation with
SBA:

[See PDF for image]

[End of figure]

Section 15(k) of the Small Business Act requires the OSDBU director to
designate a small business technical advisor when SBA has assigned a
procurement center representative to their agency. Twenty OSDBU
directors stated that SBA had assigned a procurement center
representative to their agencies.[Footnote 14] Of these, 13 directors
reported that they had assigned a small business technical advisor, and
7 said that they had not.

OSDBU Directors Explained Why They Did Not View Some 15(k) Functions as
Their Current Responsibilities:

The number of OSDBU directors who did not view a section 15(k) function
as their current responsibility varied, depending on the specific
function. The number of directors ranged from 2 who did not view
supervisory authority over OSDBU personnel as a responsibility to 8 who
did not view assigning a small business technical advisor as a
responsibility. During follow-up interviews, the OSDBU directors
provided a variety of reasons for their views.

* Two OSDBU directors (the Office of the Secretary of Defense and the
Social Security Administration (SSA)) reported that they did not
supervise OSDBU personnel. In a follow-up interview, the OSDBU director
at the Office of the Secretary of Defense told us that he does not
supervise the OSDBU directors at the military services because his
duties are primarily developing policy and providing oversight of the
military OSDBUs. The OSDBU director at SSA stated that he did not have
OSDBU staff assigned to his office, and that he was assisted by a small
business specialist, who works for the Office of Acquisition and
Grants.

* Two OSDBU directors (Navy and the U.S. Agency for International
Development (USAID)) indicated that two functions involving contract
bundling were not their responsibilities: working with agency
acquisition officials to revise procurement strategies for bundled
contract requirements and attempting to identify solicitations that
involve bundling contract requirements. In our follow-up conversations,
Navy's OSDBU director told us that her role was primarily developing
policy for small business programs at her agency. She stated that her
role stems mostly from the decentralized nature of the DOD's
procurement system. She stated that she does not review individual
contracts to identify bundling of contract requirements because these
duties are the responsibility of the small business specialists. The
OSDBU director at USAID stated that she is not aware of any bundling at
the agency and thus did not consider the two functions a
responsibility. However, she noted that her response did not mean that
USAID had not bundled any contracts.

* Four OSDBU directors (the Department of Education, Army, Navy, and
the Office of Personnel Management (OPM)) indicated that they did not
view facilitating small business participation as subcontractors to
bundled contracts as a duty of their offices. In a follow-up interview,
the OSDBU director at Education stated that she worked with the
contracting officer to unbundle contracts, but she added that the OSDBU
did not work with subcontractors. She indicated that her role was
limited to referring the names of small businesses to the contracting
office as potential subcontractors. The OSDBU directors at Army and
Navy stated that their roles were primarily developing policy, and that
small business specialists generally carry out this function. The OSDBU
director at OPM told us that he did not view the function as a duty
because contract bundling had not happened at OPM in the past fiscal
year.

* Four OSDBU directors (the Office of the Secretary of Defense, the
Department of Housing and Urban Development (HUD), Navy, and the
Department of the Treasury) reported that they did not see assisting
small businesses to obtain payments from agencies as their function. In
follow-up interviews, the OSDBU director at the Office of the Secretary
of Defense told us that few if any problems occurred in this area and,
if there were any problems, they would be handled by the small business
offices. The OSDBU director at HUD explained that the agency's contract
administrators handle this function. The OSDBU director at Navy
explained that small businesses seeking payment would need to contact
the small business specialist at one of the commands or the Defense
Contract Management Agency. Treasury officials told us that assisting
small businesses to obtain payments would be the responsibility of the
contracting office or the financial management office.

* Seven OSDBU directors (the Defense Logistics Agency (DLA), the
Department of Agriculture, Army, Education, HUD, Navy, and Treasury)
did not view assisting small businesses to obtain payments from prime
contractors as a function of their offices. Several OSDBU directors
(DLA, Agriculture, and Education) told us in follow-up interviews that
they did not view it as a function primarily because as government
personnel, they could not become involved in a contractual dispute
between the prime contractors and the subcontractors. The OSDBU
directors at Army and Navy explained that the Defense Contract
Management Agency or the small business specialists would resolve these
issues. Treasury officials explained that contracting officers at
individual bureaus were responsible for addressing the payment
problems, and that the agency's involvement would be limited by legal
constraints. Again, the OSDBU director at HUD stated that the agency's
contract administrators would handle the problems.

* Four OSDBU directors (Army, Navy, the General Services Administration
(GSA), and USAID) stated that determining a small business set-aside
for either an individual contract or a class of acquisitions was not a
function of their offices. The OSDBU directors for Army and Navy stated
that the small business specialists review contracts for small business
set-asides. Also, the OSDBU director at GSA told us that procurement
officials determine set-asides. The OSDBU director at USAID stated in a
follow-up interview that she makes set-aside recommendations on
contracts when she sees the contract.

* Seven OSDBU directors (DLA, the Office of the Secretary of Defense,
Education, the Department of State, the Department of Veterans Affairs,
SSA, and the Environmental Protection Agency) reported that they did
not assign a small business technical advisor at offices where SBA had
assigned a procurement center representative. For example, the OSDBU
director at the Office of the Secretary of Defense told us that his
responsibility for assigning small business technical advisors was
delegated to the military services, and the OSDBU director at DLA said
that the function had been delegated to the head of DLA's contracting
affairs. Also, the OSDBU director at SSA told us that the small
business specialist from the agency's Office of Acquisition and Grants,
who works with him, could fulfill the role of a small business
technical advisor. He explained that the small business specialist
assists the procurement center representative when the procurement
center representative comes to the agency to review the set-aside
determinations.

In commenting on a draft of this report, the Director, Office of Small
and Disadvantaged Business Utilization, Office of Under Secretary of
Defense for Acquisition, Technology, and Logistics, stated that the
draft included information, attributed to the Navy OSDBU director, that
is incorrect. Our draft report stated that the director did not view
three of the section 15(k) duties we asked about--working with agency
acquisition officials to revise procurement strategies for bundled
contract requirements, attempting to identify solicitations that
involve bundling contract requirements, and assisting small businesses
to obtain payments from agencies--as responsibilities of her office.
Our report was based on the Navy director's response to our survey,
which we reaffirmed in a follow-up interview with her. DOD's OSDBU
director commented that generally these functions are performed by
small business specialists, but that if mutually agreeable solutions
cannot be worked out between the parties, the matters are elevated to
the Navy OSDBU director for resolution.

OSDBU Directors Reported Performing Additional Activities as Well as
Their Section 15(k) Functions:

During preliminary interviews, OSDBU directors noted that they view as
their responsibility some functions, such as outreach activities and
reviewing subcontracting plans, that are not among those specifically
identified in section 15(k). Our survey results show that nearly all of
the 24 directors viewed most of these additional functions as a current
duty. Some directors also reported that they viewed involvement in the
solicitation development and proposal evaluation phases of the
procurement process as a current function of their office.

Most Directors Saw Outreach to Small Businesses as a Function of Their
OSDBU:

Nearly all (21) of the OSDBU directors saw hosting conferences for
small businesses as one of their responsibilities, and 20 had hosted
such an event in the last 2 years. In their written comments, several
OSDBU directors said that they typically designed the conferences to
expose small businesses to their agency's specific needs. For example,
1 OSDBU director described (1) hosting annual networking sessions for
small businesses and prime contractors and a "fair" for veteran-owned
small businesses and (2) cohosting six information technology "fairs."
Those OSDBU directors that had not hosted conferences said that they
had either participated in another agency's fairs or had assigned this
duty to the small business specialists. For example, 1 OSDBU director
said that his office usually participated in outreach conferences
hosted by relatively large organizations, including SBA, the Minority
Business Development Agency, and the Department of Commerce.

A majority (17) of OSDBU directors saw sponsoring training for small
businesses as a function, and 15 said that they had sponsored a
training program in the last 2 years. In their written responses,
several directors said that the purpose of the training programs is to
familiarize small businesses with doing business with their agencies.
Four directors said that they had partnered with another agency to
provide training. For example, 1 director said, "In conjunction with
the SBA Baltimore District Office, the OSDBU has hosted training events
on subjects concerning GSA schedules, teaming agreements, and how to do
business with [the agency]." Of those OSDBU directors that did not host
their own training programs, 1 said he had provided small businesses
with a brochure explaining contracting opportunities at the agency, and
2 referred small businesses to SBA for training.

Almost All of the Directors Reported That Reviewing and Monitoring
Subcontracting Plans Are Functions of Their OSDBU:

Almost all (22) of the OSDBU directors said that reviewing prime
contractors' subcontracting plans for small business consideration is a
current function, and 15 reported that they performed this activity in
all or most cases. According to the FAR, any prime contractor with a
contract above the simplified acquisition threshold ($100,000) must
agree to allow small businesses the "maximum practicable opportunity"
to participate in the contract. If a contract for more than $500,000 is
awarded, or is to be awarded, to a business other than a small
business, the government requires the winner of the contract to submit
an acceptable subcontracting plan that shows how small businesses will
be used as subcontractors.[Footnote 15] We found that some OSDBU
directors reviewed subcontracting plans for all acquisitions, while a
few OSDBU directors said they reviewed plans for contracts only above
certain dollar thresholds.

Almost all (19) of the OSDBU directors also reported that they monitor
prime contractors' implementation of the subcontracting plans. Several
of the OSDBU directors stated they reviewed certain standard forms to
determine if the prime contractors were following their subcontracting
plans.[Footnote 16] Three of the five defense services noted that the
Defense Contract Management Agency monitors implementation of the
subcontracting plans of DOD prime contractors. One director at a
civilian agency said that the OSDBU had implemented a pilot program
that required the prime contractors to report monthly on the level of
subcontracting and the actual payments made to small business.
According to the director, "This hands-on approach was highly
successful and resulted in significant levels of small business
participation at the subcontracting level.":

Some Directors Saw Participating in Soliciting and Evaluating Proposals
as Responsibilities of Their OSDBU:

Nine of the OSDBU directors we surveyed said that developing proposed
solicitations was a function of their OSDBU.[Footnote 17] Two OSDBU
directors noted that their involvement was limited to major
procurements. For example, 1 director noted that his office worked with
contracting officers and program officials through the agency small
business specialists "to develop special language or provisions for
some solicitations.":

Only 8 OSDBU directors said that evaluating proposals submitted by
potential contractors in response to bid solicitations was a function
of their OSDBU.[Footnote 18] Of these directors, 3 said that they
participated in the function only on an exception basis or in a few
cases.[Footnote 19] Two of the OSDBU directors wrote that their
participation in evaluating proposals submitted by potential
contractors consisted of reviewing the subcontracting plans of the
prime contractors.

Most OSDBU Directors Saw Few Challenges to Carrying Out Their
Responsibilities:

Most of the OSDBU directors we surveyed reported that they face few
challenges to carrying out their responsibilities. However, more than
half viewed three issues--lack of influence in the procurement process,
limited budgetary resources, and lack of adequate staffing--as
challenges to at least some extent. As shown in figure 5, between 15
and 19 respondents saw four of the access and independence issues in
our questionnaire as challenges to little or no extent. On the other
hand, a slight majority saw their lack of influence over procurement as
a challenge to at least some extent, and a larger majority (17) saw
limited budgetary resources and inadequate staffing levels as
challenges to at least some extent. We received very few written
comments explaining respondents' views on the challenges.

Figure 5: OSDBU Directors' Reporting Challenges:

[See PDF for image]

[End of figure]

Scope and Methodology:

To learn more about the duties and functions of OSDBUs, we administered
a Web-based questionnaire to OSDBU directors at 24 federal
agencies.[Footnote 20] To develop the survey instrument, we conducted
pretest interviews with 2 OSDBU directors and obtained input from GAO
experts on survey design. A summary of the OSDBU directors' responses
to the questionnaire is contained in appendix II. The questions asked
the respondents whether certain functions were a current role or
function of their OSDBU. The functions covered three areas: OSDBU
participation in the procurement process, OSDBU facilitation of small
business participation in agency contracting, and OSDBU interaction
with SBA staff. The questions were drawn from the OSDBU functions
listed in section 15(k) of the Small Business Act as well as those
functions mentioned by OSDBU directors during preliminary interviews we
conducted during the design phase of the instrument.

We began the survey in late May 2003 by sending an e-mail either
directly to the OSDBU director or through their agency liaisons with
unique passwords and the locations of our Web survey. Follow-up
contacts with those not completing the survey were made in June and
July, and the survey was closed in early September 2003. We received
completed questionnaires from all 24 directors in the survey
population. In one case, a GAO liaison officer reviewed the OSDBU
director's responses before submitting the survey to GAO.

We conducted 17 follow-up discussions with OSDBU directors, consisting
of 15 interviews and 2 e-mail discussions. The purpose of the follow-
ups was to confirm answers when respondents said they did not view one
or more functions listed in section 15(k) as a role of their office. On
the basis of these discussions, we changed 23 of the answers originally
placed on the survey as the director not viewing a 15(k) function as an
OSDBU role to the director viewing it as an OSDBU role. We used the
following two criteria to make these changes: (1) the directors
explicitly stated that they wished to change their answer and provided
a reason for the change or (2) the directors misunderstood the
question. Thus, these adjustments are reported as being a "yes"
response in our findings.

While OSDBU directors at the 24 agencies were asked to participate in
the survey and the survey results are therefore not subject to sampling
errors, not all OSDBUs responded to every individual question.
Nonresponse, and the practical difficulties of conducting any survey,
may introduce error in survey results. We took steps to minimize such
errors in the development and testing of our questionnaire by
conducting follow-ups with nonrespondents, and by checking and editing
survey responses and analysis. We did not assess the 24 agencies'
compliance with the provisions of section 15(k).

We conducted our work in Washington, D.C., between January 2003 and
January 2004 in accordance with generally accepted government auditing
standards.

Agency Comments and Our Evaluation:

We sent a draft of this report to all 24 agencies in our study and to
SBA for their comments. We received technical comments from DOD, DOT,
NASA, and SBA, which we incorporated as appropriate. DOD also commented
that the draft did not accurately reflect responses attributed to the
Navy OSDBU director. Our draft report stated that the director did not
view three of the section 15(k) duties we asked about--working with
agency acquisition officials to revise procurement strategies for
bundled contract requirements, attempting to identify solicitations
that involve bundling contract requirements, and assisting small
businesses to obtain payments from agencies--as responsibilities of her
office. According to the comments received from DOD's OSDBU director,
Navy's OSDBU director is ultimately responsible for carrying out these
duties (1) if Navy's small business specialists are unable to reach a
mutually agreeable solution when working with agency officials to
revise procurement strategies for a bundled contract and identify
solicitations that involve contract bundling requirements and (2) when
the buying command or contract administration office has not been able
to resolve matters regarding payments.

We do not take exception with DOD's statement that Navy's OSDBU
director is ultimately responsible for these three duties if the
matters have not been resolved by other agency officials. However, we
believe the Navy OSDBU director's responses are accurately reflected in
this report. In both the questionnaire and follow-up interview, Navy's
OSDBU director stated that she did not view the three functions as her
duties.

As agreed with your offices, unless you publicly release its contents
earlier, we plan no further distribution of this report until 30 days
from its issuance date. At that time, we will send copies of this
report to the Chairman and the Ranking Minority of the House Committee
on Small Business. We will make copies available to others on request.
In addition, this report will be available at no charge on the GAO Web
site at [Hyperlink, http://www.gao.gov].

If you have any questions regarding this report, please contact me or
Charles E. Wilson, Jr., Assistant Director, at (202) 512-8678. Key
contributors to this report are listed in appendix III.

Signed by:

David G. Wood,
Director, Financial Markets and Community Investment:

[End of section]

Appendixes:

Appendix I: Twenty-four Agencies Surveyed on OSDBU Roles and Functions:

Defense Logistics Agency:
Department of Agriculture:
Department of Commerce:
Department of Defense--Office of the Secretary:
Department of Education:
Department of Energy:
Department of Health and Human Services:
Department of Housing and Urban Development:
Department of Justice:
Department of Labor:
Department of State:
Department of the Air Force:
Department of the Army:
Department of the Interior:
Department of the Navy:
Department of the Treasury:
Department of Transportation:
Department of Veterans Affairs:
Environmental Protection Agency:
General Services Administration:
National Aeronautics and Space Administration:
Office of Personnel Management:
Social Security Administration:
U.S. Agency for International Development:

[End of section]

Appendix II: Summary of GAO Survey Results from 24 OSDBU Directors:

Introduction:

The United States General Accounting Office (GAO) is conducting a study
on small business contracting for the Senate Committee on Small
Business and Entrepreneurship. Several weeks ago, we asked you and each
of the other OSDBU directors at the 21 federal agencies with
procurements of $200 million or more in 2001 for information on the
reporting relationship between the OSDBU director and other agency
officials, including the agency head.

Now we would like to know more about how the OSDBU directors are
carrying out the duties and functions of their offices. To make the
task of reporting this information easier for you, we delayed this
second part of our request until now.

This questionnaire should take about half an hour to complete,
depending on the need to consult records and other people. Your
response by June 11th would be greatly appreciated.

Your cooperation in answering all of the questions in this survey is
vital to our ability to report to Congress.

Q1. How long have you been Director of the Office of Small and
Disadvantaged Business Utilization (OSDBU)?

How long have you been Director of OSDBU?
Mean: 4;
Median: 2;
Minimum: 0;
Maximum: 15;
Number of respondents: 24.

[End of table]

Q2. Please briefly describe the overall mission of your OSDBU.

OSDBU Roles in Agency Procurement:

The following sections ask you about the functions and duties that your
OSDBU might perform under Section 15(k) of the Small Business Act. For
each of the following activities, please tell us whether each is
currently a role or function that your OSDBU can perform, even if it
has not yet done so. For those activities that fall to your OSDBU as
official roles or functions, please tell us to what extent your OSDBU
actually engages in those activities, and describe that involvement.

Q3. Is involvement in acquisition planning, as defined in Part 7 of
the Federal Acquisition Regulation, currently a role or function of
your OSDBU?

Yes - an OSDBU role or function: 18;
No - not an OSDBU role or function: 6;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q4. In general, to what extent is your OSDBU involved in acquisition
planning?

Very great extent: 2;
Great extent: 7;
Moderate extent: 4;
Some extent: 4;
Little or no extent: 1;
Don't know: 0;
Number of respondents: 18.

[End of table]

Q5. Please briefly explain your answer to the previous question - what
level of activity, if any, has your OSDBU had in this area?

Q6. Is determining small business set-asides for individual
acquisitions currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 17;
No - not an OSDBU role or function: 7;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q7. How often is your OSDBU involved in determining small business
set- asides for individual acquisitions?

In all cases: 2;
In most cases: 6;
In some cases: 7;
In few cases: 1;
In no cases: 0;
Don't know: 0;
Number of respondents: 16.

[End of table]

Q8. Please briefly explain your answer to the previous question - what
level of activity, if any, has your OSDBU had in this area?

Q9. Is determining small business set-asides for a class of
acquisitions currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 17;
No - not an OSDBU role or function: 6;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q10. How often is your OSDBU involved in determining small business
set-asides for a class of acquisitions?

In all cases: 3;
In most cases: 2;
In some cases: 5;
In few cases: 5;
In no cases: 0;
Don't know: 0;
Number of respondents: 15.

[End of table]

Q11. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q12. In the event of a formal disagreement between your OSDBU and
procurement officials during the acquisition planning process
concerning small business matters, what is the first level of appeal
for your OSDBU if the situation is not resolved?

N/A - OSDBU cannot formally disagree: 0;
No specific first level of appeal: 3;
Agency Head: 4;
Deputy Agency Head: 5;
Chief Financial Officer: 0;
Other - please describe in box below: 12;
Number of respondents: 24.

[End of table]

If you checked "Other" - please describe below:

Q13. Does your agency require written justification from procurement
officials if they disagree with your OSDBU objections?

No written justification required: 9;
Written justification required - please describe elements of this
justification in box below: 14;
Number of respondents: 23.

[End of table]

If you checked "Written justification required" - please describe
below:

Q14. Has your OSDBU formally disagreed with the procurement officials
during acquisition planning concerning small business matters in the
past 24 months?

Yes - OSDBU has disagreed with procurement officials: 15;
No - OSDBU has not disagreed with procurement officials: 7;
Number of respondents: 22.

[End of table]

Q14a. How often has your OSDBU formally disagreed with procurement
officials during acquisition planning concerning small business
matters in the past 24 months?

In all cases: 0;
In most cases: 0;
In some cases: 7;
In few cases: 7;
Don't know: 2;
Number of respondents: 16.

[End of table]

Q14b. Typically, what were the outcomes of these disagreements?

Q15. If your OSDBU is not currently involved in acquisition planning,
what entity is involved in acquisition planning that advocates for
small business consideration?

Other Entity involved in acquisition planning: N/A - OSDBU involved;
Checked: 14;
Number of respondents: 24.

Other Entity involved in acquisition planning: None;
Checked: 1;
Number of respondents: 24.

Other Entity involved in acquisition planning: Procurement Officials;
Checked: 11;
Number of respondents: 24.

Other Entity involved in acquisition planning: SBA Procurement Center
Reps;
Checked: 7;
Number of respondents: 24.

Other Entity involved in acquisition planning: Agency Program
Officials;
Checked: 11;
Number of respondents: 24.

Other Entity involved in acquisition planning: Other;
Checked: 5;
Number of respondents: 24.

[End of table]

If you checked "Other" - please describe:

Q16. Is developing proposed solicitations currently a role or function
of your OSDBU?

Yes - an OSDBU role or function: 9;
No - not an OSDBU role or function: 15;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q17. In general, to what extent is your OSDBU involved in developing
proposed solicitations?

Very great extent: 0;
Great extent: 2;
Moderate extent: 1;
Some extent: 6;
Little or no extent: 0;
Don't know: 0;
Number of respondents: 9.

[End of table]

Q18. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q19. Is attempting to identify proposed solicitations that involve
bundling of contract requirements currently a role or function of your
OSDBU?

Yes - an OSDBU role or function: 21;
No - not an OSDBU role or function: 3;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q20. In general, to what extent does your OSDBU attempt to identify
proposed solicitations that involve bundling of contract requirements?

Very great extent: 7;
Great extent: 10;
Moderate extent: 1;
Some extent: 3;
Little or no extent: 0;
Don't know: 0;
Number of respondents: 21.

[End of table]

Q21. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q22. Is working with agency acquisition officials to revise
procurement strategies for bundled contract requirements to increase
small business participation currently a role or function of your
OSDBU?

Yes - an OSDBU role or function: 22;
No - not an OSDBU role or function: 2;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q23. In general, to what extent does your OSDBU work with agency
acquisition officials to revise procurement strategies for bundled
contract requirements to increase small business participation?

Very great extent: 6;
Great extent: 7;
Moderate extent: 2;
Some extent: 4;
Little or no extent: 0;
Don't know: 1;
Number of respondents: 20.

[End of table]

Q24. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q25. Is facilitating small business participation as subcontractors to
bundled contracts currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 19;
No - not an OSDBU role or function: 4;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q26. In general, to what extent does your OSDBU facilitate small
business participation as subcontractors to bundled contracts?

Very great extent: 5;
Great extent: 6;
Moderate extent: 3;
Some extent: 3;
Little or no extent: 0;
Don't know: 0;
Number of respondents: 17.

[End of table]

Q27. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q28. Is developing evaluation factors for solicitations for your
agency currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 15;
No - not an OSDBU role or function: 9;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q29. How often does your OSDBU develop evaluation factors for
solicitations for your agency?

In all cases: 0;
In most cases: 3;
In some cases: 9;
In few cases: 3;
In no cases: 0;
Don't know: 0;
Number of respondents: 15.

[End of table]

Q30. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q31. In the event of a formal disagreement between your OSDBU and
procurement officials during solicitation development concerning small
business matters, what is the first level of appeal for your OSDBU if
the situation is not resolved?

N/A - OSDBU cannot formally disagree: 1;
No specific first level of appeal: 5;
Agency Head: 4;
Deputy Agency Head: 3;
Chief Financial Officer: 0;
Other - please describe in box below: 10;
Number of respondents: 23.

[End of table]

If you checked "Other" - please describe:

Q32. Does your agency require written justification from procurement
officials if they disagree with your OSDBU objections?

No written justification required: 15;
Written justification required - please describe elements of this
justification in box below: 8;
Number of respondents: 23.

[End of table]

If you checked "Written justification required" - please describe:

Q33. Has your OSDBU formally disagreed with the procurement officials
during solicitation development concerning small business matters in
the past 24 months?

Yes - OSDBU has disagreed with procurement officials: 13;
No - OSDBU has not disagreed with procurement officials: 10;
Number of respondents: 23.

[End of table]

Q33a. How often has your OSDBU formally disagreed with procurement
officials during solicitation development concerning small business
matters in the past 24 months?

In all cases: 0;
In most cases: 0;
In some cases: 5;
In few cases: 6;
Don't know: 2;
Number of respondents: 13.

[End of table]

Q33b. Typically, what were the outcomes of these disagreements?

Q34. Is evaluating proposals submitted by potential contractors in
response to solicitations currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 8;
No - not an OSDBU role or function: 16;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q35. How often does your OSDBU evaluate proposals submitted by
potential contractors in response to solicitations?

In all cases: 0;
In most cases: 0;
In some cases: 6;
In few cases: 2;
In no cases: 0;
Don't know: 0;
Number of respondents: 8.

[End of table]

Q36. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q37. Is reviewing sub-contracting plans for small business
consideration from potential prime contractors currently a role or
function of your OSDBU?

Yes - an OSDBU role or function: 22;
No - not an OSDBU role or function: 2;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q38. How often does your OSDBU review sub-contracting plans for small
business consideration from potential prime contractors?

In all cases: 9;
In most cases: 6;
In some cases: 3;
In few cases: 2;
In No cases: 0;
Don't know: 1;
Number of respondents: 21.

[End of table]

Q39. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q40. Is making recommendations to procurement officials on whether a
particular contract should be awarded to a small business currently a
role or function of your OSDBU?

Yes - an OSDBU role or function: 15;
No - not an OSDBU role or function: 8;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q41. How often does your OSDBU make recommendations to procurement
officials on whether a particular contract should be awarded to a
small business?

In all cases: 2;
In most cases: 4;
In some cases: 6;
In few cases: 1;
In No cases: 1;
Don't know: 1;
Number of respondents: 15.

[End of table]

Q42. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q43. If your OSDBU does not make contract recommendations, what entity
makes recommendations on contracts for small business consideration?

Other entity recommending-N/A, OSDBU role;
Checked: 11;
Number of respondents: 24.

Other entity recommending-None;
Checked: 0;
Number of respondents: 24.

Other entity recommending-Procurement officials;
Checked: 9;
Number of respondents: 24.

Other entity recommending-SBA Procurement Center Rep;
Checked: 2;
Number of respondents: 24.

Other entity recommending-Agency program officials;
Checked: 5;
Number of respondents: 24.

Other entity recommending-Other;
Checked: 3;
Number of respondents: 24.

[End of table]

If you checked "Other" - please describe:

Q44. In the event of a formal disagreement between your OSDBU and
procurement officials during proposal evaluation concerning small
business matters, what is the first level of appeal for your OSDBU if
the situation is not resolved?

N/A - OSDBU cannot formally disagree: 2;
No specific first level of appeal: 3;
Agency Head: 2;
Deputy Agency Head: 4;
Chief Financial Officer: 1;
Other - Please describe in the box below: 10;
Don't know: 0;
Number of respondents: 22.

[End of table]

If you checked "Other" - please describe:

Q45. Does your agency require written justification from procurement
officials if they disagree with your OSDBU objections?

No written justification required: 12;
Written justification required - Please describe in the box below: 9;
Number of respondents: 21.

[End of table]

If you checked "Written justification required" - please describe:

Q46. Has your OSDBU disagreed with the procurement officials during
solicitation review concerning small business matters in the past 24
months?

Yes - OSDBU has disagreed with procurement officials: 5;
No - OSDBU has not disagreed with procurement officials: 15;
Number of respondents: 20.

[End of table]

Q47. If your OSDBU and the procurement officials have disagreed in the
past 24 months, approximately what percentage of contract awards was
in dispute?

1%-25%: 4;
26%-50%: 0;
51%-75%: 1;
76%-99%: 0;
100%: 0;
Number of respondents: 5.

[End of table]

Q48. Typically, what were the outcomes of these disagreements?

Q49. Is monitoring small businesses that receive prime contracts from
your agency currently a role or function of your OSDBU? For example,
monitoring can include your OSDBU meeting at regular intervals with
small businesses that receive prime contracts.

Yes - an OSDBU role or function: 12;
No - not an OSDBU role or function: 12;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q50. In general, to what extent does your OSDBU monitor small
businesses that receive prime contracts from your Agency?

Very great extent: 2;
Great extent: 3;
Moderate extent: 2;
Some extent: 4;
Little or no extent: 1;
Don't know: 0;
Number of respondents: 12.

[End of table]

Q51. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q52. Is monitoring prime contractors' implementation of sub-
contracting plans currently a role or function of your OSDBU? For
example, monitoring can include your OSDBU meeting at regular intervals
with small businesses that receive sub-contracts.

Yes - an OSDBU role or function: 19;
No - not an OSDBU role or function: 5;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q53. In general, to what extent does your OSDBU monitor the prime
contractors implementation of sub-contracting plans?

Very great extent: 4;
Great extent: 5;
Moderate extent: 4;
Some extent: 5;
Little or no extent: 1;
Don't know: 0;
Number of respondents: 19.

[End of table]

Q54. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q55. In what ways are agency program officials and procurement
officials made aware of small businesses as potential contractors?

Ways made aware-Not done;
Checked: 0;
Number of respondents: 24.

Ways made aware-Agency Small Business Contractor Database;
Checked: 19;
Number of respondents: 24.

Ways made aware-Meetings between procurement & business;
Checked: 22;
Number of respondents: 24.

Ways made aware-Meetings between agency program off & business;
Checked: 22;
Number of respondents: 24.

Ways made aware-SBA PRO-Net;
Checked: 22;
Number of respondents: 24.

Ways made aware-Dont know;
Checked: 0;
Number of respondents: 24.

Ways made aware-Other ways;
Checked: 11;
Number of respondents: 24.

[End of table]

If you checked "Other ways" - please describe:

Q56. Does your OSDBU have written policies and procedures relating to
the functions and duties of your OSDBU?

Yes - briefly describe the topics covered under these policies and
procedures in the box below: 22;
No: 2;
Number of respondents: 24.

[End of table]

If you checked "Yes" - please describe:

Q57. Is facilitating small business participation with your agency as
contractors, sub-contractors or suppliers currently a role or function
of your OSDBU?

Yes - an OSDBU role or function: 24;
No - not an OSDBU role or function: 0;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q58. In general, to what extent does your OSDBU facilitate small
business participation with your agency as contractors, sub-contractors
or suppliers?

Very great extent: 17;
Great extent: 5;
Moderate extent: 0;
Some extent: 1;
Little or no extent: 0;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q59. Please briefly explain your answer or describe the office that
carries out this role or function.

Q60. Is assisting small businesses to obtain payments from your agency
currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 20;
No - not an OSDBU role or function: 4;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q61. In general, to what extent does your OSDBU assist small businesses
to obtain payments from your agency?

Very great extent: 1;
Great extent: 4;
Moderate extent: 2;
Some extent: 7;
Little or no extent: 3;
Don't know: 0;
Number of respondents: 17.

[End of table]

Q62. Please briefly explain your answer or describe the office that
carries out this role or function.

Q62a. Is assisting small businesses to obtain payments from prime
contractors currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 17;
No - not an OSDBU role or function: 7;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q62b. In general, to what extent does your OSDBU assist small
businesses to obtain payments from prime contractors?

Very great extent: 1;
Great extent: 2;
Moderate extent: 1;
Some extent: 4;
Little or no extent: 3;
Don't know: 0;
Number of respondents: 11.

[End of table]

Q62c. Please briefly explain your answer or describe the office that
carries out this role or function.

Q63. Is disseminating information to small businesses on how to secure
business opportunities with your agency currently a role or function of
your OSDBU?

Yes - an OSDBU role or function: 24;
No - not an OSDBU role or function: 0;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q64. In general, to what extent does your OSDBU disseminate information
to small businesses on how to secure business opportunities with your
agency?

Very great extent: 19;
Great extent: 3;
Moderate extent: 1;
Some extent: 1;
Little or no extent: 0;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q65. Please briefly explain your answer or describe the office that
carries out this role or function:

Q66. Is hosting conferences to familiarize small businesses with
opportunities at your agency currently a role or function of your
OSDBU?

Yes - an OSDBU role or function: 21;
No - not an OSDBU role or function: 3;
Don't know: 0;
Number of respondents: 24.

[End of table]

Q67. Has your OSDBU hosted any conferences to familiarize small
businesses with opportunities at your agency in the past 24 months?

Yes: 20;
No: 1;
Number of respondents: 21.

[End of table]

Q68. How many conferences has your OSDBU hosted to familiarize small
businesses with opportunities at your agency in the past 24 months?

How many conferences has OSDBU hosted in past 24 months?
Mean: 39;
Median: 12;
Minimum: 3;
Maximum: 405;
Number of respondents: 19.

[End of table]

Q69. Please briefly explain your answer or describe the office that
carries out this role or function.

Q70. Is sponsoring training programs for small businesses currently a
role or function of your OSDBU?

Yes - an OSDBU role or function: 17;
No - not an OSDBU role or function: 6;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q71. Has your OSDBU sponsored any training programs for small
businesses in the past 24 months?

Yes: 15;
No: 2;
Number of respondents: 17.

[End of table]

Q72. Please briefly explain your answer or describe the office that
carries out this role or function.

Q73. Is conducting meetings with small business trade associations
and/or prime contractors currently a role or function of your OSDBU?

Yes - an OSDBU role or function: 22;
No - not an OSDBU role or function: 1;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q74. Has your OSDBU conducted any meetings with small business trade
associations and/or prime contractors in the past 24 months?

Yes: 20;
No: 2;
Number of respondents: 22.

[End of table]

Q75. On average, how many meetings does your OSDBU conduct with small
business trade associations and/or prime contractors in a typical week?

Average meetings OSDBU conducts w/ trade assocs in week;
Mean: 7;
Median: 4;
Minimum: 0;
Maximum: 47;
Number of respondents: 20.

[End of table]

Q76. Please briefly explain your answer or describe the office that
carries out this role or function.

Q77a. How many full-time equivalent (FTE) staff in fiscal year 2003,
excluding administrative support staff, does your OSDBU employ?

FTEs in FY 2003;
Mean: 12;
Median: 6;
Minimum: 1;
Maximum: 90;
Number of respondents: 23.

[End of table]

Q78. Do you, the Director of the OSDBU, have supervisory authority
over personnel with duties and functions of your OSDBU?

Yes: 22;
No: 2;
Number of respondents: 24.

[End of table]

Q78a. Do you, the Director of the OSDBU, serve as the primary contact
for your agency for inquiries into small business matters and those
affecting your agency's socioeconomic program goals?

Yes: 22;
No - please list the primary contact below: 1;
Number of respondents: 23.

[End of table]

Q79. If you checked "No" - list the primary contact:

Q80. Who is responsible for ensuring that small businesses receive the
maximum practicable procurement opportunities from the agency?

OSDBU Director: 13;
Procurement Director: 1;
Agency Head: 3;
Deputy Agency Head: 1;
Other - please explain in the box below: 5;
Number of respondents: 23.

[End of table]

If you checked "Other" - explain:

Q81. Has the SBA designated one or more procurement center
representatives to your agency?

Yes: 20;
No: 3;
Number of respondents: 23.

[End of table]

Q82. Have you, the Director of the OSDBU, assigned a small business
technical advisor to each office with a SBA procurement center
representative?

Yes: 13;
No: 7;
Number of respondents: 20.

[End of table]

Q83. To what extent does your OSDBU work with the SBA procurement
center representatives?

Very great extent: 4;
Great extent: 6;
Moderate extent: 1;
Some extent: 3;
Little or no extent: 5;
Don't know: 0;
Number of respondents: 19.

[End of table]

Q84. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q85. To what extent does your OSDBU cooperate and consult with the SBA?

Very great extent: 10;
Great extent: 6;
Moderate extent: 3;
Some extent: 2;
Little or no extent: 2;
Don't know: 0;
Number of respondents: 23.

[End of table]

Q86. Please briefly explain your answer to the previous question -
what level of activity, if any, has your OSDBU had in this area?

Q87. Does your OSDBU negotiate the small business goals, (also referred
to as socioeconomic goals) for your agency with the SBA?

Yes: 21;
No: 3;
Number of respondents: 24.

[End of table]

Q88. In your agency's annual small business goal-setting process, does
your OSDBU discuss potential goals with any of the following parties?

OSDBU discuss goals with: A. Agency head or deputy?
Yes: 16;
No: 3;
Number of respondents: 19.

OSDBU discuss goals with: B. Procurement officials;
Yes: 18;
No: 0;
Number of respondents: 18.

OSDBU discuss goals with: C. Agency program officials;
Yes: 14;
No: 2;
Number of respondents: 16.

OSDBU discuss goals with: D. Other - please describe in the box below;
Yes: 6;
No: 2;
Number of respondents: 8.

[End of table]

If you checked "Other" - please describe:

Q89. Does your OSDBU have other functions that do not relate to section
15(k) of the Small Business Act? For example, responsibilities for
monitoring agency processes in areas other than those relating to
small business.

Q90. To what extent is your OSDBU facing each of the following
challenges in performing its mission?

Challenges: A. Lack of independent budget;
Very great extent: 1;
Great extent: 1;
Moderate extent: 1;
Some extent: 5;
Little or no extent: 15;
Don't know: 0;
Number of respondents: 23.

Challenges: B. Limited budgetary resources;
Very great extent: 2;
Great extent: 3;
Moderate extent: 3;
Some extent: 9;
Little or no extent: 6;
Don't know: 0;
Number of respondents: 23.

Challenges: C. Lack of adequate staffing level;
Very great extent: 1;
Great extent: 4;
Moderate extent: 5;
Some extent: 7;
Little or no extent: 6;
Don't know: 0;
Number of respondents: 23.

Challenges: D. Lack of influence in procurement process;
Very great extent: 2;
Great extent: 2;
Moderate extent: 3;
Some extent: 6;
Little or no extent: 10;
Don't know: 0;
Number of respondents: 23.

Challenges: E. Director has insufficient access to head/deputy;
Very great extent: 0;
Great extent: 0;
Moderate extent: 2;
Some extent: 3;
Little or no extent: 18;
Don't know: 0;
Number of respondents: 23.

Challenges: F. Lack of independence to oppose procurement decns;
Very great extent: 0;
Great extent: 2;
Moderate extent: 2;
Some extent: 2;
Little or no extent: 17;
Don't know: 0;
Number of respondents: 23.

Challenges: G. Director employment status (appointee vs. civil);
Very great extent: 0;
Great extent: 0;
Moderate extent: 1;
Some extent: 1;
Little or no extent: 19;
Don't know: 1;
Number of respondents: 22.

Challenges: H. Other - Please describe in box below;
Very great extent: 1;
Great extent: 0;
Moderate extent: 1;
Some extent: 0;
Little or no extent: 0;
Don't know: 0;
Number of respondents: 2.

[End of table]

If you checked "Other" - Please describe:

Q91. If you have any other comments on the topics covered in this
survey, please enter them below.

[End of section]

Appendix III: GAO Contact and Staff Acknowledgments:

GAO Contacts:

David G. Wood, (202) 512-8678 Charles E. Wilson, Jr., (202) 512-6891:

Staff Acknowledgments:

In addition to the individuals named above, Emily R. Chalmers, William
R. Chatlos, Nancy Eibeck, Brodi Fontenot, John T. McGrail, Marc Molino,
and Carl Ramirez made significant contributions to this report.

(250150):

FOOTNOTES

[1] See U.S. General Accounting Office, Small and Disadvantaged
Businesses: Some Agencies' Advocates Do Not Report to the Required
Management Level, GAO-03-863 (Washington, D.C.: Sept. 4, 2003).

[2] See appendix I for the list of agencies that participated in the
survey.

[3] See appendix II for a summary of the OSDBU directors' responses to
the questionnaire.

[4] The use of sealed bids is a method of contracting that uses
competitive bidding where the award is made generally on the basis of
cost. For negotiated contracts, bids are not sealed. Agencies use
negotiation when it may be in the best interest of the government to
consider awarding the contract on a basis other than the lowest price.
Agencies use simplified acquisition procedures to the maximum extent
practicable for all purchases of supplies or services not exceeding a
certain threshold, generally $100,000. Purchases can be made through
various streamlined means, including governmentwide commercial
purchase cards, purchase orders, and blanket purchase agreements.

[5] A prime contract is any direct contract between the government and
a contractor.

[6] The small business categories include small businesses; women-owned
small businesses; small disadvantaged businesses, including section
8(a) and non-section 8(a) disadvantaged businesses; HUBZone small
businesses; veteran-owned small businesses; and service-disabled,
veteran-owned small businesses.

[7] These functions are also part of section 19.201(d) of the FAR, the
implementing regulation for section 15(k) of the Small Business Act.

[8] The Small Business Reauthorization Act of 1997 defines the bundling
of contract requirements as the consolidation of two or more
procurement requirements for goods or services previously provided or
performed under separate, smaller contracts into a solicitation of
offers for a single contract that is likely to be unsuitable for award
to a small business concern.

[9] A subcontractor is any person, other than the prime contractor, who
offers to furnish or furnishes any supplies, materials, equipment, or
services of any kind under a prime contract.

[10] Under section 15(k), the OSDBU director is to make recommendations
regarding whether a particular contract should be awarded to a small
business under certain programs designed to promote contracting
opportunities for small businesses.

[11] The small business technical advisor is to be a technically
trained employee of the contracting activity who is familiar with the
supplies or services purchased at the office, and is to assist the
procurement center representative.

[12] Another GAO team is currently conducting a study on the extent to
which contract bundling occurs and the effect of OMB's strategy on
small business federal contracting opportunities.

[13] Six respondents did not provide an answer.

[14] Three of the 24 OSDBU directors (those at the Department of the
Interior, the Office of Personnel Management, and the U.S. Agency for
International Development) reported in the survey that SBA had not
assigned a procurement center representative.

[15] The threshold for construction contracts is $1,000,000.

[16] These forms include the Standard Form 294 (Subcontracting Report
for Individual Contracts) and the Standard Form 295 (Summary
Subcontract Report).

[17] The Departments of the Air Force, Agriculture, Commerce, Energy,
Health and Human Services, Labor, the Treasury; the National
Aeronautics and Space Administration; and the Office of Personnel
Management.

[18] The Defense Logistics Agency; the Departments of Agriculture,
Commerce, Health and Human Services, Labor, State, and Transportation;
and the National Aeronautics and Space Administration.

[19] The Defense Logistics Agency and the Departments of
Transportation, Health and Human Services, and State.

[20] The Federal Emergency Management Agency was not included in the
survey because it became part of the Department of Homeland Security in
March 2003 and ceased to be an independent agency.

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