SBA's 7(j) Management Assistance Program--Changes Needed To Improve Efficiency and Effectiveness

CED-81-149: Published: Sep 29, 1981. Publicly Released: Sep 29, 1981.

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The 7(j) Management Assistance Program is part of a Small Business Administration (SBA) effort to help socially and economically disadvantaged people create and maintain small businesses by improving their technical and management skills. In 10 years, funds allocated to the program have risen from about $1 million to about $10 million, and the number of small business owners served has grown from about 1,000 to 6,000. The Economic Opportunity Act authorized SBA to: (1) contract with consulting firms that agree to provide counseling and general management assistance to individuals referred to them by SBA on an "on call" basis; and (2) provide supplementary management and technical assistance exclusively to firms participating in the SBA 8(a) program, which was designed to channel noncompetitive federal contracts to disadvantaged small businesses.

Administrative problems have limited the impact of the 7(j) program. Program resources have not been well coordinated with other SBA programs, and funds targeted for 8(a) firms were used for questionable purposes. Consequently, program funds have not been used in the most efficient manner, resulting in fewer clients receiving management and technical assistance than would otherwise have been possible. SBA used contractors when less expensive agency resources were available, applied different contracting methods without reasonable control over rates, and allowed contractors to make excessive use of subcontractors. Small business owners had varying opinions regarding the value of the advice the contractors gave them. SBA procedures require agency personnel to contact all businesses receiving contracting assistance, but only 54 percent of the clients which GAO interviewed said that SBA contacted them about the results of the contractors' work. SBA has not developed a plan for administering the program nor has it established specific program goals, objectives, or priorities. The lack of planning has led to subjective funding decisions, reliance on unsolicited proposals to satisfy program requirements, and scattered program direction. SBA funded projects that were not within the legislative objectives, costly projects which benefited only one or a few firms, and projects which it should have performed itself. Also, SBA did not adequately monitor contracts awarded under the program.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to revise the 7(j)(10) standard operating procedures to clarify the responsibilities of individuals charged with contract monitoring.

    Agency Affected: Small Business Administration

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to develop procedures for systematically screening all requests for management assistance which identify the types of assistance programs available and the situations and clients these programs are best capable of helping.

    Agency Affected: Small Business Administration

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to define and rank: (1) 7(j)(10) program goals and objectives consistent with the program's legislative mandate; (2) the number and needs of program participants; and (3) the availability of 7(j)(10) resources.

    Agency Affected: Small Business Administration

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to direct regional and district offices to follow existing agency procedures for obtaining feedback on client satisfaction with services provided by on call contractors.

    Agency Affected: Small Business Administration

  5. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to develop a written plan describing how program resources will be used. This plan should be compatible with the agency's defined program goals and objectives.

    Agency Affected: Small Business Administration

  6. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to revise the 7(j)(10) standard operating procedures to clarify the criteria and process for the allocation of 7(j)(10) program resources.

    Agency Affected: Small Business Administration

  7. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to revise the 7(j)(10) standard operating procedures to clarify the criteria for 7(j)(10) project selection.

    Agency Affected: Small Business Administration

  8. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to establish a maximum task-day cost allowable under noncompetitive 8(a) contracts for various types of on call-contract services.

    Agency Affected: Small Business Administration

  9. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator for Minority Small Business and Capital Ownership Development to direct regional and district offices to follow existing agency procedures for assuring that on call contractors are not exceeding SBA subcontracting limits.

    Agency Affected: Small Business Administration

 

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