Business Regulation and Consumer Protection:

The SBA 8(a) Procurement Program--A Promise Unfulfilled

CED-81-55: Published: Apr 8, 1981. Publicly Released: Apr 8, 1981.

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The 8(a) Procurement Program of the Small Business Administration (SBA) is designed to channel noncompetitive federal contracts to disadvantaged small businesses to help them to become self-sufficient. The program also provides management, technical, marketing, and financial aid. A review was made of the program's implementation.

The program has had some benefits: the formation of many disadvantaged firms, continued operation of these firms, providing experience in business management, and assistance in getting commercial and non-8(a) government work. But the program has fallen short of its intended goal. Only 166 of the participating firms have graduated from the program as competitive businesses. A large volume of 8(a) contracts went to 50 firms which continue to be active participants. Over three-fifths of the firms have been in the program between 7 and 11 years. More than half of the participants that GAO interviewed were dissatisfied with or did not need the provided management, technical, and marketing aid. Removing inappropriate 8(a) firms from the program would give other disadvantaged firms an opportunity to participate. Often assessments of whether 8(a) contract awards will have an impact on other small businesses were not always made or were superficial. Several interrelated factors have limited the program's effectiveness: the President's yearly 8(a) contract goal imposed on SBA, vague program graduation criteria, missing business plan and financial statement data, and limited staff resources. Redirecting the program could free the limited staff to better serve program participants, provide an opportunity for other disadvantaged firms to participate, and enhance the program's credibility within the business community.

Matter for Congressional Consideration

  1. Status: Closed

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

    Matter: Congress should further build on the recently enacted legislation by considering the following alternatives, some of which restructure the 8(a) program: (1) continue the present 8(a) program; (2) reduce the size of the present 8(a) program; (3) establish a two-tier program; and (4) replace the 8(a) program.

Recommendations for Executive Action

  1. Status: Closed

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

    Recommendation: The Administrator, SBA, should take action to fill business development specialists (BDS) vacancies so that the 8(a) program operates at full staffing strength as soon as the presidentially imposed hiring freeze is lifted.

    Agency Affected: Small Business Administration

  2. Status: Closed

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

    Recommendation: The Administrator, SBA, should provide BDS with adequate training, especially in understanding financial statements, so that the status of 8(a) firms can be assessed.

    Agency Affected: Small Business Administration

  3. Status: Closed

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

    Recommendation: The Administrator, SBA, should direct participating 8(a) firms to submit accurate and timely business plan projections and financial statements as required by SBA standard operating procedures.

    Agency Affected: Small Business Administration

  4. Status: Closed

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

    Recommendation: The Administrator, SBA, should assure that participating 8(a) firms submit financial statements that break out 8(a) and non-8(a) sales so that progress can be measured.

    Agency Affected: Small Business Administration

  5. Status: Closed

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

    Recommendation: The Administrator, SBA, should remove inappropriate 8(a) firms by assuring that the graduation criteria being developed is aggressively implemented and termination requirements set forth in SBA procedures are followed.

    Agency Affected: Small Business Administration

  6. Status: Closed

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

    Recommendation: The Administrator, SBA, should provide standardized criteria for determining adverse impact so that SBA regions and districts make proper determinations.

    Agency Affected: Small Business Administration

  7. Status: Closed

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

    Recommendation: The Administrator, SBA, should revise the standard operating procedures to require that sufficient documentation supporting the impact determinations be included in the file.

    Agency Affected: Small Business Administration

  8. Status: Closed

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

    Recommendation: The Administrator, SBA, should require SBA program personnel to fully implement the adverse impact policy aimed at protecting the rights of small businesses.

    Agency Affected: Small Business Administration

  9. Status: Closed

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

    Recommendation: The Administrator, SBA, should direct SBA personnel, in cooperation with federal procuring agencies, to identify items that 8(a) firms can provide that have been traditionally furnished by big business.

    Agency Affected: Small Business Administration

 

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