Business Regulation and Consumer Protection:

Small Business Subcontracting Report Validation Can Be Improved

GAO-02-166R: Published: Dec 13, 2001. Publicly Released: Jan 15, 2002.

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GAO assessed agencies' validation of data submitted by prime contractors on their subcontracting achievements. Of $77 billion in subcontracting reported in fiscal year 2000, $31 billion went to small businesses, such as women-owned, and small disadvantaged businesses, as well as those located in historically underutilized business zones. Both civilian and defense agencies follow a similar process to validate subcontracting data--one that involves visiting contractors, assessing compliance with subcontracting plans, and evaluating accounting systems as well as management support of the subcontracting program. Most contractors GAO reviewed are making good faith efforts to comply with their subcontracting plans. However, these reviews could be improved to enhance the validation and use of subcontracting data.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Administrator of SBA should determine whether it is cost-effective to do the following and, if so, base SBA contractor reviews on compliance risks, such as size of the contract, date of the last review, and previous ratings, rather than time available to do the reviews and proximity of the contractors to the reviewer.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: SBA issued SBA Procedural Notice 8000-584, effective November 19, 2002. This procedural notice directs CMRS to prioritize on-site compliance reviews by dollar value of federal contracts, length of time since last SBA review, results of most recent compliance review (those with marginal or unacceptable ratings receive highest priority), and the results of the most recent performance or desk review. SBA plans to include this procedural notice in its next revision of the CMR Standard operating procedures manual, SOP 60 03 5 Subcontracting Assistance Program.

    Recommendation: The Administrator of SBA should determine whether it is cost-effective to do the following and, if so, send the results of the reviews to contracting officers, especially when the ratings are marginal.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: SBA issued SBA Procedural Notice 8000-584, effective November 19, 2002. This procedural notice directs CMRs to send a copy of the contractor's rating and any recommendations for improvement due to a program review to the responsible contracting officer.

    Recommendation: To promote governmentwide oversight, both the Director of DCMA and the Administrator of SBA should develop reports that summarize their reviews; for example, in terms of the percentage of contractors meeting their goals and the progress being made over time.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: DOD's implementation of this recommendation followed SBA's implementation as noted below. According to DOD's formal response, they successfully completed Phase I of eSRS implementation. The Deputy Undersecretary of Defense (Acquisition and Technology) issued a memorandum, dated July 19, 2008, announcing that Phase I was successful and directing that Phases II and III be collapsed into Phase II. Complete implementation of eSRS took place with the reporting period ending September 30, 2008. Reports have been received from DOD contractors since October 30, 2008. This recommendation was officially closed by DOD on January 27, 2009. SBA implemented their portion of eSRS when they developed a standard report in eSRS titled "Analysis of Subcontracting Plan Goal Attainment." This report was made available to the government for usage in October 2005. Since then, SBA has been making changes to improve the reports generated by eSRS. For example, one change was a trend table for the development of a 5-year trend report. Hence, both SBA and DOD have implemented GAO's recommendation. On the basis of these actions, we will close this recommendation as implemented.

    Recommendation: To promote governmentwide oversight, both the Director of DCMA and the Administrator of SBA should develop reports that summarize their reviews; for example, in terms of the percentage of contractors meeting their goals and the progress being made over time.

    Agency Affected: Department of Defense: Defense Contract Management Agency

    Status: Closed - Implemented

    Comments: According to DOD's formal response, they successfully completed Phase I of eSRS implementation. The Deputy Undersecretary of Defense (Acquisition and Technology) issued a memorandum, dated July 19, 2008, announcing that Phase I was successful and directing that Phases II and III be collapsed into Phase II. Complete implementation of eSRS took place with the reporting period ending September 30, 2008. Reports have been received from DOD contractors since October 30, 2008. This recommendation was officially closed by DOD on January 27, 2009. SBA implemented their portion of eSRS when they developed a standard report in eSRS titled "Analysis of Subcontracting Plan Goal Attainment". This report was made available to the government for usage in October 2005. Since then, SBA has been making changes to improve the reports generated by eSRS. For example, one change was a trend table for the development of a 5-year trend report. On the basis of these actions, we will close this recommendation as implemented.

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