Small Business Administration:

Agency Should Assess Resources Devoted to Contracting and Improve Several Processes in the 8(a) Program

GAO-09-16: Published: Nov 21, 2008. Publicly Released: Nov 21, 2008.

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The Small Business Administration (SBA) helps small businesses gain access to federal contracting opportunities and helps socially and economically disadvantaged small businesses, known as 8(a) firms, by providing management and contracting assistance. SBA negotiates agency-specific goals to ensure that the federal government meets the statutory goal of awarding 23 percent of contract dollars to small businesses. GAO was asked to (1) describe how SBA sets small business contracting goals and the extent to which federal agencies met these goals; (2) examine the role of SBA staff in supporting small business contracting at selected federal agencies; and (3) examine SBA's overall administration of the 8(a) program. To address these objectives, GAO reviewed SBA guidance and SBA Inspector General (IG) reports, interviewed SBA and other federal officials, and conducted site visits and file reviews at four SBA locations.

SBA reviews prior year goal achievement and other factors to set individual contracting goals necessary for federal agencies to achieve the governmentwide goal of awarding 23 percent of federal contract dollars to small businesses. Individual agency results varied in fiscal years 2000 through 2006, although the agencies collectively achieved or came close to the 23 percent goal. In fiscal year 2006, SBA began using a scorecard to help monitor agencies' small business contracting efforts. Of the 24 agencies rated, half received the lowest rating (for failing to meet at least two contracting goals and other criteria). SBA later reviewed agency progress in implementing small business procurement plans and many agencies improved their ratings. SBA staff advocate, review, and monitor small business contracting at federal agencies, but resource constraints have limited the ability of staff to fulfill these responsibilities. SBA's procurement center representatives (PCR) work with federal agencies by reviewing proposed acquisitions, recommending contract set-asides, and performing surveillance reviews (which monitor small business contracting at federal agencies). As of August 2008, SBA had 59 PCRs, with many responsible for multiple agencies. SBA has recognized that more PCRs are needed, but has not developed a formal plan to align staff resources with program objectives. Resource constraints also affected SBA's commercial market representatives (CMR), who monitor subcontracting plans. For fiscal year 2006, the SBA IG reported that CMRs monitored less than half of the 2,200 large prime contractors. These resource constraints reduced assurances that SBA can monitor contracting effectively. SBA's administration of the 8(a) business development program is challenged by several factors, including some participants not understanding the program's purpose and requirements, its staff's diminished ability to conduct business development activities, an inefficient process to terminate firms, and a lack of routine surveillance reviews specific to the program. While SBA has controls in place to determine if firms are eligible to enter the program, firms do not have to participate in an information session or complete an assessment that rates their suitability for the program. Thus, some firms may have entered the program with unrealistic expectations or not clearly understood program requirements. SBA officials said that an emphasis on completing annual reviews of 100 percent of 8(a) firms, which are time intensive, and an inefficient termination process for noncompliant 8(a) firms diminished the time its business development specialists had for providing business development assistance. Delays in terminating firms also could result in noncompliant firms obtaining contracts. Finally, in 2006, the SBA IG recommended that SBA regularly conduct surveillance reviews for the 8(a) program. However, SBA has not yet implemented this recommendation. As a result, SBA has reduced assurances that agencies have complied with monitoring requirements for the 8(a) program.

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: To improve its administration of the prime contracting, subcontracting, and 8(a) business development programs, and in acknowledgment of the competing demands for business development specialists to complete required annual reviews of 8(a) firms and support the mission of the 8(a) program--that is, develop and prepare small disadvantaged firms for procurement and other business opportunities-- the Administrator of SBA should (1) assess the workload of business development specialists to ensure they can carry out their responsibilities. As part of such an assessment, SBA could review the size of the 8(a) portfolio for all business development specialists and determine what mechanisms can be used to prioritize or redistribute their workload; (2) in a timely manner, develop and implement its proposed plan for creating tools that would assist in the provision of business development assistance for 8(a) firms; and (3) develop a timetable for planned changes to the termination process to ensure that staff monitoring 8(a) participants can carry out terminations from the program in a timely manner.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: According to SBA, the Office of Field operations conducted an assessment of the workload of business development, now called business opportunity specialists, through its district director working group, that in FY 2012 established the optimum number of firms to be assigned each BOS, revised position descriptions to clarify expectations, and developed new performance standards. In addition, SBA is in the process of developing a new automated information management system, One Track CMS, designed to capture and monitor data regarding business development assistance provided to 8a participants. The system is planned to be deployed in early FY 2014. Regarding the termination process, officials stated as of September 2009, SBA revised its 8(a) program procedures to shorten the termination process and improve internal controls. The procedural change shortens the termination process by 30 days to 135 days. While this falls short of the 75-day reduction SBA officials planned at the time of our November 2008 report, it may succeed in removing more ineligible firms from the program.

    Recommendation: To improve its administration of the prime contracting, subcontracting, and 8(a) business development programs, and to better educate prospective applicants for the 8(a) program and maximize limited SBA resources during program tenure of participants, the Administrator of SBA should take additional steps to ensure that firms applying for the program understand its requirements, and have realistic expectations for participation. Such steps could include an education requirement, such as a seminar or assessment tool.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: In September 2012, SBA updated the training available to prospective 8(a) participants. The training series consists of online courses, supplemental workbooks and other educational materials, including a module called Pre 8(a) Business Development Module-Setting Expectations. SBA officials explained that previously SBA provided similar training, but the purpose of a comprehensive online library of materials is to familiarize small business owners with all aspects of the federal procurement process and to assist them with the growth and development of their firms. Although firms are not required to take the courses, it is highly recommended to ensure that the firms fully understand the opportunities that exist and how to prepared the potential 8(a) firms to fully participate in the program.

    Recommendation: To improve its administration of the prime contracting, subcontracting, and 8(a) business development programs, the Administrator of SBA should assess resources allocated for procurement center representative and commercial market representative functions and develop a plan to better ensure that these staff can carry out their responsibilities.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: In 2010, SBA had contracted with a consulting firm to conduct a study to define the optimal environment in which a PCR's efforts would have the maximum impact on directing contracts to qualified and capable small businesses. SBA received the final report in December 2010. As of April 2013, according to SBA officials, SBA had realigned PCRs to contract activities with the highest small business opportunities, revised PCR performance measures, and provided tools, such as ePCR, to gain additional oversight of buying activities procurement activities to ensure maximum practicable opportunities for small business. Officials explained that CMR assignments was not incorporated in the PCR assessment. However, they stated resource allocation decisions are based on workload and needs assessments made by the individual Area Directors and coordinated with SBA headquarters staff.

    Recommendation: To improve its administration of the prime contracting, subcontracting, and 8(a) business development programs, and to increase the usefulness of surveillance reviews for the 8(a) program, the Administrator of SBA should update its guidance to incorporate regular reviews of 8(a) contracting in the scope of the reviews.

    Agency Affected: Small Business Administration

    Status: Open

    Comments: For FY 2012, SBA developed a checklist to be incorporated into surveillance reviews to address findings in the SBA OIG report 11-11 that SBA did not adequately assess the small business programs of contracting activities in its surveillance reviews. SBA has created a checklist for the surveillance reviews to include a review of the 8(a) program; however, changes to the 2004 guidance have not been implemented.

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