Small Business Contracting:

Action Needed by Those Agencies Whose Advocates Do Not Report to Agency Heads as Required

GAO-11-418: Published: Jun 3, 2011. Publicly Released: Jun 16, 2011.

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Section 15(k) of the Small Business Act requires that all federal agencies with procurement powers establish an Office of Small and Disadvantaged Business Utilization (OSDBU) to advocate for small businesses. Section 15(k)(3) requires that OSDBU directors be responsible only to and report directly to agency or deputy agency heads. GAO was asked to assess agencies' compliance with the reporting structure and identify the functions OSDBUs performed. GAO reviewed compliance with section 15(k)(3) at 16 agencies--the 7 agencies that each procured more than $15 billion in goods and services in 2009 and 9 that it had previously reported were not complying with this requirement. GAO also surveyed the OSDBU directors at 25 agencies that represented more than 98 percent of civilian obligations and 90 percent of DOD obligations in 2009.

Nine of the 16 federal agencies that GAO reviewed were in compliance with section 15(k)(3) of the Small Business Act, which requires OSDBU directors to be responsible only to and report directly to the agency or deputy agency head. The remaining seven agencies were not in compliance with the provision, and their OSDBU directors reported to lower-level officials or had delegated OSDBU responsibilities to officials who did not meet the reporting requirement. These agencies were not in compliance when GAO last examined them in 2003. During GAO's current review, directors who reported to agency heads cited benefits to the relationship, while those who did not had mixed views. GAO concluded that the views expressed by the directors at noncompliant agencies did not justify noncompliance and that these agencies should comply or provide support to Congress of their need, if any, for statutory flexibilities. Ongoing noncompliance with section 15(k)(3) undermines the intent of the act and may prevent some OSDBU directors from having direct access to top agency management. Consistent with its 2004 report, GAO's current work found that the 25 OSDBU directors surveyed focused their procurement activities on certain functions listed in section 15(k). At least 19 directors listed the five functions related to contract bundling, maintaining supervisory authority over staff, and helping small businesses obtain payments from agencies as among their duties. Fewer directors viewed the remaining three functions, such as reviewing acquisitions for small business set-asides and assisting small businesses to obtain payments from prime contractors, as duties. Directors who did not view these functions as their responsibility generally noted that contracting or program staff performed them. Whether OSDBU directors who do not perform certain functions listed in 15(k) are complying with the statute is not clear. GAO recommends that agencies not in compliance with section 15(k)(3) take steps to comply with this statutory requirement or report to Congress on why they have not complied, including any requests for statutory reporting flexibility as appropriate. SSA agreed with the recommendation, and Interior agreed to reevaluate its reporting structure. Commerce, Justice, State, and the Treasury disagreed, believing they were in compliance. GAO maintains its position on agencies' compliance status, as discussed further in the report. Agriculture did not comment.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Agriculture made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure that were consistent with legislation in place at the time we conducted our review. (Congress has since enacted revised requirements; we did not assess Agriculture's compliance with these new requirements.) Specifically, in a July 2014 Federal Register notice, Agriculture revised its delegations of authority to reflect that the Assistant Secretary for Administration was no longer the designated OSDBU director. Rather, the official responsible for carrying out the duties of the OSDBU director would report directly to the Secretary or Deputy Secretary. The notice also stated that offices within the Departmental Management organization would continue to provide general administrative support to the OSDBU. In addition, the OSDBU director's position description as of September 2015 stated that, while the director is under the administrative control of the Assistant Secretary for Administration, the director has direct access to the Secretary and/or Deputy Secretary on all matters related to the OSDBU to ensure top level support for small business efforts and effective implementation of program requirements. The position description also noted that the Deputy Secretary is the rating official for performance and the Secretary is the approving official to ensure the incumbent's expectations and performance are aligned with USDA goals. Finally, the OSDBU director's performance agreement for fiscal year 2015 showed that the Deputy Secretary was the rating official.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: In response to our recommendation, Treasury made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure that were consistent with legislation in place at the time we conducted our review. (Congress has since enacted revised requirements; we did not assess Treasury's compliance with these new requirements.) Specifically, the OSDBU director's position description, dated January 2015, now states that the director is appointed by, and reports directly to, the Deputy Secretary of the Treasury. Treasury's organizational chart also shows that the OSDBU director reports directly to the Deputy Secretary. In addition, the OSDBU director provided support showing that he had monthly meetings scheduled with the Deputy Secretary. Finally, the Deputy Secretary signed the OSDBU director's performance agreement for fiscal year 2015. Taking these steps to give the Treasury OSDBU director direct access to the deputy agency head should help increase small businesses' visibility and help the director advocate for them effectively.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Justice made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure that were consistent with legislation in place at the time we conducted our review. (Congress has since enacted revised requirements; we did not assess Justice's compliance with these new requirements.) Specifically, in an October 2011 response to the report, Justice stated that while the Deputy Assistant Attorney General for Policy, Management and Planning would continue in the role of rating official for the OSDBU director, it planned to elevate the review function for the OSDBU director's performance appraisal to the Office of the Deputy Attorney General. According to the agency, this change would reinforce and enhance the OSDBU director's access to the Deputy Attorney General. To effect this change, Justice stated that it would revise the OSDBU director's position description to clarify the relationship of this position to the Deputy Attorney General and that its placement within the Justice Management Division was for administrative support purposes only. The revised position description, dated November 2011, states that for purposes of administrative management, support, and assistance, the OSDBU is organizationally in the Justice Management Division. It also notes that the OSDBU director reports to the Deputy Attorney General for all substantive matters related to his/her responsibilities for implementing and executing the functions and duties required by sections 637 and 644 of title 15 U.S. Code. In addition, it states that the Associate Deputy Attorney General is the rating official and the Deputy Attorney General the reviewing official for performance rating purposes. Taking these steps to give the OSDBU director direct access to the deputy agency head should help increase small businesses' visibility and help the director advocate for them effectively.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Department of Justice

  4. Status: Closed - Implemented

    Comments: In response to our recommendation, Commerce made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure that were consistent with legislation in place at the time we conducted our review. (Congress has since enacted revised requirements; we did not assess Commerce's compliance with these new requirements.) Specifically, Commerce notified the Chairman of the Subcommittee on Contracting and Workforce, House Committee on Small Business in October 2011 that while the agency planned to maintain a dual reporting structure OSDBU, it planned to strengthen the relationship between the OSDBU Director and the Deputy Secretary by scheduling meetings every other month. In November 2011, Commerce notified the Chairman of the House Committee on Small Business that it would also ensure that (1) the OSDBU director had access to senior staff in the Deputy Secretary's office in between meetings with the Deputy Secretary and (2) the OSDBU performance evaluations would be conducted by either the Senior Advisor to the Deputy Secretary or the Chief of Staff to the Deputy Secretary and reviewed by the Deputy Secretary. In December 2012, Commerce provided GAO with documentation showing that the OSDBU director had meetings scheduled with the Deputy Secretary once every 2 months and biweekly meetings scheduled with the Senior Advisor to the Deputy Secretary. In addition, the OSDBU director's performance plan for fiscal year 2012 showed that the rating official was the Senior Advisor to the Deputy Secretary and the reviewing official was the Deputy Secretary. Finally, Commerce revised the agency's internal order on the OSDBU effective April 2015. The order changed the organizational placement and reporting structure for the OSDBU from the Chief Financial Officer and Assistant Secretary for Administration to the Deputy Secretary. Specifically, it stated that the OSDBU shall be headed by a director who shall be responsible to, and report directly to, the Deputy Secretary. Taking these steps to give the OSDBU director direct access to the deputy agency head should help increase small businesses' visibility and help the director advocate for them effectively.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Department of Commerce

  5. Status: Closed - Implemented

    Comments: The Department of the Interior made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure that were consistent with legislation in place at the time we conducted our review. (Congress has since enacted revised requirements; we did not assess Interior's compliance with these new requirements.) Specifically, in a January 2015 job announcement for the OSDBU director position, Interior stated that the OSDBU director was a direct report to the department's Deputy Secretary. Further, in November 2015, Interior provided an updated organizational chart showing that the OSDBU director reports to the Deputy Secretary. Similarly, the Departmental Manual was updated to state that the director reports to the Deputy Secretary and serves as the principal policy advisor to the Deputy Secretary and Assistant Secretary - Policy, Management and Budget for the department's small business programs. Finally, the OSDBU director's performance plan for fiscal year 2016 was signed by the Deputy Assistant Secretary - Budget, Finance, Performance and Acquisition as the rating official and the Deputy Secretary as the reviewing official. Taking these steps to give the OSDBU director direct access to the deputy agency head should help increase small businesses' visibility and help the director advocate for them effectively.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Department of the Interior

  6. Status: Closed - Implemented

    Comments: In response to our recommendation, the Social Security Administration (SSA) has made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure. Specifically, in August 2011, SSA notified us that effective July 31, 2011, the agency's OSDBU director had begun reporting to the Deputy Commissioner, the deputy agency head for SSA. The OSDBU director's position description was revised on August 10, 2011, to show that the director was being moved from the Office of the Deputy Commissioner for Budget, Finance and Management to the Office of the Commissioner. The revised position description also stated that the director reports to the Deputy Commissioner of Social Security, who provides administrative direction, and included an organization chart that showed that the OSDBU director reported to the Deputy Commissioner.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Social Security Administration

  7. Status: Closed - Implemented

    Comments: State made changes to its Office of Small and Disadvantaged Business Utilization (OSDBU) reporting structure that were consistent with legislation in place at the time we conducted our review. (Congress has since enacted revised requirements; we did not assess State's compliance with these new requirements.) Specifically, in an October 2011 letter to the House Small Business Committee, State stated that it would designate the former OSDBU Operations Director as the OSDBU Director and that the Assistant Secretary for Administration would no longer function as the OSDBU director, as had been the case in the past. Further, the department stated that the new OSDBU director would be evaluated by the senior career official in the Office of the Deputy Secretary of State for Management and Resources who conducts the performance appraisals for the most senior staff in the Deputy's office. It also stated that the Deputy Secretary of State for Management and Resources would serve as the final reviewer and the Deputy Secretary would meet with the OSDBU director on a regular basis. In August 2015, State provided the current position description for the OSDBU director, which states that the OSDBU director reports directly to the Deputy Secretary for Management and Resources. The position description also states that the OSDBU director will be evaluated by the senior career official in the Office of the Deputy Secretary of State for Management and Resources who conducts the performance appraisals for the most senior staff in the Deputy's office and the Deputy Secretary of State for Management and Resources will serve as the final reviewer. Taking these steps to give the OSDBU director direct access to the deputy agency head should help increase small businesses' visibility and help the director advocate for them effectively.

    Recommendation: Given the ongoing requirement in the Small Business Act that OSDBU directors report to agency heads or deputy heads, the heads of the Departments of Agriculture, Commerce, the Interior, Justice, State, and the Treasury and the Social Security Administration should take steps as necessary to comply with the requirement or report to Congress on why they have not complied. Such information could be included in SBA's annual scorecard report to Congress. Moreover, agencies that have not complied with the requirement could seek any statutory flexibilities or exceptions they believe may be appropriate.

    Agency Affected: Department of State

 

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