Small Business:

SBA Could Better Focus Its 8(a) Program to Help Firms Obtain Contracts

RCED-00-196: Published: Jul 20, 2000. Publicly Released: Jul 20, 2000.

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Pursuant to a congressional request, GAO reviewed the Small Business Administration's (SBA) 8(a) program's progress in developing small businesses that are owned by socially and economically disadvantaged individuals, focusing on: (1) the extent to which firms are obtaining federal contracts; (2) how SBA tracks the training and assistance provided to firms; and (3) how firms view the program.

GAO noted that: (1) access by firms to 8(a) contracts remains a problem; (2) a long-standing concern cited in GAO's previous reports and those of the SBA Inspector General is that a few firms receive most of the 8(a) contracts, effectively limiting the developmental opportunities available to other firms in the program; (3) SBA has made some changes in the program to address this problem, but SBA officials said that because of differences in firms' skills and experience and other factors, it is reasonable that not all 8(a) firms will receive contracts from the program; (4) in addition, SBA relies on other federal agencies to make the contract awards, and federal procuring officials are confronted with the competing objectives of accomplishing their agencies' missions at a reasonable cost and achieving the 8(a) program's business development goals; (5) SBA remains unable to track the training and assistance it provides to 8(a) firms; (6) the lack of a system to track the training and assistance firms receive impairs SBA's ability to measure the program's performance and to determine what assistance firms need; (7) SBA piloted a Business Assessment Tool in 1999 that would evaluate firms' business development needs, but at the time of GAO's review, SBA had not completed its review of the pilot; (8) according to GAO's survey results, almost all firms joined the program to obtain 8(a) contracts, wanted SBA to provide contracting assistance, and were more satisfied with the program if they had received a contract; (9) 86 percent of the firms surveyed joined the program to obtain 8(a) contracts; (10) however, only about one-fifth of the firms joined the program to learn more about how to manage a business; (11) one reason for these firms' not placing a higher priority on learning to manage a business is that a large majority of the firms had owners with over 10 years' experience managing a business; (12) in addition, the firms themselves were not new--over half the firms GAO surveyed had been in business 5 years or more before joining the program; and (13) overall satisfaction with the program was mixed, but firms that received 8(a) contracts were more satisfied than those that did not.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Small Business Administration (SBA) Office of Government Contracting and Business Development has demonstrated its heightened emphasis on helping inform 8(a) firms about contracting opportunities, assisting them with contacts at federal agencies, and becoming more involved with the firms. For example, SBA instructed its district office personnel to host four "matchmaking" events in fiscal year 2004, make one-on-one matchmaking appointments to personally bring together representatives of 8(a) firms and procurement entities. In addition, SBA partnered with Hewlett Packard to host national matchmaking events on a larger scale. In April of 2004, SBA reported that over 4,000 firms were linked in procurement entities in 14,500 matchmaking appointments and that special events were held in seven major cities. The national events bring together local, state, federal agencies, large corporations, and 8(a) firms. Workshops at the events focus on helping the small businesses prepare to do business with government agencies or large corporations, on-site SBA counseling, procurement meetings with the government agencies and corporations. SBA is now collecting data on the number of actual contracts awarded as a result of the matchmaking events.

    Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should instruct the district offices to place their highest priority on helping inform firms about contracting opportunities, assisting firms with contacts at federal agencies, and becoming more involved with firms as they seek and negotiate contracts.

    Agency Affected: Small Business Administration

  2. Status: Open

    Comments: SBA drafted a plan for providing individualized business development assistance to 8(a) firms, along with an assessment tool--the 8(a) Business Development Assessment Tool (BDAT). A subsequent evaluation of BDAT revealed that the tool would not provide the expected outcome. Consequently, the Office of Government Contracting and Business Development launched a more broad modernization effort in December of 2011. One of the outcomes of that effort was the conceptualization of the One Track Certification Management System (One Track CMS), which included many of the requirements from the BDAT. However, SBA experienced some delays regarding the contract for development and the ultimate implementation of the One Track CMS. On June 3, 2015, SBA and GAO staff met to discuss the status of open SBA 8(a) program recommendations. This recommendation was mentioned, but, no updates on the current status of this recommendation were provided. The One Track CMS was not yet operational as of the date of that meeting.

    Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should periodically perform a nationwide sample survey of 8(a) firms to obtain measurable program data. At a minimum, the survey should assess whether SBA assistance is meeting the firms' expectations and needs.

    Agency Affected: Small Business Administration

  3. Status: Open

    Comments: With the deployment of the Business Development Management Information System on July 28, 2008, along with an 8(a) Business Development Assessment Tool (BDAT)--which will entail an enhancement of SBA's Business Development Management Information System--SBA stated that it will be able to annually collect data that will be used to assess an 8(a) participant's needs for technical assistance and training. A subsequent evaluation of BDAT revealed that the tool would not provide the expected outcome. Consequently, the Office of Government Contracting and Business Development launched a more broad modernization effort in December of 2011. One of the outcomes of that effort was the conceptualization of One Track Certification Management System (One Track CMS), which included many of the requirements from the BDAT. However, SBA experienced some delays regarding the contract for development and the ultimate implementation of the One Track CMS. On June 3, 2015, SBA and GAO staff met to discuss the status of open SBA 8(a) program recommendations. This recommendation was mentioned, but no updates on the current status of this recommendation were provided. The One Track CMS was not yet operational as of the date of that meeting.

    Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should provide a method for collecting data on each firm's training needs for tracking the assistance provided.

    Agency Affected: Small Business Administration

  4. Status: Closed - Implemented

    Comments: In SBA's fiscal year (FY) 2000 performance and accountability report, SBA stated that its current success indicator for the 8(a) program would be replaced in future annual performance plans with a measure of the percentage of firms that graduate and are economically viable 3 years after graduation. Such a measure was used by SBA previously and would be a stronger measure of program performance. SBA has now taken this action and reported (in its fiscal year 2003 Performance and Accountability Report) these client success rates 3 years after graduation from the 8(a) program: FY 2000 65 percent; FY 2001 64 percent; FY 2002 unavailable. Its goal for FY 2003 was 70 percent, but results were not available.

    Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should revise the 8(a) program's success measure in SBA's future annual performance plans to make the measure a more meaningful assessment of the program's impact.

    Agency Affected: Small Business Administration

  5. Status: Closed - Implemented

    Comments: SBA assesses how 7(j) funds will be used each year; currently the funds are used for both management training and assistance in obtaining contracts. Through a contractor, SBA created a web-based Procurement Academy to provide procurement assistance to 8(a) firms via Internet training and a CD-ROM. The CDs are also distributed by SBA district offices to eligible companies. SBA surveyed its district offices to identify the training needs of businesses in their districts. As a result, SBA used some 7(j) funds to provide contract bid and proposal writing seminars for eligible businesses.

    Recommendation: The Administrator, SBA, should reassess the agency's use of 7(j) Management and Technical Assistance Program funding. The reassessment should consider whether to devote most of the 7(j) program's funding to training designed to develop the abilities of 8(a) firms to obtain contracts or to retain the current business development focus but restrict the training to firms with a demonstrated need.

    Agency Affected: Small Business Administration

 

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