Small Business:

Information on and Improvements Needed to Surety Bond Guarantee Programs

RCED-91-99: Published: Apr 23, 1991. Publicly Released: May 28, 1991.

Additional Materials:

Contact:

Judy A. England Joseph
(202) 512-7631
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the: (1) Small Business Administration's (SBA) management of its Surety Bond Guarantee (SBG) program between fiscal year (FY) 1987 and FY 1989; and (2) status of the SBA pilot Preferred SBG Program.

GAO found that: (1) SBG program data indicated that SBA guaranteed 33,408 bonds having a total contract value of $3.9 billion between FY 1987 and FY 1989; (2) the number of guaranteed bonds remained at about 11,000 each year, and the value of contracts with SBA bond guarantees increased from $1.22 billion in 1987 to $1.4 billion in 1989; (3) minority contractors obtained about 15 percent of the guaranteed bonds, but the amount of bond guarantees that they obtained declined from 1,749 to 1,666 between FY 1987 and FY 1989; (4) specialty sureties underwrote 99 percent of all the guaranteed bonds; (5) SBA needed to improve the overall reliability of its SBG data, which could make it difficult to determine whether the new Preferred SBG program increased minority participation; (6) SBA was slow in implementing the pilot Preferred SBG program, issuing its first bond guarantee nearly 2 years after program authorization; and (7) SBA attributed the implementation delay to the lengthy process of drafting program regulations and consulting with the surety industry on establishing procedures for program administration.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Revisions to SBA's Surety Bond Guarantee Program SOP include recommended guidance. The final SOP should be issued shortly.

    Recommendation: To ensure consistency among the 10 SBA regions and accurate reporting of SBG program management data, the Administrator, SBA, should ensure that the Office of Surety Guarantees' (OSG) planned updates to the standard operating procedure (SOP) include guidance to field staff on what to do if the bond applications include no minority code classification.

    Agency Affected: Small Business Administration

  2. Status: Closed - Implemented

    Comments: Revisions to SBA's Surety Bond Program SOP do not contain recommended guidance regarding database entries. However, SBA Surety Bond Program officials stated that during a recent training session, surety bond program staff were instructed to document database entries.

    Recommendation: To ensure consistency among the 10 SBA regions and accurate reporting of SBG program management data, the Administrator, SBA, should ensure that the OSG-planned updates to SOP include instructions for documenting all entries made into the database, such as annotating the source document.

    Agency Affected: Small Business Administration

  3. Status: Closed - Implemented

    Comments: Revisions to SBA's Surety Bond Guarantee Program SOP do not contain guidance regarding verifying data entered into the computer system. However, SBA Surety Bond Program officials stated that during a recent training session, surety bond program staff were instructed to verify data entries.

    Recommendation: To ensure consistency among the 10 SBA regions and accurate reporting of SBG program management data, the Administrator, SBA, should ensure that the OSG-planned updates to SOP include procedures for verifying data being entered into the surety bond guarantee computer system.

    Agency Affected: Small Business Administration

  4. Status: Closed - Implemented

    Comments: Revisions to SBA's Surety Bond Program SOP do not contain recommended guidance regarding categorizing obligee types. However, SBA Surety Bond Program officials stated that during a recent training session, surety bond program staff were instructed to identify the obligee type.

    Recommendation: To ensure consistency among the 10 SBA regions and accurate reporting of SBA program management data, the Administrator, SBA, should ensure that the OSG-planned updates to SOP include instructions for categorizing obligee types.

    Agency Affected: Small Business Administration

 

Explore the full database of GAO's Open Recommendations »

Dec 11, 2014

Nov 20, 2014

Nov 19, 2014

Nov 7, 2014

Oct 14, 2014

Sep 22, 2014

Sep 16, 2014

Jul 28, 2014

Looking for more? Browse all our products here