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Small Business: Problems in Restructuring SBA's Minority Business Development Program

RCED-92-68 Published: Jan 31, 1992. Publicly Released: Mar 04, 1992.
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Highlights

Pursuant to a legislative requirement, GAO provided information on the Small Business Administration's (SBA) progress in implementing provisions of the Business Opportunity Development Reform Act of 1988, designed to remedy the problems which prevented the SBA 8(a) Program from developing firms owned by socially and economically disadvantaged individuals into viable businesses.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
While the Business Opportunity Development Reform Act of 1988 encourages the equitable geographical distribution of 8(a) contracts, SBA has limited control over such distribution because the act also directs the agency to award contracts to 8(a) firms recommended by procuring agencies. Because these two provisions appear to work against each other, Congress may wish to consider: (1) clarifying its intent in directing SBA to equitably distribute contracts; or (2) eliminating the directive from the act.
Closed – Not Implemented
According to the House and Senate Small Business Committee, no legislation is pending and none is planned on this issue. So, there is no need to keep this recommendation open.
Should Congress decide to keep this directive, it may wish to revise the act's provision that requires SBA to award contracts to the firms recommended by procuring agencies, in order to give SBA greater control over the distribution of the contracts.
Closed – Not Implemented
According to the House and Senate Small Business Committee, no legislation is pending and none is planned on this issue. So, there is no need to keep this recommendation open.

Recommendations for Executive Action

Agency Affected Recommendation Status
Small Business Administration In order to ensure that the 8(a) program achieves its objective of promoting the development of small businesses, the Administrator, SBA, should direct the Associate Administrator, Office of Minority Small Business and Capital Ownership Development (MSB&COD), to fully implement the new 8(a) application tracking system and use it to identify where and why delays are occurring in the application process, and work to meet the legislatively mandated 90-day processing time frame.
Closed – Implemented
According to SBA, it has completed installation of computer software to track 8(a) applications from receipt through final action. Follow-on review will assess effectiveness of new software.
Small Business Administration In order to ensure that the 8(a) program achieves its objective of promoting the development of small businesses, the Administrator, SBA, should direct the Associate Administrator, MSB&COD, to either withhold contracts, as required by the act, from all 8(a) firms that fail to provide business plans to SBA for review and approval or request that Congress revise this provision of the act.
Closed – Implemented
MSB&COD notice, issued May 1992, directed field offices to withhold contract support and other program benefits from firms that fail to provide new business plans.
Small Business Administration In order to ensure that the 8(a) program achieves its objective of promoting the development of small businesses, the Administrator, SBA, should direct the Associate Administrator, MSB&COD, to complete the development and implementation of written plans that detail the specific tasks and time frames for actions to be taken to correct the problems with the 8(a) program's management information system.
Closed – Implemented
Follow-on review (code 385325) will show that SBA did not adequately plan the new system, and GAO will make a new recommendation that action be taken to correct planning deficiencies. So, there is no need to keep this recommendation open.
Small Business Administration In order to ensure that the 8(a) program achieves its objective of promoting the development of small businesses, the Administrator, SBA, should direct the Associate Administrator, Office of Minority Small Business and Capital Ownership Development (MSB&COD), to determine the type and amount of management and technical assistance required by 8(a) firms, use this information to procure such assistance in the future, and work with the Office of Advocacy to develop objective criteria for better measuring the effectiveness of assistance provided under the 7(j) program to 8(a) firms.
Closed – Implemented
Follow-on review (code 385325) will show that SBA is still not tracking 7(j) assistance by type and amount, and GAO will make a new recommendation that action be taken to correct this deficiency. So, there is no need to keep this recommendation open.
Small Business Administration In order to ensure that the 8(a) program achieves its objective of promoting the development of small businesses, the Administrator, SBA, should direct the Associate Administrator, MSB&COD, to determine the amount of loans and other forms of financial assistance provided to 8(a) firms by all SBA programs and use this information to determine the future financial needs of 8(a) firms.
Closed – Implemented
SBA added a data field to the Loan Accounting System in June 1992 to track financial assistance provided to 8(a) firms through 7(a) loan program. However, follow-on review (code 385325) will show that SBA still is not tracking other sources of financial assistance, and GAO will make a new recommendation to correct this deficiency. So, there is no need to keep this recommendation open.

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Topics

Bid protestsDisadvantaged personsFederal legislationManagement information systemsMinority business assistanceMinority business contractsReporting requirementsSmall business assistanceSmall business contractorsTechnical assistance