Small Business:

Problems Continue With SBA's Minority Business Development Program

RCED-93-145: Published: Sep 17, 1993. Publicly Released: Sep 24, 1993.

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Pursuant to a congressional request, GAO reviewed the Small Business Administration's (SBA) ability to implement changes to the 8(a) business development program relating to the: (1) collection and management of 8(a) program data; (2) certification of 8(a) program participants; (3) development and maintenance of 8(a) firms' business plans; (4) competitive award of 8(a) program contracts; and (5) distribution of 8(a) contracts among 8(a) firms. GAO also reviewed SBA efforts to determine the amount and type of financial, technical, and management assistance provided to 8(a) firms as well as the effectiveness of such assistance.

GAO found that: (1) the 8(a) program still lacks a management information system that provides complete and accurate information on all 8(a) program aspects, including data on the type and amount of financial, management, and technical assistance provided to 8(a) firms; (2) SBA also lacks an application tracking system that can provide it with timely information on processing problems; (3) SBA does not effectively review the business plan of each 8(a) firm to ensure that it is up-to-date, the firm's business development goals are realistic, or that the firm is progressing toward achieving its goals; (4) SBA certification time for 8(a) program participants continues to exceed the mandated 90-day period; and (5) SBA has made improvements in tracking management and technical assistance, but the extent of financial assistance provided to 8(a) firms is not fully known.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: SBA completed the redesign of the 8(a) program's management information system and it became operational in October 1995. The system includes an 8(a) application-tracking component and a capability to track financial assistance to 8(a) firms referred to in the recommendation. However, because SBA has always maintained that its system design complied with federal regulations and guidelines and that GAO's findings (and this recommendation) were due to a lack of agency documentation, SBA has no plans to provide further documentation to support its system design.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator of the Office of Minority Small Business and Capital Ownership Development (MSB&COD), in addition to implementing the recommendations in the January 1992 report relating to implementing the 8(a) application-tracking system and determining the full extent of financial assistance provided to 8(a) firms, to complete and analyze users' requirements for the 8(a) program's management information system, document the system's design, and complete the system's implementation plan, all in accordance with federal regulations and guidelines.

    Agency Affected: Small Business Administration

  2. Status: Closed - Implemented

    Comments: In late 1995, SBA made the annual review of each 8(a) firm's business plan and other documents one of the three goals for assessing field office performance in fiscal year 1995. In February 1996, SBA evaluated the records of 300 randomly selected 8(a) firms in the first of a series of periodic reviews by SBA to assess field office compliance with servicing requirements. One of the objectives of SBA's review was to determine whether the field offices were conducting annual reviews of 8(a) firms' business plans, and the overall quality of these reviews.

    Recommendation: The Administrator, SBA, should direct the Associate Administrator, MSB&COD, in addition to implementing the recommendations in the January 1992 report relating to implementing the 8(a) application-tracking system and determining the full extent of financial assistance provided to 8(a) firms, to direct SBA field offices to annually review each approved business plan, as required by the act.

    Agency Affected: Small Business Administration

 

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