Small Business:

Monitoring of Subcontracting to Small Disadvantaged Businesses

RCED-95-271, Sep 22, 1995

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Pursuant to a congressional request, GAO reviewed the efforts of the Defense Logistics Agency (DLA), the National Aeronautics and Space Administration (NASA), the Department of Energy (DOE), and the General Services Administration (GSA) in providing maximum subcontracting opportunities for small disadvantaged businesses.

GAO found that the four agencies: (1) have established procedures to monitor contractors, which include reports from the contractors on their subcontracting activities, as well as on-site reviews of contractors' subcontracting programs; (2) have met or exceeded their annual subcontracting goals to small disadvantaged businesses since fiscal year 1988; and (3) do not closely review contractor-submitted reports on subcontracting activities, and they do not verify subcontracting data reported by the contractors to ensure data accuracy. In addition, GAO found that: (1) some agency officials question the need for additional monitoring procedures, since they rely on contractors to self-certify their progress; (2) some contracting staff believe that the threat of assessed liquidated damages encourages compliance with subcontracting goals, while others believe that the definition of good faith effort is vague and they question whether an assessment of liquidated damages could be upheld in court; and (3) various initiatives are under way that may affect the agencies' monitoring process, including streamlined reports, contractorwide subcontracting plans, and electronic data reporting.

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