This is the accessible text file for GAO report number GAO-03-54 
entitled 'Small Business Administration: The Commercial Marketing 
Representative Role Needs to Be Strategically Planned and Assessed' 
which was released on November 01, 2002.



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GAO Higlights:



November 2002:



SMALL BUSINESS ADMINISTRATION:



The Commercial Marketing Representative Role Needs to Be 

Strategically Planned and Assessed:



Highlights of GAO-03-54, a report to Senator John Kerry, Chairman, 

Senate Committee on Small Business and Entrepreneurship, and Senator 

Max Cleland.:



Why GAO Did This Study:



Subcontracting on federal contracts is a large and growing marketplace 

for small businesses.  The Small Business Administration’s (SBA) 

Commercial Marketing Representatives (CMRs) have long been considered 
to 

be key to fostering small businesses’ participation in subcontracts.  

GAO was asked to assess the role that CMRs are playing in administering 

SBA’s subcontracting assistance program.



What GAO Found:



CMRs are supposed to promote small business subcontracting in two 

primary 

ways.  First, they review prime contractors’ compliance with the 

requirements 

of their subcontracting plans—either through on-site visits to 

contractors 

or by simply reviewing their subcontractor activity reports.  

Second, they 

conduct various marketing activities, such as marketing small 

businesses 

to prime contractors.



In recent years, however, additional duties placed on CMRs have 

often taken 

priority over these responsibilities.  In fact, in fiscal year 

2000, 87 

percent of the CMRs had other substantial responsibilities.  

Moreover, 

workloads and prime contractor coverage now vary greatly between 

CMRs.  

Additionally, CMRs are relying more on “desk” reviews of 

subcontractors’ 

activity to monitor compliance with subcontracting plans as 

opposed to 

on-site reviews.  This is a concern to some SBA officials who 

believe 

that on-site reviews are more thorough, though others believe 

the desk 

review offers the potential for greater coverage.  



Declines in staffing and travel funds have contributed to the 

changing role 

of the CMR.  With downsizing and retirements taking place and 

no staff 

assigned to replace lost personnel, the number of CMR full-time 

equivalents 

(FTEs) has decreased significantly and has resulted in workload 

imbalances.



While there are concerns about the changing nature of the CMR 

role, SBA has 

not strategically planned for these changes or assessed their 

collective 

impact.  Instead, it has implemented ad hoc measures to deal 

piecemeal 

with resource declines.  Unless steps are taken to better evaluate 

and plan 

for the future of CMRs, SBA will continue to lack an understanding 

of their 

contributions to small business subcontracting. 



Past and Projected Percentage of Depot Maintenance Funds Allocated to 

the Private Sector, as DOD Reported:



[See PDF for image]



Source: DOD “50-50” Reports, Feb. 4 and Apr. 12, 2002.



[End of Figure]



What GAO Recommends:



GAO is recommending that SBA strategically assess, evaluate, and 

plan 

the CMR role. In doing so, it should address such issues as the 

impact 

of assigning multiple roles to CMRs and the effectiveness of 

compliance-monitoring methods.



SBA neither concurred nor disagreed with GAO’s recommendations. 

However, SBA did agree that it needs to rethink the CMR role and 

develop outcome and impact measures to better assess CMRs’ 

effectiveness. SBA also objected to some of GAO’s conclusions but 

did 

not provide sufficient evidence to support its objections.



This is a test for developing highlights for a GAO report. The 

full 

report, including GAO’s objectives, scope, methodology, and 

analysis is 

available at www.gao.gov/cgi-bin/getrpt?GAO-03-54. For 

additional 

information about the report, contact David E. Cooper 

(202) 512-4841. 

To provide comments on this test highlights, contact Keith 

Fultz (202-

512-3200) or email HighlightsTest@gao.gov.



Report to Congressional Requesters:



United States General Accounting Office:



GAO:



November 2002:



SMALL BUSINESS ADMINISTRATION:



The Commercial Marketing Representative Role Needs to Be Strategically 

Planned and Assessed:



GAO-03-54:



Contents:



Letter:



Results in Brief:



Background:



The CMR Role Is Conflicted and in Decline:



Factors Affecting the CMR Role:



Conclusions:



Recommendations for Executive Action:



Agency Comments and Our Evaluation:



Scope and Methodology:



Appendix I: Comments from the U.S. Business Administration:



Tables:



Table 1: Detailed Data on Time That CMRs Spent in Compliance Monitoring 

and Marketing in Fiscal Year 2000:



Table 2: Number and Percentage of On-Site Versus Desk Reviews Performed 

by Year:



Table 3: Number of Prime Contractors per CMR FTE by Area Office:



Figures:



Figure 1: Number of Full-Time and Number of Part-Time CMRs for Selected 

Years:



Figure 2: CMR Roles and Responsibilities in Fiscal Year 2000:



Figure 3: Percentage of Time Spent in Compliance Monitoring and 

Marketing in Fiscal Year 2000:



Figure 4: Percentage of On-Site versus Desk Reviews Performed:



Figure 5: Variances in CMR Workload:



Abbreviations:



CMR: Commercial Marketing Representative

COC: Certificate of Competency

FTE: full-time equivalent

GAO: General Accounting Office

HCA: Head Contracting Authority

HUB Zones: historically underutilized business zones

OGC: Office of Government Contracting

OIG: Office of the Inspector General

PCRs: Procurement Center Representives

PRO-Net: Procurement Marketing and Access Network

SBA: Small Business Administration:



United States General Accounting Office:



Washington, DC 20548:



November 1, 2002:



The Honorable John F. Kerry

Chairman, Committee on Small Business

 and Entrepreneurship

United States Senate:



The Honorable Max Cleland

United States Senate:



Subcontracting on large federal contracts is becoming increasingly 

important to small businesses, principally because subcontracts may 

offer the most opportunities for these businesses to participate in 

federal procurement in the near future.[Footnote 1] The number of prime 

contracts is shrinking, and many prime contracts have become so large 

that small businesses find it difficult to compete for them. Moreover, 

the Small Business Administration (SBA) reported that dollars paid for 

subcontracts increased 40 percent from fiscal year 1993 through fiscal 

2001, growing from $65 billion to $91.1 billion.[Footnote 2]



SBA’s Subcontracting Assistance Program focuses on increasing 

subcontracting opportunities for small businesses through major prime 

contractors. Historically, SBA staff known as Commercial Marketing 

Representatives (CMRs) have administered and implemented this program.



You asked us to assess the CMR role, particularly with respect to (1) 

what role CMRs are playing in administering and implementing the 

Subcontracting Assistance Program and;(2) what factors have affected 

this role. As part of our evaluation, we used data from a recent survey 

we conducted of all staff working as CMRs in fiscal year 2000.[Footnote 

3] Our overall response rate was 97 percent.



Results in Brief:



The CMR role is conflicted and in decline. Most CMRs are now largely 

part-time and have substantial additional roles and responsibilities 

that often take priority over CMR duties. In addition, there are 

differences of opinion and concerns within the agency about the focus 

of the CMR role. Some SBA Area Directors, Supervisors, and CMRs believe 

that CMRs should focus more on monitoring prime contractors’ compliance 

with their subcontracting plans. Other SBA officials believe that CMRs 

should focus more on helping small businesses connect with prime 

contractors for subcontracting opportunities.



There are also differences of opinion and concerns within the agency 

about the relative merits of the methods CMRs use to monitor 

compliance. Some SBA officials and many CMRs believe that going on-site 

to conduct detailed reviews of prime contractors is more effective than 

simply reviewing their subcontracting activity reports, which is now 

the most frequently used monitoring method. Other SBA officials argue 

that relying on report reviews is not only effective but also necessary 

because it is more cost-efficient. Finally, CMRs’ geographic 

distribution and workloads are very uneven, as is their coverage of 

prime contractors.



Resource declines and the agency’s ad hoc, piecemeal response are the 

main factors driving this situation. CMR roles and responsibilities 

have been affected by cutbacks in staff and travel funds during the 

past decade. For example, CMRs (and other staff) have been assigned 

multiple roles, and on-site reviews of prime contractors have been 

curtailed as economy measures. Workload distributions and prime 

contractor coverage have been affected in turn. As resources have 

declined, the agency has struggled to make adjustments piecemeal as 

particular situations have arisen, rather than stepping back to 

strategically assess and plan the CMR role. Thus, role change occurred 

not by design but by default.



Consequently, we do not know whether the CMR role is effective or not. 

Even though CMRs are considered to be critical to the successful 

implementation of SBA’s Subcontracting Assistance Program, the agency 

does not have a clear strategic vision of what CMR roles and 

responsibilities should be and has not developed outcome or impact 

measures for the CMR role. In addition, the agency has not assessed or 

evaluated the effects of the various adjustments it has made to the CMR 

role in response to the resource challenges.



We are recommending that the agency strategically assess, evaluate, and 

plan the CMR role. This should include a careful assessment of such 

issues as the impact of assigning multiple roles to staff, appropriate 

role focus, the effectiveness of different methods of compliance 

monitoring, uneven distributions of CMRs and CMR workloads, and uneven 

prime contractor coverage.



SBA neither concurred nor disagreed with our recommendations. However, 

SBA did agree that it needs to rethink the CMR role and develop outcome 

and impact measures to better assess CMRs’ effectiveness. SBA also 

objected to some of our conclusions but did not provide sufficient 

evidence to support its objections.



Background:



The federal government encourages federal prime contractors’ use of 

small businesses as subcontractors by requiring prime contractors to 

develop plans with stated goals for subcontracting to various types of 

small businesses. Federal regulations require a subcontracting plan for 

each contract or contract modification that exceeds $500,000 ($1 

million for construction contracts) and has subcontracting 

possibilities.[Footnote 4]



The Subcontracting Assistance Program is SBA’s vehicle for increasing 

the percentage of subcontract awards to small businesses and ensuring 

that small businesses have the maximum practicable opportunity to 

participate in the performance of federal government 

contracts.[Footnote 5] SBA’s Office of Government Contracting (OGC) 

oversees this program. SBA/OGC has six Area Offices responsible for all 

prime contractors’ subcontracting performance.[Footnote 6]



The program is implemented by CMRs, who promote small business 

subcontracting in two primary ways, as described in SBA 

regulations.[Footnote 7] First, CMRs review prime contractors’ 

compliance with the requirements of their subcontracting plans. They 

conduct on-site compliance reviews at prime contractors’ facilities and 

validate how well the prime contractors are implementing their 

subcontracting plans. They also conduct “desk reviews,” which are 

reviews of relevant subcontracting reports that are submitted by prime 

contractors and completed without on-site visits.



Second, CMRs conduct various marketing activities, such as marketing 

small businesses to prime contractors or matching certain types of 

small business subcontractors with prime contractors. CMRs perform this 

“matchmaking” through both personal introductions and the use of Web-

based tools that help to connect prime contractors and subcontractors. 

CMRs also provide various educational activities (e.g., seminars and 

workshops) for prime contractors, subcontractors, and agency officials 

as part of their marketing activities. In describing the duties 

required of CMRs, SBA regulations do not place a relative order of 

importance on any of these responsibilities.[Footnote 8]



In addition, CMRs work on various SBA special initiatives as part of 

their marketing activities. For example, CMRs promote SBA’s special 

8(a) subcontracting initiative, which focuses on increasing the number 

of subcontracts to small disadvantaged businesses. CMRs also promote 

several special initiatives involving SBA’s Procurement Marketing and 

Access Network (PRO-Net). PRO-Net is a Web-based system that allows 

prime contractors to advertise potential subcontracting opportunities 

and small businesses to advertise their capabilities as 

subcontractors.[Footnote 9] CMRs install PRO-Net access stations at 

large prime contractor sites and public libraries, and train interested 

businesses and agencies in the use of PRO-Net to match prime 

contractors and subcontractors. Finally, CMRs conduct special training 

for agencies and contractors on SBA’s historically underutilized 

business zones (HUB-Zone) Empowerment Contracting Program, which 

encourages economic development in HUB Zones.



SBA/OGC also employs other contract specialists, who focus on small 

businesses as prime contractors rather than subcontractors. These 

include Procurement Center Representatives (PCRs), size determination 

specialists, and Certificate of Competency (COC) specialists. PCRs work 

with agencies to determine whether it is appropriate for acquisitions 

not set aside for small businesses to be set aside.[Footnote 10] Size 

determination specialists determine whether a small business meets 

existing size standards for all procurement programs for which status 

as a small business is required.[Footnote 11] COC specialists review a 

contracting officer’s determination that the small business in question 

is not competent to perform on a particular contract.[Footnote 12]



The CMR Role Is Conflicted and in Decline:



The CMR role is conflicted and in decline. Over the past few years, the 

CMR role has become part-time, and CMRs now usually have additional 

roles that often take priority. CMRs appear to spend slightly more time 

on marketing activities than on compliance monitoring, and they now 

rely much more frequently on desk reviews than on-site visits for the 

latter. In addition, workloads and prime contractor coverage vary 

greatly between CMRs. SBA officials and CMRs have several concerns 

about the CMR role.



The CMR Role Is Usually Part-Time and Often Lower Priority:



The CMR position is usually part-time. At the end of fiscal year 2001, 

about 90 percent of the CMRs had other substantial responsibilities in 

addition to their CMR duties. At that time, only 4 of the 39 CMRs were 

full-time CMRs. As figure 1 shows, the number of part-time CMRs has 

grown over time, increasing twelve-fold since 1992. (SBA officials 

anticipate the continued assignment of additional roles to CMRs and 

other contracting specialists.) In addition, despite the fact that a 

larger number of staff had CMR duties at the end of fiscal year 2001 

than in fiscal 1992, the number of CMR full-time equivalents (FTEs) 

declined 28 percent--from 25 to about 18--during this period.



Figure 1: Number of Full-Time and Number of Part-Time CMRs for Selected 

Years:



[See PDF for image]



Source: SBA’s personnel records.



[End of figure]



The SBA officials and CMRs we interviewed told us that part-time CMRs 

have a variety of additional responsibilities, including serving as 

PCRs, COC specialists, and/or size determination specialists.[Footnote 

13] For example, in our survey, 87 percent of the CMRs responding 

reported that in fiscal year 2000, they served in one or even two 

additional roles, as figure 2 shows.[Footnote 14] PCR was the most 

frequent additional role; 59 percent of the part-time CMRs also served 

as PCRs.



Figure 2: CMR Roles and Responsibilities in Fiscal Year 2000:



[See PDF for image]



Source: GAO survey.



[End of figure]



The CMRs and SBA officials we interviewed also told us that part-time 

CMRs often give lower priority to their CMR work than to their PCR, 

COC, and/or size determination work. This is consistent with our 

survey--57 percent of the part-time CMR respondents reported spending 

60 to 89 percent of their time in fiscal year 2000 performing non-CMR 

duties. Only 31 percent reported spending less than 30 percent of their 

time on non-CMR duties. Apparently, there are several reasons for this, 

including not only the workload demands of these other roles, but also 

the time frames within which they must be performed. Generally, these 

roles are tied to specific procurements, and staff performing them must 

meet the procurement schedule. Regulations and guidance also mandate 

tight time frames for certain tasks.[Footnote 15] In contrast, CMR work 

is generally not as time sensitive, and several CMRs who perform these 

other roles told us they “fit in CMR work” when they have time.



Time Spent on Compliance Monitoring Versus Marketing Varies:



CMRs generally seem to spend slightly more time on marketing than on 

compliance monitoring. Figure 3 and table 1 show details of how CMRs 

spent their time in fiscal year 2000. However, the SBA officials and 

CMRs we interviewed told us that the amount of time that both full-and 

part-time CMRs spend on the two primary CMR duties--compliance 

monitoring and marketing--varies considerably between Area Offices and 

between individual CMRs.



Figure 3: Percentage of Time Spent in Compliance Monitoring and 

Marketing in Fiscal Year 2000:



[See PDF for image]



Source: GAO survey.



[End of figure]



Table 1: Detailed Data on Time That CMRs Spent in Compliance Monitoring 

and Marketing in Fiscal Year 2000:



Percent of time spent: 0; Compliance monitoring: Number of CMRs: 3; 

Compliance monitoring: Percent of CMRs: 10; Marketing: Number of CMRs: 

0; Marketing: Percent of CMRs: 0.



Percent of time spent: 1-9; Compliance monitoring: Number of CMRs: 4; 

Compliance monitoring: Percent of CMRs: 13; Marketing: Number of CMRs: 
6; 

Marketing: Percent of CMRs: 20.



Percent of time spent: 10-19; Compliance monitoring: Number of CMRs: 
12; 

Compliance monitoring: Percent of CMRs: 40; Marketing: Number of CMRs: 
9; 

Marketing: Percent of CMRs: 30.



Percent of time spent: 20-29; Compliance monitoring: Number of CMRs: 3; 

Compliance monitoring: Percent of CMRs: 10; Marketing: Number of CMRs: 
5; 

Marketing: Percent of CMRs: 17.



Percent of time spent: 30-39; Compliance monitoring: Number of CMRs: 6; 

Compliance monitoring: Percent of CMRs: 20; Marketing: Number of CMRs: 
5; 

Marketing: Percent of CMRs: 17.



Percent of time spent: 40-49; Compliance monitoring: Number of CMRs: 1; 

Compliance monitoring: Percent of CMRs: 3; Marketing: Number of CMRs: 
1; 

Marketing: Percent of CMRs: 3.



Percent of time spent: 50-59; Compliance monitoring: Number of CMRs: 0; 

Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs: 
1; 

Marketing: Percent of CMRs: 3.



Percent of time spent: 60-69; Compliance monitoring: Number of CMRs: 0; 

Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs: 
2; 

Marketing: Percent of CMRs: 7.



Percent of time spent: 70-79; Compliance monitoring: Number of CMRs: 0; 

Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs: 
0; 

Marketing: Percent of CMRs: 0.



Percent of time spent: 80-89; Compliance monitoring: Number of CMRs: 1; 

Compliance monitoring: Percent of CMRs: 3; Marketing: Number of CMRs: 
0; 

Marketing: Percent of CMRs: 0.



Percent of time spent: 90-99; Compliance monitoring: Number of CMRs: 0; 

Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs: 
1; 

Marketing: Percent of CMRs: 3.



Percent of time spent: Total; Compliance monitoring: Number of CMRs: 
30; 

Compliance monitoring: Percent of CMRs: 99; Marketing: Number of CMRs: 
30; 

Marketing: Percent of CMRs: 100.



Note: Two of the CMRs surveyed did not respond completely to this 

question and therefore were omitted. Percents do not add to 100 because 

of rounding. Marketing includes outreach and marketing activities, 

special initiatives, and ongoing prime contractor assistance.



Source: GAO survey.



[End of table]



Shift from On-Site to Desk Reviews:



CMRs use desk reviews far more frequently than on-site reviews to 

monitor prime contractors’ compliance with subcontracting plans. In 

fiscal year 2001, 70 percent of all compliance reviews were desk 

reviews. Reliance on desk reviews has increased substantially since 

fiscal year 1992, when all compliance reviews were done on-site. Figure 

4 and table 2 show more details.



Figure 4: Percentage of On-Site versus Desk Reviews Performed:



[See PDF for image]



Source: SBA’s CMR database and SBA’s Area records.



[End of figure]



Table 2: Number and Percentage of On-Site Versus Desk Reviews Performed 

by Year:



Fiscal year: 1992; All compliance reviews: 380; On-site reviews[A]: 380 

(100%); Desk reviews: 0.



Fiscal year: 1993; All compliance reviews: 458; On-site reviews[A]: 458 

(100%); Desk reviews: 0.



Fiscal year: 1994; All compliance reviews: 470; On-site reviews[A]: 470 

(100%); Desk reviews: 0.



Fiscal year: 1995; All compliance reviews: 484; On-site reviews[A]: 484 

(100%); Desk reviews: 0.



Fiscal year: 1996; All compliance reviews: 777; On-site reviews[A]: 441 

(57%); Desk reviews: 336 (43%).



Fiscal year: 1997; All compliance reviews: 1,786; On-site reviews[A]: 

290 (16%); Desk reviews: 1,496 (84%).



Fiscal year: 1998; All compliance reviews: 1,497; On-site reviews[A]: 

233 (16%); Desk reviews: 1,264 (84%).



Fiscal year: 1999; All compliance reviews: 1,425; On-site reviews[A]: 

345 (24%); Desk reviews: 1,080 (76%).



Fiscal year: 2000; All compliance reviews: 1,096; On-site reviews[A]: 

252 (23%); Desk reviews: 844 (77%).



Fiscal year: 2001; All compliance reviews: 896; On-site reviews[A]: 269 

(30%); Desk reviews: 627 (70%).



[A] Includes follow-up reviews, which are return visits to a contractor 

to determine whether recommendations from the original on-site review 

have been made.



Source: SBA’s CMR database and SBA’s Area records.



[End of table]



Uneven CMR Workload and Prime Contractor Coverage:



There is an uneven distribution of CMRs nationally and an uneven 

distribution of CMR workload. According to SBA, at the end of fiscal 

year 2001, there were about 18 CMR FTEs nationally to monitor the 

subcontracting activities of the 2,029 prime contractors under SBA’s 

cognizance. Figure 5 and table 3 illustrate the wide range in CMR 

workload.



Figure 5: Variances in CMR Workload:



[See PDF for image]



Source: SBA’s workload analysis.



[End of figure]



Table 3: Number of Prime Contractors per CMR FTE by Area Office:



Area Offices: 1; CMR FTEs: 4.20; Number of prime contractors: 314; 

Number of prime contractors per CMR FTE: 75.



Area Offices: 2; CMR FTEs: 2.40; Number of prime contractors: 474; 

Number of prime contractors per CMR FTE: 198.



Area Offices: 3; CMR FTEs: 1.75; Number of prime contractors: 234; 

Number of prime contractors per CMR FTE: 134.



Area Offices: 4; CMR FTEs: 1.63; Number of prime contractors: 237; 

Number of prime contractors per CMR FTE: 145.



Area Offices: 5; CMR FTEs: 4.95; Number of prime contractors: 277; 

Number of prime contractors per CMR FTE: 56.



Area Offices: 6; CMR FTEs: 2.85; Number of prime contractors: 493; 

Number of prime contractors per CMR FTE: 173.



Area Offices: Total; CMR FTEs: 17.78; Number of prime contractors: 

2,029; Number of prime contractors per CMR FTE: 114.



Source: SBA’s workload analysis.



[End of table]



The SBA officials and CMRs we interviewed also acknowledged wide 

variations in workload between individual CMRs, whether full-time or 

part-time, in different Area Offices or within the same Area Office. 

For example, in one Area Office, one CMR had 13 prime contractors to 

monitor, while another had 65. Both spend about 10 percent of their 

time as CMRs. Similarly, in another Area Office, one CMR had 120 prime 

contractors to monitor, while a CMR in another had only 2. Both spend 

only 20 percent of their time as CMRs.



Not surprisingly, the uneven distribution of CMRs and CMR FTEs has 

contributed to wide variations in the number of on-site reviews 

performed annually by Area Offices.[Footnote 16] For example, one Area 

Office conducted 15 on-site reviews in fiscal year 2001, while others 

conducted 40 or more. In addition, uneven workload distribution has 

contributed to the existence of large blocks of un-reviewed, that is, 

“uncovered,” prime contractors. For example, in one Area, there are no 

SBA reviews of any kind--on-site or desk--being done for 212 prime 

contractors, including all the prime contractors in one state and half 

of those in another. SBA officials told us that in fiscal year 2001, 

only 11.4 percent of the prime contractors nationwide received an on-

site SBA review.[Footnote 17]



Concerns about the CMR Role:



CMRs and SBA officials have a range of concerns about the focus of the 

CMR role--particularly with regard to how CMRs should spend their time. 

Some believe that CMRs should concentrate more on monitoring prime 

contractors’ compliance with their subcontracting plans. Others believe 

they should focus more on helping small businesses connect with prime 

contractors for subcontracting opportunities. There are also 

differences of opinion and concerns within the agency about the 

relative merits of the methods that CMRs use to monitor compliance as 

well as with the uneven distribution of the CMR workload.



Disagreements about the Balance between Compliance Monitoring and 

Marketing:



There are disagreements within SBA about the most appropriate focus for 

the CMR role, that is, the balance between compliance monitoring and 

marketing. The Area Directors, Supervisors, and CMRs we interviewed had 

different views about CMR work priorities. For example, one Area 

Director stated that compliance monitoring should be the first priority 

for CMRs and matchmaking (i.e., marketing) should be secondary. Another 

Area Director said that the CMR role should be a combination of 

compliance monitoring and matchmaking but that matchmaking should get 

more emphasis.



In contrast, the May 2001 report of the SBA Subcontracting Task Team 

clearly identifies compliance monitoring as the CMRs’ main 

function.[Footnote 18] The report concludes that over the past several 

years, CMRs have spent a disproportionate amount of their time on 

special initiatives. The report recommends that compliance reviews 

become the CMRs’ primary focus and that less emphasis be placed on 

ancillary duties, such as matchmaking or special initiatives. The 

report even proposes a new job title for the CMR, adding that 

“marketing” gives the wrong impression that matchmaking is the CMR’s 

main role.



In contrast again, SBA’s Web site does not mention compliance 

monitoring as part of the CMR role. Rather, the Web site, which is an 

important means of communicating with both prime contractors and small 

businesses, describes the CMR role as “assisting small businesses in 

obtaining subcontracts by marketing small businesses and matching them 

with large prime contractors.”:



Concerns about the focus of the CMR role are not new. SBA’s Office of 

the Inspector General (OIG) issued a report in October 1995 citing the 

need to focus CMR efforts more effectively with respect to compliance 

monitoring and matchmaking.[Footnote 19]



Concerns about Desk Reviews:



SBA introduced desk reviews in fiscal year 1996 as an economy measure. 

Because desk reviews take place in the CMRs’ offices rather than at the 

prime contractors’ locations, CMRs do not have to travel. In addition, 

the desk review takes substantially less time to accomplish than does 

the on-site review. Consequently, relying on desk reviews saves both 

travel money and CMR time.



SBA staff opinions differ about the relative merits of on-site versus 

desk reviews. Some SBA officials and many CMRs believe that on-site 

reviews are more effective and question the relative value of desk 

reviews as a means of monitoring compliance. During on-site reviews, 

CMRs determine if prime contractors are complying with their 

subcontracting plans by going to the prime contractor’s location, 

reviewing files and documentation that support reported summaries of 

subcontracting activities, and interviewing officials. The CMRs we 

spoke with said that this type of in-depth review is one of their best 

tools to encourage the maximum use of small businesses as 

subcontractors. In contrast, other SBA officials believe that using 

desk reviews not only saves resources but also increases the total 

amount of monitoring that CMRs can do. SBA officials said they have 

never evaluated the effectiveness of the two types of reviews.



Concerns about CMR Workload and Prime Contractor Coverage:



SBA’s OIG observed the uneven workload distribution problem in October 

1995.[Footnote 20] Noting the limited subcontracting resources and 

variable staffing levels and workloads, the OIG concluded that the 

unequal distribution of workload among CMRs was correlated with the 

uneven coverage of prime contractors. Accordingly, the OIG recommended 

that SBA more evenly distribute prime contractors among CMRs to improve 

coverage. However, SBA officials told us that where CMRs are located is 

driven by factors other than the location of prime contractors with 

subcontracting plans. For example, they said that although they can 

request CMRs to relocate to provide better coverage, they cannot 

require staff to relocate.



It is likely that the full extent of the uneven workload and coverage 

problems has not yet been identified. SBA officials have estimated that 

as many as 1,500 additional prime contractors with subcontracting plans 

are not presently captured by SBA’s data systems. While SBA officials 

told us they are working to improve the methods and databases for 

identifying and tracking prime contractors, progress appears to be very 

slow. Again in October 1995, the SBA OIG noted that the number of 

federal prime contractors with subcontracting plans was unknown, 

complicating SBA’s efforts to focus subcontracting program activities 

and likely resulting in lost small business opportunities.[Footnote 21]



Factors Affecting the CMR Role:



Two primary factors have affected the CMR role: declines in resources 

and an ad hoc, piecemeal response to resource challenges. Both staffing 

and travel funds declined substantially over the past several years. 

With downsizing and retirements taking place and no staff assigned to 

replace lost personnel, the number of CMR FTEs declined significantly 

and resulted in workload imbalances across and even within SBA’s Area 

Offices. Travel fund reductions have meant fewer on-site visits and 

greater reliance on desk reviews. Staff at all levels agreed that 

insufficient resources--particularly staffing and travel funds--are 

the biggest obstacles to greater CMR coverage of prime contractors.



SBA did not formulate a strategic plan for dealing with the impact of 

resource reductions on the CMR role. Without such a plan, SBA 

implemented ad hoc measures to deal piecemeal with resource declines. 

Nonetheless, these measures collectively have redefined the CMR role.



Declining Resources:



SBA/OGC resources have declined substantially over the past few years. 

From fiscal year 1991 through fiscal 2000,[Footnote 22] staff declined 

52 percent, from 333 to 159. During this same period, travel funds 

declined 54 percent, from $440,000 to $201,000. SBA officials agreed 

that these resource declines have significantly affected the CMR role. 

For example, SBA Area Directors told us that the need to assign 

multiple roles to field staff has increased since SBA experienced 

significant budget and staff cuts in the mid-1990s. Prior to these 

cuts, most field staff for both the prime and subcontracting programs 

were hired as specialists for one program. Now most, including CMRs, 

work on multiple programs. Similarly, the Subcontracting Task Team 

report pointed out that the merging of the CMR/PCR positions was 

workload driven and reflected the fact that positions were not being 

filled when incumbents retired.[Footnote 23] Finally, several SBA 

officials told us that to cope with the loss of staff and lack of 

travel funds, as well as the increased number of special initiatives, 

the assignment of multiple roles to staff became necessary and the desk 

review was created to replace the on-site review, when necessary.



The decline in travel funds has especially affected on-site compliance 

monitoring. The lack of travel funds has become a critical factor in 

decisions about which prime contractors receive on-site reviews, 

particularly in those Area Offices that cover large geographic areas. 

For example, in one Area, one CMR said that one major factor 

determining which contractors receive on-site visits was whether they 

could be reached on a tank of gas, since travel funds are so limited. 

In another Area, the Director said that travel funds have been a 

problem for a long time, and that for many months of the fiscal year, 

CMRs do not have access to any travel money. This prevents them from 

being able to effectively select prime contractors for on-site review.



Our survey indicated that the lack of travel funds also affected on-

site reviews in fiscal year 2000. For example, 76 percent of the 

responding CMRs rated their Area Office’s travel budget as very 

important in determining which prime contractors to review on-site. In 

comparison, fewer--66 percent--rated problems with contractor reports 

as very important. Still fewer--58 percent and 50 percent, 

respectively--rated poor/marginal ratings of the contractor during the 

last on-site review and the fact that the contractor had never had an 

on-site review as very important. Similarly, 78 percent rated the lack 

of travel funds as a significant barrier to conducting on-site prime 

contractor reviews.



Finally, the Task Team’s report expressed concern that without the 

requisite travel money and other resources, SBA will continue to 

monitor (on-site) about 12 percent of the total prime contractor 

portfolio, thus limiting the effectiveness of the Subcontracting 

Assistance Program.[Footnote 24]



Ad Hoc, Piecemeal Response to Resource Challenges:



SBA’s response to these resource challenges has been largely ad hoc and 

reactive. As resources have declined, the agency has struggled to keep 

up with subcontracting program demands by making various piecemeal 

adjustments to address specific problems, such as assigning multiple 

roles to CMRs and instituting desk reviews to cover staffing shortages 

and travel fund declines. SBA has not stepped back--at either the 

agency or program level--and taken a broader, more strategic look at 

the CMR role, particularly in the context of today’s resource-

constrained environment.



Strategic planning, assessment, and evaluation are essential elements 

of good management. This has been recognized for federal agencies since 

1993, when the Government Performance and Results Act[Footnote 25] 

became law. Effective management requires the establishment of goals 

and objectives as well as impact or outcome performance measures.



SBA has not extended such planning to the CMR role to help address the 

difficult challenges that declining resources pose for the 

Subcontracting Assistance Program. SBA’s agency-level plan does not 

address the CMR role at all.[Footnote 26] Furthermore, SBA officials 

told us that SBA’s current strategic-planning process does not deal 

with the CMR role in subcontracting or provide for assessments, 

evaluations, or planning for the CMR role. In addition, they told us 

that neither OGC nor the Subcontracting Assistance Program has 

conducted strategic assessments or planning for the CMR role.



In sum, while regulations and operating procedures describe a variety 

of duties and responsibilities that CMRs may perform,[Footnote 27] SBA 

has not developed goals and objectives for the CMR role. For example, 

the agency analyzed what might be desirable levels of prime contractor 

coverage or subcontracting plan compliance in today’s environment and 

how CMRs might contribute to achieving these goals. In addition, 

although SBA has productivity measures (e.g., the number of on-site and 

desk reviews conducted) to track CMRs’ performance, it does not have 

impact or outcome measures--or even such expectations--for CMRs. 

Finally, SBA has not strategically assessed, evaluated, or planned how 

best to address critical CMR role issues that have emerged during the 

past few years, such as the effect of multiple role assignments for 

CMRs, disagreements about the focus of the CMR role, the relative 

merits of on-site and desk reviews, and the impact of uneven 

distributions of CMRs and CMR workloads.



Consequently, we do not know how effective the CMR role is. 

Effectiveness cannot be assessed without outcome and impact measures 

tied to program goals and objectives. These do not exist for the CMR 

role.



Conclusions:



Subcontracting on federal contracts is a large and growing marketplace 

for small businesses. CMRs have been long considered to be key to 

fostering small business participation in such subcontracting. However, 

the value of the CMR role and the effect of recent changes in it are 

unknown. Unless steps are taken to better assess, evaluate, and plan 

for the future of the CMR role, SBA will continue to lack an 

understanding of CMR contributions to small business subcontracting. 

Moreover, its approach to addressing challenges that CMRs face will 

continue to be ad hoc and piecemeal.



Recommendations for Executive Action:



We recommend that the Administrator of SBA:



* assess, evaluate, and plan the CMR role, including addressing such 

issues as the impact of assigning multiple roles to CMRs, the 

appropriate CMR role focus, the effectiveness of compliance-monitoring 

methods, and the impact of uneven CMR workloads and prime contractor 

coverage;



* develop specific outcome and impact measures for CMRs’ effectiveness; 

and:



* clearly communicate the strategic plan and expectations for the CMR 

role to both SBA staff and small businesses.



Agency Comments and Our Evaluation:



SBA provided us with written comments on a draft of this report. The 

comments, along with our responses, appear in appendix I.



SBA neither concurred nor disagreed with our recommendations. However, 

SBA said that our report will be extremely helpful as it seeks ways to 

strengthen and improve its Subcontracting Assistance Program. In 

addition, SBA agreed that it needs to rethink the CMR role in today’s 

environment and noted that some aspects of the role may change in the 

future. SBA also agreed that it needs to develop outcome or impact 

measures to better assess the effectiveness of the CMR role. 

Furthermore, SBA noted that it has changed its Web site to include 

compliance monitoring as part of the CMR role.



SBA objected to some of our conclusions, particularly (1) that SBA’s 

response to the challenges posed by declining resources has been ad hoc 

and piecemeal; (2) that SBA lacks a clear, strategic vision of the CMR 

role; and (2) that CMRs’ effectiveness is unknown. We continue to 

believe that our conclusions are correct. They are based on evidence 

that SBA has not strategically assessed, evaluated, or planned the CMR 

role in light of the current environment, including developing goals 

and objectives for the role and impact and outcome measures for CMRs.



SBA’s comments do not provide any new evidence to the contrary. For 

example, the task force study that SBA cites as evidence of planning 

identified some specific problems with the CMR role and recommended 

some specific solutions. However, it did not strategically assess or 

plan the CMR role, nor was it tied to any SBA strategic-planning 

effort. In addition, the study did not use or establish measurable 

goals and objectives or outcome and impact measures for the CMR role. 

Similarly, the regulations and operating procedures that SBA references 

as evidence of vision are not tied to measurable goals and objectives 

and associated outcome and impact measures.[Footnote 28] Rather, they 

simply describe a variety of duties and responsibilities that CMRs are 

required to perform. In addition, the conditions that SBA cites as 

evidence of CMRs’ effectiveness may be the result of many factors other 

than CMRs’ efforts alone. SBA has not conducted the assessments and 

evaluations necessary to determine what effect CMRs actually had on 

these conditions. Finally, SBA’s agreement that it needs to rethink the 

CMR role and develop impact or outcome measures further supports our 

conclusions.



Scope and Methodology:



To determine CMRs’ duties and responsibilities, we analyzed pertinent 

legislation, regulations, and operating procedures and reviewed other 

agency documentation, including staffing profiles and workload 

analyses. We extracted information from the General Services 

Administration’s Federal Procurement Data System database on prime and 

subcontractors. We also interviewed officials at SBA headquarters and 

Area Directors and CMRs located in all six SBA Area Offices. We 

interviewed all six Area Directors and several Area Supervisors. We 

also interviewed 15 of the 39 current CMR staff, accounting for about 

51 percent of the total CMR FTEs. Finally, we analyzed data from a GAO 

survey of all 33 staff working as CMRs in fiscal year 2000, who 

constitute 85 percent of the current CMR population. Our overall 

response rate was 97 percent. On our survey, we asked a variety of 

questions about CMRs’ roles and responsibilities.



To identify the factors affecting the CMR role, we reviewed pertinent 

legislation, SBA staffing information, workload analyses, and travel 

budget fund submissions. We also interviewed SBA headquarters and Area 

Office personnel and reviewed agency audit reports and task force 

studies. We also met with SBA officials responsible for strategic 

planning.



We conducted our work from November 2001 through July 2002 in 

accordance with generally accepted government auditing standards.



We are sending copies of this report to interested congressional 

committees; the Administrator, SBA; and the Director, Office of 

Management and Budget. We will also make copies available to others 

upon request. In addition, the report will be available at no charge on 

the GAO Web site at http://www.gao.gov.



If you have any questions concerning this letter, please call me at 

(617) 565-7555. Key contributors to this review were Catherine 

Baltzell, Art Fine, David Bennett, Christina Chaplain, and Sylvia 

Schatz.



David E. Cooper

Director, Acquisition and Sourcing Management:



[End of section]



Appendix I: Comments from the U.S. Business Administration:



Note: GAO’s comments supplementing those in the report’s text appear at 

the end of this appendix.



U.S. SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C.20416:



OCT 8 2002:



Ms. Catherine Baltzell:



Assistant Director, Acquisition and Sourcing Management General 

Accounting Office:



441 G Street, NW Room 4440/A Washington, DC 20548:



Dear Ms. Baltzell:



Thank you for your e-mail of September 18, 2002, providing us an 

opportunity to review and comment on your draft report entitled “The 

Commercial Marketing Representative Role Needs to be Strategically 

Planned and Assessed” (GAO-03-54). I wish to commend you for your 

thorough review. Your observations will be extremely helpful as we 

seek ways to strengthen and improve our Subcontracting Assistance 

Program.



We believe that the reference on page one of the report to 33 staff 

working as Commercial Market Representatives (CMRs) in fiscal year 2000 

is misleading. You mention on page 6 and elsewhere in the report that 

the U.S. Small Business Administration (SBA) had only four (4) full-

time CMRs on October 1, 2001, the beginning of the fiscal year in which 

your study was conducted. We would like to point out that, in addition 

to these four full-time CMRs, SBA has four other employees in the field 

who devote 80% or more of their time to the CMR function.Our records 

also indicate that on October 1, 2001, SBA had 31 other part-time CMRs. 

Accordingly, we suggest that this sentence be rewritten to say that, at 

the beginning of fiscal year 2001, SBA had “39 staff in the CMR 

program, only 8 of whom were essentially full-time.” Otherwise the 

reader may begin reviewing the report with the misconception that SBA 

has almost three dozen full-time CMRs.



One of your main conclusions beginning on page 2, and elsewhere in the 

report, is that the SBA has had an “ad hoc, piecemeal response” to the 

problem of declining resources rather than “stepping back to 

strategically assess and plan the CMR role.” This statement does not 

accurately depict SBA’s approach to addressing this problem. In January 

2001, we convened a task force consisting of 13 supervisors, PCRs, and 

CMRs representing some of our most experienced employees in the field. 

This task force examined the subcontracting program and submitted a 

draft report to senior management on May 1, 2001, with numerous 

recommendations for strengthening the program. We have already 

implemented some of those recommendations, primarily in the procedures 

and checklists that the CMRs use during compliance reviews. Also, we 

are now revising the CMRs Standard Operating Procedures (SOP) to 

implement many of the other recommendations within the coming year. To 

imply that SBA has not examined the program critically and taken 

remedial action is not accurate.



On page two of the report, you state that “there are differences of 

opinion and concerns within the agency about the focus of the CMR 

role.” On page 14, you discuss this in more detail, citing the balance 

between compliance monitoring and marketing.This has been a critical 

issue for more than two decades, and SBA has always sought to find a 

balance between these two responsibilities. In fact, recognizing that 

each of the SBA Area Offices has its unique needs, we have deliberately 

given SBA’s Area Directors the flexibility to decide how they wish to 

prioritize their CMRs’ duties and responsibilities. In some cases, this 

means prioritizing compliance reviews; in other cases, it means 

prioritizing sourcing. The important point is that each Area Director 

can decide how to manage the program to achieve the best results under 

their own unique circumstances.



We also do not agree with your statement on page 20 of the report, that 

SBA does not have a clear, strategic vision of the CMR’s roles and 

responsibilities. To the contrary, this vision is set forth explicitly 

in Title 13 of the Code of federal Regulations, subpart 125.3, and in 

SOP 60 03 5, Subcontracting Assistance Program.We do agree, however, 

that we need to rethink the CMR’s role and how it is carried out in 
light 

of current resources and advances in information technology. Some 
aspects 

of the CMR’s roles and responsibilities may change in the future. We 

also agree that we need to develop outcome or impact measures that 

better indicate the effectiveness of the CMR Program.



There is also much discussion beginning on page 15 of the report of the 

desk reviews (officially known as “Performance Reviews”) that we 

implemented in 1996. Desk reviews are done by examining the 

contractors’ SF-294s, Subcontract Report on Individual Contracts, and 

SF-295s, Summary Subcontract Report, without making site visits. While 

we concur that onsite compliance reviews are preferable to desk 

reviews, we believe that on-site reviews are less cost-effective and 

are not needed in every instance.Indeed, SBA uses the results of the 

desk reviews to determine which prime contractors should receive on-

site reviews - a useful approach to risk management that addresses one 

of GAO’s primary concerns in a 2001 report (GAO-02166R, Small Business: 

Subcontracting Report Validation Can Be Improved).



The effectiveness of desk reviews can be seen by the increase in the 

total compliance reviews from 1995 to 1997, the year after we 

implemented them (desk reviews were implemented during fiscal year 

1996).In 1995, we conducted only 484 compliance reviews; by contrast, 

in 1997, we conducted 1,786 compliance reviews. In other words, the 

desk reviews allowed us to more than triple the number of compliance 

reviews that we conducted, with fewer CMRs and no additional travel 

money. We believe that what you describe as an ad hoc response was a 

logical and cost-effective approach to maximizing the utilization of 

available resources.



From the data mentioned above, it should be clear that your statement 

on page 15 that SBA officials have never evaluated the effectiveness of 

the two types of reviews (on-site vs. desk) is incorrect.To the 

contrary, we know that on-site visits are more effective, but we also 

know that they are less cost-effective than desk reviews and are not 

always necessary.



Another example of SBA’s resourcefulness is an agreement we signed with 

the Defense Logistics Agency (DLA) in 1996. That agreement delegated 

the primary responsibility for monitoring the subcontracting plans of 

most Department of Defense contractors to DLA, which has allowed SBA to 

focus its limited resources on monitoring the subcontracting plans of 

civilian agency contractors.SBA also monitors a small number of defense 

contractors not handled by DLA. The Defense Contract Management Agency 

(DCMA) now monitors subcontracting plans for the Department of Defense, 

and we are currently renegotiating the agreement with DCMA.



We also do not agree with your statement that SBA does not know if the 

CMRs are effective or not.In fiscal year 2000 (the most recent year for 

which we have reliable data), small businesses received 39.7% of all 

subcontract awards; small disadvantaged businesses (SDBs) received 

6.7%, and women-owned small businesses received 4.7%. These percentages 

are much higher than at the prime contract level.In other words, if’ 

measured on a percentage basis, prime contractors did much better than 

Federal agencies in achieving their goals. Another measure is the 

percentage of subcontract dollars awarded to SDBs, which has improved 

steadily over the past two decades, from barely more than 2% in the 

mid-1980s to well over six percent from 1995 to 2000. We believe these 

figures improved as a result of SBA’s concerted effort to strengthen 

and revitalize the CMR program, which began in 1987 with the issuance 

of SBA Policy Notice 6000215 and continued with SOP 60 03 3 in 1989. 

This Policy Notice and SOP set forth SBA’s first rigorous approach to 

compliance reviews and resulted in a gradual improvement in 

subcontracting achievements, as measured by percentage, in subsequent 

years (see attachment).



Table 2 on page 11 (Number and Percent by Year) appears to be 

incorrect, and we are providing a corrected copy as an enclosure to 

this response. There appear to be two primary reasons for the 

discrepancies: (a) you did not include Follow-up Reviews, which are a 

type of on-site compliance review; and (b) you did not make an 

adjustment, as explained to your auditors during the review, for one 

CMR who failed to enter any compliance reviews into the database in 

1999 and 2000. There are also some other discrepancies, but they are 

not statistically significant; for example, you show 1,504 desk reviews 

in 1997, while we show 1,496.In any case, we believe that our table 

represents a more accurate picture of the CMRs’ performance over the 

past decade.



In your discussion of goals and objectives on page 20, you leave the 

reader with the impression that SBA has never assigned specific, 

quantitative goals to the CMRs. This is not true. Every year CMRs are 

assigned specific Performance Standards that are tied to Critical 

Elements such as compliance reviews and other activities.Over the past 

decade, we have often established subcontracting goals for our Area 

Directors as well. We understand that GAO would like SBA to develop 

more substantive impact or outcome measures, and we believe this has 

merit. In any case, we recommend that you rephrase this section so that 

it will not give the reader the impression CMRs are not assigned goals 

and objectives.



Since you examined the SBA web site (http://www sba gov/GC/

contacts.html) during your audit, we have corrected the omission that 

you noted; the website now mentions compliance monitoring as part of 

the CMR’s role.



Your concerns about the CMR workload are also well taken, but we would 

like to clarify two points in this section of your report. You point 

out that there may be as many as 1,500 additional prime contractors 

with subcontracting plans that are not in our:



database. You also state that our effort to develop a database to 

identify and track prime contractors “appears to be very slow.” In 

fact, the new database has been developed and is currently being field 

tested by the CMRs.Among other things, it provides a mechanism to 

capture all contractors listed in the Federal Procurement Data System 

with subcontracting plans. We fully expect to have every prime 

contractor with a subcontracting plan in our database by the end of the 

second quarter of fiscal year 2003.



We should also like to point out that we maintained an extremely 

comprehensive database to support the CMR Program from 1991 to 2001. 

Although that database was limited by the technology that existed in 

the early 1990s, it contains a wealth of historical data on prime 

contractors that will continue to be useful in the future.



On page 16, you point out that SBA’s Office of Inspector General 

observed the uneven workload distribution in October 1995 and 

recommended that SBA more evenly distribute prime contractors among 

CMRs to improve coverage. Since then, we have addressed this problem by 

creating more “generalists,” employees who perform more than one Office 

of Government Contracting function. The eight essentially full-time 

CMRs are supplemented by roughly 31 other SBA staff who perform CMR 

work as a collateral duty.It is true that there is currently one area 

of the United States where we still have an uneven workload 

distribution, and we are studying options to determine how we can best 

address this issue.



Finally, it has come to our attention that one of the other Federal 

agencies submitted incorrect subcontracting data to the Federal 

Procurement Data Center (FPDC) for fiscal year 2001. The FPDC provided 

SBA with a corrected report on August 14,



2002, which shows total subcontracting in fiscal year 2001 to be $91.1 

billion, not $95 billion as previously reported. Accordingly, you may 

wish to correct the reference to $95 billion on page 1 of your report.



Once again, I wish to thank you for your report, which should prove to 

be invaluable as we seek ways to improve the effectiveness of our 

CMRs.I especially wish to commend the members of the GAO staff who 

worked on this assignment for their professionalism in conducting the 

audit.



Sincerely,



Fred C. Armendariz:



Associate Deputy Administrator for Government Contracting and Business 

Development:



Signed by Fred Armendariz



Enclosure:



The following are GAO’s comments on the Small Business Administration’s 

letter dated October 8, 2002.



GAO’s Comments:



We do not agree that 80-percent time is essentially equivalent to 100-

percent time. Four staff that work 80 percent of their time as 

Commercial Marketing Representatives (CMRs) constitute about three 

full-time equivalents (FTEs), not four FTEs. This is a difference of 

about 20 percent. As we point out in our report, SBA’s use of part-time 

CMRs for whom the CMR role is, as SBA comments, “a collateral duty,” 

has not meant an increase in CMR staff resources. Rather, total CMR 

FTEs declined 28 percent from fiscal year 1992 through fiscal 2001.



SBA’s task force study identified some specific problems with the CMR 

role and recommended some specific solutions, and SBA’s efforts to 

implement some of these solutions can possibly lead to some incremental 

improvements. However, the task force study did not strategically 

assess or plan the CMR role, nor was it tied to any SBA strategic-

planning effort. In addition, the study did not use or establish 

measurable goals and objectives or outcome and impact measures for the 

CMR role. In other words, the study did not address the larger issues 

of CMR strategic role assessment and planning. In the absence of such 

planning, SBA’s approach to addressing challenges that CMRs face will 

continue to be ad hoc and piecemeal.



Delegating decisions about the focus of the CMR role to Area Directors 

may be appropriate. However, SBA has not conducted any assessments or 

evaluations that address what Area Office factors and characteristics 

make such delegation essential or effective. Furthermore, SBA has not 

evaluated the effectiveness of local decisions regarding the balance 

between compliance monitoring and marketing. The resource pressures on 

the CMR role heighten our concern. It may be that local decisions about 

the focus of the CMR role are more influenced by the realities of local 

resource constraints than by local compliance monitoring and marketing 

needs. Without sound assessment and evaluation, however, this and many 

other issues of role focus will remain clouded.



The regulations and operating procedures that SBA references do not 

constitute a strategic vision tied to measurable goals and objectives. 

Rather, as we discuss in our report, they simply describe a variety of 

duties and responsibilities that CMRs are required to perform.[Footnote 

29] Since the regulations and guidance do not place a relative order of 

importance on these duties, and the Small Business Act and the Federal 

Acquisition Regulations do not mention CMRs, there is no law, 

regulation, or guidance requiring or suggesting that CMRs prioritize 

their work according to a strategic vision.



In contrast, a strategic vision is broader and more comprehensive. It 

is expressed in an overall strategic plan that articulates a mission 

and specific plans to fulfill that mission, including measurable goals 

and objectives and associated outcome and impact measures. SBA also 

appears to recognize at least to some degree the limitations of the 

regulations and operating procedures as a strategic vision because it 

agrees that it needs to rethink the CMR role and develop outcome or 

impact measures.



SBA recognizes that on-site reviews are both more effective than and 

preferable to desk reviews but asserts that they are “less cost-

effective” and “not always necessary.” However, SBA does not offer 

persuasive evidence to support these assertions. During our review, SBA 

officials told us that they had not conducted assessments or 

evaluations of either of these compliance review methods or of their 

comparative effectiveness. Furthermore, SBA has not identified the 

criteria--that is, the strategic goals and objectives and associated 

impact or outcome measures--necessary to guide such assessments and 

evaluations.



SBA also says that it uses the results of desk reviews to determine 

which prime contractors should receive on-site reviews. However, as we 

discuss in our report, the lack of travel funds is the primary driver 

of decisions about which prime contractors receive on-site reviews.



SBA observes that in fiscal year 2000, small businesses, in general; 

small disadvantaged businesses; and women-owned small businesses 

received “much higher” percentages of all subcontract awards than of 

prime contract awards.[Footnote 30] SBA also observes that the 

percentage of subcontract dollars awarded to small disadvantaged 

businesses has improved steadily over the past two decades.[Footnote 

31] SBA then attributes both of these conditions solely to CMR efforts.



SBA has not conducted the assessments and evaluations necessary to 

support this conclusion. Moreover, while CMRs’ efforts may well have 

contributed to these conditions, a number of other factors likely have 

had a significant impact. As we note in our report, federal regulations 

require a subcontracting plan for each contract or contract 

modification that exceeds $500,000 ($1 million for construction 

contracts) and has subcontracting possibilities.[Footnote 32] Federal 

agencies are independently responsible for complying with these 

regulations. Agencies may even conduct their own subcontract-monitoring 

efforts. For example, DOD reviews subcontracting plans for defense 

prime contractors. In fact, SBA commented that it has delegated the 

primary responsibility for monitoring the subcontracting plans of most 

DOD contractors to the responsible DOD agency so that SBA can focus its 

limited resources on monitoring civilian agencies’ plans. Since DOD 

accounted for 65 percent of all subcontracted dollars awarded in 2001, 

it is not likely that CMRs alone are responsible for all small business 

subcontracting achievements.



There are also inherent business incentives for prime contractors to 

subcontract voluntarily with small businesses. For example, small 

business subcontractors can provide important specialized capabilities 

that the prime contractor does not have or wish to invest in 

developing. Small business subcontractors may also be able to provide 

some general services faster and more economically, thus saving prime 

contractor resources. Subcontracting also allows prime contractors to 

avoid permanent staffing increases that may not be sustainable in the 

face of market shifts. Finally, as we note in our report, the nature of 

federal contracting has changed. The number of prime contracts is 

shrinking, and many prime contracts have become so large that small 

businesses find it difficult to compete for them. This change alone may 

heavily influence the conditions that SBA cites as markers of CMRs’ 

effectiveness.



We do not agree that our report leaves a mistaken impression with 

regard to the goals and objectives assigned to CMRs. Rather, we state 

clearly that SBA has productivity measures (such as the number of on-

site and desk reviews conducted) to track CMRs’ performance but that it 

does not have impact or outcome measures--or even such expectations--

for CMRs. SBA agrees that it needs to develop outcome or impact 

measures to better measure CMR effectiveness.



We continue to believe that SBA’s development of its new database 

appears to be slow. SBA began developing this new database in early 

2001, after experiencing repeated problems with its original database. 

In October 2001, the SBA officials we interviewed told us that the new 

database would be operational in January 2002. In February 2002, SBA 

told us that it would be operational by June. Now, in October 2002, SBA 

says that it is only in test mode and acknowledges that it will not 

have a complete list of prime contractors with subcontracting plans 

until the end of the second quarter of fiscal year 2003.



While SBA’s original database does provide some useful information, the 

SBA officials we interviewed told us that the data were not complete. 

The database did not contain a complete list of prime contractors with 

subcontracting plans.



We continue to have concerns about CMRs’ workload and prime contractor 

coverage. As we discuss in our report, about 18 CMR FTEs nationally 

monitor the subcontracting activities of the 2,029 prime contractors 

currently identified. In addition, CMRs have various marketing duties. 

(In fiscal year 2000, CMRs generally seemed to spend slightly more time 

on marketing than on compliance monitoring.) CMR compliance monitoring 

Area Office workloads currently range from 56 to 198 prime contractors 

per CMR FTE. There are wide variations in CMR workloads both between 

Area Offices and within more than one Area Office. This situation may 

be exacerbated when additional contractors with subcontracts are 

identified and added to CMR workloads.



FOOTNOTES



[1] See the SBA Subcontracting Task Team Draft Recommendations, May 

2001.



[2] All dollar figures in this report have been adjusted to 2001 

dollars to account for inflation.



[3] We conducted the survey for our report entitled Small Business 

Subcontracting Validation Can Be Improved, GAO-02-166R (Washington, 

D.C.: Dec. 13, 2001).



[4] See Federal Acquisition Regulation 19.702.



[5] SBA is authorized to assist federal agencies and businesses in 

complying with their subcontracting responsibilities and to evaluate 

prime contractors’ compliance with their subcontracting plans by 15 

U.S.C. 637(d)(10)(C).



[6] The Department of Defense’s Defense Contract Management Agency also 

reviews subcontracting plans for defense prime contractors.



[7] See 13 C.F.R. 125.3 (c)(d).



[8] See C.F.R. 125.3 (c)(d).



[9] Small businesses may also advertise their capabilities as prime 

contractors.



[10] See 13 C.F.R. 125.2(b).



[11] See 13 C.F.R. 121.401.



[12] See 13 C.F.R. 125.5(f).



[13] Most of these positions are GS-13 positions.



[14] Since fiscal year 2000, SBA has assigned 6 additional part-time 

CMRs. Our survey includes 85 percent of the current population of 39 

CMRs. 



[15] See Federal Acquisition Regulation 19.4 and 19.6, SBA SOP 60 04 4, 

SOP 60 02 6.



[16] Differing emphasis by Area Directors and CMRs on compliance 

monitoring versus marketing and the lack of travel funds (especially in 

geographically large areas) also appear to be contributing factors.



[17] SBA officials told us that agency-wide on-site review goals have 

not been set because of travel fund restrictions.



[18] See SBA Subcontracting Task Team Draft Recommendations, May 1, 

2001. 



[19] See SBA’s Inspector General report Prime Contracts and 

Subcontracting Program, October 1995.



[20] See SBA’s Inspector General report Prime Contracts and 

Subcontracting Program, October 1995.



[21] See SBA’s Inspector General report Prime Contracts and 

Subcontracting Program, October 1995.



[22] Fiscal year 2000 is the most recent year for which both staff and 

travel data were available from SBA.



[23] See SBA Subcontracting Task Team Draft Recommendations, May 1, 

2001.



[24] See SBA Subcontracting Task Team Draft Recommendations, May 1, 

2001.



[25] See P.L. 103-62.



[26] See SBA Strategic Plan FY 2001-2006.



[27] See 13 C.F.R. Part 125, 3(c)(d), SBA SOP 60 03 5.



[28] See13 C.F.R. Part 125, SBA SOP 60 03 5.



[29] See C.F.R. Part 125.3(c)(d), SBA SOP 60 03 5.



[30] SBA did not provide data on prime contract awards, so we were 

unable to assess the magnitude of the differences between subcontract 

and prime contract awards to these types of businesses.



[31] SBA did not provide data on subcontract dollars awarded over time 

to small businesses in general or to women-owned businesses.



[32] See Federal Acquisition Regulation 19.702.



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