Small Business Contracting:

Opportunities to Improve the Effectiveness of Agency and SBA Advocates and Mentor-Protege Programs

GAO-11-844T: Published: Sep 15, 2011. Publicly Released: Sep 15, 2011.

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William B. Shear
(202) 512-4325


Office of Public Affairs
(202) 512-4800

This testimony discusses our recent work on the federal government's efforts to increase contracting opportunities for small businesses. This work covered (1) the Offices of Small and Disadvantaged Business Utilization (OSDBU) at federal agencies, (2) federal mentor-protege programs, and (3) the Small Business Administration's (SBA) Procurement Center Representatives (PCR) and Commercial Market Representatives (CMR). More specifically, to increase small businesses' visibility within federal agencies, in 1978 Congress amended the Small Business Act to require that all federal agencies with procurement powers establish an OSDBU, which would advocate for small businesses in a variety of ways. The act further requires that OSDBU directors be responsible only to and report directly to agency heads or their deputies. The purpose of this provision is to help ensure that OSDBU directors have direct access to their agencies' top decision makers in order to advocate effectively. The functions an OSDBU may perform include administering a mentor-protege program. Under such programs, mentors--businesses, typically experienced prime contractors--provide technical, managerial, and other business development assistance to eligible small businesses, or proteges. In return, the programs provide incentives for mentor participation, such as credit toward subcontracting goals. Overall, mentor-protege programs seek to enhance the ability of small businesses to compete more successfully for federal contracts. Thirteen agencies currently have mentor-protege programs: the Department of Homeland Security (DHS), Department of Defense (DOD), Department of Energy (Energy), Environmental Protection Agency (EPA), Federal Aviation Administration (FAA), General Services Administration (GSA), Department of Health and Human Services (HHS), National Aeronautics and Space Administration (NASA), SBA, Department of State (State), Department of the Treasury (Treasury), United States Agency for International Development (USAID), and Department of Veterans Affairs (VA). In addition to OSDBUs, SBA's PCRs and CMRs play an important role in helping ensure that small businesses gain access to contracting and subcontracting opportunities. A PCR's key responsibilities include reviewing proposed agency contract actions--such as potential bundling or consolidation--and making set-aside recommendations to agency contracting officers, reviewing agency small business programs, and counseling small businesses. A CMR's key responsibilities include counseling small businesses on obtaining subcontracts and helping match large prime contractors with small businesses. This testimony discusses three reports we issued in June 2011. Specifically, this testimony discusses our work on (1) the reporting structure at and functions performed by OSDBUs in agencies with major contracting activity, (2) the mentor-protege programs at 13 federal agencies, and (3) SBA's PCRs and CMRs.

In summary, we found the following and made recommendations for improvement: (1) Nine of the 16 agencies we reviewed were in compliance with the Small Business Act's requirement that OSDBU directors be responsible only to and report directly to the agency or deputy agency head; however, seven were not. We recommended that the seven agencies act to comply with the requirement. The Social Security Administration (SSA) agreed with the recommendation, and the Department of the Interior agreed to reevaluate its reporting structure. The Departments of Commerce, Justice, State, and the Treasury disagreed, stating they were in compliance. We maintained our position on these agencies' compliance status. The Department of Agriculture did not comment. (2) While controls existed at all 13 federal agencies with mentor-protege programs to help ensure that participants met eligibility criteria and benefited from the program, the agencies generally did not track protege achievements after program completion. We recommended that 10 agencies consider doing so. Six of the 10 agencies--DHS, Energy, GSA, HHS, Treasury, and VA--generally agreed with our recommendation. We clarified the wording of the recommendation in response to SBA's comment that the wording in our draft report would lead to the conclusion that all mentor-protege programs have the same objective. State partially agreed with our recommendation, citing concerns about the impact that postcompletion reporting could have on the department, mentor firms, and protege firms. EPA and FAA did not comment. (3) Although SBA had some measures to assess the effectiveness of PCRs and CMRs, select data these staff reported were not reliable and report controls and reviews had weaknesses. We recommended that SBA take measures to improve data reliability and internal controls. SBA agreed with our recommendations and has been updating guidance for the PCR and CMR programs to provide clear instructions for reporting. SBA also said it would implement a method to verify and review the PCR and CMR documentation.

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