Minority Business:

Awarding of Cooperative Agreement To Operate Development Centers

RCED-87-46BR: Published: Nov 19, 1986. Publicly Released: Nov 19, 1986.

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In response to a congressional request, GAO: (1) reviewed the Department of Commerce's Minority Business Development Agency's (MBDA) procedures in awarding cooperative agreements to operate Minority Business Development Centers; (2) reviewed the Southeastern Michigan Business Development Center's (SMBDC) allegations concerning the MBDA award of the 1986 cooperative agreement to operate the Detroit Center; and (3) determined whether there is a nationwide trend in which MBDA takes these agreements away from minority and community-based organizations and awards them to national accounting firms and other non-community-based organizations.

GAO found that: (1) a nationwide trend has not developed whereby national accounting firms and other non-community-based organizations replace minority and community-based firms as awardees of cooperative agreements; (2) its analysis of MBDA data showed a slight increase nationally in minority organizations' participation in the Minority Business Development Center Program; (3) in 1983, 74 percent of awardees were minority-owned organizations; (4) in fiscal year (FY) 1986, such organizations operated 78 percent of the centers; (5) in the MBDA Chicago Region, including the Detroit Center, minority-organization awardees went from 40 percent in FY 1983 to 46 percent in FY 1986; and (6) nationwide, there were only seven changes in operators to or from minority ownerships, with national accounting firms replacing minority and community-based organizations in three cases and minority and community-based organizations replacing national accounting firms in the remaining four. GAO also found that: (1) the MBDA Chicago Region followed MBDA procedures in selecting the 1986 Detroit Center awardee; and (2) the SMBDC allegations concerning the MBDA award of the 1986 agreement were without merit.

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