Minority Business:

Management Improvements Needed at Minority Business Development Agency

RCED-90-69: Published: Jan 19, 1990. Publicly Released: Feb 12, 1990.

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John M. Ols, Jr
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Pursuant to a congressional request, GAO reviewed the Minority Business Development Agency's (MBDA) operations, focusing on: (1) MBDA review and approval of competitive grant applications; (2) MBDA staffing levels and work load; and (3) client satisfaction with management, marketing, and technical assistance MBDA provided through its network of Minority Business Development Centers.

GAO found that: (1) MBDA delayed approval of 76 of the 102 center operation grants it scheduled for award during fiscal year (FY) 1988, primarily due to its detection, during the grant application review process, of such problems as unresolved debts to the government and disallowed indirect cost rates; (2) some of those delays forced centers to suspend operations and disrupt client services until they received funding; (3) MBDA headquarters and regional staffing levels changed little between FY 1980 and FY 1989, although the program budget decreased by $19 million, and directors believed that offices were overstaffed; (4) personal differences between former headquarters directors hindered effective communications and efficient use of staff and negatively affected employee morale and productivity; and (5) MBDA management planned to focus efforts on improving the grant review process to eliminate approval delays and on reexamining agency staffing needs, roles, and responsibilities. GAO also found that, of 149 surveyed center clients: (1) 72 percent reported high or general satisfaction with center services; (2) over 83 percent reported that they would contact a center if they needed assistance in the future; (3) 53 percent believed that center services were very useful in meeting their business needs; (4) 36 percent believed that their business skills greatly increased as a result of center services; and (5) 66 percent rated center personnel as having at least above-average expertise.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: MBDA implemented recommendations from the private consulting firm the agency hired. The hiring of a consulting firm was one of the major corrective actions proposed by MBDA to address GAO findings and recommendations.

    Recommendation: The Secretary of Commerce should instruct the Director, MBDA, to, in his reevaluation of the grant process: (1) determine, in cooperation with other pertinent Commerce officials, whether actions taken to correct problems that have delayed the processing of grant applications are effective, and if not, develop alternative solutions; and (2) develop solutions for other quality control problems that exist with grant applications and problems that continue to contribute to delays in the funding of centers.

    Agency Affected: Department of Commerce

  2. Status: Closed - Implemented

    Comments: MBDA hired a private consulting firm to examine the agency's utilization of its personnel. The consulting firm has issued a new organizational plan for MBDA and has recommended expansion of existing staffs' roles and responsibilities.

    Recommendation: The Secretary of Commerce should direct the Director, MBDA, as part of his effort to examine agency staffing, to determine how to either: (1) better utilize existing staff resources through the expansion of their roles and responsibilities; or (2) reduce staff to realistically reflect the agency's work load.

    Agency Affected: Department of Commerce


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