Energy Management:

DOE Can Improve Distribution of Dollars Awarded Under SBA's 8(a) Program

RCED-94-28: Published: Feb 23, 1994. Publicly Released: Mar 25, 1994.

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Pursuant to a congressional request, GAO reviewed the distribution of Department of Energy (DOE) contract awards to firms participating in the Small Business Administration's 8(a) program, focusing on whether DOE: (1) distributes its 8(a) contract funding equitably; and (2) has complied with noncompetitive contract award requirements.

GAO found that: (1) DOE awarded 58 percent of its 8(a) contracts to 13 firms and 42 percent of its remaining contracts to 112 firms as of April 1992; (2) DOE has concentrated its 8(a) awards among a small number of firms by combining several smaller contracts into single larger contracts; (3) DOE and other federal agencies have awarded over 90 percent of their 8(a) contracts noncompetitively; (4) DOE could increase its small business assistance by better distribution of its noncompetitive awards; (5) although DOE is required to award competitive contracts if the estimated contract cost exceeds certain thresholds, DOE has structured its procurements so that estimated prices fall below the competition thresholds; (6) DOE has avoided the competition requirements to facilitate the procurement process; and (7) DOE should discontinue its avoidance of the competition requirements to demonstrate its commitment to the 8(a) program and to further assist small businesses.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In a memorandum for heads of DOE units, the Secretary of Energy stated that they should "Exercise caution when estimating the cost of a proposed 8(a) contract so as not to structure the price estimate artificially low to avoid the thresholds for competition established in the Business Opportunity Development Program Reform Act."

    Recommendation: To meet the objectives of the 8(a) program, the Secretary of Energy should direct program offices at headquarters to avoid structuring 8(a) procurements to avoid the thresholds for competition established in the Business Opportunity Development Reform Act. Furthermore, the Secretary of Energy should provide the same direction to offices at other DOE locations, as appropriate.

    Agency Affected: Department of Energy


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