Percentage of Competitively Awarded 8(a) Contract Dollars Was About the Same

To help develop firms and better prepare them to compete in the commercial marketplace after they leave the program, the act requires that 8(a) program contracts be awarded competitively to 8(a) firms when the total contract price, including the estimated value of contract options, exceeds $5 million for manufacturing contracts or $3 million for all other contracts. SBA’s June 1995 revisions to the 8(a) program regulations closed a major loophole involving the competitive award of indefinite delivery, indefinite quantity (IDIQ) contracts. Contract Dollars Continued to Be Concentrated in a Small Percentage of Firms

The concentration of 8(a) contract dollars among relatively few firms is a long-standing condition that continued in fiscal year 1995. In 1995, SBA made several efforts to increase the award of 8(a) contracts to firms that had never received contracts. Few Firms Graduate From Program

SBA’s regulations provide that any firm that (1) substantially achieves its business development goals and objectives before completing its program term and (2) has demonstrated the ability to compete in the marketplace without 8(a) program assistance may be graduated from the 8(a) program. The data also show that during fiscal year 1995, SBA terminated another 160 firms from the program for various reasons, including failure to comply with program requirements, and 250 more firms left the program because their program terms had expired during the fiscal year. Authorized by section 7(j) of the Small Business Act, as amended, the 7(j) program provides seminars and individual assistance to 8(a) firms. 8(a) Contracts and Dollars Awarded Competitively for Fiscal Years 1991 Through 1995

Range of Total 8(a) Contract Dollars Awarded to Top 50 8(a) Firms for Fiscal Years 1992 Through 1995

Analysis of 8(a) Firms’ Compliance With Their Non-8 (A) Business Requirements for Fiscal Year 1995

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Why GAO Did This Study

GAO discussed the Small Business Administration's (SBA) 8(a) Minority Business Development Program, focusing on SBA progress in: (1) requiring the competitive award of high-value 8(a) contracts; (2) distributing 8(a) contracts to a larger number of firms; (3) ensuring that firms rely less on 8(a) contracts as they move through the 8(a) program; and (4) graduating from the program firms that have demonstrated that they can survive without 8(a) contracts.

What GAO Found

GAO noted that: (1) while the dollar amount of 8(a) contracts awarded competitively during fiscal year (FY) 1995 increased over FY 1994, the percentage of contract dollars awarded competitively remained at about 19 percent; (2) SBA revisions closed a major loophole that allowed the use of indefinite delivery, indefinite quantity contracts to avoid competition; (3) although SBA made several efforts to more widely distribute 8(a) contracts, the concentration of 8(a) program dollars to relatively few firms continued in FY 1995; (4) during FY 1995, a larger percentage of 8(a) firms in their final year of the program achieved the required level of non-8(a) business than was reported for previous years; (5) during FY 1995, SBA graduated 3 firms from the 8(a) program, the first graduations in the program's history, and terminated another 160 firms for various reasons, and 250 firms left the program; (6) during FY 1995, SBA approved 885 8(a) applications; and (7) SBA provided management and technical assistance to 8(a) firms through its 7(j) program.