	Background

Under legislation that established Advocacy in its current form in 1976,  Advocacy’ duties are to  serve as a focal point for small businesses’ concerns about the  federal government’s policies and activities; advise small businesses on how to interact with the federal develop proposals for federal agencies on behalf of small businesses; represent the views and interests of small businesses before federal  agencies; enlist the cooperation and assistance of public and private agencies,  businesses, and other organizations in disseminating information  about the federal government’s programs and services that benefit  small businesses. Advocacy’s Internal Controls Do Not Ensure the Quality of Its Research and That Required Information Quality Practices Are Followed

Producing research products, both internally and externally, on issues of  importance to small businesses is one of Advocacy’s primary  responsibilities. Without adequate documentation—a key internal control—of its peer  reviews, Advocacy does not have an institutional record of its activities  and cannot demonstrate that it is following its own peer review process. Advocacy Has Not Followed Some Required Elements of Information Quality Guidelines

While Advocacy has quality review policies for its peer review process, it  does not have policies and procedures that reflect the federal information  quality guidelines on retaining data for influential studies or taking other  steps to substantiate the quality of information in such studies when they  have not retained the data. We also found that Advocacy staff had not taken additional steps, in the  absence of retaining the underlying data, to substantiate the quality of the  regulatory cost estimates in two of the studies that it sponsored and  disseminated. Documentation of Key Regulatory Activities is Inconsistent and Roundtables Are Not Publicized According to Advocacy’s Policies

Advocacy has practices and procedures (“policies”) for its regulatory  activities—comment letters and roundtables—however, documentation of  these key regulatory activities is inconsistent. For example, the guide stated that when regulatory attorneys  decide to intervene in the rulemaking process, they must follow up, as  appropriate, with the interested associations to ensure that Advocacy has  sufficient information and data to make its case for intervening. But there  is no policy to document these interactions. But the guide contains no  policy that this step be documented. According to federal internal control standards, effective management of  a workforce is essential to achieving program results. Yet Advocacy has not incorporated  succession planning into its workforce planning efforts, such as its  training and mentoring initiatives. However, Advocacy’s research, regulatory, and  workforce planning functions could be improved by strengthening its  internal controls as follows:
Research activities. Regulatory activities. Advocacy’s lack of documentation and  transparency of the regulatory activities we reviewed made it difficult  to validate Advocacy’s efforts to represent small businesses. While Advocacy’s workforce planning  efforts help in managing its current staff, these efforts do not include  any strategies to plan for succession, even though several staff have  been with the office for many years and will eventually need to be  replaced. Recommendations for Executive Action

To improve Advocacy’s system of internal control, and help to provide  reasonable assurance that the office is meeting its mission, we  recommend that the Chief Counsel of Advocacy take the following five  actions:
Strengthen the accountability of its research activities by taking the  following two actions:
Enhance its peer review policies and procedures by including  written guidance on selecting peer reviewers and documenting all  steps of the peer review process—whether a peer review occurred  and how and to what extent peer reviewer comments were  addressed. II), Advocacy  agreed with our recommendations. Finally, Advocacy agreed that workforce planning is  important for ensuring that the office maintains the skills and resources  needed to fulfill its mission and noted that the office is developing a  Leadership Succession Plan in response to our recommendation. GAO staff who made major contributions to this report are  listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This report examines Advocacy’s (1) research activities; (2) regulatory  activities, including the applicability of the Federal Advisory Committee  Act (FACA) to Advocacy’s roundtables; and (3) workforce planning  efforts. We analyzed  Advocacy’s research products produced in the 5 most recent fiscal  years—2008 through 2012—and interviewed relevant Advocacy officials  on the processes by which they assess the quality of its research  products. Appendix II: Comments from the Office of Advocacy, Small Business Administration

Appendix III: Legal Analysis of the Applicability of the Federal Advisory Committee Act to the Office of Advocacy’s Roundtables

	Conclusions

Advocacy is an “agency” under FACA first because it meets the statutory  definition of this term in FACA and the Administrative Procedure Act  incorporated by reference: it is an “authority of the Government of the  United States, whether or not it is within or subject to review by another  agency” and not subject to statutory exemption.
Why GAO Did This Study

Congress created Advocacy within SBA in 1976 as an independent voice for small businesses. Questions have recently been raised about Advocacy's efforts to represent small businesses in regulatory activities and some of its research on small business issues. In light of these questions, GAO was asked to review Advocacy's activities.
This report examines Advocacy's (1) research, (2) regulatory activities, and (3) workforce planning efforts. GAO analyzed Advocacy's research, comment letters, and other regulatory information for fiscal years 2008-2013; assessed Advocacy's policies and procedures against federal standards for internal control and information quality; and interviewed agency officials, and small business and industry representatives. GAO also analyzed the applicability of the Federal Advisory Committee Act to Advocacy roundtables.

What GAO Found

The Office of Advocacy (Advocacy) within the Small Business Administration (SBA) fulfills its mission by researching small business issues and providing input into federal rulemaking and related regulatory activities. However, GAO identified key areas in Advocacy's system of internal control that could be improved.
Research. GAO found that Advocacy did not ensure that its staff monitored the quality of the information the office disseminated, as required. GAO reviewed 20 selected research products and found that in 16 cases a required quality review had not been documented. Advocacy recently established a review policy for its research, but it does not include procedures for selecting the reviewers or documenting that a review occurred and how reviewer comments are addressed. GAO also found that Advocacy staff had not followed federal information quality guidelines to retain data and could not substantiate the quality of information in two cost-estimation reports—a research product it has contracted for every 5 years. Without better controls over its quality review process and efforts to substantiate the information it disseminates, Advocacy cannot ensure the validity of one of its core activities—research in support of small businesses.
Regulatory activities. Advocacy recently updated procedures for its regulatory activities, but these could be strengthened. GAO found the extent to which individual staff maintained records varied, in part, because the procedures lacked policies for documentation. For instance, the procedures state that when staff decide to intervene in the rulemaking process, they must follow up as appropriate with the interested groups to ensure that Advocacy has sufficient information and data to support its case. However, there is no policy that these interactions be documented. Federal internal control standards state that documentation and records should be maintained. If key procedures are not being documented, managers do not have an institutional record that agency goals and objectives in this area are being met. GAO also found that the Federal Advisory Committee Act's transparency and other requirements do not apply to Advocacy's meetings with stakeholders to get input on regulations (roundtables).
Workforce planning. Advocacy's workforce efforts include training and mentoring for new staff, but do not include succession planning, which is recommended by the Office of Personnel Management. According to federal internal control standards, effective management of a workforce is essential to achieving program results. Officials told GAO that Advocacy was a small office and that additional staff were hired on an as-needed basis. However, some key staff have been with Advocacy for many years and their experience will be difficult to replace. If Advocacy does not incorporate succession planning strategies into its workforce planning efforts, it is at risk of not having the skills and expertise to meet its mission when key staff leave or retire.

What GAO Recommends

GAO makes several recommendations to improve the Office of Advocacy's controls over the quality of its research, the documentation of its regulatory activities, and workforce planning. In commenting on a draft of this report, Advocacy agreed with our recommendations and noted some steps it will take to address them.