Duties of OSDBU directors and functions of OSDBUs. Some of the required functions of the OSDBU director in section 15(k) of  the Small Business Act include the following:  identifying proposed solicitations that involve significant bundling of  contract requirements; working with agency acquisition officials, where appropriate, to revise  such proposed solicitations to increase the probability of participation  by a small business; assisting small businesses in obtaining payments from an agency (or  prime contractor) with which they have contracted; assigning a small business technical adviser to each office with an  SBA-appointed procurement center representative (an SBA staff  member assigned to federal agencies or contract administration  offices and who carries out SBA policies and programs); and providing the chief acquisition officer and senior procurement  executive of the agency with advice and comments on acquisition  strategies, market research, and justifications related to certain  provisions of the act. The  National Defense Authorization Act for Fiscal Year 2013 amended the  statutory requirements of 15 U.S.C. Agencies Demonstrated High Levels of Compliance with Two OSDBU Director Requirements, but Three Other Requirements Had Lower Rates of Compliance

Of the five director-related requirements we reviewed, the level of  demonstrated compliance varied, but was not universal for any one  requirement (see table 1):
Four of the 10 agencies we reviewed for the requirement that the  director report to the head or deputy head of the agency did not  demonstrate compliance. Nineteen of 24 agencies demonstrated compliance with a requirement  for collateral duties of the director. Eighteen of 24 agencies demonstrated compliance with a requirement  for the director’s compensation and seniority. Not All OSDBU Directors Reported to the Head or Deputy Head of the Agency

Section 15(k)(3) generally requires that the OSDBU director report  directly to and be responsible only to the agency head or the deputy  head. Director experience. Reporting to lower levels of  management may result in OSDBU directors not having direct access to  top agency management, which may limit their influence. Identify and address bundling of contract requirements. One agency did not demonstrate compliance. Provide assistance on payments. Some OSDBUs Did Not Demonstrate Compliance for Assigning Small Business Technical Advisers, Advising on In- Sourcing, and Responding to Notifications of Undue Restrictions

In reviewing information from our survey, follow-up questions, interviews,  and policy documentation, we determined that 10 of the 24 agencies did  not demonstrate compliance with the requirement for assigning small  business technical advisers, and 8 of the 24 agencies did not  demonstrate compliance with providing advice on proposed in-sourcing  decisions. As required, the SBPAC peer review  panel annually conducts reviews of each OSDBU to determine  compliance with section 15(k) requirements. In addition, agencies in the most recent review received overall scores  (across the seven success factors) of 94–98 percent. According to federal standards for internal control,  management should use quality information to make informed decisions  and evaluate an entity’s performance in achieving key objectives. Other than reviewing the documentation provided by  agencies, SBA’s guidance for the peer review panel does not indicate any  other means by which peer reviewers could obtain or clarify information. Preliminary  information that SBA provided in a description of changes to the fiscal  year 2017 scorecard suggests that the new review process will be similar  to the current process. This is consistent  with what we recommended. The agency said that it has begun to implement the  recommendation for fiscal year 2017 and that it has been developing  more detailed guidelines that provide more objective criteria than the  current guidelines, such as indicating whether agencies comply with  the 21 section 15(k) requirements. We also note that the documentation SBA  provided on its plans for the revised process suggests that similar  methods to assess compliance will be used in the new process as  under the current process. More specifically, we examined  (1) the extent to which selected federal agencies with procurement  powers demonstrated compliance with five requirements of section 15(k)  relating to the OSDBU director (including reporting relationships,  qualifications, and supervisory duties); (2) the extent to which selected  federal agencies demonstrated compliance with eight section 15(k)  requirements for carrying out selected OSDBU functions or activities; and  (3) the Small Business Procurement Advisory Council review of OSDBU  compliance with section 15(k) requirements. Assessment of Compliance with Other Selected Section 15(k) Requirements

We surveyed OSDBU directors at the 24 agencies about the other section  15(k) requirements relating to OSDBU directors (such as rank and  responsibilities) and about OSDBU functions. We had a 100 percent  response rate. Appendix  I Compliance with Select Section 15 Requirements :  Overall Agencies’  Demonstrated  )

Appendix IV: Demonstrated Compliance with Section 15(k), Defense Logistics Agency

We reviewed policy documents and survey and interview responses and  determined that the Office of Small and Disadvantaged Business  Utilization (OSDBU) at the Defense Logistics Agency (DLA) demonstrated  compliance with 8 of the 12 section 15(k) requirements within our review  (see table 5).
Why GAO Did This Study

Section 15(k) of the Small Business Act requires federal agencies with procurement powers to establish an OSDBU to advocate for small businesses. The National Defense Authorization Act for Fiscal Year 2013 established additional requirements for OSDBUs and required SBPAC to review OSDBU compliance with section 15(k) requirements.
GAO was asked to review compliance with selected requirements of section 15(k). GAO examined (1) the extent to which selected federal agencies demonstrated compliance with 13 requirements for OSDBUs and (2) SBPAC review process results. GAO selected a sample of 10 agencies, based on contracting obligations, to review a reporting requirement for OSDBU directors. For the other 12 requirements, GAO surveyed OSDBU directors at 24 agencies, selected based on contracting obligations (100 percent response rate). To review and augment survey responses, GAO also analyzed guidance and documents and interviewed OSDBU directors.

What GAO Found

Demonstrated compliance with selected section 15(k) requirements for the Office of Small and Disadvantaged Business Utilization (OSDBU) varied across the 24 agencies GAO surveyed. Five agencies demonstrated compliance with all the requirements, four agencies demonstrated compliance with all but one requirement, and 15 agencies did not demonstrate compliance with two or more requirements. Examples of GAO findings include the following:
Four OSDBU directors did not report directly to the agency head or deputy (the one requirement for which GAO reviewed only 10 agencies).
Five agencies did not demonstrate compliance with a requirement for collateral duties of OSDBU directors.
Six agencies did not demonstrate compliance with a requirement for compensation and seniority of OSDBU directors.
Twenty-three agencies demonstrated compliance for four requirements on OSDBU director experience, supervisory duties of the OSDBU director, identifying and addressing significant bundling of contracts (consolidation of two or more procurement requirements into a solicitation for a single contract), and providing assistance on payments.
Fifteen agencies demonstrated compliance with a requirement to respond to notifications that solicitations unduly restricted the ability of small businesses to compete for contracts.
Noncompliance with section 15(k) requirements may limit the extent to which an OSDBU can advocate for small businesses. For example, OSDBU influence in agencies might be limited if directors reported to lower levels of management. Directors with other duties might be less able to carry out all section 15(k) duties.
Results of the Small Business Procurement Advisory Council's (SBPAC) annual review of compliance with section 15(k) requirements differed from GAO's assessments. The Small Business Administration (SBA) chairs SBPAC, and its members are nearly all OSDBU directors. All agencies in the most recent review scored 94–98 percent. But where GAO's review considered the same section 15(k) requirements as the SBPAC review, GAO found some agencies had not demonstrated compliance with multiple requirements. Other than reviewing documentation agencies choose to provide, SBA's guidance for the review panel does not indicate any other means by which reviewers could obtain or clarify information. GAO's review included follow-up discussions with agency officials to obtain or clarify information. SBA has been developing a new review process, but preliminary information GAO reviewed indicates the process will be similar to the current one. According to federal standards for internal control, management should use quality information to make informed decisions. Under the new process, the review results (which SBA uses in another process that determines an agency's overall grade for small business contracting) also will carry twice as much weight as under the current process—underscoring the importance of the review results. A new review process substantially similar to the old one (especially in relation to guidance) may not provide a reliable indicator of OSDBU compliance with section 15(k) requirements.

What GAO Recommends

GAO makes 20 recommendations, including that agencies not demonstrating compliance with section 15(k) requirements comply or report to Congress on why they have not, and that SBA should provide more detailed guidance for the new SBPAC review process than exists for the current process. Agency responses to the recommendations varied. As discussed in the report, GAO maintains that implementation of its recommendations is warranted.