Agency and Advocacy Group Officials Differed in Their Opinions on Contracting Challenges That Minority-Owned Businesses May Face

Federal agency and advocacy group officials that we interviewed differed  in their opinions on challenges that small businesses—including those  that are minority-owned—may face when seeking to contract with the  federal government. The challenges identified included a lack of  performance history and knowledge of the federal contracting process,  contract bundling, a lack of access to contracting officials, lack of  monitoring of subcontracting plans, and difficulties assessing capital. Since few small businesses can obtain this bonding  capacity, this official said that these businesses rely on “teaming”  arrangements—two or more businesses that collectively pursue larger  procurement contracts—to expand their opportunities. For example, an official at one  In general, advocacy groups identified linguistic and cultural barriers as a  challenge for minority-owned businesses on a limited basis. Officials from advocacy groups also cited examples of  cultural barriers. Agency Outreach Efforts Help Address Some Challenges Facing Small and Minority-Owned Businesses

As we have previously noted, federal agencies conduct outreach to help  minority-owned businesses seeking federal government contracts. Federal Agencies Collect Some Information on Contracting Assistance Provided to Minority-Owned Businesses

Federal agencies we contacted generally collect and report information  on contracting assistance they provide to small and small disadvantaged  businesses. A majority of the federal agencies we contacted told us that the extent to  which they met SBA prime and subcontracting goals for the various  socioeconomic categories of businesses (including the small  disadvantaged business goal) provided a measure of their efforts to assist  minority-owned businesses in contracting with the federal government. In addition, all four agencies we reviewed met  their prime contracting goals of 5 percent, and three met their 5 percent  subcontracting goals for this category. Two agencies we reviewed collected and reported data by minority group. For fiscal year 2011, MBDA reported that its business  centers helped minority-owned businesses obtain 1,108 transactions (the  sum of contracts and financings) totaling over $3.9 billion (see table 1). For example, SBA reported that of the  7,814 8(a) program participants in fiscal year 2011—the most recent data  available—more than 90 percent of the participants were minority-owned  businesses (see fig. While  providing support to minority-owned businesses, these agencies and  offices were outside of the scope of our review, which as we stated in our  report, focused on the four agencies—DHS, DOD, GSA, and HHS—that  accounted for about 70 percent of total federal obligations to small,  minority-owned businesses in fiscal year 2010. Appendix I: Objectives, Scope, and Methodology

Our objectives were to describe: (1) what federal agency officials and  advocacy groups identified as challenges that small, minority-owned  businesses may face in seeking to contract with the federal government— including any linguistic or cultural barriers—and agencies’ efforts to  address them, and (2) what information is available on federal efforts to  assist small, minority-owned businesses in contracting with the federal  government. We analyzed information on  programs that provide federal contracting assistance and resources on  contracting opportunities, and are available to minority-owned  businesses. These agencies were the Departments of Defense (DOD),  Health and Human Services (HHS), and Homeland Security (DHS), and,  the General Services Administration (GSA). We conducted interviews with officials  from the selected agencies and contracting offices to identify and obtain  available information on their outreach efforts to assist minority-owned  businesses. Appendix II: Percentage of Obligated Funds for Contracts to Socioeconomic Categories by Minority Group, Fiscal Year 2011

We analyzed data from the Federal Procurement Data System – Next  Generation to determine the amount of obligated funds for contracts that  federal agencies made to small businesses by minority group for fiscal  year 2011. As figure 3 shows, the federal government obligated over $36  billion (35.1 percent) to small, minority-owned businesses in fiscal year  2011.
Why GAO Did This Study

Each year, the government obligates billions in contracts to businessesnearly $537 billion in fiscal year 2011. About $104 billion (19.4 percent) was obligated to small businesses, and over $36 billion of this amount was obligated to small businesses that identified themselves as minority-owned (see figure). In this report, GAO describes (1) what federal agency officials and advocacy groups identified as challenges small, minority-owned businesses may face in seeking federal government contractsincluding any linguistic or cultural barriersand agencies efforts to address them, and (2) what information is available on federal efforts to assist small, minority-owned businesses in contracting with the federal government. For selected agencies, GAO analyzed data on obligations to minority-owned businesses, reviewed information on programs and resources that can assist minority-owned businesses, reviewed relevant information from the Department of Justice on agencies Limited English Proficiency plans, and interviewed officials from selected federal agencies and advocacy groups that provide assistance to minority-owned businesses. In written comments, Commerce said that GAO had not covered all federal efforts to support small, minority-owned business contracting. As GAO noted in the report, this study focused on selected agencies and contracting activities that accounted for about 70 percent of total federal obligations to small, minority-owned businesses in fiscal year 2010.

What GAO Found

While their views varied to some degree, federal agency officials and advocacy groups GAO contacted identified a number of challenges that small, minority-owned businesses may face in pursuing federal government contracts. For example, officials and advocacy groups pointed to a lack of performance history and knowledge of the federal contracting process as significant barriers. Officials from advocacy groups cited additional challenges, such as difficulty gaining access to contracting officials and decreased contracting opportunities resulting from contract bundlingthe consolidation of two or more contracts previously performed under smaller contracts, into a single contract. Officials from agencies that accounted for 70 percent of federal contracting with small, minority-owned businesses(the Departments of Defense, Health and Human Services, and Homeland Security, and the General Services Administration) told GAO that they conducted outreach to help small, minority-owned businesses with these challenges. Their outreach efforts include one-on-one interviews between contracting office staff and businesses seeking federal contracts. Linguistic and cultural barriers were identified as a challenge on a limited basis.
Federal agencies GAO contacted collected and reported some information on the contracting assistance provided to small disadvantaged businessesincluding those that are minority-owned. Two agencies GAO reviewed collected and reported data by minority group. The Minority Business Development Agency in the Department of Commercecreated to foster the growth of minority-owned businesses of all sizesreported that its business centers helped these businesses obtain 1,108 financings and contracts worth over $3.9 billion in fiscal year 2011. For the same fiscal year, the Small Business Administration (SBA) reported that more than 90 percent of its primary business development program participants were minority-owned businesses. Federal agencies that GAO contacted said that the goals SBA negotiated with federal agencies for contracting with various socioeconomic categories, including small disadvantaged businesses, provided some information on efforts to assist minority-owned businesses. In fiscal year 2011, agencies GAO contacted met their prime contracting goal and three out of four agencies met their subcontracting goals. GAO generally found limited data on participants in agency outreach efforts because the agencies are not required to, and therefore generally do not, collect data on the minority group or socioeconomic category of businesses that participate in outreach events for federal contracting opportunities.