s)

	More Than Half of OSDBU Directors Reviewed Reported Only to Their Agen or Dep uty Agency Head

We found that 9 of the 16 agencies we reviewed were in compliance with  the Small Business Act’s requirement that OSDBU directors be responsible only to and report directly to the agency or deputy agency head (se e table  1). The OSDBU directors at the compliant agencies cited benefit the reporting relationship. Ongoing  noncompliance with section 15(k)(3) undermines the intent of the act and  may prevent some OSDBU directors from having direct access to top  agency management. Given how long these agencies have not been in  compliance with the requirement, at a minimum they have an obligation to  explain their noncompliance to Congress and provide support for their  need, if any, for greater statutory flexibility in establishing a reporting  structure for their OSDBU director. Directors who did not view a section 15(k) function as their  responsibility generally reported that contracting, acquisition, or program  staff performed it. The number ranged from 1 who did not view maintaining  supervisory authority over OSDBU personnel as a function to 11 who did  not view assisting small businesses to obtain payments from prime  contractors as a responsibility. However, 7 of the 16 federal agencies that we  reviewed were not in compliance with the act. However, we did not find that these arguments  justified noncompliance with section 15(k)(3). Recommendation for Executive Action

Given the ongoing requirement in the Small Business Act that OSDBU  directors report to agency heads or deputy heads, we recommend that the  heads of the Departments of Agriculture, Commerce, the Interior, Justice,  State, and the Treasury and the Social Security Administration take steps  as necessary to comply with the requirement or report to Congress on why  they have not complied. However, we concluded that the agency was not in  compliance with section 15(k)(3) because the Assistant Secretary had  delegated his OSDBU responsibilities to a lower-level official who did not  report to the Secretary or Deputy Secretary. Using these data, we determined that  seven agencies each procured more than $15 billion in goods and services  in fiscal year 2009. Assessment of Compliance with Section 15(k)(3) of the Small Business Act

To assess whether the OSDBU director reports directly to the agency head  or the deputy head as required by section 15(k)(3) of the Small Business  Act, we focused on the seven agencies with major contracting activity and  nine additional agencies that we reported in September 2003 were not  complying with this requirement. The 20 agencies were responsible for more than 98 percent of  civilian agency obligations in fiscal year 2009. Appendix II: Reporting Relationships at Seven Agencies Not in Compliance with Section 15(k)(3)

Appendix II: Re Agen 15(k)(3)
As discussed in the body of our report, seven agencies were not in  compliance with section 15(k)(3) of the Small Business Act, which  requires that the director of the Office of Small and Disadvantaged  Business Utilization (OSDBU) be responsible only to and report directly to  the agency head or deputy head.
Why GAO Did This Study

Section 15(k) of the Small Business Act requires that all federal agencies with procurement powers establish an Office of Small and Disadvantaged Business Utilization (OSDBU) to advocate for small businesses. Section 15(k)(3) requires that OSDBU directors be responsible only to and report directly to agency or deputy agency heads. GAO was asked to assess agencies' compliance with the reporting structure and identify the functions OSDBUs performed. GAO reviewed compliance with section 15(k)(3) at 16 agencies--the 7 agencies that each procured more than $15 billion in goods and services in 2009 and 9 that it had previously reported were not complying with this requirement. GAO also surveyed the OSDBU directors at 25 agencies that represented more than 98 percent of civilian obligations and 90 percent of DOD obligations in 2009.

What GAO Found

Nine of the 16 federal agencies that GAO reviewed were in compliance with section 15(k)(3) of the Small Business Act, which requires OSDBU directors to be responsible only to and report directly to the agency or deputy agency head. The remaining seven agencies were not in compliance with the provision, and their OSDBU directors reported to lower-level officials or had delegated OSDBU responsibilities to officials who did not meet the reporting requirement. These agencies were not in compliance when GAO last examined them in 2003. During GAO's current review, directors who reported to agency heads cited benefits to the relationship, while those who did not had mixed views. GAO concluded that the views expressed by the directors at noncompliant agencies did not justify noncompliance and that these agencies should comply or provide support to Congress of their need, if any, for statutory flexibilities. Ongoing noncompliance with section 15(k)(3) undermines the intent of the act and may prevent some OSDBU directors from having direct access to top agency management. Consistent with its 2004 report, GAO's current work found that the 25 OSDBU directors surveyed focused their procurement activities on certain functions listed in section 15(k). At least 19 directors listed the five functions related to contract bundling, maintaining supervisory authority over staff, and helping small businesses obtain payments from agencies as among their duties. Fewer directors viewed the remaining three functions, such as reviewing acquisitions for small business set-asides and assisting small businesses to obtain payments from prime contractors, as duties. Directors who did not view these functions as their responsibility generally noted that contracting or program staff performed them. Whether OSDBU directors who do not perform certain functions listed in 15(k) are complying with the statute is not clear.

What GAO Recommends

GAO recommends that agencies not in compliance with section 15(k)(3) take steps to comply with this statutory requirement or report to Congress on why they have not complied, including any requests for statutory reporting flexibility as appropriate. SSA agreed with the recommendation, and Interior agreed to reevaluate its reporting structure. Commerce, Justice, State, and the Treasury disagreed, believing they were in compliance. GAO maintains its position on agencies' compliance status, as discussed further in the report. Agriculture did not comment.