The Office of HUBZone Program administers the HUBZone program. Reporting Lines for Field Staff Who Implement Government Contracting and Business Development Programs Vary

OGCBD headquarters sets policies for SBA’s business development and  government contracting programs, and SBA staff in field offices and other  locations help to implement these programs at the local level. The reporting relationships between field staff and SBA  headquarters also vary depending on the program. For example, field  staff who implement government contracting programs report to OGCBD,  while staff who manage the local portfolio-driven 8(a) business  development program report to OFO, which oversees the field offices. In addition, OFO officials said the  reporting structure, in which Business Opportunity Specialists who  implement the 8(a) program report to OFO rather than to OGCBD, allows  for staff to also support the goals of their district office, which may require  them to support local market duties and other SBA programs, in addition  to supporting the firms in their 8(a) portfolio. However, OGCBD officials told us that the current reporting structure can  result in inconsistent program delivery for business development  programs. Because the communications changes were  implemented recently, it may be too soon to tell if they are having the  intended effect. SBA Has Made Improvements to Its Certification Processes, but Some Weaknesses Remain

Over the past decade, we and SBA’s OIG have identified a number of  weaknesses in the processes SBA uses to certify and recertify  businesses as being eligible to participate in its HUBZone, 8(a), and  WOSB programs and have made recommendations to SBA to address  them. For example, in February 2015 we reported that  SBA relied on firms’ attestations of continued eligibility and generally did  not request supporting documentation as part of the recertification  process. As of  May 2017, this recommendation remains open. SBA’s OIG  recommended that SBA (1) clearly document its justification for approving  or denying applicants into the 8(a) program, particularly when those  decisions differed from lower-level recommendations, and (2) provide  documentation showing how eligibility concerns raised by lower-level  reviewers were resolved for the 30 firms not documented. We made two recommendations in this report:
SBA should establish and implement comprehensive procedures to  monitor and assess performance of certifiers in accord with the  requirements of the third-party certifier agreement and program  regulations; and
SBA should enhance examination of businesses that register to  participate in the WOSB program, including actions such as  developing and implementing procedures to conduct annual eligibility  examinations, analyzing examination results and individual  businesses found to be ineligible to better understand the cause of the  high rate of ineligibility in annual reviews, and implementing ongoing  reviews of a sample of all businesses that have represented their  eligibility to participate in the program. In response to our recommendations, SBA has taken some actions. Legal Requirements and Volume, among Other Factors, Affect the Timeliness of SBA’s Rule-Making Actions

The timeliness of SBA’s rule-making process can vary due to the legal  requirements that govern this process, among other factors. For SBA and the federal government more broadly, certain stages of the  rule-making process have mandated time periods, as shown in figure 2. Interagency Review. SBA officials noted some factors that may have contributed to certain  rules taking longer than anticipated in recent years. OMB officials stated that  the timeliness of SBA’s rule makings is not unusual and has not raised  any concerns. Various approaches exist for measuring the length of time required to  develop and issue final rules, but they have limitations. Initiation to final publication. The most complete measure of the  length of time for a rule making is to measure the period from initiation  of the rule to final publication, but this approach is limited by  disagreement as to when a rule-making process begins. For our current review of  four selected SBA rules, the time between the publication of proposed  and final rules ranged from 7.5 months to 17.5 months. The  agency provided technical comments that we incorporated as  appropriate. Appendix I: Objectives, Scope, and Methodology

This report examined (1) the field-office and reporting structure the Small  Business Administration (SBA) uses to implement government  contracting and business development and the benefits and challenges  posed by these structures; (2) progress SBA has made to strengthen its  certification processes; and (3) the timeliness of SBA’s rule-making  process. Further, we reviewed prior  GAO and SBA Office of Inspector General (OIG) reports from 2008  through 2016 for findings related to SBA’s organizational structure and  the benefits and challenges posed by its current structure. To examine the progress SBA has made to strengthen its processes for  certifying small businesses as eligible to participate in its programs, we  reviewed relevant laws, regulations, and agency guidance. We also  reviewed four statutorily mandated SBA rules, selected from a possible  47 provisions in the National Defense Authorization Acts of fiscal years  2013, 2014, 2015, and 2016 that potentially required SBA to draft and  implement rules. We selected these rules as examples of mandatory rule  making.
Why GAO Did This Study

SBA's OGCBD administers a business development program and further promotes small business participation in federal contracting through a variety of other programs.
A House Committee Report accompanying the National Defense Authorization Act for Fiscal Year 2017 included a provision for GAO to examine the operations of SBA's OGCBD. GAO examined (1) the field-office and reporting structure OGCBD uses to implement its government contracting and business development programs, (2) progress OGCBD has made to strengthen its processes for certifying small businesses as eligible to participate in its programs, and (3) the timeliness of SBA's rule-making process.
GAO reviewed documentation related to SBA's organizational structure and certification processes; relevant laws and regulations; SBA program guidance; and previous GAO reports. GAO interviewed SBA and OMB officials. GAO reviewed four statutorily mandated SBA rules, which were selected from 47 provisions in the National Defense Authorization Acts for fiscal years 2013, 2014, 2015, and 2016 as examples of mandatory rule making.
GAO makes no new recommendations in this report, and maintains that SBA should implement prior recommendations. SBA's technical comments on GAO's draft report are incorporated as appropriate.

What GAO Found

The Office of Government Contracting and Business Development (OGCBD) at Small Business Administration (SBA) headquarters sets policies for SBA's business development and government contracting programs, and SBA field office staff help to implement these programs at the local level. The reporting relationships between field staff and SBA headquarters vary depending on the program. For example, field staff who implement government contracting programs report to OGCBD, while most staff who implement the 8(a) business development program report to the Office of Field Operations (OFO), which oversees SBA's field offices. SBA officials told GAO that this reporting structure, in which some field staff implement OGCBD programs but report to OFO, offers some benefits—for example, it allows these staff to support the goals of OGCBD programs as well as those of the individual field offices. However, officials also said the reporting structure can result in inconsistent program delivery. They described recent steps to improve communication between OGCBD and field staff, but it is too soon to tell if these steps will be effective.
SBA has taken some steps to address weaknesses GAO and the SBA Office of Inspector General (OIG) have identified in its processes for certifying small businesses as eligible to participate in SBA programs, but some recommendations remain open. For example, GAO found in 2015 that SBA had not required firms seeking recertification for the Historically Underutilized Business Zone (HUBZone) program to submit any information to verify continued eligibility and instead relied on firms' attestations of continued eligibility. GAO recommended that SBA assess the HUBZone recertification process and add additional controls; SBA had not yet implemented this recommendation as of May 2017. SBA's OIG also found in 2016 that SBA managers overturned lower-level reviewers' decisions to deny firms admission to the 8(a) program without documenting in the information system how eligibility concerns were resolved. SBA's OIG recommended that SBA clearly document the justification for approving or denying firms. In response, SBA stated that managers are now required to document decisions in the system that differ from those of lower-level reviewers.
A number of legal requirements and the volume of required rule makings, among other factors, affect the timeliness of SBA's rule-making process. Certain stages of the rule-making process have mandated time periods, such as the required 90-day interagency review process for certain rules. Various approaches exist for measuring the length of time required to develop and issue final rules, but they have limitations. For example, in measuring the period from rule initiation to final publication, agencies may differ on when they mark initiation. For four finalized SBA rules GAO reviewed, the time from publication of the proposed rule to publication of the final rule varied from 7.5 months to 17.5 months. SBA officials noted that an increase in the number of statutorily mandated rules in recent years has contributed to delays in the agency's ability to promulgate rules in a more timely fashion. Office of Management and Budget (OMB) officials GAO spoke with stated that the length of time for SBA's rule makings is not unusual and has not raised any concerns.