To qualify for the 8(a) program, a firm must be at least 51 percent owned  and controlled by an individual who meets SBA’s criteria of socially and  economically disadvantaged. In a subsequent review,  agency ratings showed improvement, with four agencies receiving the  lowest rating. SBA Analyzes Such Factors as Prior-Year Goal Achievement of Agencies and Potential Impacts on Meeting Government-wide Goals to Set Agencies’ Contracting Goals

SBA is required to report on contracting goal achievements of federal  agencies in an effort to meet the statutory government-wide goal of  awarding 23 percent of contracting dollars to small businesses and goals  established for four socioeconomic categories (see table 1). SBA Developed a Scorecard to Evaluate Small Business Contracting Efforts of Agencies

For fiscal year 2006, SBA began using a Small Business Procurement  Scorecard to help monitor agencies’ small business contracting efforts,  including plans and progress in meeting the goals, and to bring greater  attention to goal achievement (see fig. 2). 3). Resource Constraints Limit Ability of SBA Staff to Advocate for, Review, and Monitor Small Business Contracting at Federal Agencies

Resource constraints limit the ability of SBA staff to carry out some of  their core responsibilities. More specifically, PCRs  review federal agency acquisitions and recommend small business set- asides;    can dispute a procurement through informal or formal means with the  agency’s procurement officials in instances where an agency does not  accept the recommended set-aside;   conduct surveillance reviews, which monitor small business contracting at  recommend procurement strategies to federal agencies to maximize small  business participation in federal contracts; and   counsel and train small businesses on obtaining federal contracts. Furthermore, the SBA IG found in fiscal year 2006 that less than half of the  2,200 large prime contractors were monitored and only 24 percent of those  monitored had been reviewed on-site. As a result, SBA has reduced assurance  that PCRs and CMRs are ensuring that federal agencies increase their  share of federal contracts for small business or are effectively monitoring  contracting activity at the federal agencies. Second, SBA staff said that  the recent emphasis on meeting the long-standing statutory requirement to  complete annual reviews of 100 percent of 8(a) firms—which are time- and  resource-intensive—has diminished their ability to conduct business  development activities. Delays in completing annual reviews also could result in potentially  noncompliant firms receiving contracts. SBA staff conduct surveillance reviews by reviewing contract files and  interviewing agency officials. Further,  SBA officials could not explain why reviews for the 8(a) program had not  been conducted. As a result, SBA has reduced assurance that  agencies have complied with procurement laws and regulations for 8(a)  contracts. Consequently, some participants that are not  adequately informed about the program’s purpose and requirements may  have unrealistic expectations of the program and be unprepared to fulfill  their responsibilities, such as providing documentation for annual reviews. However, SBA has not yet implemented changes that its IG recommended  for the review process in 2006; notably, that the agency regularly conduct  surveillance reviews at the federal agencies with which it has partnership  agreements to ensure compliance with regulations for 8(a) contracting. As part of such an assessment, SBA  could review the size of the 8(a) portfolio for all business development  specialists and determine what mechanisms can be used to prioritize or  redistribute their workload; in a timely manner, develop and implement its proposed plan for  creating tools that would assist in the provision of business  development assistance for 8(a) firms; and   develop a timetable for planned changes to the termination process to  ensure that staff monitoring 8(a) participants can carry out  terminations from the program in a timely manner. Appendix I: Scope and Methodology

To describe the actions the Small Business Administration (SBA) takes to  set small business contracting goals and the extent to which federal  agencies have achieved their small business goals in recent years, we  reviewed pertinent legislation, guidance issued by SBA, our prior reports,  and SBA’s Small Business Procurement Scorecard for fiscal years 2006 and  2008. We also analyzed the SBA field office directory for the six  area offices and identified the number of procurement center  representatives (PCR) and commercial market representatives (CMR) in  the agency as of August 2008. To examine SBA’s overall administration of the 8(a) business development  program, we reviewed and analyzed 8(a) program regulations, SBA’s  procedures for administering the program, and previous SBA Inspector  General (IG) reports.
Why GAO Did This Study

The Small Business Administration (SBA) helps small businesses gain access to federal contracting opportunities and helps socially and economically disadvantaged small businesses, known as 8(a) firms, by providing management and contracting assistance. SBA negotiates agency-specific goals to ensure that the federal government meets the statutory goal of awarding 23 percent of contract dollars to small businesses. GAO was asked to (1) describe how SBA sets small business contracting goals and the extent to which federal agencies met these goals; (2) examine the role of SBA staff in supporting small business contracting at selected federal agencies; and (3) examine SBA's overall administration of the 8(a) program. To address these objectives, GAO reviewed SBA guidance and SBA Inspector General (IG) reports, interviewed SBA and other federal officials, and conducted site visits and file reviews at four SBA locations.

What GAO Found

SBA reviews prior year goal achievement and other factors to set individual contracting goals necessary for federal agencies to achieve the governmentwide goal of awarding 23 percent of federal contract dollars to small businesses. Individual agency results varied in fiscal years 2000 through 2006, although the agencies collectively achieved or came close to the 23 percent goal. In fiscal year 2006, SBA began using a scorecard to help monitor agencies' small business contracting efforts. Of the 24 agencies rated, half received the lowest rating (for failing to meet at least two contracting goals and other criteria). SBA later reviewed agency progress in implementing small business procurement plans and many agencies improved their ratings. SBA staff advocate, review, and monitor small business contracting at federal agencies, but resource constraints have limited the ability of staff to fulfill these responsibilities. SBA's procurement center representatives (PCR) work with federal agencies by reviewing proposed acquisitions, recommending contract set-asides, and performing surveillance reviews (which monitor small business contracting at federal agencies). As of August 2008, SBA had 59 PCRs, with many responsible for multiple agencies. SBA has recognized that more PCRs are needed, but has not developed a formal plan to align staff resources with program objectives. Resource constraints also affected SBA's commercial market representatives (CMR), who monitor subcontracting plans. For fiscal year 2006, the SBA IG reported that CMRs monitored less than half of the 2,200 large prime contractors. These resource constraints reduced assurances that SBA can monitor contracting effectively. SBA's administration of the 8(a) business development program is challenged by several factors, including some participants not understanding the program's purpose and requirements, its staff's diminished ability to conduct business development activities, an inefficient process to terminate firms, and a lack of routine surveillance reviews specific to the program. While SBA has controls in place to determine if firms are eligible to enter the program, firms do not have to participate in an information session or complete an assessment that rates their suitability for the program. Thus, some firms may have entered the program with unrealistic expectations or not clearly understood program requirements. SBA officials said that an emphasis on completing annual reviews of 100 percent of 8(a) firms, which are time intensive, and an inefficient termination process for noncompliant 8(a) firms diminished the time its business development specialists had for providing business development assistance. Delays in terminating firms also could result in noncompliant firms obtaining contracts. Finally, in 2006, the SBA IG recommended that SBA regularly conduct surveillance reviews for the 8(a) program. However, SBA has not yet implemented this recommendation. As a result, SBA has reduced assurances that agencies have complied with monitoring requirements for the 8(a) program.