Summary
The Small Business Administration's 8(a) program--the federal government's primary vehicle for developing small businesses owned by socially and economically disadvantaged persons--is not meeting client expectations. First, SBA's efforts are not aligned with the needs or expectations of 8(a) firms. Firms want SBA to provide more assistance that will help them obtain contracts. SBA has stressed business management skills, even though most firms joined the program to obtain 8(a) contracts. This misalignment of SBA efforts and 8(a) firms' needs has been further compounded by the fact that most 8(a) contract dollars go to a small number of firms. Second, SBA has no way to tell how well the 8(a) program is working or know the full extent of business development assistance provided to firms. SBA is unable to measure the 8(a) program's performance in such basic areas as the level of training provided, whether such training matched firms' needs, or even the amount of 8(a) contracts the firms obtained. GAO summarized these two reports in testimony before Congress; see: Small Business: Expectations of Firms in SBA's 8(a) Program Are Not Being Met, by Stanley J. Czerwinski, Associate Director for Housing and Community Development Issues, before the Senate Committee on Small Business. GAO/T-RCED-00-261, July 20 (15 pages).
GAO noted that: (1) access by firms to 8(a) contracts remains a problem; (2) a long-standing concern cited in GAO's previous reports and those of the SBA Inspector General is that a few firms receive most of the 8(a) contracts, effectively limiting the developmental opportunities available to other firms in the program; (3) SBA has made some changes in the program to address this problem, but SBA officials said that because of differences in firms' skills and experience and other factors, it is reasonable that not all 8(a) firms will receive contracts from the program; (4) in addition, SBA relies on other federal agencies to make the contract awards, and federal procuring officials are confronted with the competing objectives of accomplishing their agencies' missions at a reasonable cost and achieving the 8(a) program's business development goals; (5) SBA remains unable to track the training and assistance it provides to 8(a) firms; (6) the lack of a system to track the training and assistance firms receive impairs SBA's ability to measure the program's performance and to determine what assistance firms need; (7) SBA piloted a Business Assessment Tool in 1999 that would evaluate firms' business development needs, but at the time of GAO's review, SBA had not completed its review of the pilot; (8) according to GAO's survey results, almost all firms joined the program to obtain 8(a) contracts, wanted SBA to provide contracting assistance, and were more satisfied with the program if they had received a contract; (9) 86 percent of the firms surveyed joined the program to obtain 8(a) contracts; (10) however, only about one-fifth of the firms joined the program to learn more about how to manage a business; (11) one reason for these firms' not placing a higher priority on learning to manage a business is that a large majority of the firms had owners with over 10 years' experience managing a business; (12) in addition, the firms themselves were not new--over half the firms GAO surveyed had been in business 5 years or more before joining the program; and (13) overall satisfaction with the program was mixed, but firms that received 8(a) contracts were more satisfied than those that did not.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
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Recommendations for Executive Action
Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should instruct the district offices to place their highest priority on helping inform firms about contracting opportunities, assisting firms with contacts at federal agencies, and becoming more involved with firms as they seek and negotiate contracts.
Agency Affected: Small Business Administration
Status: Implemented
Comments: The Small Business Administration (SBA) Office of Government Contracting and Business Development has demonstrated its heightened emphasis on helping inform 8(a) firms about contracting opportunities, assisting them with contacts at federal agencies, and becoming more involved with the firms. For example, SBA instructed its district office personnel to host four "matchmaking" events in fiscal year 2004, make one-on-one matchmaking appointments to personally bring together representatives of 8(a) firms and procurement entities. In addition, SBA partnered with Hewlett Packard to host national matchmaking events on a larger scale. In April of 2004, SBA reported that over 4,000 firms were linked in procurement entities in 14,500 matchmaking appointments and that special events were held in seven major cities. The national events bring together local, state, federal agencies, large corporations, and 8(a) firms. Workshops at the events focus on helping the small businesses prepare to do business with government agencies or large corporations, on-site SBA counseling, procurement meetings with the government agencies and corporations. SBA is now collecting data on the number of actual contracts awarded as a result of the matchmaking events.
Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should periodically perform a nationwide sample survey of 8(a) firms to obtain measurable program data. At a minimum, the survey should assess whether SBA assistance is meeting the firms' expectations and needs.
Agency Affected: Small Business Administration
Status: In process
Comments: SBA officials continue to agree that the best way to assess whether the 8(a) program is meeting the needs of participants is through a nationwide survey. They state that are dedicated to examining methods to perform the survey without placing an undue burden on the small businesses, and within the agency's budget. In the past, SBA reported that it had developed a survey but funds were not available for it to be launched.
Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should provide a method for collecting data on each firm's training needs for tracking the assistance provided.
Agency Affected: Small Business Administration
Status: In process
Comments: SBA continues to agree that it needs a method for collecting feedback from 8(a) participants on the quality of service SBA provides and information on their training needs. SBA states that it is "dedicated to examining" methods to obtain feedback without burdening the 8(a) program participants.
Recommendation: To better address the purpose of the 8(a) program, meet the needs and expectations of the firms in the program, and improve SBA's ability to determine how well the program is working, the Administrator, SBA, should revise the 8(a) program's success measure in SBA's future annual performance plans to make the measure a more meaningful assessment of the program's impact.
Agency Affected: Small Business Administration
Status: Implemented
Comments: In SBA's fiscal year (FY) 2000 performance and accountability report, SBA stated that its current success indicator for the 8(a) program would be replaced in future annual performance plans with a measure of the percentage of firms that graduate and are economically viable 3 years after graduation. Such a measure was used by SBA previously and would be a stronger measure of program performance. SBA has now taken this action and reported (in its fiscal year 2003 Performance and Accountability Report) these client success rates 3 years after graduation from the 8(a) program: FY 2000 65 percent; FY 2001 64 percent; FY 2002 unavailable. Its goal for FY 2003 was 70 percent, but results were not available.
Recommendation: The Administrator, SBA, should reassess the agency's use of 7(j) Management and Technical Assistance Program funding. The reassessment should consider whether to devote most of the 7(j) program's funding to training designed to develop the abilities of 8(a) firms to obtain contracts or to retain the current business development focus but restrict the training to firms with a demonstrated need.
Agency Affected: Small Business Administration
Status: Implemented
Comments: SBA assesses how 7(j) funds will be used each year; currently the funds are used for both management training and assistance in obtaining contracts. Through a contractor, SBA created a web-based Procurement Academy to provide procurement assistance to 8(a) firms via Internet training and a CD-ROM. The CDs are also distributed by SBA district offices to eligible companies. SBA surveyed its district offices to identify the training needs of businesses in their districts. As a result, SBA used some 7(j) funds to provide contract bid and proposal writing seminars for eligible businesses.
