Energy Management

DOE Can Improve Distribution of Dollars Awarded Under SBA's 8(a) Program Gao ID: RCED-94-28 February 23, 1994

Contract dollars awarded by the Energy Department (DOE) under the Small Business Administration's 8(a) program are concentrated among a small number of firms. Nearly 60 percent of DOE's $1 billion worth of active contracts in April 1992 went to 13 firms. This concentration is due, in part, to the fact that DOE, like other federal agencies, is authorized to direct noncompetitive 8(a) awards to firms that it specifies. In addition, DOE's Oak Ridge office has contributed to the concentration of awards by combining several procurements into a single larger procurement, resulting in the award of only one contract rather than several. Although these practices are not prohibited, DOE is missing an opportunity to have a positive impact on a large number of firms. Agencies are required to award 8(a) contracts competitively if the estimated prices of the contracts exceed certain thresholds. DOE, however, has kept price estimates for contracts artificially low and structured contracts so that their estimated prices fall below the thresholds specified for competition. This practice has further contributed to the concentration of 8(a) contract dollars among a small number of firms.

GAO found that: (1) DOE awarded 58 percent of its 8(a) contracts to 13 firms and 42 percent of its remaining contracts to 112 firms as of April 1992; (2) DOE has concentrated its 8(a) awards among a small number of firms by combining several smaller contracts into single larger contracts; (3) DOE and other federal agencies have awarded over 90 percent of their 8(a) contracts noncompetitively; (4) DOE could increase its small business assistance by better distribution of its noncompetitive awards; (5) although DOE is required to award competitive contracts if the estimated contract cost exceeds certain thresholds, DOE has structured its procurements so that estimated prices fall below the competition thresholds; (6) DOE has avoided the competition requirements to facilitate the procurement process; and (7) DOE should discontinue its avoidance of the competition requirements to demonstrate its commitment to the 8(a) program and to further assist small businesses.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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