Small Business Administration

This testimony discusses program and contractor abuses involving two of the top 25 contractors participating in the Small Business Administration's (SBA) 8(a) business development programs, , which is intended to promote the development of small business owned by socially and economically disadvantaged persons. GAO's investigation uncovered program abuse and ineffective SBA oversight of the two firms--I-NET, Inc., of Bethesda, Maryland, and TAMSCO of Calverton, Maryland. During the application process, both firms provided information that gave rise to questions about their eligibility to participate in the 8(a) program, but SBA did not fully resolve those questions before admitting the firms to the program. Further, one firm misrepresented its qualification to enter and stay in the program. SBA did not, however, suspend the firm's contracts or remove it from the program after it learned about the misrepresentations. With regard to the second firm, GAO questioned the practices of the contracting agency--the Coast Guard. In a contract with the second firm, Coast Guard officials changed the contract's original classification code to one for which the firm qualified and altered the contract's minimum value to direct a contract to the firm, avoiding federal competition requirements.