The Small Business Administration's 8(a) Procurement Program

The Small Business Administration (SBA) uses its 8(a) procurement program to assist disadvantaged small businessmen by entering into procurement contracts with federal agencies and subcontracting the work to these businessmen. Through sponsorship arrangements, SBA encourages nondisadvantaged businesses (sponsors) to provide management services, training, and capital to disadvantaged small businesses. SBA success in helping disadvantaged firms to become self-sufficient and competitive had been minimal, and sponsorship arrangements did little to contribute to success. Contractors became sponsors to make profits and to protect their livelihoods in the government contracting industry and had little incentive to develop 8(a) firms into viable businesses. SBA did not monitor the sponsors' control of firms, and did not establish procedures on management fees. SBA has recently revised procedures, but progress has not been evaluated.