SBA's 7(j) Management Assistance Program--Changes Needed To Improve Efficiency and Effectiveness

The 7(j) Management Assistance Program is part of a Small Business Administration (SBA) effort to help socially and economically disadvantaged people create and maintain small businesses by improving their technical and management skills. In 10 years, funds allocated to the program have risen from about $1 million to about $10 million, and the number of small business owners served has grown from about 1,000 to 6,000. The Economic Opportunity Act authorized SBA to: (1) contract with consulting firms that agree to provide counseling and general management assistance to individuals referred to them by SBA on an "on call" basis; and (2) provide supplementary management and technical assistance exclusively to firms participating in the SBA 8(a) program, which was designed to channel noncompetitive federal contracts to disadvantaged small businesses.

Administrative problems have limited the impact of the 7(j) program. Program resources have not been well coordinated with other SBA programs, and funds targeted for 8(a) firms were used for questionable purposes. Consequently, program funds have not been used in the most efficient manner, resulting in fewer clients receiving management and technical assistance than would otherwise have been possible. SBA used contractors when less expensive agency resources were available, applied different contracting methods without reasonable control over rates, and allowed contractors to make excessive use of subcontractors. Small business owners had varying opinions regarding the value of the advice the contractors gave them. SBA procedures require agency personnel to contact all businesses receiving contracting assistance, but only 54 percent of the clients which GAO interviewed said that SBA contacted them about the results of the contractors' work. SBA has not developed a plan for administering the program nor has it established specific program goals, objectives, or priorities. The lack of planning has led to subjective funding decisions, reliance on unsolicited proposals to satisfy program requirements, and scattered program direction. SBA funded projects that were not within the legislative objectives, costly projects which benefited only one or a few firms, and projects which it should have performed itself. Also, SBA did not adequately monitor contracts awarded under the program.

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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