Small Business

Pursuant to a congressional request, GAO provided information on 8(a) contracting activities for fiscal years (FY) 1996 through 1998 in certain offices within the Department of the Treasury, focusing on: (1) a comparison of Departmental Offices' 8(a) contract goals with Treasury's departmentwide 8(a) contract goals; (2) the total number of Departmental Offices' contracts and 8(a) contracts as well as the percentage of total Departmental Offices' contract expenditures used for 8(a) contracts; (3) the distribution of Departmental Offices' 8(a) contracts by dollar value and type of goods/services procured; and (4) whether five Departmental Offices' 8(a) contracts adhered to regulations that limit the amount of work that can be subcontracted.

GAO noted that: (1) during FY 1996 through FY 1998, Treasury Departmental Offices' 8(a) contract goals averaged about 38 percent of the Offices' funds obligated for procurement each year; (2) in comparison, Treasury's departmentwide 8(a) contract goals averaged about 11 percent of the funds obligated for procurement each year during this period; (3) from FY 1996 through FY 1998, the annual number of Departmental Offices' contracts ranged from 132 to 155, and the annual number of 8(a) contracts ranged from 15 to 19; (4) during the 3 fiscal years, Departmental Offices' annual contract expenditures ranged from about $20.4 million to about $26.5 million, and 48 to 55 percent of total annual contract expenditures were for 8(a) contracts; (5) the distribution of yearly expenditures for Departmental Offices' 8(a) contracts for FY 1996 through FY 1998 showed that about one-half or more of the contracts had yearly expenditures of about $250,000 or less each, and a few had yearly expenditures greater than $1 million each; (6) the products and services provided to the Departmental Offices by 8(a) contracts varied; (7) on the basis of funds spent, the top three categories for the 3-year period were: (a) automatic data processing and telecommunications services; (b) professional, administrative, and management support services; and (c) architect and engineering services; (8) during the 1 fiscal year GAO analyzed, four of the five service contracts GAO reviewed were in compliance with the Small Business Administration (SBA) regulations that limit the amount of work 8(a) contractors can subcontract; (9) three of the contractors spent at least 50 percent of the cost incurred for personnel on their employees during the year analyzed; (10) one of the two contractors that spent less than 50 percent of the cost incurred for personnel on its own employees was in compliance with SBA regulations governing subcontracting limitations, because Treasury directed the contractor to use specific sources for subcontracts; (11) Treasury officials said that they were not aware that the cost of work performed by the fifth contractor's employees represented less than 50 percent of the personnel costs of that contract; (12) GAO concurs with SBA officials that it was Treasury that had primary responsibility for monitoring compliance with subcontracting limitations; (13) however, SBA recognized it also had some responsibility to assist agencies in monitoring subcontracting compliance; and (14) in July 1998, SBA modified its regulations, which could help resolve this issue.