Small Business

The Small Business Administration's 8(a) program--the federal government's primary vehicle for developing small businesses owned by socially and economically disadvantaged persons--is not meeting client expectations. First, SBA's efforts are not aligned with the needs or expectations of 8(a) firms. Firms want SBA to provide more assistance that will help them obtain contracts. SBA has stressed business management skills, even though most firms joined the program to obtain 8(a) contracts. This misalignment of SBA efforts and 8(a) firms' needs has been further compounded by the fact that most 8(a) contract dollars go to a small number of firms. Second, SBA has no way to tell how well the 8(a) program is working or know the full extent of business development assistance provided to firms. SBA is unable to measure the 8(a) program's performance in such basic areas as the level of training provided, whether such training matched firms' needs, or even the amount of 8(a) contracts the firms obtained. GAO summarized these two reports in testimony before Congress; see: Small Business: Expectations of Firms in SBA's 8(a) Program Are Not Being Met, by Stanley J. Czerwinski, Associate Director for Housing and Community Development Issues, before the Senate Committee on Small Business. GAO/T-RCED-00-261, July 20 (15 pages).

GAO noted that: (1) SBA's 8(a) information system, while intended to be a comprehensive tool enabling SBA to monitor the program, does not meet the information needs of headquarters or district officials; (2) potentially useful information, such as the amount of training and assistance provided for participating firms, is not captured as part of SBA's information-gathering process; (3) this limits SBA's ability to assess whether its efforts have an impact on the ultimate performance goal of creating commercially viable and stable firms; (4) due to recent changes in the 8(a) contracting process, most federal agencies are required to submit quarterly contracting data to SBA's headquarters instead of submitting copies of contracts to SBA's district offices; (5) some federal agencies have not submitted the quarterly information, and some of the information that has been submitted has not been in a usable format, so it has not been entered into the system or provided for the district offices, according to SBA's headquarters officials; (6) these problems have severely undermined the completeness and accuracy of the information in the system on contracts; (7) SBA plans to update the 8(a) information system as part of an agencywide information systems modernization initiative, but it is not expected to be completed for some time; (8) in the meantime, SBA has begun to develop a strategic information technology plan that combines and updates recommendations from the SBA's earlier business process reengineering studies, including efforts to update the information; and (9) these studies include an April 1999 review that recommended that SBA: (a) develop automated applications for firms wishing to enter the program; (b) consolidate all program information sources into one system; and (c) use another federal information system--the Federal Procurement Data System-as-a-source for 8(a) contract data.

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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