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. This testimony summarizes the July 2000 reports, GAO/RCED-00-196 and GAO/RCED-00-197.

GAO noted that: (1) SBA's efforts are not aligned with the needs or expectations of 8(a) firms; (2) SBA has never surveyed its customer--the 8(a) firms--in a meaningful way to determine what experience they have or what their needs are; (3) GAO surveyed 1,200 firms participating in the 8(a) program and found that firms want SBA to provide them with more assistance that will help them obtain contracts; (4) firms did not place a high priority on learning to manage a business because a large majority of the firms had owners with over 10 years' experience managing a business; (5) in providing assistance, GAO found that SBA has emphasized business management skills, even though most firms joined the program to obtain 8(a) contracts; (6) this misalignment of SBA's efforts and the needs of 8(a) firms has been further compounded by the fact that most 8(a) contract dollars go to a small number of firms; (7) GAO recommended that SBA take a number of actions, including periodically surveying 8(a) firms, to better meet the needs of the firms in the program; (8) SBA has no way to tell how well the 8(a) program is working; (9) almost a decade ago, GAO first reported that the agency did not know the full extent of business development assistance provided for firms; (10) yet, SBA still does not have a tracking system in place; (11) SBA did pilot a Business Assessment Tool in 1999 that would evaluate firm's business development needs, but at the time of GAO's review, agency officials were still evaluating the results of the pilot; (12) changes in the contracting process have undermined the accuracy of SBA's contracting data; and (13) as a result, SBA lacks the ability to measure the 8(a) program's performance in such basic areas as determining the level of training provided, whether that training matched firms' needs, or even the amount of 8(a) contracts that firms obtained.