Information on the Number of Small Business Set-Asides Issued and Successfully Challenged
Gao ID: GAO-03-242R November 1, 2002The Small Business Act requires small businesses to have the maximum practicable opportunity to participate in the performance of federal government contracts. Congress directed the President to set a governmentwide goal of at least 23 percent of the total dollar value of the federal government's prime contract awards to be awarded to small businesses each fiscal year. The small Business Administration's (SBA) Procurement Center Representatives (PCRs) work with federal agencies and procuring activities by reviewing proposed acquisitions to determine whether they can be set aside for small businesses. GAO found that the number of PCR-recommended small businesses set-asides has declined by almost one-half since fiscal year 1991. Overall, contracting officers accepted 76 percent of the set-aside recommendations. Of the 24 percent rejected, SBA did not pursue 85 percent. Of the 15 percent appealed, 26 percent were successful. SBA officials attributed the decline to several factors, including (1) downsizing the number of PCRs; (2) assigning other duties to PCRs, such as requiring some PCRs to be Commercial Marketing Representatives, further reducing available PCR resources; and (3) fewer set-aside opportunities due to increasing size and individual federal procurements. SBA officials also explained that PCRs take different approaches to filing set-aside recommendations--some choose to influence contract actions informally, without filing set-aside recommendations. SBA does not keep track of information PCR actions.
GAO-03-242R, Information on the Number of Small Business Set-Asides Issued and Successfully Challenged
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United States General Accounting Office:
GAO:
November 1, 2002:
The Honorable John F. Kerry:
Chairman:
Committee on Small Business and Entrepreneurship:
United States Senate:
The Honorable Max Cleland:
United States Senate:
Subject: Information on the Number of Small Business Set-Asides Issued
and Successfully Challenged:
This letter responds to your request that we identify the number of
small business set-asides issued over the past 10 years and how many
successful Small Business Administration (SBA) challenges have
resulted. The Small Business Act requires small businesses to have the
maximum practicable opportunity to participate in the performance of
federal government contracts. [Footnote 1] Congress directed the
President to set a government-wide goal of at least 23 percent of the
total dollar value of the federal government‘s prime contract awards to
be awarded to small businesses each fiscal year. [Footnote 2]
SBA‘s Procurement Center Representatives (PCRs) work with federal
agencies and procuring activities by reviewing proposed acquisitions to
determine whether they can be set aside for small businesses. If the
PCR believes that the agency/activity should set aside the procurement
for small business, the PCR may issue a formal request to the
contracting officer. Should the contracting officer reject the PCR‘s
recommendation, the PCR may appeal the rejection to the Head Contracting
Authority (HCA) for the agency/activity. [Footnote 3]
We found that the number of PCR-recommended small business set-asides4
has declined by almost one-half since fiscal year 1991. (See table 1
and fig. 1.) Overall, contracting officers accepted about 76 percent of
the set-aside recommendations. Of the 24 percent rejected, SBA did not
pursue about 85 percent. Of the approximately 15 percent SBA appealed,
about 26 percent were successful.
Table 1: Status of Small Business Set-Aside Requests Filed by SBA,
Fiscal Years 1991-2001:
Fiscal year: 1991;
Set-aside requests filed: 529;
Set-aside requests rejected: 85;
Percent of set-aside requests rejected: 16.1;
HCA appeals filed: 9;
HCA appeals rejected: 9;
Percent of HCA appeals rejected: 100.0.
Fiscal year: 1992;
Set-aside requests filed: 543;
Set-aside requests rejected: 133;
Percent of set-aside requests rejected: 24.5;
HCA appeals filed: 4;
HCA appeals rejected: 4;
Percent of HCA appeals rejected: 100.0.
Fiscal year: 1993;
Set-aside requests filed: 482;
Set-aside requests rejected: 140;
Percent of set-aside requests rejected: 29.0;
HCA appeals filed: 14;
HCA appeals rejected: 13;
Percent of HCA appeals rejected: 92.9.
Fiscal year: 1994;
Set-aside requests filed: 439;
Set-aside requests rejected: 96;
Percent of set-aside requests rejected: 21.9;
HCA appeals filed: 20;
HCA appeals rejected: 12;
Percent of HCA appeals rejected: 60.0.
Fiscal year: 1995;
Set-aside requests filed: 404;
Set-aside requests rejected: 93;
Percent of set-aside requests rejected: 23.0;
HCA appeals filed: 9;
HCA appeals rejected: 7;
Percent of HCA appeals rejected: 77.8.
Fiscal year: 1996;
Set-aside requests filed: 300;
Set-aside requests rejected: 92;
Percent of set-aside requests rejected: 30.7;
HCA appeals filed: 11;
HCA appeals rejected: 8;
Percent of HCA appeals rejected: 72.7.
Fiscal year: 1997;
Set-aside requests filed: 265;
Set-aside requests rejected: 55;
Percent of set-aside requests rejected: 20.8;
HCA appeals filed: 22;
HCA appeals rejected: 14;
Percent of HCA appeals rejected: 63.6.
Fiscal year: 1998;
Set-aside requests filed: 253;
Set-aside requests rejected: 57;
Percent of set-aside requests rejected: 22.5;
HCA appeals filed: 20;
HCA appeals rejected: 13;
Percent of HCA appeals rejected: 65.0.
Fiscal year: 1999;
Set-aside requests filed: 285;
Set-aside requests rejected: 57;
Percent of set-aside requests rejected: 20.0;
HCA appeals filed: 9;
HCA appeals rejected: 7;
Percent of HCA appeals rejected: 77.8.
Fiscal year: 2000;
Set-aside requests filed: 277;
Set-aside requests rejected: 97;
Percent of set-aside requests rejected: 35.0;
HCA appeals filed: 13;
HCA appeals rejected: 11;
Percent of HCA appeals rejected: 84.6.
Fiscal year: 2001;
Set-aside requests filed: 281;
Set-aside requests rejected: 55;
Percent of set-aside requests rejected: 19.6;
HCA appeals filed: 13;
HCA appeals rejected: 9;
Percent of HCA appeals rejected: 69.2.
Fiscal year: Total;
Set-aside requests filed: 4,058;
Set-aside requests rejected: 960;
Percent of set-aside requests rejected: 23.7;
HCA appeals filed: 144;
HCA appeals rejected: 107;
Percent of HCA appeals rejected: 74.3.
Source: SBA‘s PCR Information System and SBA Area records.
[End of table]
Figure 1: Number of Small Business Set-Aside Requests Filed by SBA,
Fiscal Years 1991-2001:
[See PDF for image]
This figure is a line graph depicting the following data:
Fiscal year: 1991;
Number of Form 70's filed: 529.
Fiscal year: 1992;
Number of Form 70's filed: 543.
Fiscal year: 1993;
Number of Form 70's filed: 482.
Fiscal year: 1994;
Number of Form 70's filed: 439.
Fiscal year: 1995;
Number of Form 70's filed: 404.
Fiscal year: 1996;
Number of Form 70's filed: 300.
Fiscal year: 1997;
Number of Form 70's filed: 265.
Fiscal year: 1998;
Number of Form 70's filed: 253.
Fiscal year: 1999;
Number of Form 70's filed: 285.
Fiscal year: 2000;
Number of Form 70's filed: 277.
Fiscal year: 2001;
Number of Form 70's filed: 281.
Source: SBA‘s PCR Information System and SBA Area records.
[End of figure]
SBA officials attributed the decline to several factors, including (1)
downsizing the number of PCRs; (2) assigning other duties to PCRs, such
requiring some PCRs to be Commercial Marketing Representatives (CMRs),
[Footnote 5] further reducing available PCR resources; and (3) fewer
set-aside opportunities due to the increasing size of individual
federal procurements. SBA officials also explained that PCRs take
different approaches to filing set-aside recommendations”some choose to
influence contract actions informally, without filing set-aside
recommendations. SBA does not keep track of informal PCR actions.
Agency Comments:
We provided SBA officials with a copy of this letter for comments. They
concurred with our findings.
Scope and Methodology:
To determine small business set-aside trends, we reviewed SBA databases
and records. To determine possible reasons for the decline in set-
asides, we interviewed all six Area Directors and cognizant
headquarters officials. We conducted our work from November 2001
through July 2002 in accordance with generally accepted government
auditing standards.
We will send copies of this report to the Administrator, SBA; the
Director, Office of Management and Budget; and interested congressional
committees. We will also make copies available to others upon request.
We will also make copies available to others upon request. In addition,
the report will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you have any questions concerning this report, please call me at
(617) 565-7555. Key contributors to this review included Catherine
Baltzell, Art Fine, David Bennett, Cristina Chaplain, and Sylvia
Schatz.
Signed by:
David E. Cooper:
Director, Acquisition and Sourcing Management:
[End of correspondence]
Footnotes:
[1] See 15 U.S.C. 637(d)(1).
[2] See 15 U.S.C. 644(g)(1).
[3] 13 C.F.R. 125.2(b)(6).
[4] PCRs use the small business set-aside request process when they
believe that the agency should have set aside certain procurements for
small business.
[5] A CMR is a specialist who facilitates the process of matching large
federal prime contractors with small businesses as subcontractors. CMRs
identify and develop small businesses and market them to the large
contractors, and assist the small businesses in obtaining subcontracts.
CMRs also perform compliance reviews on large federal prime contractors‘
subcontracting programs to assure compliance with all applicable laws.
[End of section]
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