Small Business Administration
The Commercial Marketing Representative Role Needs to Be Strategically Planned and Assessed Gao ID: GAO-03-54 November 1, 2002Subcontracting on federal contracts is a large and growing marketplace for small businesses. The Small Business Administration's (SBA) Commercial Marketing Representatives (CMRs) have long been considered to be key to fostering small businesses' participation in subcontracts. GAO was asked to assess the role that CMRs are playing in administering SBA's subcontracting assistance program.
CMRs are supposed to promote small business subcontracting in two primary ways. First, they review prime contractors' compliance with the requirements of their subcontracting plans--either through on-site visits to contractors or by simply reviewing their subcontractor activity reports. Second, they conduct various marketing activities, such as marketing small businesses to prime contractors. In recent years, however, additional duties placed on CMRs have often taken priority over these responsibilities. In fact, in fiscal year 2000, 87 percent of the CMRs had other substantial responsibilities. Moreover, workloads and prime contractor coverage now vary greatly between CMRs. Additionally, CMRs are relying more on "desk" reviews of subcontractors' activity to monitor compliance with subcontracting plans as opposed to on-site reviews. This is a concern to some SBA officials who believe that on-site reviews are more thorough, though others believe the desk review offers the potential for greater coverage. Declines in staffing and travel funds have contributed to the changing role of the CMR. With downsizing and retirements taking place and no staff assigned to replace lost personnel, the number of CMR full-time equivalents (FTEs) has decreased significantly and has resulted in workload imbalances. While there are concerns about the changing nature of the CMR role, SBA has not strategically planned for these changes or assessed their collective impact. Instead, it has implemented ad hoc measures to deal piecemeal with resource declines. Unless steps are taken to better evaluate and plan for the future of CMRs, SBA will continue to lack an understanding of their contributions to small business subcontracting.
RecommendationsOur 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.
Director: Team: Phone:GAO-03-54, Small Business Administration: The Commercial Marketing Representative Role Needs to Be Strategically Planned and Assessed
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GAO Higlights:
November 2002:
SMALL BUSINESS ADMINISTRATION:
The Commercial Marketing Representative Role Needs to Be
Strategically Planned and Assessed:
Highlights of GAO-03-54, a report to Senator John Kerry, Chairman,
Senate Committee on Small Business and Entrepreneurship, and Senator
Max Cleland.:
Why GAO Did This Study:
Subcontracting on federal contracts is a large and growing marketplace
for small businesses. The Small Business Administration‘s (SBA)
Commercial Marketing Representatives (CMRs) have long been considered
to
be key to fostering small businesses‘ participation in subcontracts.
GAO was asked to assess the role that CMRs are playing in administering
SBA‘s subcontracting assistance program.
What GAO Found:
CMRs are supposed to promote small business subcontracting in two
primary
ways. First, they review prime contractors‘ compliance with the
requirements
of their subcontracting plans”either through on-site visits to
contractors
or by simply reviewing their subcontractor activity reports.
Second, they
conduct various marketing activities, such as marketing small
businesses
to prime contractors.
In recent years, however, additional duties placed on CMRs have
often taken
priority over these responsibilities. In fact, in fiscal year
2000, 87
percent of the CMRs had other substantial responsibilities.
Moreover,
workloads and prime contractor coverage now vary greatly between
CMRs.
Additionally, CMRs are relying more on ’desk“ reviews of
subcontractors‘
activity to monitor compliance with subcontracting plans as
opposed to
on-site reviews. This is a concern to some SBA officials who
believe
that on-site reviews are more thorough, though others believe
the desk
review offers the potential for greater coverage.
Declines in staffing and travel funds have contributed to the
changing role
of the CMR. With downsizing and retirements taking place and
no staff
assigned to replace lost personnel, the number of CMR full-time
equivalents
(FTEs) has decreased significantly and has resulted in workload
imbalances.
While there are concerns about the changing nature of the CMR
role, SBA has
not strategically planned for these changes or assessed their
collective
impact. Instead, it has implemented ad hoc measures to deal
piecemeal
with resource declines. Unless steps are taken to better evaluate
and plan
for the future of CMRs, SBA will continue to lack an understanding
of their
contributions to small business subcontracting.
Past and Projected Percentage of Depot Maintenance Funds Allocated to
the Private Sector, as DOD Reported:
[See PDF for image]
Source: DOD ’50-50“ Reports, Feb. 4 and Apr. 12, 2002.
[End of Figure]
What GAO Recommends:
GAO is recommending that SBA strategically assess, evaluate, and
plan
the CMR role. In doing so, it should address such issues as the
impact
of assigning multiple roles to CMRs and the effectiveness of
compliance-monitoring methods.
SBA neither concurred nor disagreed with GAO‘s recommendations.
However, SBA did agree that it needs to rethink the CMR role and
develop outcome and impact measures to better assess CMRs‘
effectiveness. SBA also objected to some of GAO‘s conclusions but
did
not provide sufficient evidence to support its objections.
This is a test for developing highlights for a GAO report. The
full
report, including GAO‘s objectives, scope, methodology, and
analysis is
available at www.gao.gov/cgi-bin/getrpt?GAO-03-54. For
additional
information about the report, contact David E. Cooper
(202) 512-4841.
To provide comments on this test highlights, contact Keith
Fultz (202-
512-3200) or email HighlightsTest@gao.gov.
Report to Congressional Requesters:
United States General Accounting Office:
GAO:
November 2002:
SMALL BUSINESS ADMINISTRATION:
The Commercial Marketing Representative Role Needs to Be Strategically
Planned and Assessed:
GAO-03-54:
Contents:
Letter:
Results in Brief:
Background:
The CMR Role Is Conflicted and in Decline:
Factors Affecting the CMR Role:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendix I: Comments from the U.S. Business Administration:
Tables:
Table 1: Detailed Data on Time That CMRs Spent in Compliance Monitoring
and Marketing in Fiscal Year 2000:
Table 2: Number and Percentage of On-Site Versus Desk Reviews Performed
by Year:
Table 3: Number of Prime Contractors per CMR FTE by Area Office:
Figures:
Figure 1: Number of Full-Time and Number of Part-Time CMRs for Selected
Years:
Figure 2: CMR Roles and Responsibilities in Fiscal Year 2000:
Figure 3: Percentage of Time Spent in Compliance Monitoring and
Marketing in Fiscal Year 2000:
Figure 4: Percentage of On-Site versus Desk Reviews Performed:
Figure 5: Variances in CMR Workload:
Abbreviations:
CMR: Commercial Marketing Representative
COC: Certificate of Competency
FTE: full-time equivalent
GAO: General Accounting Office
HCA: Head Contracting Authority
HUB Zones: historically underutilized business zones
OGC: Office of Government Contracting
OIG: Office of the Inspector General
PCRs: Procurement Center Representives
PRO-Net: Procurement Marketing and Access Network
SBA: Small Business Administration:
United States General Accounting Office:
Washington, DC 20548:
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:
Subcontracting on large federal contracts is becoming increasingly
important to small businesses, principally because subcontracts may
offer the most opportunities for these businesses to participate in
federal procurement in the near future.[Footnote 1] The number of prime
contracts is shrinking, and many prime contracts have become so large
that small businesses find it difficult to compete for them. Moreover,
the Small Business Administration (SBA) reported that dollars paid for
subcontracts increased 40 percent from fiscal year 1993 through fiscal
2001, growing from $65 billion to $91.1 billion.[Footnote 2]
SBA‘s Subcontracting Assistance Program focuses on increasing
subcontracting opportunities for small businesses through major prime
contractors. Historically, SBA staff known as Commercial Marketing
Representatives (CMRs) have administered and implemented this program.
You asked us to assess the CMR role, particularly with respect to (1)
what role CMRs are playing in administering and implementing the
Subcontracting Assistance Program and;(2) what factors have affected
this role. As part of our evaluation, we used data from a recent survey
we conducted of all staff working as CMRs in fiscal year 2000.[Footnote
3] Our overall response rate was 97 percent.
Results in Brief:
The CMR role is conflicted and in decline. Most CMRs are now largely
part-time and have substantial additional roles and responsibilities
that often take priority over CMR duties. In addition, there are
differences of opinion and concerns within the agency about the focus
of the CMR role. Some SBA Area Directors, Supervisors, and CMRs believe
that CMRs should focus more on monitoring prime contractors‘ compliance
with their subcontracting plans. Other SBA officials believe that CMRs
should focus more on helping small businesses connect with prime
contractors for subcontracting opportunities.
There are also differences of opinion and concerns within the agency
about the relative merits of the methods CMRs use to monitor
compliance. Some SBA officials and many CMRs believe that going on-site
to conduct detailed reviews of prime contractors is more effective than
simply reviewing their subcontracting activity reports, which is now
the most frequently used monitoring method. Other SBA officials argue
that relying on report reviews is not only effective but also necessary
because it is more cost-efficient. Finally, CMRs‘ geographic
distribution and workloads are very uneven, as is their coverage of
prime contractors.
Resource declines and the agency‘s ad hoc, piecemeal response are the
main factors driving this situation. CMR roles and responsibilities
have been affected by cutbacks in staff and travel funds during the
past decade. For example, CMRs (and other staff) have been assigned
multiple roles, and on-site reviews of prime contractors have been
curtailed as economy measures. Workload distributions and prime
contractor coverage have been affected in turn. As resources have
declined, the agency has struggled to make adjustments piecemeal as
particular situations have arisen, rather than stepping back to
strategically assess and plan the CMR role. Thus, role change occurred
not by design but by default.
Consequently, we do not know whether the CMR role is effective or not.
Even though CMRs are considered to be critical to the successful
implementation of SBA‘s Subcontracting Assistance Program, the agency
does not have a clear strategic vision of what CMR roles and
responsibilities should be and has not developed outcome or impact
measures for the CMR role. In addition, the agency has not assessed or
evaluated the effects of the various adjustments it has made to the CMR
role in response to the resource challenges.
We are recommending that the agency strategically assess, evaluate, and
plan the CMR role. This should include a careful assessment of such
issues as the impact of assigning multiple roles to staff, appropriate
role focus, the effectiveness of different methods of compliance
monitoring, uneven distributions of CMRs and CMR workloads, and uneven
prime contractor coverage.
SBA neither concurred nor disagreed with our recommendations. However,
SBA did agree that it needs to rethink the CMR role and develop outcome
and impact measures to better assess CMRs‘ effectiveness. SBA also
objected to some of our conclusions but did not provide sufficient
evidence to support its objections.
Background:
The federal government encourages federal prime contractors‘ use of
small businesses as subcontractors by requiring prime contractors to
develop plans with stated goals for subcontracting to various types of
small businesses. Federal regulations require a subcontracting plan for
each contract or contract modification that exceeds $500,000 ($1
million for construction contracts) and has subcontracting
possibilities.[Footnote 4]
The Subcontracting Assistance Program is SBA‘s vehicle for increasing
the percentage of subcontract awards to small businesses and ensuring
that small businesses have the maximum practicable opportunity to
participate in the performance of federal government
contracts.[Footnote 5] SBA‘s Office of Government Contracting (OGC)
oversees this program. SBA/OGC has six Area Offices responsible for all
prime contractors‘ subcontracting performance.[Footnote 6]
The program is implemented by CMRs, who promote small business
subcontracting in two primary ways, as described in SBA
regulations.[Footnote 7] First, CMRs review prime contractors‘
compliance with the requirements of their subcontracting plans. They
conduct on-site compliance reviews at prime contractors‘ facilities and
validate how well the prime contractors are implementing their
subcontracting plans. They also conduct ’desk reviews,“ which are
reviews of relevant subcontracting reports that are submitted by prime
contractors and completed without on-site visits.
Second, CMRs conduct various marketing activities, such as marketing
small businesses to prime contractors or matching certain types of
small business subcontractors with prime contractors. CMRs perform this
’matchmaking“ through both personal introductions and the use of Web-
based tools that help to connect prime contractors and subcontractors.
CMRs also provide various educational activities (e.g., seminars and
workshops) for prime contractors, subcontractors, and agency officials
as part of their marketing activities. In describing the duties
required of CMRs, SBA regulations do not place a relative order of
importance on any of these responsibilities.[Footnote 8]
In addition, CMRs work on various SBA special initiatives as part of
their marketing activities. For example, CMRs promote SBA‘s special
8(a) subcontracting initiative, which focuses on increasing the number
of subcontracts to small disadvantaged businesses. CMRs also promote
several special initiatives involving SBA‘s Procurement Marketing and
Access Network (PRO-Net). PRO-Net is a Web-based system that allows
prime contractors to advertise potential subcontracting opportunities
and small businesses to advertise their capabilities as
subcontractors.[Footnote 9] CMRs install PRO-Net access stations at
large prime contractor sites and public libraries, and train interested
businesses and agencies in the use of PRO-Net to match prime
contractors and subcontractors. Finally, CMRs conduct special training
for agencies and contractors on SBA‘s historically underutilized
business zones (HUB-Zone) Empowerment Contracting Program, which
encourages economic development in HUB Zones.
SBA/OGC also employs other contract specialists, who focus on small
businesses as prime contractors rather than subcontractors. These
include Procurement Center Representatives (PCRs), size determination
specialists, and Certificate of Competency (COC) specialists. PCRs work
with agencies to determine whether it is appropriate for acquisitions
not set aside for small businesses to be set aside.[Footnote 10] Size
determination specialists determine whether a small business meets
existing size standards for all procurement programs for which status
as a small business is required.[Footnote 11] COC specialists review a
contracting officer‘s determination that the small business in question
is not competent to perform on a particular contract.[Footnote 12]
The CMR Role Is Conflicted and in Decline:
The CMR role is conflicted and in decline. Over the past few years, the
CMR role has become part-time, and CMRs now usually have additional
roles that often take priority. CMRs appear to spend slightly more time
on marketing activities than on compliance monitoring, and they now
rely much more frequently on desk reviews than on-site visits for the
latter. In addition, workloads and prime contractor coverage vary
greatly between CMRs. SBA officials and CMRs have several concerns
about the CMR role.
The CMR Role Is Usually Part-Time and Often Lower Priority:
The CMR position is usually part-time. At the end of fiscal year 2001,
about 90 percent of the CMRs had other substantial responsibilities in
addition to their CMR duties. At that time, only 4 of the 39 CMRs were
full-time CMRs. As figure 1 shows, the number of part-time CMRs has
grown over time, increasing twelve-fold since 1992. (SBA officials
anticipate the continued assignment of additional roles to CMRs and
other contracting specialists.) In addition, despite the fact that a
larger number of staff had CMR duties at the end of fiscal year 2001
than in fiscal 1992, the number of CMR full-time equivalents (FTEs)
declined 28 percent--from 25 to about 18--during this period.
Figure 1: Number of Full-Time and Number of Part-Time CMRs for Selected
Years:
[See PDF for image]
Source: SBA‘s personnel records.
[End of figure]
The SBA officials and CMRs we interviewed told us that part-time CMRs
have a variety of additional responsibilities, including serving as
PCRs, COC specialists, and/or size determination specialists.[Footnote
13] For example, in our survey, 87 percent of the CMRs responding
reported that in fiscal year 2000, they served in one or even two
additional roles, as figure 2 shows.[Footnote 14] PCR was the most
frequent additional role; 59 percent of the part-time CMRs also served
as PCRs.
Figure 2: CMR Roles and Responsibilities in Fiscal Year 2000:
[See PDF for image]
Source: GAO survey.
[End of figure]
The CMRs and SBA officials we interviewed also told us that part-time
CMRs often give lower priority to their CMR work than to their PCR,
COC, and/or size determination work. This is consistent with our
survey--57 percent of the part-time CMR respondents reported spending
60 to 89 percent of their time in fiscal year 2000 performing non-CMR
duties. Only 31 percent reported spending less than 30 percent of their
time on non-CMR duties. Apparently, there are several reasons for this,
including not only the workload demands of these other roles, but also
the time frames within which they must be performed. Generally, these
roles are tied to specific procurements, and staff performing them must
meet the procurement schedule. Regulations and guidance also mandate
tight time frames for certain tasks.[Footnote 15] In contrast, CMR work
is generally not as time sensitive, and several CMRs who perform these
other roles told us they ’fit in CMR work“ when they have time.
Time Spent on Compliance Monitoring Versus Marketing Varies:
CMRs generally seem to spend slightly more time on marketing than on
compliance monitoring. Figure 3 and table 1 show details of how CMRs
spent their time in fiscal year 2000. However, the SBA officials and
CMRs we interviewed told us that the amount of time that both full-and
part-time CMRs spend on the two primary CMR duties--compliance
monitoring and marketing--varies considerably between Area Offices and
between individual CMRs.
Figure 3: Percentage of Time Spent in Compliance Monitoring and
Marketing in Fiscal Year 2000:
[See PDF for image]
Source: GAO survey.
[End of figure]
Table 1: Detailed Data on Time That CMRs Spent in Compliance Monitoring
and Marketing in Fiscal Year 2000:
Percent of time spent: 0; Compliance monitoring: Number of CMRs: 3;
Compliance monitoring: Percent of CMRs: 10; Marketing: Number of CMRs:
0; Marketing: Percent of CMRs: 0.
Percent of time spent: 1-9; Compliance monitoring: Number of CMRs: 4;
Compliance monitoring: Percent of CMRs: 13; Marketing: Number of CMRs:
6;
Marketing: Percent of CMRs: 20.
Percent of time spent: 10-19; Compliance monitoring: Number of CMRs:
12;
Compliance monitoring: Percent of CMRs: 40; Marketing: Number of CMRs:
9;
Marketing: Percent of CMRs: 30.
Percent of time spent: 20-29; Compliance monitoring: Number of CMRs: 3;
Compliance monitoring: Percent of CMRs: 10; Marketing: Number of CMRs:
5;
Marketing: Percent of CMRs: 17.
Percent of time spent: 30-39; Compliance monitoring: Number of CMRs: 6;
Compliance monitoring: Percent of CMRs: 20; Marketing: Number of CMRs:
5;
Marketing: Percent of CMRs: 17.
Percent of time spent: 40-49; Compliance monitoring: Number of CMRs: 1;
Compliance monitoring: Percent of CMRs: 3; Marketing: Number of CMRs:
1;
Marketing: Percent of CMRs: 3.
Percent of time spent: 50-59; Compliance monitoring: Number of CMRs: 0;
Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs:
1;
Marketing: Percent of CMRs: 3.
Percent of time spent: 60-69; Compliance monitoring: Number of CMRs: 0;
Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs:
2;
Marketing: Percent of CMRs: 7.
Percent of time spent: 70-79; Compliance monitoring: Number of CMRs: 0;
Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs:
0;
Marketing: Percent of CMRs: 0.
Percent of time spent: 80-89; Compliance monitoring: Number of CMRs: 1;
Compliance monitoring: Percent of CMRs: 3; Marketing: Number of CMRs:
0;
Marketing: Percent of CMRs: 0.
Percent of time spent: 90-99; Compliance monitoring: Number of CMRs: 0;
Compliance monitoring: Percent of CMRs: 0; Marketing: Number of CMRs:
1;
Marketing: Percent of CMRs: 3.
Percent of time spent: Total; Compliance monitoring: Number of CMRs:
30;
Compliance monitoring: Percent of CMRs: 99; Marketing: Number of CMRs:
30;
Marketing: Percent of CMRs: 100.
Note: Two of the CMRs surveyed did not respond completely to this
question and therefore were omitted. Percents do not add to 100 because
of rounding. Marketing includes outreach and marketing activities,
special initiatives, and ongoing prime contractor assistance.
Source: GAO survey.
[End of table]
Shift from On-Site to Desk Reviews:
CMRs use desk reviews far more frequently than on-site reviews to
monitor prime contractors‘ compliance with subcontracting plans. In
fiscal year 2001, 70 percent of all compliance reviews were desk
reviews. Reliance on desk reviews has increased substantially since
fiscal year 1992, when all compliance reviews were done on-site. Figure
4 and table 2 show more details.
Figure 4: Percentage of On-Site versus Desk Reviews Performed:
[See PDF for image]
Source: SBA‘s CMR database and SBA‘s Area records.
[End of figure]
Table 2: Number and Percentage of On-Site Versus Desk Reviews Performed
by Year:
Fiscal year: 1992; All compliance reviews: 380; On-site reviews[A]: 380
(100%); Desk reviews: 0.
Fiscal year: 1993; All compliance reviews: 458; On-site reviews[A]: 458
(100%); Desk reviews: 0.
Fiscal year: 1994; All compliance reviews: 470; On-site reviews[A]: 470
(100%); Desk reviews: 0.
Fiscal year: 1995; All compliance reviews: 484; On-site reviews[A]: 484
(100%); Desk reviews: 0.
Fiscal year: 1996; All compliance reviews: 777; On-site reviews[A]: 441
(57%); Desk reviews: 336 (43%).
Fiscal year: 1997; All compliance reviews: 1,786; On-site reviews[A]:
290 (16%); Desk reviews: 1,496 (84%).
Fiscal year: 1998; All compliance reviews: 1,497; On-site reviews[A]:
233 (16%); Desk reviews: 1,264 (84%).
Fiscal year: 1999; All compliance reviews: 1,425; On-site reviews[A]:
345 (24%); Desk reviews: 1,080 (76%).
Fiscal year: 2000; All compliance reviews: 1,096; On-site reviews[A]:
252 (23%); Desk reviews: 844 (77%).
Fiscal year: 2001; All compliance reviews: 896; On-site reviews[A]: 269
(30%); Desk reviews: 627 (70%).
[A] Includes follow-up reviews, which are return visits to a contractor
to determine whether recommendations from the original on-site review
have been made.
Source: SBA‘s CMR database and SBA‘s Area records.
[End of table]
Uneven CMR Workload and Prime Contractor Coverage:
There is an uneven distribution of CMRs nationally and an uneven
distribution of CMR workload. According to SBA, at the end of fiscal
year 2001, there were about 18 CMR FTEs nationally to monitor the
subcontracting activities of the 2,029 prime contractors under SBA‘s
cognizance. Figure 5 and table 3 illustrate the wide range in CMR
workload.
Figure 5: Variances in CMR Workload:
[See PDF for image]
Source: SBA‘s workload analysis.
[End of figure]
Table 3: Number of Prime Contractors per CMR FTE by Area Office:
Area Offices: 1; CMR FTEs: 4.20; Number of prime contractors: 314;
Number of prime contractors per CMR FTE: 75.
Area Offices: 2; CMR FTEs: 2.40; Number of prime contractors: 474;
Number of prime contractors per CMR FTE: 198.
Area Offices: 3; CMR FTEs: 1.75; Number of prime contractors: 234;
Number of prime contractors per CMR FTE: 134.
Area Offices: 4; CMR FTEs: 1.63; Number of prime contractors: 237;
Number of prime contractors per CMR FTE: 145.
Area Offices: 5; CMR FTEs: 4.95; Number of prime contractors: 277;
Number of prime contractors per CMR FTE: 56.
Area Offices: 6; CMR FTEs: 2.85; Number of prime contractors: 493;
Number of prime contractors per CMR FTE: 173.
Area Offices: Total; CMR FTEs: 17.78; Number of prime contractors:
2,029; Number of prime contractors per CMR FTE: 114.
Source: SBA‘s workload analysis.
[End of table]
The SBA officials and CMRs we interviewed also acknowledged wide
variations in workload between individual CMRs, whether full-time or
part-time, in different Area Offices or within the same Area Office.
For example, in one Area Office, one CMR had 13 prime contractors to
monitor, while another had 65. Both spend about 10 percent of their
time as CMRs. Similarly, in another Area Office, one CMR had 120 prime
contractors to monitor, while a CMR in another had only 2. Both spend
only 20 percent of their time as CMRs.
Not surprisingly, the uneven distribution of CMRs and CMR FTEs has
contributed to wide variations in the number of on-site reviews
performed annually by Area Offices.[Footnote 16] For example, one Area
Office conducted 15 on-site reviews in fiscal year 2001, while others
conducted 40 or more. In addition, uneven workload distribution has
contributed to the existence of large blocks of un-reviewed, that is,
’uncovered,“ prime contractors. For example, in one Area, there are no
SBA reviews of any kind--on-site or desk--being done for 212 prime
contractors, including all the prime contractors in one state and half
of those in another. SBA officials told us that in fiscal year 2001,
only 11.4 percent of the prime contractors nationwide received an on-
site SBA review.[Footnote 17]
Concerns about the CMR Role:
CMRs and SBA officials have a range of concerns about the focus of the
CMR role--particularly with regard to how CMRs should spend their time.
Some believe that CMRs should concentrate more on monitoring prime
contractors‘ compliance with their subcontracting plans. Others believe
they should focus more on helping small businesses connect with prime
contractors for subcontracting opportunities. There are also
differences of opinion and concerns within the agency about the
relative merits of the methods that CMRs use to monitor compliance as
well as with the uneven distribution of the CMR workload.
Disagreements about the Balance between Compliance Monitoring and
Marketing:
There are disagreements within SBA about the most appropriate focus for
the CMR role, that is, the balance between compliance monitoring and
marketing. The Area Directors, Supervisors, and CMRs we interviewed had
different views about CMR work priorities. For example, one Area
Director stated that compliance monitoring should be the first priority
for CMRs and matchmaking (i.e., marketing) should be secondary. Another
Area Director said that the CMR role should be a combination of
compliance monitoring and matchmaking but that matchmaking should get
more emphasis.
In contrast, the May 2001 report of the SBA Subcontracting Task Team
clearly identifies compliance monitoring as the CMRs‘ main
function.[Footnote 18] The report concludes that over the past several
years, CMRs have spent a disproportionate amount of their time on
special initiatives. The report recommends that compliance reviews
become the CMRs‘ primary focus and that less emphasis be placed on
ancillary duties, such as matchmaking or special initiatives. The
report even proposes a new job title for the CMR, adding that
’marketing“ gives the wrong impression that matchmaking is the CMR‘s
main role.
In contrast again, SBA‘s Web site does not mention compliance
monitoring as part of the CMR role. Rather, the Web site, which is an
important means of communicating with both prime contractors and small
businesses, describes the CMR role as ’assisting small businesses in
obtaining subcontracts by marketing small businesses and matching them
with large prime contractors.“:
Concerns about the focus of the CMR role are not new. SBA‘s Office of
the Inspector General (OIG) issued a report in October 1995 citing the
need to focus CMR efforts more effectively with respect to compliance
monitoring and matchmaking.[Footnote 19]
Concerns about Desk Reviews:
SBA introduced desk reviews in fiscal year 1996 as an economy measure.
Because desk reviews take place in the CMRs‘ offices rather than at the
prime contractors‘ locations, CMRs do not have to travel. In addition,
the desk review takes substantially less time to accomplish than does
the on-site review. Consequently, relying on desk reviews saves both
travel money and CMR time.
SBA staff opinions differ about the relative merits of on-site versus
desk reviews. Some SBA officials and many CMRs believe that on-site
reviews are more effective and question the relative value of desk
reviews as a means of monitoring compliance. During on-site reviews,
CMRs determine if prime contractors are complying with their
subcontracting plans by going to the prime contractor‘s location,
reviewing files and documentation that support reported summaries of
subcontracting activities, and interviewing officials. The CMRs we
spoke with said that this type of in-depth review is one of their best
tools to encourage the maximum use of small businesses as
subcontractors. In contrast, other SBA officials believe that using
desk reviews not only saves resources but also increases the total
amount of monitoring that CMRs can do. SBA officials said they have
never evaluated the effectiveness of the two types of reviews.
Concerns about CMR Workload and Prime Contractor Coverage:
SBA‘s OIG observed the uneven workload distribution problem in October
1995.[Footnote 20] Noting the limited subcontracting resources and
variable staffing levels and workloads, the OIG concluded that the
unequal distribution of workload among CMRs was correlated with the
uneven coverage of prime contractors. Accordingly, the OIG recommended
that SBA more evenly distribute prime contractors among CMRs to improve
coverage. However, SBA officials told us that where CMRs are located is
driven by factors other than the location of prime contractors with
subcontracting plans. For example, they said that although they can
request CMRs to relocate to provide better coverage, they cannot
require staff to relocate.
It is likely that the full extent of the uneven workload and coverage
problems has not yet been identified. SBA officials have estimated that
as many as 1,500 additional prime contractors with subcontracting plans
are not presently captured by SBA‘s data systems. While SBA officials
told us they are working to improve the methods and databases for
identifying and tracking prime contractors, progress appears to be very
slow. Again in October 1995, the SBA OIG noted that the number of
federal prime contractors with subcontracting plans was unknown,
complicating SBA‘s efforts to focus subcontracting program activities
and likely resulting in lost small business opportunities.[Footnote 21]
Factors Affecting the CMR Role:
Two primary factors have affected the CMR role: declines in resources
and an ad hoc, piecemeal response to resource challenges. Both staffing
and travel funds declined substantially over the past several years.
With downsizing and retirements taking place and no staff assigned to
replace lost personnel, the number of CMR FTEs declined significantly
and resulted in workload imbalances across and even within SBA‘s Area
Offices. Travel fund reductions have meant fewer on-site visits and
greater reliance on desk reviews. Staff at all levels agreed that
insufficient resources--particularly staffing and travel funds--are
the biggest obstacles to greater CMR coverage of prime contractors.
SBA did not formulate a strategic plan for dealing with the impact of
resource reductions on the CMR role. Without such a plan, SBA
implemented ad hoc measures to deal piecemeal with resource declines.
Nonetheless, these measures collectively have redefined the CMR role.
Declining Resources:
SBA/OGC resources have declined substantially over the past few years.
From fiscal year 1991 through fiscal 2000,[Footnote 22] staff declined
52 percent, from 333 to 159. During this same period, travel funds
declined 54 percent, from $440,000 to $201,000. SBA officials agreed
that these resource declines have significantly affected the CMR role.
For example, SBA Area Directors told us that the need to assign
multiple roles to field staff has increased since SBA experienced
significant budget and staff cuts in the mid-1990s. Prior to these
cuts, most field staff for both the prime and subcontracting programs
were hired as specialists for one program. Now most, including CMRs,
work on multiple programs. Similarly, the Subcontracting Task Team
report pointed out that the merging of the CMR/PCR positions was
workload driven and reflected the fact that positions were not being
filled when incumbents retired.[Footnote 23] Finally, several SBA
officials told us that to cope with the loss of staff and lack of
travel funds, as well as the increased number of special initiatives,
the assignment of multiple roles to staff became necessary and the desk
review was created to replace the on-site review, when necessary.
The decline in travel funds has especially affected on-site compliance
monitoring. The lack of travel funds has become a critical factor in
decisions about which prime contractors receive on-site reviews,
particularly in those Area Offices that cover large geographic areas.
For example, in one Area, one CMR said that one major factor
determining which contractors receive on-site visits was whether they
could be reached on a tank of gas, since travel funds are so limited.
In another Area, the Director said that travel funds have been a
problem for a long time, and that for many months of the fiscal year,
CMRs do not have access to any travel money. This prevents them from
being able to effectively select prime contractors for on-site review.
Our survey indicated that the lack of travel funds also affected on-
site reviews in fiscal year 2000. For example, 76 percent of the
responding CMRs rated their Area Office‘s travel budget as very
important in determining which prime contractors to review on-site. In
comparison, fewer--66 percent--rated problems with contractor reports
as very important. Still fewer--58 percent and 50 percent,
respectively--rated poor/marginal ratings of the contractor during the
last on-site review and the fact that the contractor had never had an
on-site review as very important. Similarly, 78 percent rated the lack
of travel funds as a significant barrier to conducting on-site prime
contractor reviews.
Finally, the Task Team‘s report expressed concern that without the
requisite travel money and other resources, SBA will continue to
monitor (on-site) about 12 percent of the total prime contractor
portfolio, thus limiting the effectiveness of the Subcontracting
Assistance Program.[Footnote 24]
Ad Hoc, Piecemeal Response to Resource Challenges:
SBA‘s response to these resource challenges has been largely ad hoc and
reactive. As resources have declined, the agency has struggled to keep
up with subcontracting program demands by making various piecemeal
adjustments to address specific problems, such as assigning multiple
roles to CMRs and instituting desk reviews to cover staffing shortages
and travel fund declines. SBA has not stepped back--at either the
agency or program level--and taken a broader, more strategic look at
the CMR role, particularly in the context of today‘s resource-
constrained environment.
Strategic planning, assessment, and evaluation are essential elements
of good management. This has been recognized for federal agencies since
1993, when the Government Performance and Results Act[Footnote 25]
became law. Effective management requires the establishment of goals
and objectives as well as impact or outcome performance measures.
SBA has not extended such planning to the CMR role to help address the
difficult challenges that declining resources pose for the
Subcontracting Assistance Program. SBA‘s agency-level plan does not
address the CMR role at all.[Footnote 26] Furthermore, SBA officials
told us that SBA‘s current strategic-planning process does not deal
with the CMR role in subcontracting or provide for assessments,
evaluations, or planning for the CMR role. In addition, they told us
that neither OGC nor the Subcontracting Assistance Program has
conducted strategic assessments or planning for the CMR role.
In sum, while regulations and operating procedures describe a variety
of duties and responsibilities that CMRs may perform,[Footnote 27] SBA
has not developed goals and objectives for the CMR role. For example,
the agency analyzed what might be desirable levels of prime contractor
coverage or subcontracting plan compliance in today‘s environment and
how CMRs might contribute to achieving these goals. In addition,
although SBA has productivity measures (e.g., the number of on-site and
desk reviews conducted) to track CMRs‘ performance, it does not have
impact or outcome measures--or even such expectations--for CMRs.
Finally, SBA has not strategically assessed, evaluated, or planned how
best to address critical CMR role issues that have emerged during the
past few years, such as the effect of multiple role assignments for
CMRs, disagreements about the focus of the CMR role, the relative
merits of on-site and desk reviews, and the impact of uneven
distributions of CMRs and CMR workloads.
Consequently, we do not know how effective the CMR role is.
Effectiveness cannot be assessed without outcome and impact measures
tied to program goals and objectives. These do not exist for the CMR
role.
Conclusions:
Subcontracting on federal contracts is a large and growing marketplace
for small businesses. CMRs have been long considered to be key to
fostering small business participation in such subcontracting. However,
the value of the CMR role and the effect of recent changes in it are
unknown. Unless steps are taken to better assess, evaluate, and plan
for the future of the CMR role, SBA will continue to lack an
understanding of CMR contributions to small business subcontracting.
Moreover, its approach to addressing challenges that CMRs face will
continue to be ad hoc and piecemeal.
Recommendations for Executive Action:
We recommend that the Administrator of SBA:
* assess, evaluate, and plan the CMR role, including addressing such
issues as the impact of assigning multiple roles to CMRs, the
appropriate CMR role focus, the effectiveness of compliance-monitoring
methods, and the impact of uneven CMR workloads and prime contractor
coverage;
* develop specific outcome and impact measures for CMRs‘ effectiveness;
and:
* clearly communicate the strategic plan and expectations for the CMR
role to both SBA staff and small businesses.
Agency Comments and Our Evaluation:
SBA provided us with written comments on a draft of this report. The
comments, along with our responses, appear in appendix I.
SBA neither concurred nor disagreed with our recommendations. However,
SBA said that our report will be extremely helpful as it seeks ways to
strengthen and improve its Subcontracting Assistance Program. In
addition, SBA agreed that it needs to rethink the CMR role in today‘s
environment and noted that some aspects of the role may change in the
future. SBA also agreed that it needs to develop outcome or impact
measures to better assess the effectiveness of the CMR role.
Furthermore, SBA noted that it has changed its Web site to include
compliance monitoring as part of the CMR role.
SBA objected to some of our conclusions, particularly (1) that SBA‘s
response to the challenges posed by declining resources has been ad hoc
and piecemeal; (2) that SBA lacks a clear, strategic vision of the CMR
role; and (2) that CMRs‘ effectiveness is unknown. We continue to
believe that our conclusions are correct. They are based on evidence
that SBA has not strategically assessed, evaluated, or planned the CMR
role in light of the current environment, including developing goals
and objectives for the role and impact and outcome measures for CMRs.
SBA‘s comments do not provide any new evidence to the contrary. For
example, the task force study that SBA cites as evidence of planning
identified some specific problems with the CMR role and recommended
some specific solutions. However, it did not strategically assess or
plan the CMR role, nor was it tied to any SBA strategic-planning
effort. In addition, the study did not use or establish measurable
goals and objectives or outcome and impact measures for the CMR role.
Similarly, the regulations and operating procedures that SBA references
as evidence of vision are not tied to measurable goals and objectives
and associated outcome and impact measures.[Footnote 28] Rather, they
simply describe a variety of duties and responsibilities that CMRs are
required to perform. In addition, the conditions that SBA cites as
evidence of CMRs‘ effectiveness may be the result of many factors other
than CMRs‘ efforts alone. SBA has not conducted the assessments and
evaluations necessary to determine what effect CMRs actually had on
these conditions. Finally, SBA‘s agreement that it needs to rethink the
CMR role and develop impact or outcome measures further supports our
conclusions.
Scope and Methodology:
To determine CMRs‘ duties and responsibilities, we analyzed pertinent
legislation, regulations, and operating procedures and reviewed other
agency documentation, including staffing profiles and workload
analyses. We extracted information from the General Services
Administration‘s Federal Procurement Data System database on prime and
subcontractors. We also interviewed officials at SBA headquarters and
Area Directors and CMRs located in all six SBA Area Offices. We
interviewed all six Area Directors and several Area Supervisors. We
also interviewed 15 of the 39 current CMR staff, accounting for about
51 percent of the total CMR FTEs. Finally, we analyzed data from a GAO
survey of all 33 staff working as CMRs in fiscal year 2000, who
constitute 85 percent of the current CMR population. Our overall
response rate was 97 percent. On our survey, we asked a variety of
questions about CMRs‘ roles and responsibilities.
To identify the factors affecting the CMR role, we reviewed pertinent
legislation, SBA staffing information, workload analyses, and travel
budget fund submissions. We also interviewed SBA headquarters and Area
Office personnel and reviewed agency audit reports and task force
studies. We also met with SBA officials responsible for strategic
planning.
We conducted our work from November 2001 through July 2002 in
accordance with generally accepted government auditing standards.
We are sending copies of this report to interested congressional
committees; the Administrator, SBA; and the Director, Office of
Management and Budget. 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 http://www.gao.gov.
If you have any questions concerning this letter, please call me at
(617) 565-7555. Key contributors to this review were Catherine
Baltzell, Art Fine, David Bennett, Christina Chaplain, and Sylvia
Schatz.
David E. Cooper
Director, Acquisition and Sourcing Management:
[End of section]
Appendix I: Comments from the U.S. Business Administration:
Note: GAO‘s comments supplementing those in the report‘s text appear at
the end of this appendix.
U.S. SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C.20416:
OCT 8 2002:
Ms. Catherine Baltzell:
Assistant Director, Acquisition and Sourcing Management General
Accounting Office:
441 G Street, NW Room 4440/A Washington, DC 20548:
Dear Ms. Baltzell:
Thank you for your e-mail of September 18, 2002, providing us an
opportunity to review and comment on your draft report entitled ’The
Commercial Marketing Representative Role Needs to be Strategically
Planned and Assessed“ (GAO-03-54). I wish to commend you for your
thorough review. Your observations will be extremely helpful as we
seek ways to strengthen and improve our Subcontracting Assistance
Program.
We believe that the reference on page one of the report to 33 staff
working as Commercial Market Representatives (CMRs) in fiscal year 2000
is misleading. You mention on page 6 and elsewhere in the report that
the U.S. Small Business Administration (SBA) had only four (4) full-
time CMRs on October 1, 2001, the beginning of the fiscal year in which
your study was conducted. We would like to point out that, in addition
to these four full-time CMRs, SBA has four other employees in the field
who devote 80% or more of their time to the CMR function.Our records
also indicate that on October 1, 2001, SBA had 31 other part-time CMRs.
Accordingly, we suggest that this sentence be rewritten to say that, at
the beginning of fiscal year 2001, SBA had ’39 staff in the CMR
program, only 8 of whom were essentially full-time.“ Otherwise the
reader may begin reviewing the report with the misconception that SBA
has almost three dozen full-time CMRs.
One of your main conclusions beginning on page 2, and elsewhere in the
report, is that the SBA has had an ’ad hoc, piecemeal response“ to the
problem of declining resources rather than ’stepping back to
strategically assess and plan the CMR role.“ This statement does not
accurately depict SBA‘s approach to addressing this problem. In January
2001, we convened a task force consisting of 13 supervisors, PCRs, and
CMRs representing some of our most experienced employees in the field.
This task force examined the subcontracting program and submitted a
draft report to senior management on May 1, 2001, with numerous
recommendations for strengthening the program. We have already
implemented some of those recommendations, primarily in the procedures
and checklists that the CMRs use during compliance reviews. Also, we
are now revising the CMRs Standard Operating Procedures (SOP) to
implement many of the other recommendations within the coming year. To
imply that SBA has not examined the program critically and taken
remedial action is not accurate.
On page two of the report, you state that ’there are differences of
opinion and concerns within the agency about the focus of the CMR
role.“ On page 14, you discuss this in more detail, citing the balance
between compliance monitoring and marketing.This has been a critical
issue for more than two decades, and SBA has always sought to find a
balance between these two responsibilities. In fact, recognizing that
each of the SBA Area Offices has its unique needs, we have deliberately
given SBA‘s Area Directors the flexibility to decide how they wish to
prioritize their CMRs‘ duties and responsibilities. In some cases, this
means prioritizing compliance reviews; in other cases, it means
prioritizing sourcing. The important point is that each Area Director
can decide how to manage the program to achieve the best results under
their own unique circumstances.
We also do not agree with your statement on page 20 of the report, that
SBA does not have a clear, strategic vision of the CMR‘s roles and
responsibilities. To the contrary, this vision is set forth explicitly
in Title 13 of the Code of federal Regulations, subpart 125.3, and in
SOP 60 03 5, Subcontracting Assistance Program.We do agree, however,
that we need to rethink the CMR‘s role and how it is carried out in
light
of current resources and advances in information technology. Some
aspects
of the CMR‘s roles and responsibilities may change in the future. We
also agree that we need to develop outcome or impact measures that
better indicate the effectiveness of the CMR Program.
There is also much discussion beginning on page 15 of the report of the
desk reviews (officially known as ’Performance Reviews“) that we
implemented in 1996. Desk reviews are done by examining the
contractors‘ SF-294s, Subcontract Report on Individual Contracts, and
SF-295s, Summary Subcontract Report, without making site visits. While
we concur that onsite compliance reviews are preferable to desk
reviews, we believe that on-site reviews are less cost-effective and
are not needed in every instance.Indeed, SBA uses the results of the
desk reviews to determine which prime contractors should receive on-
site reviews - a useful approach to risk management that addresses one
of GAO‘s primary concerns in a 2001 report (GAO-02166R, Small Business:
Subcontracting Report Validation Can Be Improved).
The effectiveness of desk reviews can be seen by the increase in the
total compliance reviews from 1995 to 1997, the year after we
implemented them (desk reviews were implemented during fiscal year
1996).In 1995, we conducted only 484 compliance reviews; by contrast,
in 1997, we conducted 1,786 compliance reviews. In other words, the
desk reviews allowed us to more than triple the number of compliance
reviews that we conducted, with fewer CMRs and no additional travel
money. We believe that what you describe as an ad hoc response was a
logical and cost-effective approach to maximizing the utilization of
available resources.
From the data mentioned above, it should be clear that your statement
on page 15 that SBA officials have never evaluated the effectiveness of
the two types of reviews (on-site vs. desk) is incorrect.To the
contrary, we know that on-site visits are more effective, but we also
know that they are less cost-effective than desk reviews and are not
always necessary.
Another example of SBA‘s resourcefulness is an agreement we signed with
the Defense Logistics Agency (DLA) in 1996. That agreement delegated
the primary responsibility for monitoring the subcontracting plans of
most Department of Defense contractors to DLA, which has allowed SBA to
focus its limited resources on monitoring the subcontracting plans of
civilian agency contractors.SBA also monitors a small number of defense
contractors not handled by DLA. The Defense Contract Management Agency
(DCMA) now monitors subcontracting plans for the Department of Defense,
and we are currently renegotiating the agreement with DCMA.
We also do not agree with your statement that SBA does not know if the
CMRs are effective or not.In fiscal year 2000 (the most recent year for
which we have reliable data), small businesses received 39.7% of all
subcontract awards; small disadvantaged businesses (SDBs) received
6.7%, and women-owned small businesses received 4.7%. These percentages
are much higher than at the prime contract level.In other words, if‘
measured on a percentage basis, prime contractors did much better than
Federal agencies in achieving their goals. Another measure is the
percentage of subcontract dollars awarded to SDBs, which has improved
steadily over the past two decades, from barely more than 2% in the
mid-1980s to well over six percent from 1995 to 2000. We believe these
figures improved as a result of SBA‘s concerted effort to strengthen
and revitalize the CMR program, which began in 1987 with the issuance
of SBA Policy Notice 6000215 and continued with SOP 60 03 3 in 1989.
This Policy Notice and SOP set forth SBA‘s first rigorous approach to
compliance reviews and resulted in a gradual improvement in
subcontracting achievements, as measured by percentage, in subsequent
years (see attachment).
Table 2 on page 11 (Number and Percent by Year) appears to be
incorrect, and we are providing a corrected copy as an enclosure to
this response. There appear to be two primary reasons for the
discrepancies: (a) you did not include Follow-up Reviews, which are a
type of on-site compliance review; and (b) you did not make an
adjustment, as explained to your auditors during the review, for one
CMR who failed to enter any compliance reviews into the database in
1999 and 2000. There are also some other discrepancies, but they are
not statistically significant; for example, you show 1,504 desk reviews
in 1997, while we show 1,496.In any case, we believe that our table
represents a more accurate picture of the CMRs‘ performance over the
past decade.
In your discussion of goals and objectives on page 20, you leave the
reader with the impression that SBA has never assigned specific,
quantitative goals to the CMRs. This is not true. Every year CMRs are
assigned specific Performance Standards that are tied to Critical
Elements such as compliance reviews and other activities.Over the past
decade, we have often established subcontracting goals for our Area
Directors as well. We understand that GAO would like SBA to develop
more substantive impact or outcome measures, and we believe this has
merit. In any case, we recommend that you rephrase this section so that
it will not give the reader the impression CMRs are not assigned goals
and objectives.
Since you examined the SBA web site (http://www sba gov/GC/
contacts.html) during your audit, we have corrected the omission that
you noted; the website now mentions compliance monitoring as part of
the CMR‘s role.
Your concerns about the CMR workload are also well taken, but we would
like to clarify two points in this section of your report. You point
out that there may be as many as 1,500 additional prime contractors
with subcontracting plans that are not in our:
database. You also state that our effort to develop a database to
identify and track prime contractors ’appears to be very slow.“ In
fact, the new database has been developed and is currently being field
tested by the CMRs.Among other things, it provides a mechanism to
capture all contractors listed in the Federal Procurement Data System
with subcontracting plans. We fully expect to have every prime
contractor with a subcontracting plan in our database by the end of the
second quarter of fiscal year 2003.
We should also like to point out that we maintained an extremely
comprehensive database to support the CMR Program from 1991 to 2001.
Although that database was limited by the technology that existed in
the early 1990s, it contains a wealth of historical data on prime
contractors that will continue to be useful in the future.
On page 16, you point out that SBA‘s Office of Inspector General
observed the uneven workload distribution in October 1995 and
recommended that SBA more evenly distribute prime contractors among
CMRs to improve coverage. Since then, we have addressed this problem by
creating more ’generalists,“ employees who perform more than one Office
of Government Contracting function. The eight essentially full-time
CMRs are supplemented by roughly 31 other SBA staff who perform CMR
work as a collateral duty.It is true that there is currently one area
of the United States where we still have an uneven workload
distribution, and we are studying options to determine how we can best
address this issue.
Finally, it has come to our attention that one of the other Federal
agencies submitted incorrect subcontracting data to the Federal
Procurement Data Center (FPDC) for fiscal year 2001. The FPDC provided
SBA with a corrected report on August 14,
2002, which shows total subcontracting in fiscal year 2001 to be $91.1
billion, not $95 billion as previously reported. Accordingly, you may
wish to correct the reference to $95 billion on page 1 of your report.
Once again, I wish to thank you for your report, which should prove to
be invaluable as we seek ways to improve the effectiveness of our
CMRs.I especially wish to commend the members of the GAO staff who
worked on this assignment for their professionalism in conducting the
audit.
Sincerely,
Fred C. Armendariz:
Associate Deputy Administrator for Government Contracting and Business
Development:
Signed by Fred Armendariz
Enclosure:
The following are GAO‘s comments on the Small Business Administration‘s
letter dated October 8, 2002.
GAO‘s Comments:
We do not agree that 80-percent time is essentially equivalent to 100-
percent time. Four staff that work 80 percent of their time as
Commercial Marketing Representatives (CMRs) constitute about three
full-time equivalents (FTEs), not four FTEs. This is a difference of
about 20 percent. As we point out in our report, SBA‘s use of part-time
CMRs for whom the CMR role is, as SBA comments, ’a collateral duty,“
has not meant an increase in CMR staff resources. Rather, total CMR
FTEs declined 28 percent from fiscal year 1992 through fiscal 2001.
SBA‘s task force study identified some specific problems with the CMR
role and recommended some specific solutions, and SBA‘s efforts to
implement some of these solutions can possibly lead to some incremental
improvements. However, the task force study did not strategically
assess or plan the CMR role, nor was it tied to any SBA strategic-
planning effort. In addition, the study did not use or establish
measurable goals and objectives or outcome and impact measures for the
CMR role. In other words, the study did not address the larger issues
of CMR strategic role assessment and planning. In the absence of such
planning, SBA‘s approach to addressing challenges that CMRs face will
continue to be ad hoc and piecemeal.
Delegating decisions about the focus of the CMR role to Area Directors
may be appropriate. However, SBA has not conducted any assessments or
evaluations that address what Area Office factors and characteristics
make such delegation essential or effective. Furthermore, SBA has not
evaluated the effectiveness of local decisions regarding the balance
between compliance monitoring and marketing. The resource pressures on
the CMR role heighten our concern. It may be that local decisions about
the focus of the CMR role are more influenced by the realities of local
resource constraints than by local compliance monitoring and marketing
needs. Without sound assessment and evaluation, however, this and many
other issues of role focus will remain clouded.
The regulations and operating procedures that SBA references do not
constitute a strategic vision tied to measurable goals and objectives.
Rather, as we discuss in our report, they simply describe a variety of
duties and responsibilities that CMRs are required to perform.[Footnote
29] Since the regulations and guidance do not place a relative order of
importance on these duties, and the Small Business Act and the Federal
Acquisition Regulations do not mention CMRs, there is no law,
regulation, or guidance requiring or suggesting that CMRs prioritize
their work according to a strategic vision.
In contrast, a strategic vision is broader and more comprehensive. It
is expressed in an overall strategic plan that articulates a mission
and specific plans to fulfill that mission, including measurable goals
and objectives and associated outcome and impact measures. SBA also
appears to recognize at least to some degree the limitations of the
regulations and operating procedures as a strategic vision because it
agrees that it needs to rethink the CMR role and develop outcome or
impact measures.
SBA recognizes that on-site reviews are both more effective than and
preferable to desk reviews but asserts that they are ’less cost-
effective“ and ’not always necessary.“ However, SBA does not offer
persuasive evidence to support these assertions. During our review, SBA
officials told us that they had not conducted assessments or
evaluations of either of these compliance review methods or of their
comparative effectiveness. Furthermore, SBA has not identified the
criteria--that is, the strategic goals and objectives and associated
impact or outcome measures--necessary to guide such assessments and
evaluations.
SBA also says that it uses the results of desk reviews to determine
which prime contractors should receive on-site reviews. However, as we
discuss in our report, the lack of travel funds is the primary driver
of decisions about which prime contractors receive on-site reviews.
SBA observes that in fiscal year 2000, small businesses, in general;
small disadvantaged businesses; and women-owned small businesses
received ’much higher“ percentages of all subcontract awards than of
prime contract awards.[Footnote 30] SBA also observes that the
percentage of subcontract dollars awarded to small disadvantaged
businesses has improved steadily over the past two decades.[Footnote
31] SBA then attributes both of these conditions solely to CMR efforts.
SBA has not conducted the assessments and evaluations necessary to
support this conclusion. Moreover, while CMRs‘ efforts may well have
contributed to these conditions, a number of other factors likely have
had a significant impact. As we note in our report, federal regulations
require a subcontracting plan for each contract or contract
modification that exceeds $500,000 ($1 million for construction
contracts) and has subcontracting possibilities.[Footnote 32] Federal
agencies are independently responsible for complying with these
regulations. Agencies may even conduct their own subcontract-monitoring
efforts. For example, DOD reviews subcontracting plans for defense
prime contractors. In fact, SBA commented that it has delegated the
primary responsibility for monitoring the subcontracting plans of most
DOD contractors to the responsible DOD agency so that SBA can focus its
limited resources on monitoring civilian agencies‘ plans. Since DOD
accounted for 65 percent of all subcontracted dollars awarded in 2001,
it is not likely that CMRs alone are responsible for all small business
subcontracting achievements.
There are also inherent business incentives for prime contractors to
subcontract voluntarily with small businesses. For example, small
business subcontractors can provide important specialized capabilities
that the prime contractor does not have or wish to invest in
developing. Small business subcontractors may also be able to provide
some general services faster and more economically, thus saving prime
contractor resources. Subcontracting also allows prime contractors to
avoid permanent staffing increases that may not be sustainable in the
face of market shifts. Finally, as we note in our report, the nature of
federal contracting has changed. The number of prime contracts is
shrinking, and many prime contracts have become so large that small
businesses find it difficult to compete for them. This change alone may
heavily influence the conditions that SBA cites as markers of CMRs‘
effectiveness.
We do not agree that our report leaves a mistaken impression with
regard to the goals and objectives assigned to CMRs. Rather, we state
clearly that SBA has productivity measures (such as the number of on-
site and desk reviews conducted) to track CMRs‘ performance but that it
does not have impact or outcome measures--or even such expectations--
for CMRs. SBA agrees that it needs to develop outcome or impact
measures to better measure CMR effectiveness.
We continue to believe that SBA‘s development of its new database
appears to be slow. SBA began developing this new database in early
2001, after experiencing repeated problems with its original database.
In October 2001, the SBA officials we interviewed told us that the new
database would be operational in January 2002. In February 2002, SBA
told us that it would be operational by June. Now, in October 2002, SBA
says that it is only in test mode and acknowledges that it will not
have a complete list of prime contractors with subcontracting plans
until the end of the second quarter of fiscal year 2003.
While SBA‘s original database does provide some useful information, the
SBA officials we interviewed told us that the data were not complete.
The database did not contain a complete list of prime contractors with
subcontracting plans.
We continue to have concerns about CMRs‘ workload and prime contractor
coverage. As we discuss in our report, about 18 CMR FTEs nationally
monitor the subcontracting activities of the 2,029 prime contractors
currently identified. In addition, CMRs have various marketing duties.
(In fiscal year 2000, CMRs generally seemed to spend slightly more time
on marketing than on compliance monitoring.) CMR compliance monitoring
Area Office workloads currently range from 56 to 198 prime contractors
per CMR FTE. There are wide variations in CMR workloads both between
Area Offices and within more than one Area Office. This situation may
be exacerbated when additional contractors with subcontracts are
identified and added to CMR workloads.
FOOTNOTES
[1] See the SBA Subcontracting Task Team Draft Recommendations, May
2001.
[2] All dollar figures in this report have been adjusted to 2001
dollars to account for inflation.
[3] We conducted the survey for our report entitled Small Business
Subcontracting Validation Can Be Improved, GAO-02-166R (Washington,
D.C.: Dec. 13, 2001).
[4] See Federal Acquisition Regulation 19.702.
[5] SBA is authorized to assist federal agencies and businesses in
complying with their subcontracting responsibilities and to evaluate
prime contractors‘ compliance with their subcontracting plans by 15
U.S.C. 637(d)(10)(C).
[6] The Department of Defense‘s Defense Contract Management Agency also
reviews subcontracting plans for defense prime contractors.
[7] See 13 C.F.R. 125.3 (c)(d).
[8] See C.F.R. 125.3 (c)(d).
[9] Small businesses may also advertise their capabilities as prime
contractors.
[10] See 13 C.F.R. 125.2(b).
[11] See 13 C.F.R. 121.401.
[12] See 13 C.F.R. 125.5(f).
[13] Most of these positions are GS-13 positions.
[14] Since fiscal year 2000, SBA has assigned 6 additional part-time
CMRs. Our survey includes 85 percent of the current population of 39
CMRs.
[15] See Federal Acquisition Regulation 19.4 and 19.6, SBA SOP 60 04 4,
SOP 60 02 6.
[16] Differing emphasis by Area Directors and CMRs on compliance
monitoring versus marketing and the lack of travel funds (especially in
geographically large areas) also appear to be contributing factors.
[17] SBA officials told us that agency-wide on-site review goals have
not been set because of travel fund restrictions.
[18] See SBA Subcontracting Task Team Draft Recommendations, May 1,
2001.
[19] See SBA‘s Inspector General report Prime Contracts and
Subcontracting Program, October 1995.
[20] See SBA‘s Inspector General report Prime Contracts and
Subcontracting Program, October 1995.
[21] See SBA‘s Inspector General report Prime Contracts and
Subcontracting Program, October 1995.
[22] Fiscal year 2000 is the most recent year for which both staff and
travel data were available from SBA.
[23] See SBA Subcontracting Task Team Draft Recommendations, May 1,
2001.
[24] See SBA Subcontracting Task Team Draft Recommendations, May 1,
2001.
[25] See P.L. 103-62.
[26] See SBA Strategic Plan FY 2001-2006.
[27] See 13 C.F.R. Part 125, 3(c)(d), SBA SOP 60 03 5.
[28] See13 C.F.R. Part 125, SBA SOP 60 03 5.
[29] See C.F.R. Part 125.3(c)(d), SBA SOP 60 03 5.
[30] SBA did not provide data on prime contract awards, so we were
unable to assess the magnitude of the differences between subcontract
and prime contract awards to these types of businesses.
[31] SBA did not provide data on subcontract dollars awarded over time
to small businesses in general or to women-owned businesses.
[32] See Federal Acquisition Regulation 19.702.
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