In a report released on June 30, 2017, the Government Accountability Office (GAO) reaffirmed “long-standing management challenges” within the Small Business Administration’s operation of several small business contracting activities “resulting in inefficient program operations.”
The programs impacted include small businesses in the socioeconomic categories of small disadvantaged businesses (SDB), women-owned small businesses (WOSB), service disabled veteran-owned small businesses (SDVOSB), and historically underutilized business zone (HUBZone) small businesses.
For three of the small business programs, GAO specifically found:
- There is no specific guidance or criteria for making requests for supporting documentation in connection with applications made as a part of the HUBZone certification process.
- Because of shortcomings in the recertification process, there is not reasonable assurance that only qualified firms are allowed to continue in the HUBZone program.
- Despite some automation put in place by the SBA, there is a backlog of firms in the recertification pipeline, required within a three-year time frame.
- There is an open issue involving the need to “clearly document [SBA’s] justification for approving or denying applicants into the 8(a) program, particularly when those decisions differed from lower-level recommendations.” The SBA’s Office of Inspector General (OIG) intends to continue to flag this issue “until this practice is documented in an SOP or desk guide for the program.”
- The OIG reports that it has received documentation on thirty 8(a)-certified firms that it earlier found did not meet all of the eligibility requirements, and plans to issue an analysis of that documentation in a forthcoming report.
- SBA validated an earlier OIG report by agreeing that 40 percent of the WOSB concerns that the OIG questioned were not, in fact, eligible to receive contracts under the WOSB program at the time of award.
- While the FY15 National Defense Authorization Act (NDAA) eliminated SBA’s self-certification process for the WOSB program, the SBA has not yet implemented a process to eliminate self-certification.
- “As a result of inadequate monitoring and controls, such as not implementing a full certification program, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible.”
- Until a new certification program required by the FY15 NDAA is implemented, “oversight of third-party certifiers and enhancing examinations of WOSB firms are needed to help ensure that only eligible businesses participate in the WOSB program.”
GAO’s complete report can be seen at: http://www.gao.gov/assets/690/685569.pdf.
Here is a list of earlier GAO audits of SBA’s small business programs, linked to the full reports:
- Women-Owned Small Business Program: Certifier Oversight and Additional Eligibility Controls Are Needed
- Small Business Administration: Steps Have Been Taken to Improve Administration of the 8(a) Program, but Key Controls for Continued Eligibility Need Strengthening
- HUBZONE Program: Fraud and Abuse Identified in Four Metropolitan Areas
- Small Business Administration: Agency Should Assess Resources Devoted to Contracting and Improve Several Processes in the 8(a) Program
- Small Business Administration: Additional Actions Are Needed to Certify and Monitor HUBZone Businesses and Assess Program Results