Focus on the 8(a) program: IG: 8(a)s with no biz plans got $93M

Also, 4 geographic areas have highest 8(a) caseloads; SBA has not compiled full 8(a) portfolio data since 2017

      A new report from the Small Business Administration’s Inspector General found that several 8(a) firms ineligible to receive 8(a) set-asides nonetheless won $93 million in such awards.

      Those firms failed to obtain SBA approval of their business plans, rendering them ineligible for 8(a) set-asides.

      The IG’s Feb. 14 report--an audit of SBA’s assistance to 8(a) firms--also revealed a broad range of gaps in the SBA’s administration of the 8(a) Business Development Program, including shortcomings in management, staffing and data collection, which apparently worsened in recent years.

      For example, the report notes that the SBA has not organized and submitted complete data on its 8(a) portfolio since 2017. The agency says it is hampered by problems with its Certify IT system.

Audit of SBA’s assistance to 8(a) firms

      The report primarily examined SBA’s business development assistance to 8(a) firms from 2018 to 2020. Of the 4,523 individually-owned and active 8(a) firms at that time, the IG selected 40 firms to review, mainly with large contracts, not a statistically representative sample.

      Of the 40, the IG identified 15 firms without SBA-approved business plans, making them ineligible for set-asides. Four of those ineligible firms received 8(a) set-asides totaling $93 million.

      The IG questioned SBA’s lack of consistency in reviewing and approving 8(a) plans, and its lack of performance measures to judge progress.

      “SBA’s business development process did not consistently allow for SBA or its stakeholders to determine whether firms met their individual goals to successfully complete the program. There was no mechanism in place to ensure that SBA consistently reviewed business plans and goals and then objectively monitored business development progress,” the report said.

      The IG made several recommendations to address the issues, and SBA agreed with some of the recommendations and rejected others. Other findings

      The report made other key findings:

• SBA consistently has missed annual deadlines for reporting to Congress on the current 8(a) portfolio and on former participants. SBA officials blamed data reliability problems and ineffective data collection through the Certify system. SBA has not submitted 8(a) portfolio data since 2017;
• SBA’s metric for measuring 8(a) program assistance was incorrect. In 2020, SBA reported it assisted more than 11,000 small firms through 8(a), but more than 7,600 of those were applicants whose only assistance from SBA was review of their applications. About 600 were approved to participate in the 8(a) program;
• Fifteen SBA district offices did not have a Business Opportunity Specialist assigned to the 8(a) firms they serviced. Those firms received services from employees in job roles without the required Level I Federal Acquisition Certification in Contracting; and
• The IG identified a very broad range of 8(a) firm caseloads for SBA business opportunity specialists in district offices, from fewer than 10 8(a) firms per specialist for DE, VT, ME, WY and RI, among others; to more than 70 8(a) firms per specialist for NJ; Richmond, VA; Seattle and DC Metro.

More Information:
IG report: https://bit.ly/3t4ytkr

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