8(a) Program Wide Open to Fraud, IG Says The 8(a) program is vulnerable to fraud because nobody is watching, SBA’s Office of Inspector General found. Contractors in the 8(a) program who violate regulations will not be caught because neither SBA nor agencies that award the contracts monitor the contractor to ensure, for example, that it is not operating as a front, the report said. One 8(a) company “appears to have contracted out 100 percent of the work” on all 13 of its contracts with one agency, valued at more than $2 million, the IG said. Neither the company nor the agency was identified. “Since Federal officials were not monitoring 8(a) [business development] companies’ compliance with 8(a) BD regulations, companies could violate the regulations and government officials would be unaware of the violations,” the report said. “When companies violate the regulations, it undermines the integrity of the 8(a) BD program and hinders the company from ultimately being able to compete in the mainstream of the American economy.” By law, SBA serves as the prime contractor on 8(a) contracts, but since 1998 the agency has delegated responsibility for awarding and executing the contracts to 26 agencies, including all of the largest ones. The IG said: “SBA did not ensure that procuring agencies monitored compliance with 8(a) BD regulations when completing 8(a) BD contracts. It does not appear that SBA performed any surveillance reviews to determine, in part, whether procuring agencies were ensuring compliance with these regulations.” “None of the 23 procuring agencies that we contacted had procedures or other guidance that would detect if companies were not complying with these regulations,” the report added, and SBA did not know that. Although the procuring agency signs the contract, the IG said, “As the prime contractor, SBA has ultimate responsibility for ensuring that companies comply with 8(a) BD regulations.” The IG recommended that SBA’s agreements with procuring agencies be changed to specify that the procuring agency is responsible for monitoring compliance with 8(a) regulations. It said SBA should conduct regular surveillance reviews to make sure the agencies are enforcing the regulations. Officials of SBA’s Office of Government Contracting and Business Development and its Office of Field Operations agreed with the recommendations. The IG report is available at http://sba.gov/ig/6-15.pdf.