SBA short on ANC 8(a) oversight

      The Small Business Administration has not followed through on multiple recommendations dating from 2006 to 2016 to keep better tabs on Alaska Native Corporations (ANCs) participating in the SBA’s 8(a) Business Development Program, a Government Accountability Office auditor testified at a House hearing.

      ANCs, which have a special status within the 8(a) program, are allowed to have complex ownership structures and multiple subsidiaries to receive federal set-asides and sole-source contracts.

      While SBA has implemented 15 of the GAO’s 21 past recommendations regarding oversight of ANCs in the 8(a) program, it has not followed through on several significant concerns, and as a result the programs continue to be at risk of non-compliance, the GAO said.

      An important recommendation from 2006 that has not been carried out consistently is for the SBA to regularly review whether the granting of large 8(a) sole-source and set-aside contracts to ANCs is negatively affecting other small business federal contractors in the 8(a) program. The SBA did perform a limited study in 2009 that showed no impact, but it should be performing more rigorous studies on the subject and doing them more often, GAO said.

      The other main problems are:

• SBA has incomplete information on ANC ownership;
• SBA has limitations in tracking and sharing revenue information on ANC-owned firms, noted by the GAO in 2016. While SBA plans to implement a system to correct the problem, the system is not operational to date;
• SBA’s Alaska District Office, which oversees the majority of ANCs, has had insufficient staffing for at least 10 years. In the most recent GAO review in 2016, the office had 1.5 staff members auditing 200 ANCs each, while there should have been five staffers reviewing no more than 100 ANCs each.
• SBA has provided inadequate program guidance to staff to interpret new regulations.

      The GAO testimony was at the Oct. 22 hearing of the House Small Business subcommittee on investigations, oversight and regulations. SBA officials did not testify at the hearing.

More information:
GAO testimony: https://www.gao.gov/assets/710/702178.pdf

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