GAO: Budget, Staff Cuts Hurt SBA’s Effectiveness Deep cuts in budget and personnel “have hindered the ability of SBA staff to carry out core activities related to monitoring of federal contracting,” the Government Accountability Office found. In a wide-ranging report, GAO said practically every aspect of SBA’s government contracting programs has been affected, from the procurement center representatives who are supposed to advocate set-aside contracts to the monitoring of 8(a) companies to ensure that they comply with the rules. SBA’s workforce has been reduced by 26% since 2000. By some estimates its core operating budget has been cut by 40% during the Bush administration. Procurement Center Representatives These officials are responsible for reviewing contracts and identifying and recommending set-asides. SBA had 59 PCRs in August 2008, although some of them had other duties as well. The agency planned to hire seven more. GAO found that the average PCR was responsible for five different contracting shops, and some had as many as 12. As a result, GAO said the PCRs reviewed less than 1% of federal contracts in 2007. Auditors could not determine how many set-asides they recommended, because SBA stopped collecting the data several years ago. “Officials in three of the four area offices we visited explained PCRs were stretched too thin and were not able to cover all contracting activities effectively,” GAO said. “More specifically, five of the eight PCRs we interviewed were finding it difficult to provide adequate coverage to one agency, much less several.” Commercial Market Representatives CMRs are assigned to monitor prime contractors’ compliance with subcontracting plans. SBA currently has 31 CMRs, most of whom have additional duties. “CMRs with whom we spoke had large portfolios, ranging from approximately 90 to 200 prime contractors,” GAO said. A 2006 report by SBA’s inspector general found that less than half of the 2,200 large prime contractors were monitored and only one-fourth of those monitored received an on-site visit. Commenting on the personnel and budget constraints, GAO said, “SBA has reduced assurances that staff effectively are advocating for and monitoring federal contracting with small businesses.” 8(a) Program GAO found fault with the management of the 8(a) program from beginning to end. It said companies coming into the program often don’t understand how it works; they expect to be given contracts. Although SBA has set up online educational tools for prospective applicants, use of the tools is voluntary. GAO said SBA staffers spend so much time on annual reviews of 8(a) firms that they are able to do little business development activity. SBA reviews every company every year, and some business development specialists said conducting annual reviews consumed most of their time. GAO’s auditors found nearly one-third of the 8(a) companies they examined were not in compliance with program rules. Several had been out of compliance for years. But dismissing a company from the program is tedious and time-consuming. Because SBA rules require it to send repeated notices to a company before it is terminated, the terminations often take four months. SBA said it is working to simplify the process. Recommendations GAO recommended that SBA reallocate its scarce resources so that it can achieve program objectives. SBA agreed with the recommendations, and said some fixes were already in progress. But GAO noted that some of those changes had been in the planning stages for several years, with no action taken.