Report: SBA Should Better Educate 8(a) Applicants

The Small Business Administration could do a better job of educating applicants about its popular 8(a) loan program, but its effectiveness has been hampered by agency downsizing and budget reductions, according to a new government report (pdf).

The SBA's 8(a) program is designed to help small firms gain access to federal contracting opportunities and to help socially and economically disadvantaged small firms by providing management and contracting assistance. The federal government is supposed to award 23 percent of its total contract dollars to small businesses, but it has not achieved that goal.

The Government Accountability Office said the program is challenged by several factors - participants don't understand the program's purpose and requirements, the agency's staff has a diminished ability to conduct business development activities, the process to terminate firms is inefficient and there is a lack of routine program surveillance reviews.

"Years of SBA downsizing and budget reductions significantly reduced the resources available for these agency functions, including contracting review and monitoring," said the report.

The office also said the SBA has successfully put controls in place to determine if firms are eligible to enter the program, but applicants could benefit from participating in an information session or completing an assessment that rates their suitability to the program.

Staff workloads relating to the annual reviews appeared to be heavy, according to the report. GAO investigators spoke with 19 business development specialists at the agency. The number of firms for which they were responsible ranged from 36 to 162, with the majority of specialists responsible for 90 or more firms. However, portfolio size varies by district office because the concentration of 8(a) firms varies by district office, with the Washington Metropolitan Area district office having the highest number. In 2006, that office was responsible for more than 1,000 of the 9,667 firms in the program.

The SBA agreed with the GAO's recommendations and a letter from the agency is included on page 67 of the report.

The report was requested by Reps. Bennie Thompson (D-Miss.), chairman of the Homeland Security Committee, and Edolphus Towns (D-N.Y.), chairman of an Oversight and Government Reform subcommittee.

By Sharon McLoone |  November 24, 2008; 9:20 AM ET Data Points , Gov't Contracting , Watchdogs
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Based on my observations as a consultant who helps small disadvantaged companies apply for 8(a)certification, in my opinion the number one thing the Small Business Administration could do to make the 8(a) application process better for everyone--both for the business owners applying for certification and the SBA Business Opportunity Specialists who subsequently review their applications--would be to clearly specify *all* of the data and documents required for certification. Currently SBA websites provide only partial lists of required documentation, causing much confusion and adding to the burden of the Business Opportunity Specialists, who must generate long letters requesting additional items from business owners in order to render each application complete for review. Also, the list of documentation requirements should be updated regularly to reflect changes to 8(a) program processes generated by SBA Office of Hearings and Appeals (OHA) cases. The problem is not that applicants are uneducated about what the 8(a) program is; the problem is that the government has not provided applicants with enough up-to-date, detailed information on what specific data, documents, and eligibility criteria applicants must meet to participate in the 8(a) program. By implementing a few simple, cost effective changes like publicizing the full list of application requirements and keeping it current, the SBA would greatly assist both their customers and their hardworking, often overburdened staff.

Posted by: GCSInc | November 24, 2008 4:33 PM

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