Report Identifies SBA Challenges with Small Business Programs

November 8, 2018

The Small Business Administration’s (SBA) Office of Inspector General (OIG) published last month its Report on the Most Serious Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2019. OIG’s report, which has been issued annually since 2000, assesses SBA's programs and activities for significant risks, including those related to fraud, waste, error, mismanagement, and inefficiencies.

OIG's report identified eight challenges facing the SBA. The most-widely discussed challenge from small businesses’ perspective is SBA’s methods for tracking procurement data to reliably measure the Government’s achievement of small business contract goals in accordance with the Small Business Act. OIG found that federal agencies consistently have overstated their small business achievements. For example, the OIG said that the Department of Defense excluded certain types of procurements from its small business baseline.

Aside from skewed baselines, OIG said its audits and those conducted by the Government Accountability Office (GAO) identified widespread misreporting by procurement agencies, taking credit for making small business contract awards while large companies perform most of the work.

OIG in its report also pointed to challenges SBA faces in providing effective business development assistance to 8(a) firms, particularly in certifying that only eligible firms are admitted into and remain part of the 8(a) program. There has been a steady decline in 8(a) participants since 2010, so while SBA tries to implement a more streamlined application process to increase participation, OIG anticipates that relaxing application requirements may “erode core safeguards that prevented questionable firms from entering the 8(a) program.”

Most of the challenges addressed by OIG in its report have been carried over from previous years’ assessments, and SBA says its reform efforts are currently tackling these problems.

“ILMA continues to monitor changes in SBA policies and procedures, because many members rely on its programs,” said ILMA CEO Holly Alfano. “For example, we are mindful the SBA may include additional obligations on small businesses through greater scrutiny, additional representations, increased enforcement in small business size representations and area-office audits.”