Washington, DC - Today, the Government Accountability Office (GAO) issued a report requested by Rep. Edolphus Towns (D-NY), Chair, Subcommittee Government Management, Organization, and Procurement of the Committee on Oversight and Government Reform and Rep. Bennie G. Thompson (D-MS), Chair, Committee on Homeland Security and that examined how the Small Business Administration (SBA) sets small business contracting goals and the extent to which federal agencies met these goals; the role of SBA staff in supporting small business contracting at selected federal agencies; and SBA’s overall administration of the 8(a) program.

In FY2006, the federal government awarded $77 billion in contracts to small businesses. The dollar value of these contract awards would lead one to believe that the federal government is actively involved in assuring the participation of small businesses in the federal sector.  We asked the GAO to undertake this study because these dollar value amounts did not appear to tell the whole story.  We heard harrowing stories from our constituents about their experiences with the Small Business Administration, the agency responsible for providing technical assistance and loans.  Those anecdotal reports indicated that the dollar value of contracts was not an indicator of the quality of assistance provided by SBA. 

Unfortunately, this GAO report has confirmed these anecdotal accounts.  This report tells a story of an Administration that has allowed an agency to whither on the vine.  It details the inaction of agency officials who failed to serve the small business and minority business community.

GAO found:

Years of SBA downsizing and budget reductions have significantly reduced resources available for core SBA functions, including contracting review and monitoring;

• Drastic cuts in SBA employees responsible for reviewing subcontracting plans of large prime contractors have reduced the ability of  SBA to assure that prime contractors are subcontracting working to legitimate small businesses;
  
• Ineffective administration and understaffing of the 8a business development program have limited SBA’s ability to provide the business development services that form the core of the 8a program;
  
• Consistent understaffing has led to SBA’s inability to assure that other federal agencies comply with the procurement laws that govern the 8a program.

Rep. Towns (D-NY), stated “SBA’s failings cannot be allowed to go unaddressed. Small businesses are the engine of this nation’s economy.  Our oversight has shown that the Bush Administration has consistently undermined this agency.  I look forward to working with the Obama Administration to help restore this agency”.

“We cannot allow the important and necessary goals of the (8a) program to be undermined by the kind of inaction we have seen in this administration. Small, minority businesses must be given a fair opportunity to succeed.  This report demonstrates that this agency’s neglect compromised the ability of these businesses to fairly compete,” said Rep. Thompson.

###

Return to Congressman Towns' website