Small Business Administration: Steps Have Been Taken to Improve Administration of the 8(a) Program, but Key Controls for Continued Eligibility Need Strengthening

SBA has conducted various training sessions starting on April 27, 2010, for personnel responsible for the delivery of the 8(a) program. The training is being conducted in an effort to provide guidance that will improve consistency and compliance with applicable rules and regulations, as well as the quality of annual reviews. According to SBA, the training addresses areas related to determining a participant's continued 8(a) eligibility (e.g., taking appropriate action to recommend firms for graduation when the firms exceed four of the seven industry size averages). Additionally, SBA indicated that it has set up a database on its share portal to closely monitor and daily track the status of annual reviews processed by the field offices. SBA also has a Field Accountability Review (FAR) program as an internal control mechanism to fulfill oversight requirements. According to SBA, one of the areas covered by the FAR onsite visits is the 8(a) annual compliance reviews conducted of participating firms. The FAR reviews are conducted on SBA district offices using audit-like steps to measure performance and compliance regarding federal statutory mandates, regulations, and SBA policy and procedures. The FAR process is intended to identify challenges that need to be addressed by management (and respective program offices).

SBA has subsequently issued revised regulations that provide additional 8(a) program continued eligibility requirements and criteria related to size standards, indicators of economic disadvantage (e.g., net worth, personal income, fair market value of assets), and other thresholds businesses must meet to remain eligible for the 8(a) program.

SBA stated that its Office of Field Operations (OFO) conducted a Workforce Analysis to determine staffing levels and resources needed to adequately serve 8(a) participants. In 2011 and 2012, the district director working group established the optimum number of firms to be assigned each BOS, revised position descriptions to clarify expactations, and developed new performance standards. Additionally, these changes were intended to improve overall 8(a) program delivery and enhance the provision of business development assistance by linking expecations directly to employee perfromance requirements.

Effective September 21, 2016, SBA adopted updated Standard Operating Procedures (SOP) that detail specific steps and timeframes governing a firm's failure to comply with annual review requirements and termination. The updated SOPs directly address the issue of a firm's failure to submit required documentation for the annual review process. According to SBA officials, SBA will monitor the implementation of the updated SOPs as part of its annual Field Accountability Reviews.

SBA has established a centralized process to collect and maintain accurate data on the firms participating in the Mentor-Protege Program. SBA maintains a list of offically approved mentor-protege agreements in an electronic data system for use by the SBA staff during their annual review process. Additionally, SBA has revised the 8(a) annual update form (Form 1450) to require firms to provide information on their mentor-protege program participation, which can be used by SBA staff during the annual review process.

SBA, in coordination with its Office of Inspector General (OIG), has established a hotline and an online mechanism to capture and record complaints about potentially ineligible firms participating in the 8(a) program, as well as other allegations involving fraud, waste, and abuse of SBA programs. According to SBA, monitoring of the hotline has been assigned to its Office of Program Review. SBA also noted that its Office of Business Development works with its OIG in resolving hotline complaints and referrals are made to the Office of Continuing Eligibility for further action, if necessary.