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27–254 2018

GAO AUDIT REVEALS HALF-MEASURES TAKEN BY

SMALL BUSINESS ADVOCATES

HEARING

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND

WORKFORCE

OF THE

COMMITTEE ON SMALL BUSINESS

UNITED STATES

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

HEARING HELD

OCTOBER 25, 2017

Small Business Committee Document Number 115–043

Available via the GPO Website: www.fdsys.gov

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(II)

HOUSE COMMITTEE ON SMALL BUSINESS

STEVE CHABOT, Ohio, Chairman

STEVE KING, Iowa

BLAINE LUETKEMEYER, Missouri

DAVE BRAT, Virginia

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa

STEVE KNIGHT, California

TRENT KELLY, Mississippi

ROD BLUM, Iowa

JAMES COMER, Kentucky

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico

DON BACON, Nebraska

BRIAN FITZPATRICK, Pennsylvania

ROGER MARSHALL, Kansas

RALPH NORMAN, South Carolina

NYDIA VELA ́ ZQUEZ, New York, Ranking Member

DWIGHT EVANS, Pennsylvania

STEPHANIE MURPHY, Florida

AL LAWSON, JR., Florida

YVETTE CLARK, New York

JUDY CHU, California

ALMA ADAMS, North Carolina

ADRIANO ESPAILLAT, New York

BRAD SCHNEIDER, Illinois

VACANT

KEVIN FITZPATRICK, Majority Staff Director

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel

ADAM MINEHARDT, Staff Director

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(III)

C O N T E N T S

OPENING STATEMENTS

Page

Hon. Steve Knight ................................................................................................... 1

Hon. Stephanie Murphy .......................................................................................... 2

WITNESSES

Mr. William B. Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office, Washington, DC ..... 4

Mr. Robb N. Wong, Associate Administrator, Office of Government Contracting and Business Development, United States Small Business Administration, Washington, DC ................................................................................... 5

Mr. Kevin Boshears, Director, Office of Small and Disadvantaged Business

Utilization, Department of Homeland Security, Washington, DC ................... 6

APPENDIX

Prepared Statements:

Mr. William B. Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office, Washington, DC ..................................................................................................... 15

Mr. Robb N. Wong, Associate Administrator, Office of Government Contracting and Business Development, United States Small Business Administration, Washington, DC ..................................................................... 38

Mr. Kevin Boshears, Director, Office of Small and Disadvantaged Business Utilization, Department of Homeland Security, Washington, DC ... 41

Questions for the Record:

None.

Answers for the Record:

None.

Additional Material for the Record:

GAO Report ....................................................................................................... 44

Responsible Business Lending Coalition ........................................................ 201

Social Security Administration ........................................................................ 233

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(1)

GAO AUDIT REVEALS HALF-MEASURES

TAKEN BY SMALL BUSINESS ADVOCATES

WEDNESDAY, OCTOBER 25, 2017

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS,

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE,

Washington, DC.

The Subcommittees met, pursuant to call, at 11:00 a.m., in Room

2360, Rayburn House Office Building, Hon. Steve Knight [chairman of the Subcommittee] presiding.

Present: Representatives Knight, Chabot, Comer, Evans, and

Murphy.

Chairman KNIGHT. Good morning. This hearing will come to

order. And we will see as members will be coming in as we get

going.

Okay, we have heard time and time again that small business

contractors are good for the government and good for the economy.

They are innovators. Job creators increase competition and save

taxpayer dollars in the process. That is why there is a statutory

goal of awarding at least 23 percent of prime contract dollars to

small businesses. Given their importance, we need to ensure that

they have every opportunity to compete.

Today we are here to talk about a critically important advocate

for small contractors within our federal procurement ecosystem, the

Office of Small and Disadvantaged Business Utilization, or

OSDBUs, operate on the front lines of government procurement,

acting as a protector and champion of small businesses within the

federal contracting space.

These offices are charged with the implementation and execution

of contracting assistance, related functions and duties, specifically

fighting against unjustified contract bundling. In order to protect

and preserve the interests of small businesses across the Federal

Government, each agency with procurement powers has its own

OSDBU office. Thus, it is important to access whether these offices

are faithfully executing the responsibilities given to them.

The GAO conducted a comprehensive audit of 24 federal

OSDBUs, accessing their compliance with the requirement laid out

in section 15(k) of the Small Business Act. While the report indicated widespread and varying degrees of noncompliance, some of

GAO’s results are particularly troubling. GAO found several agencies were not complying with specific functional requirements in

the Small Business Act. We will explore those in more detail today.

Furthermore, OSDBU directors are continuing to report to persons

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other than the head or deputy head of the agency, and some directors are holding collateral duties.

Each of the section 15(k) requirements serve a unique and essential function. Any noncompliance may impede the OSDBU’s ability

to effectively advocate for small contractors.

With that said, agencies responded to GAO’s findings in various

ways. Many agreed, stating that they would begin complying with

the section 15(k) requirements. However, some disagreed and argued that due to the nature of the requirement and the office, that

particular requirements are unsuitable for them. Some further argued that the internal structure of the agency poses barriers to

compliance, and that noncompliance can be attributed to the agency seeking efficiencies among its programs and offices.

Agencies should not be allowed to flout the law. It is our responsibility to conduct proper oversight by asking them to explain why

they are noncompliant, and explore options to remedy the situation. However, I also understand each agency has its own set of

challenges, particularly OSDBUs in some of the smaller ones. I

hope to gain a deeper understanding today of what these challenges might be.

Lastly, it is important for us to examine the Small Business Procurement Advisory Council, or SBPAC. Led by the SBA and comprised of OSDBU directors, SBPAC undertakes annual reviews of

OSDBU’s compliance with its statutory requirements. Discrepancies were found between GAO and SBPAC’s review. This is troubling since SBPAC’s reviews influence SBA’s small business scorecard grades for each agency. Inaccurate SBPAC reviews may ultimately impede Congress’ ability to conduct effective oversight over

agency OSDBUs. Understanding this, we should explore ways in

which the SBPAC review process can be improved and what additional controls can be put in place to ensure objectivity and fairness

in its future reviews.

Now, if you understood all that, great. We are halfway there.

Ultimately, the lessons we take from examining today’s GAO report will help us understand how OSDBUs impact small contractors nationwide. I look forward to hearing from our witnesses. We

will benefit from your perspective and I thank you for being here

today.

I now yield to the ranking member, Ms. Murphy, for her opening

statement.

Ms. MURPHY. Thank you, Mr. Chairman.

Each year the Federal Government procures more than $400 billion in goods and services from businesses around the country

through government contracts. The Small Business Act established

a governmentwide goal of awarding at least 23 percent of prime

federal contracts to small businesses to ensure that they receive

their fair share of federal contracting opportunities. Additionally,

Offices of Small and Disadvantaged Business Utilization, or

OSDBUs, were created at every federal agency to increase small

business participation in the federal procurement marketplace.

OSDBUs promote small business inclusion within an individual

agency’s mandate and ensure that small firms are treated fairly

and equitably in the contracting process. In this capacity, OSDBUs

serve as one of the primary advocates for small firms and offer

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them information and guidance on contracting opportunities, both

for prime contract awards and subcontract awards. Additionally,

they work with the SBA and other agency officials to determine

contracting goals for their agency. Overall, OSDBUs serve a critical

role in the procurement process because they are well positioned to

help small businesses compete more successfully for Federal Government contracts.

To ensure that these offices are fulfilling their mission, the GAO

has reviewed each agency’s compliance with their statutorily mandated functions. This hearing will address the most recent report

on efforts to encourage agencies to voluntarily comply with reporting structure requirements for the OSDBU director.

The GAO concluded that several agencies failed to comply with

the statute in a variety of ways, which may have interfered with

their ability to fully advocate for small businesses as Congress had

intended. Findings like these leave us all concerned about the lack

of assistance for small contractors, many of whom rely on OSDBUs.

With the recent growth in federal contract spending, small firms

should be receiving opportunities commensurate with this increase.

However, the dollars and actions awarded to small businesses have

been somewhat stagnant since fiscal year 2005. Moreover, small

business contracting programs are vastly underutilized as only 25

percent of these actions were awarded through a small business

set-aside or sole source contract.

Pursuant to statutory requirements, OSDBUs must work with

small businesses to ensure that they receive the maximum practicable opportunity to compete for contracts. This Committee

shares that priority and, therefore, must hold OSDBUs who do not

meet these statutory requirements accountable for their shortcomings. Today’s hearing will provide background and ideas needed

to guide the Committee as we draft legislation to address this problem.

I thank the witnesses for being here and look forward to gaining

more insight as to how we can make OSDBUs more effective in

meeting their mission. Thank you, and I yield back.

Chairman KNIGHT. Thank you very much. And if Committee

members have an opening statement prepared, I ask that they be

submitted for the record.

Okay. I am going to take a minute to explain the timing. Mr.

Shear and Mr. Wong know exactly what I am going to say. You

have got 5 minutes. The lights will come on, when it goes to yellow

you have a minute, and then just start wrapping it up when it gets

to red, and then we will keep this thing moving.

Okay. I would now like to introduce our witnesses. Our first witness is no stranger to us. It is Mr. William Shear, director of Financial Markets and Community Investment Team at the GAO.

Mr. Shear has testified before this Committee on a number of occasions, and been engaged with this Committee on a wide range of

small business topics. We again look forward to Mr. Shear and

hearing his perspective on finding this important GAO report and

we welcome you back today. It is always good to see you.

Our second witness today is Mr. Robb Wong. Mr. Wong serves

as the associate administrator for the U.S. Small Business Administration Office of Government Contracting Business Development.

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He is responsible for advocating for small businesses in the federal

marketplace and oversees more than $500 billion in total federal

spending. This will be Mr. Wong’s second time testifying before this

Subcommittee, and we are very happy that he has come back and

we look forward to your statements.

Our third witness today is a newcomer, so we will break you in

easy, Mr. Kevin Boshears. Mr. Boshears serves as the director of

the Department of Homeland Security’s Office of Small and Disadvantaged Business Utilization and has served in the position

since May of 2003. Prior to that he served as the director of Treasury Department OSDBU and worked as a procurement analyst,

providing guidance to small business specialists located in Treasury’s 12 bureaus. Mr. Boshears has enjoyed a long and respectable

career as an instructor, teacher, and dedicated public servant in

the small business procurement arena. Needless to say, he brings

a wealth of knowledge and experience to the table. We welcome you

to the Subcommittee, and we look forward to your statements

today.

Mr. Shear, you are now recognized for 5 minutes.

STATEMENTS OF WILLIAM B. SHEAR, DIRECTOR, FINANCIAL

MARKETS AND COMMUNITY INVESTMENT, UNITED STATES

GOVERNMENT ACCOUNTABILITY OFFICE; ROBB N. WONG,

ASSOCIATE ADMINISTRATOR, OFFICE OF GOVERNMENT

CONTRACTING AND BUSINESS DEVELOPMENT, UNITED

STATES SMALL BUSINESS ADMINISTRATION; KEVIN

BOSHEARS, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF HOMELAND SECURITY

STATEMENT OF WILLIAM B. SHEAR

Mr. SHEAR. Thank you. Chairman Knight, Ranking Member

Murphy, and members of the Subcommittee, I am pleased to be

here today to discuss our recent work on the Office of Small and

Disadvantaged Business Utilization, often called OSDBUs.

The Federal Government has a longstanding policy to maximize

contracting opportunities for small businesses. To help increase

small business visibility among federal agencies, in 1978, Congress

amended the Small Business Act to require that all federal agencies with procurement powers establish an OSDBU to advocate for

small businesses. Section 15(k) of the Small Business Act contains

provisions related to OSDBUs.

We recently completed a report containing findings from an extensive compliance audit where we examined 15(k) requirements at

24 agencies. In addition, we examined the review by the Small

Business Procurement Advisory Council, called the SBPAC, of

OSDBU compliance with section 15(k) requirements. This statement is based on our recent report.

With respect to our examination of compliance, demonstrated

compliance with selected section 15(k) requirements for the

OSDBU varied across the 24 agencies surveyed. Examples of GAO

findings include the following.

Five agencies did not demonstrate compliance with the requirement to limit collateral duties of OSDBU directors.

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Six agencies did not demonstrate compliance with the requirement for compensation and seniority of OSDBU directors.

Nearly all agencies, 23 to be specific, demonstrated compliance

for four requirements on OSDBU director experience, supervisory

duties of the OSDBU director, identifying and addressing significant bundling of contracts, and providing assistance on payments.

Fifteen agencies demonstrated compliance with the requirement

to respond to notification by small business that a solicitation unduly restricts the ability of the small business to compete for the

award.

For the one requirement for which we reviewed only 10 agencies,

four OSDBU directors did not report directly to the agency head or

deputy head.

SBA chairs SBPAC and its members are nearly all OSDBU directors. With respect to our examination of the SBPAC’s annual peer

review, we found that SBA’s assessment of compliance differed

from ours. Specifically, when we considered the same section 15(k)

requirements as the SBPAC review, our compliance determinations

did not align with SBPAC’s 2016 organizational success factor

scores. Other than reviewing documentation agencies choose to provide, SBA’s guidance for the review panel does not indicate any

other means by which reviewers could obtain or clarify information

about agencies’ compliance with section 15(k) requirements. We

recognize that neither the SBPAC nor any other entity, including

ourselves, can conduct this type of compliance audit that we have

just completed. However, we do think that the SBPAC should consider our findings as it continues to work on a more in-depth review process.

For the 19 of 24 agencies that did not demonstrate compliance

with section 15(k) requirements, we recommended that they comply

or report to Congress on why they had not complied, including

seeking any statutory flexibilities or exceptions believed appropriate. We made one recommendation to SBA to include more detailed guidance to SBPAC members for the annual reviews.

Chairman Knight, Ranking Member Murphy, and members of

the Subcommittee, this concludes my statement. I would be pleased

to answer any questions that you may have.

Chairman KNIGHT. Thank you, Mr. Shear.

And Mr. Wong, you are now recognized for 5 minutes.

STATEMENT OF ROBB N. WONG

Mr. WONG. Thank you. Good morning.

Thank you, Chairman Knight. Thank you, Ranking Member

Murphy. I appreciate the opportunity to testify today, particularly

alongside Mr. Bill Shear from GAO and my colleague, Kevin

Boshears of DHS. SBA is fortunate to have a good and constructive

relationship with both of them.

In my role as Associate Administrator for SBA’s Office of Government Contracting and Business Development, I also chair the

SBPAC, which works collaboratively with the OSDBUs to achieve

the governmentwide small business goals. I hope to bring a fresh

set of eyes and perspective.

When I reviewed the GAO report I made several observations.

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One, I see that the government, through the hard work of the

OSDBUs, has hit its small business goals for prime contracting in

each of the past 4 years. That is a noteworthy achievement because

these are seasoned, committed, small business professionals and

they do their job well.

Two, the GAO reports that several agencies and their OSDBU

programs are not in overall compliance with portions of the 15(k)

requirements. This is a concern to me, particularly as a lawyer. I

believe that full compliance with the law is essential.

In my opinion, the SBPAC must work collaboratively together to

balance both of these needs.

The purpose of the GAO report in this hearing is to make the

OSDBU program function even better, and SBA certainly shares

that goal. Of the 20 recommendations made in the report, there is

only one for SBA. The report recommends that we provide more detailed guidance in our SBPAC review process. Otherwise, the remaining recommendations involve other agencies. For SBA’s part,

we have already begun to implement changes in our review process

through changing the scorecard weighted goals and percentages as

outlined in my written testimony. Also, we have implemented peer

review changes in factoring in compliance requirements as part of

our scorecard process. Those changes will be in place for the upcoming fiscal year 2017 evaluations.

Aside from the scorecard and peer review, I also mentioned in

my written testimony that I intend to use the SBPAC to increase

collaboration between SBA and the OSDBU directors. I want us to

share best practices and opportunities to increase access across

agencies. The bottom line is that I want us collectively to best serve

our small business customers.

Thank you, Mr. Chairman, and members of the Committee for

your continued interest in this program. I look forward to your

questions, and I yield back the balance of my time. Thank you.

Chairman KNIGHT. Thank you, Mr. Wong.

And Mr. Boshears, you are now recognized for 5 minutes.

STATEMENT OF KEVIN BOSHEARS

Mr. BOSHEARS. Chairman Knight, Ranking Member Murphy,

and distinguished members of the Subcommittee, I welcome the opportunity to discuss with you today the Department of Homeland

Security’s, DHS, award-winning small business contracting program.

Since its inception, DHS has always been committed to small

business inclusion in its contracting program. And as the director

of the Office of Small and Disadvantaged Business Utilization,

OSDBU, I work throughout the department to promote and develop

strategies for small business participation in the DHS contracting

program and with other OSDBU directors, SBA and the SBPAC, to

promote federal-wide small business participation.

Some of the innovative and inclusive initiatives DHS uses include maintaining a web presence with helpful and timely resources for small businesses, publishing an annual forecast of contracting opportunities, and setting and monitoring DHS-wide and

component small business goals.

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As this Committee knows very well, small businesses make substantial contributions to the American economy and taxpayers

through innovation, job creation, cost savings, tax revenue. For

these reasons, the DHS OSDBU plays a key role in the Department’s efforts to promote meaningful communications with industry. DHS is proud of its successful small business contracting program, which has benefitted from strong support from DHS senior

leadership. For example, Acting Secretary Elaine Duke and Undersecretary for Management Claire Grady, the senior official performing the duties of the deputy secretary, are both long-time supporters of the federal small business contracting program throughout their distinguished careers. They continue to offer strong support to the DHS OSDBU in their current positions. DHS is also

proud of its results from the SBA’s annual small business procurement scorecard. DHS has received a grade of A or A+ each year between fiscal year 2009 and fiscal year 2016, making DHS the largest federal agency to have such a consistent success record.

Finally, as evidence of the Department’s efforts to maintain a

small business contracting program that promotes small business

prime contracts and small business subcontracts under DHS large

business prime contractors, DHS demonstrated compliance with all

of the section 15(k) requirements selected by GAO for the review

during a recent audit that is the topic of this hearing.

Chairman Knight, Ranking Member Murphy, and distinguished

members of the Subcommittee, thank you again for the opportunity

to testify today on this important topic. I look forward to your questions. Thank you.

Chairman KNIGHT. Quick and to the point.

We do have the Chairman of the Small Business Committee here

with us today, and we will ask him for all of the really smart questions to be coming out.

I will start questions, and I will recognize myself for 5 minutes.

So I will ask just kind of a general question across the board,

and Mr. Shear, we will start with you. Some agencies have stated

in response to the GAO’s findings that certain functional requirements are unmet because those functions are performed by another

office within the agency. In light of other competing priorities and

limited budgets, should this be of concern, particularly of small

agencies?

Mr. SHEAR. The answer to that is yes. I think that whenever

any agency is not in compliance—cannot demonstrate compliance—

it raises the concern because the requirements are there to serve

a purpose. I was very glad to hear Robb Wong say that. It is important that agencies be in compliance. One of the things that we did

in our interactions with the agencies and that we raise as possibility in terms of asking for, let’s say, exceptions or things of that

nature, is that there can be circumstances in which it might make

sense to create an exception or to create some flexibility around

some requirements. But it is at the starting point, and many times

at our finishing point, there is the lack of compliance, of demonstrated compliance that is a concern for us.

Chairman KNIGHT. And let me take that a little further. And

Mr. Wong, maybe you can help me out with this. What happens

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with noncompliance? What is the mechanism now? If you are finding out there is noncompliance, what is the next step?

Mr. WONG. So I can really only speak to the way that I have

been handling this for the last couple of months. But the first thing

I have done is try to educate myself about how many Agencies have

been out of compliance and then we seek to wonder why. But in

general, I will assure you, at least at this point, that from my dealings with the OSDBUs, they are committed small business professionals, and I do not think that anyone willfully wants to be or is

trying to willfully flout the law. But when we do find someone that

is out of compliance, I think that it is important that they become

compliant. I do believe that if an exception is necessary, then we

can obviously advocate for that. But in general, if we find that

somebody is out of compliance, we will certainly try to, in my mind,

I look at things that because all of the 15(k) requirements are complied with at some point by all of the agencies that we have, so

they are a good roadmap and they certainly serve a purpose. So

what we want to be able to do with the agencies that are out of

compliance is to educate them by collaborating with them with best

practices and trying to use the SBPAC to share information to help

others that are out of compliance to get in compliance by following

the example of other agencies that have been able to comply.

Chairman KNIGHT. And I think that is the perfect answer. I

really do. I think that so many small businesses, you know, whatever their dealings are with government, one of their issues and

one of the things that they talk to us about is government is not

working with me or they are not trying to help me and figure out

why I am not doing the right thing or why I missed something. I

could talk for my home State in California. I dealt with an awful

lot of agencies that were more on the heavy-handed instead of the

education. And a small business is in business of making money so

that they can produce jobs and they can produce opportunities. And

so I think that part of our job, or at least the government’s job,

should be let’s help them get to a place where they will be in compliance and they will understand what we are trying to do and why

this is so important. So I think that is a perfect answer.

One last question and then I will go to Ms. Murphy. Given that

federal contracting has moved towards practices that may be unfriendly to small business, such as strategic sourcing and category

management, how important do you think these section 15(k) requirements are to address concerns regarding small businesses?

And I will go to Mr. Boshears or Mr. Wong or whoever wants to

jump on in on that.

Mr. BOSHEARS. In my experience at DHS, and I believe this

will relate to your question about strategic sourcing.

I am sorry.

Chairman KNIGHT. No, you are good.

Mr. BOSHEARS. In regard to your question about strategic

sourcing and category management, I will reflect just briefly on my

experience at DHS with regard to section 15(k). What I have observed is that being in compliance with section 15(k) establishes

the foundation and the framework to implement the small business

contracting program. I found that to be very important in my work.

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And then in terms of strategic sourcing and category management, we have to use the current federal contracting system as our

launch pad to understand how small businesses can participate in

that environment. For a small business advocate, the small business constituents that are interested in doing business with a federal agency like mine, DHS, or any federal agency, what they want

to know about is how can they identify meaningful opportunities to

participate? So if that comes in the form of strategic sourcing, they

would want to learn about that, for example. If they are looking at

the way an agency has bought something in the past, they want

to consider that. So all of these types of things factor into their decision on how to participate. So with this new landscape, those

types of things will still come into play.

Chairman KNIGHT. Thank you very much.

And I am going to move on to Ms. Murphy. And I recognize her

for 6 minutes and 32 seconds.

Ms. MURPHY. Thank you, Mr. Chairman.

Mr. Shear, the OSDBU reporting structure described in section

15(k)(3) of the Small Business Act is in place to ensure that those

charged with advocating for small businesses are in a position to

influence contracting opportunities. In multiple GAO reports concerning OSDBUs, you have emphasized the correlation between an

office’s reporting structure and its ability to effectively advocate on

behalf of small businesses. Can you elaborate on how an OSDBU’s

reporting structure can affect an agency’s ability to achieve small

business contracting goals?

Mr. SHEAR. Let me use one example that comes to mind immediately and that is something that Kevin Boshears was just talking

about, strategic sourcing. So even though the report I am discussing here is not addressing strategic sourcing, certainly a lot of

the apparatus around OSDBUs created by the Small Business Act

is to give a certain stature to the OSDBU director to really affect,

to really have resources in place to reach out to small businesses,

to influence policy of the agency, whether it is talking about market research or whatever other mechanisms there are, to make

sure that there are appropriate opportunities for small businesses.

So let me just refer back to we did a report now 3 years ago on

strategic sourcing and inclusion of small business. So from the moment of going into DHS—I hope I do not embarrass you, Kevin—

but I will just say it was clear that he was at the table with the

DHS strategic sourcing working group and even making decisions

of when strategic sourcing would be used. So that stature became

even more important than when we talk about just simple single

award contracts. It became very important that way. It became

very important that they were using set-asides within strategic

sourcing in a way that I thought was more pronounced than some

of the other agencies used. So that gives an example of where this

structure can be very effective. So, I think I will end it there unless

you want to ask a follow-up.

Ms. MURPHY. No, thank you. I appreciate that.

Well, Mr. Boshears, first, let me commend your office for being

the highest complying OSDBU, and thank you for being here. Are

there, from your perspective, having run a successful program, are

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there any statutory changes you would recommend to increase utilization of small business contracting programs?

Mr. BOSHEARS. Thank you for the question. In my work effort,

I get a tremendous amount of feedback directly from small business owners and representatives themselves. So over the past year

or two, when I am having these discussions, and I have them like

on a daily basis, it is one of the joys of my work. I listen for patterns. You know, if companies are bringing up the same topic to

me repeatedly from different individual companies, it gets my attention. So I would say over the past year or so, maybe a 2-year

period, what the small business that I have spoken with, they want

to be able to continue to have meaningful opportunities to participate.

Like, for example, suppose a small business has served as a

prime contractor on a small business set-aside contract and they

have done a really, really good job, they want to be able to have,

at least make an effort to keep doing that contract. Like, if there

is a recompetition later for the same work. Well, in areas like strategic sourcing or category management or governmentwide contracts, if the agency is changing contracts, you know, moving from

one method to another and that small business is not on the second

contract of choice, then the company does not have an opportunity

to, in their words, rebid their work. So these are the types of things

that have come on my radar screen in the past couple of years because I have heard that from hundreds of companies in my daily

and weekly phone calls and email exchanges. So as Mr. Shear mentioned on one of GAO’s reviews from several years ago on strategic

sourcing, when these discussions are taking place, it is very important for the OSDBU director to use Mr. Shear’s words, ‘‘have a seat

at the table.’’ Because, see, that is the only way in my experience

one can be an effective advocate.

You see, I hold the small business community in such high regard. At DHS, for over 14 years now, the small business community, they have done a magnificent job for us in support of our mission and they are very, very good in what they do in a wide variety

of industries. So I want to be able to continue to offer these meaningful opportunities to participate.

Experienced small business owners will tell you they understand

that there are different contract vehicles and different ways of buying for the Federal Government, and they will tell you, and they

try to keep abreast of it. But it is very important to keep that

meaningful opportunity to participate because that is where they

flourish. And that is where all the good things happen as a result

of securing those contracts.

Ms. MURPHY. Great. Thank you very much. And I will yield

back.

Chairman KNIGHT. Okay. And we will go to Mr. Comer for his

questions.

Mr. COMER. Thank you, Mr. Chairman.

Mr. Wong, first question. Once the SBPAC finds that a statutory

requirement is not met by OSDBU, what happens next? Does the

SBA conduct any oversight or investigation into identified instances of noncompliance?

Mr. WONG. Thank you for the question, Congressman.

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As I said before, I can only tell you what I have done over the

last couple of months since I have been there. But compliance with

the law is critical to me. I agree with Kevin and Mr. Shear that

it provides a framework upon which we can analyze the small business community and that is the way that we can help them the

best. But when we find somebody that is out of compliance, honestly, the first question I want to know is why.

And what I have found is that in general, if somebody is out of

compliance and wants to be in compliance or needs to be in compliance, then we have to be collaborative. We are not in a supervisory

position and we do not want to be I do not think, but we have to

work collaboratively as a community to work together to bring

them in compliance. One of the things I had mentioned before is

we like to team them with other agencies that are in compliance

with those goals so that they can share best practices and simply

just strategize on how to become compliant and still be effective.

Mr. COMER. Okay. In the memo it says, ‘‘Across the board,

agencies cited inadequate staffing levels, organizational structural

barriers, and limited budgets as reasons for noncompliance.’’ Could

anyone on the panel answer this? If anyone would like to elaborate

on any of those particular issues and what stands out the most.

Would anyone like to comment on that?

Mr. SHEAR. Hearing silence I will be brave and try to answer

the question.

Mr. COMER. There you go.

Mr. SHEAR. No, I appreciate the question. It is a very good

question. Where I think that for some agencies that have lower levels of contracting activity, some of the granularity in the requirements might be something that this Committee might want to consider in its interactions. But for the most part I come back to what

has already been stated. There is a severe concern, as a starting

point, and many times as an ending point, there is a severe concern

when an agency is not in compliance, especially I would say to

some of the larger issues, whether it is dealing with bundling,

whether it is the level of seniority of the individual, the reporting

relationship, those are very important factors here.

And even though we had agencies that came forward and said

this requirement, let’s just say for example on collateral duties,

does not make sense for us, and we can be sympathetic to a point

with that and really consider what they are saying. I would be glad

to answer questions about that type of situation.

There is a real concern when it is, to use an expression that

Kevin just used, having a place at the table, of really being an advocate, it is a concern. And when we asked, at every interview we

had with agencies, so across the 24 agencies, we asked the question, ‘‘Are there any of these provisions in the Small Business Act

that we are examining that you think are less important than some

of the others and maybe should be considered for statutory

changes?’’ We got silence.

So the only time where we got input directly saying something

had to be done, it was very specific to that agency. And so there

was a lack of the agencies coming forward and just saying this is

what we think should be done, at least for the smaller contracting

shops.

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Mr. COMER. Thank you, Mr. Chairman. I yield back.

Chairman KNIGHT. Mr. Shear, just real quickly, or Mr. Evans,

when the GAO does its audit report and it comes out, how much

of the findings can you then go back to the agencies and say these

are the corrections that we think are the best corrections or the

best steps you can take? Or is it up to the agencies to figure out

what steps you need to take to correct this?

Mr. SHEAR. It is a great question. Okay, thanks. It is a great

question. I will answer it in a general way first.

Whenever we make recommendations, agencies are not required

to implement our recommendations, but they tend to have a pretty

high rate of addressing our recommendations. So in this case we

have one case where we have not been very successful. I mean, our

last OSDBU report was now 6 years ago. And in our recommendations we had a statement that the agency should come into compliance or explain to Congress why not. So the general answer is we

are always willing to work with agencies and we do not want to

make recommendations that micromanage them, that says you

shall do this, such as stating you should put this person in place

or you should institute this specific procedure. But we try to make

them general enough that they can incorporate our recommendations within the context of how they run their agencies.

So when we are asked, and I note there is a lot of interaction

between SBA and us on open recommendations, when they ask us

we will say these are the types of things that we are looking for.

We tend to look for general actions that are in the spirit of recommendations, of taking actions to address deficiencies that we

have identified in our reports. So I know this is a very high-level

answer, but that generally illustrates how things can work with

agencies, whether it is in this arena or with other types of recommendations.

Chairman KNIGHT. Okay. Very good.

Mr. Evans, you are recognized.

Mr. EVANS. Thank you, Mr. Chairman.

This is to the panel. How are each of you and your entities engaged with efforts to supply diversity and diversity among your

outreach within the contracting programs?

Mr. SHEAR. I feel like it is a question that is more about what

OSDBUs and the agencies do in their small business programs.

Mr. EVANS. Correct.

Mr. SHEAR. I will just state that we, on behalf of this Committee, and I have testified on HUBZone and on different programs

that are meant to reach out to different socioeconomic categories,

we have certainly done work on the 8(a) business development program and those various programs. So we evaluate. So I always say

we evaluate. We do not actually go out and administer anything.

But we have had a focus over the years with our body of work on

how well those programs work.

Mr. WONG. Thank you for the question. I would say from SBA’s

point of view, we do focus on the how. And my job that I look at

very simply is we want to make it easier for the public and the

companies who want our certifications, make it easier for them to

get them. But I think that we also have a responsibility to help

them to make more money by using them. So I take a look at the

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13

socioeconomic categories every day and I have a lot of familiarity

over the last 25, 30 years with those programs. I am constantly

thinking of additional things, either through process, through policy, or through advocacy to make more opportunities, and effectively, to increase the supply of contracts that can be executed by

these small businesses. I can certainly talk to you at another time

about the specific things I have in mind. Thank you.

Mr. BOSHEARS. At DHS, for the past 14 years, we have a history of supporting all of the small and socioeconomic programs

available to the Federal Government. And we found that to use the

private sector phrase, ‘‘supplier diversity,’’ that that has been a tremendous strength to us. By actively engaging with the small business community as part of our overall effort on industry engagement and participating in a number of outreach activities all

around the country, including some we host ourselves, we found

that by helping to identify these meaningful opportunities, supporting the various small business set-aside programs, we have a

very diverse pool within our small business contractor base that

has stepped forward, took a very sincere effort to understand the

DHS mission, and then through their contract work, in effect, support the mission. So it has been a tremendous benefit to us, and

we certainly plan to continue that effort.

Mr. EVANS. Let me just follow up a little bit then. What areas

do you feel can be strengthened?

Mr. BOSHEARS. Within our program?

Mr. EVANS. Yes.

Mr. BOSHEARS. Well, we always want to look for improvement.

What I would like to see within the DHS framework is really a continuation of things that we started years ago, but that we are putting more emphasis on now. Like, for example, industry engagement and communication with the industry is important for all size

businesses who want to operate in federal contracting, but it is especially important for the small business community because they,

again, I talk to so many companies, they share their thoughts with

me so they are always with me. You know, they do not have big

marketing budgets. You know, they have scarce resources so they

have to find ways to be effective in those efforts.

So one of the things that they have told me is that if by targeting

three to five federal agencies as potential customers, they can focus

their efforts. And with the consideration of various teaming arrangements that are very common in federal space, small businesses can actively engage with target agencies, including DHS as

an illustration. And then on the federal and DHS side of the fence,

if we can continue to identify these meaningful opportunities that

I mentioned briefly a few minutes ago, we can continue to do this.

And again, it is a benefit to DHS because these firms help us meet

the mission.

Mr. EVANS. Thank you, Mr. Chairman. I yield back the balance.

Chairman KNIGHT. Thank you, Mr. Evans.

Well, it has been a fruitful meeting. I appreciate all the members. I think Ms. Murphy and I have worked kind of in a teamwork

to try and understand some of these issues and try and correct

some of these problems. Some of these are very difficult and they

are difficult to understand. You throw out a thousand acronyms at

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us. It is like being on Armed Services and trying to understand everything that is going on. But the crux of it is understanding what

small business is going through and how small business can kind

of work through a problem, work through an issue.

And I love what Mr. Wong said. Be educated on something and

try not to make the same mistake and be able to comply in the future. So it is very important that we talk about this and that

maybe we make some changes to this.

So today’s hearing is a perfect example of the critical oversight

function of this Subcommittee on Contracting and Work Force. It

is the responsibility of the OSDBUs to advocate for small contractors, and it is Congress’ duty to ensure that these statutory responsibilities are being met. GAO’s work with this report and the valuable testimony from all of our witnesses allows us to identify where

the gaps are and pinpoint weaknesses where legislative action or

continued oversight may be necessary. What we have learned today

will be critical in promoting small business success in the federal

contracting space.

I ask unanimous consent that members have 5 legislative days

to submit statements and supporting materials for the record.

Without objection, so ordered.

This hearing is now adjourned.

[Whereupon, at 11:51 a.m., the Subcommittee was adjourned.]

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A P P E N D I X

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For Release on Delivery 

Expected at 11:00 a.m. ET 

Wednesday, October 25, 2017 

GA0-18-191T 

United States Government Accountability Office 

Testimony 

Before the Subcommittee on 

Contracting and Workforce, Committee 

on Small Business, House of 

Representatives 

SMALL BUSINESS 

CONTRACTING 

Actions Needed to 

Demonstrate Compliance 

with Requirements for 

Small Business Advocates 

Statement of William B. Shear, Director, Financial 

Markets and Community Investment 
16

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SMALL BUSINESS CONTRACTING 

Actions Needed to Demonstrate Compliance with 

Requirements for Small Business Advocates 

What GAO Found 

Demonstrated compliance with selected section 15(k) requirements for the Office 

of Small and Disadvantaged Business Utilization (OSDBU) varied across the 24 

agencies GAO surveyed_ Examples of GAO findings (which relate to both 

OSDBU directors and OSDBU functions) include the following: 

Five agencies did not demonstrate compliance with a requirement to limit 

collateral duties of OSDBU directors. 

Six agencies did not demonstrate compliance with a requirement for 

compensation and seniority of OSDBU directors_ 

Twenty-three agencies demonstrated compliance for four requirements on 

OSDBU director experience, supervisory duties of the OSDBU director, 

identifying and addressing significant bundling of contracts (conso!ldation of 

procurement requirements into a solicitation for a single contract), and 

providing assistance on payments. 

Fifteen agencies demonstrated compliance with a requirement to respond to 

notification by a small business that a solicitation unduly restricts the ability of 

the small business to compete for the award. 

Four OSDBU directors did not report directly to the agency head or deputy 

head (the one requirement for which GAO reviewed only 10 agencies). 

Noncompliance with section 15(k) requirements may !lmit the extent to which an 

OSDBU can advocate for small businesses. For example, OSOBU influence in 

agencies might be limited if directors reported to lower levels of management. 

Directors with other duties might be less able to carry out all section 15(k) duties 

Results of the Small Business Procurement Advisory Council's (SBPAC) annual 

review of compliance with section 15(k) requirements differed from GAO's 

assessments. The Small Business Administration (SBA) chairs SBPAC, and its 

members are nearly all OSDBU directors. AH agencies in the most recent review 

scored 94-98 percent (of 100 percent). But where GAO's review considered the 

same section 15(k) requirements as the SBPAC review, GAO found some 

agencies had not demonstrated compliance with multiple requirements. Other 

than reviewing documentation agencies choose to provide, SBA's guidance for 

the review pane! does not indicate any other means by which reviewers could 

obtain or clarify infonnation. GAO's review included follow-up discussions with 

agency officials to obtain or clarify information. 

SBA has been developing a new review process, but preliminary information 

GAO reviewed indicates the process will be similar to the current one. According 

to federal standards for internal control, management should use quality 

information to make informed decisions. Under the new process, the review 

results (which SBA uses in another process that determines an agency's overall 

grade for small business contracting) also wH! carry twice as much weight as 

under the current process-underscoring the importance of the review results. A 

new review process substantially similar to the old one (especially in relation to 

guidance) may not provide a reliable indicator of OSOBU compliance with section 

15(k) requirements. 

------------- United States Government Accountability Office 
17

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Chairman Knight, Ranking Member Murphy, and Members of the 

Subcommittee: 

I am pleased to be here today to discuss our recent work on the Offices of 

Small and Disadvantaged Business Utilization (OSDBU). As you know, 

the federal government has a long-standing policy to maximize 

contracting opportunities for small businesses. To help increase small 

business visibility among federal agencies, in 1978 Congress amended 

the Small Business Act to require that all federal agencies with 

procurement powers establish an OSDBU, which would advocate for 

small businesses in procurement and contracting processes.' Section 

15(k) of the act contains provisions related to OSDBUs. 

The National Defense Authorization Act for Fiscal Year 2013 further 

amended the Small Business Act with provisions intended to strengthen 

the position of the OSDBU director (director-related requirements). 

Section 15(k) of the Small Business Act also includes required functions 

and duties of OSDBUs (functional requirements). 

My testimony is based on our August 2017 report (GA0-17-675) that 

examined (1) the extent to which selected federal agencies demonstrated 

compliance with five section 15(k) requirements relating to the OSDBU 

director; (2) the extent to which selected federal agencies demonstrated 

compliance with eight section 15(k) requirements on OSDBU functions or 

activities; and (3) the review by the Small Business Procurement Advisory 

Council (SBPAC) of OSDBU compliance with section 15(k) 

requirements. 2 

For the August 2017 report, we reviewed 24 agencies (civilian and 

military). For one director-related requirement (that the OSDBU director 

report to the agency head or deputy head), we reviewed 10 of the 24 

1

The provisions for OSDBUs were further amended, including in the National Defense 

Authorization Act for Fiscal Year 2013 (Pub. L No. 112-239, § 1691, 126 Stat 1632,2087 

(2013)); the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. No. 114-92, 

§ 870, 129 Stat 726, 938 (2015)); and the National Defense Authorization Act for Fiscal 

Year 2017 (Pub. L. No. 114-328, §§ 1812, 1813, 1821, 130 Stat 2000,2652, 2654 

{2016)). Our report, upon which this testimony is based, did not include amendments in 

the National Defense Authorization Act of Fiscal Year 2017 because the statute was 

amended during the time GAO was conducting the report review. 

2See GAO, Small Business Contracting: Actions Needed to Demonstrate and Better 

Review Compliance with Select Requirements for Small Business Advocates, 

GA0-17.$75 (Washington, D.C.: Aug. 25, 2017) 

Page 1 GA0-18-1911 
18

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Background 

agencies and analyzed reports, position descriptions, and performance 

appraisals and interviewed OSDBU directors and agency officials. For the 

rest of the requirements in our review, we surveyed the 24 OSDBU 

directors, reviewed agency documents, and interviewed OSDBU directors 

and agency officials. To make our determinations of demonstrated 

compliance, we used agency documentation, survey responses, follow-up 

with agency officials, or some combination of the three. See appendix I 

for more information. 

The work on which this statement is based was performed in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on 

our audit objectives. 

Section 15(k)(3) of the Small Business Act, as amended, requires that 

OSDBU directors generally be responsible only to and report directly to 

agency heads or their deputies. 3 The purpose of this provision is to help 

ensure OSDBU directors have direct access to agencies' top decision 

makers to advocate effectively for small businesses. Subsequent 

amendments specify minimum seniority or pay levels for directors, 

enumerate qualifying work experience, specify who must sign the 

director's performance appraisals, and outline position responsibilities. 

Section 15(k), as amended, also establishes functions for which OSDBU 

directors are responsible, which include identifying proposed solicitations 

that bundle contract requirements; working with agency acquisitions 

officials to revise solicitations to increase the probability of small business 

participation; and assisting small businesses in obtaining payments from 

3

AU references to section 15(k} are to section 15 of the Small Bus1ness Act, codified at 15 

u.s. c. § 644(k). 

Page Z GA0~1B-191T 
19

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Agencies 

Demonstrated Mixed 

Levels of Compliance 

with OSDBU Director 

Requirements 

agencies. 4 OSDBUs also are to provide senior agency officials with 

advice on acquisition strategies and market research. See appendix II for 

more information. 

SBPAC annually reviews each OSDBU to determine compliance with 

section 15(k) requirements' The reviews are used to help determine the 

annual scorecard grade that the Small Business Administration (SBA) 

gives each agency. 6 SBPAC also must report the results of the review to 

the House and Senate Small Business committees. 

Of the five director-related requirements we reviewed, the level of 

demonstrated compliance varied, but was not universal for any one 

requirement (see table 1): 

Four of the 10 agencies we reviewed for the requirement that the 

director report to the head or deputy head of the agency did not 

demonstrate compliance. 

Twenty-three of the 24 agencies we reviewed demonstrated 

compliance for two requirements on director experience and 

supervisory duties. 

Nineteen of 24 agencies demonstrated compliance with a requirement 

limiting collateral duties of the director. 

4The Small Business Reauthorization Act of 1997 defines the bundling of contract 

requirements as the conso!ldatlon of 2 or more procurement requirements for goods or 

services previously provided or performed under separate smaller contracts into a 

solicitation of offers for a single contract likely to be unsuitable for award to a small 

business due to (1) the diversity, size, or specialized nature of the elements of the 

performance specified; {2) the aggregate dollar value of the anticipated award; {3) the 

geographical dispersion of the contract performance sites; or (4) any combination of the 

factors described. Pub. L. No. 105-135, § 412, 111 Stat 2592, 2617 (1997), codified at 15 

us. c.§ 632(0). 

5SBPAC comprises the Administrator of the Smat! Business Administration (SBA), or the 

designee of the administrator, the director of the Minority Busmess Development Agency, 

and the heads of each OSDBU. SBA chairs the council, which assists agencies in their 

acquisition planning efforts. The council also is to identify best practices for maximizing 

small business utmzation in federal contracting. 

6According to SBA, the annual scorecard measures how we!! federal agencies reach small 

business contracting goals and reports agency~specific progress. Scorecard grades are 

based on the extent to which (or how well) agencies met goals for prime contracts and 

subcontracts and their progress plans for meeting goals. 

Page 3 GA0-18-191T 
20

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-------- Department of DefenSe- OffiCe of the'Secretary 

Eighteen of 24 agencies demonstrated compliance with a requirement 

for the director's compensation and seniority. 

,/ ,/ ,/ ,/ ,/ 

,/ ,/ -/ ,/ -/ 

,/ [8] NIA ,/ ,/ 

,/ ,/ NIA ,/ 

,/ " [8] ,/ ,/ 

,/ ,/ 

,/ NIA ,/ ,/ 

,/ NIA ,/ ./ 

./ NIA ./ ,/ 

Page 4 GA0-18-191T 
21

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Noncompliance with section 15(k) requirements may limit the extent to 

which an OSDBU can successfully advocate for small businesses. For 

example, OSDBU influence in agencies might be limited if directors 

reported to lower levels of management Directors with other duties might 

be less able to carry out all section 15(k) duties. 

In our August 2017 report, we made recommendations to 12 agencies to 

address demonstrated noncompliance with director-related requirements 

of section 15(k) or report to Congress on why they had not complied, 

including seeking any statutory flexibilities or exceptions believed 

appropriate. Agency responses to our recommendations varied. For 

example, the U.S. Agency for International Development agreed with our 

recommendation relating to section 15(k)(15), which requires that the 

OSDBU director not have collateral duties beyond those needed to carry 

out the responsibilities of section 15(k). We found that the agency had not 

demonstrated compliance with section 15(k)(15) because its OSDBU 

Page 5 
22

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Agency Compliance 

Varied by Functional 

Requirement 

director had responsibility for the Minority Serving Institution program 

which is outside of the statutorily defined OSDBU duties. The agency 

stated that moving responsibility for the program from the OSDBU would 

not gain efficiencies and the agency will explore requesting an exception 

to allow the OSDBU director to continue to advocate for that program. 

The Department of Defense disagreed with the part of the 

recommendation to the Defense Logistics Agency about section 15(k)(7), 

supervisory duties. The Department noted the agency had numerous field 

offices, and thus supervisory authority was divided (headquarters did not 

supervise each field office). But this resulted in an OSDBU director not 

supervising all staff carrying out OSDBU responsibilities, which is 

required by section 15(k)(7), and we maintained our recommendation. 

Levels of demonstrated compliance were high for five of eight functional 

requirements, but were much lower for the remaining three requirements 

(see table 2). 

All 24 agencies demonstrated compliance with requirements for 

providing advice to officials, providing training to small businesses or 

acquisition personnel, and receiving unsolicited proposals and 

forwarding them when appropriate. 

Twenty-three of the 24 agencies demonstrated compliance related to 

identifying and addressing significant bundling of contract 

requirements and providing payment assistance to small businesses. 

Ten and eight of the 24 agencies, respectively, did not demonstrate 

compliance with requirements for assigning small business technical 

advisers and providing advice on proposed in-sourcing decisions7 

Nine of the 24 agencies did not demonstrate compliance with the 

requirement to respond to notification by a small business that a 

solicitation unduly restricts the ability of the small business to compete 

for the award. 8 

tn~sourcing refers to converting an activity performed by a small business to an activity 

performed by a federal employee. 

8This requirement is triggered when a small business notifies the agency (before contract 

award) that the small business believes that a solicitation, request for proposal, or request 

for quotation unduly restricts the ability of the small business to compete for the award. 

Page 6 
23

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In our August 2017 report, we made recommendations to 17 agencies to 

address demonstrated noncompliance wrth section 15(k) functional 

requirements (as shown in table 2). 9 Agency responses to our 

recommendations varied. For example, some agencies questioned the 

effectiveness or practicality of performing actions in a certain way. The 

National Aeronautics and Space Administration (NASA) partially agreed 

with the part of our recommendation related to section 15(k)(17), 

responding to notification by a small business that it believes a solicitation 

unduly restricts the small business's ability to compete. OSDBU directors 

are required to inform an agency's advocate for competition of such 

notifications. NASA said that it would do so going forward to comply with 

the statute. NASA added that it believes that the most practical and 

effective way to address such notifications is for the OSDBU, in 

consultation with the contracting officer, to resolve issues at the lowest 

level possible. In another example, the Department of Veterans Affairs 

(VA) concurred in principle with the recommendation related to section 

15(k)(8), which requires the OSDBU director to assign a small business 

technical adviser to each office where SBA assigned a procurement 

center representative. The agency stated that for the OSDBU to select an 

employee and direct that person's principal work efforts, while that person 

nominally remains accountable to and on the payroll of the contracting 

activity, requires an unusual degree of "matrixed" reporting relationships 

not often found in any workplace. VA said that its OSDBU will seek to 

collaborate with the cognizant contracting activities through VA's Senior 

Procurement Council, and develop a clear written understanding of roles 

and responsibilities in a memorandum of understanding. We maintain our 

recommendation, as VA's comments do not make it clear if the OSDBU 

director will assign a small business technical adviser to the procuring 

activity, or if the assigned staff would be a full-time employee of this 

activity (as is also required by section 15(k)(8)). 

91n GA0-17 ~675, we made recommendations addressing noncompliance to 19 agencies 

The recommendations to some agencies addressed demonstrated noncompliance for 

both directoNelated and functional section 15(k) requirements. 

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Some SBPAC Review 

Scores Were Not 

Consistent with Our 

Compliance 

Determinations 

Some SBPAC review scores were inconsistent with our compliance 

determinations for the section 15(k) requirements we and SBPAC both 

considered. The SBPAC review panel-comprising OSDBU directorsannually reviews each OSDBU to determine compliance with section 

15(k) requirements; it considers seven success factors for achievement of 

and commitment to small business contracting. 10 The peer reviews are a 

form of internal control intended to provide some assurance that OSDBUs 

comply with section 15(k) requirements. Agencies in the most recent 

review received overall scores (across the seven success factors) of 94-

98 percent. 

For several agencies, our compliance determinations for the section 15(k) 

requirements related to organizational structure did not align with 

SBPAC's 2016 scores for the "OSDBU organization" success factor (see 

table 3). 11 Where our review considered the same section 15(k) 

requirements as the SBPAC review, we found that several agencies had 

not demonstrated compliance with multiple requirements. 

10Some success factors closely mirror requirements and areas of section 15(k), white 

others are more general and do not aHgn with section 15(k) specifically 

11To compare SBPAC scores and our determinations, we focused on the organization 

success factor because it aligned most directly with five requirements-15(k)(2), (k)(3), 

(k)(7), (k)(8), and (k)(15). Other success factors are less directly related to the additional 

section 15(k) requirements in our review. The nine members of the peer review panel 

each provide a score for each success factor, and SBA then calculates an average of 

each score. SBA's peer review panel guidance provides the following grading scale: 1.0 

(excellent), 0.9 (above average), 0.8 {satisfactory), 0.7 (below average), and 0.6 

(unsatisfactory). 

Pago 10 GA0-18-191T 
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Table 3: Peer Review Scores for Organization Success Factor (FY 2016) Compared with GAO Determinations of Compliance 

for Related Section 15(k) Requirements (as of May 19, 2017), Selected Agencies 

Agency 

Department of Agriculture 

Department of Energy 

Department of Justice 

Department of Labor 

Department of State 

Department of Veterans Affairs 

Environmen1al Protection Agency 

Office of Personnel Management 

Social Security Administration 

SBPAC peer review score for 

organization success factora 

(FY 2016) 

1.0 (excellent) 

0.83 (satisfactory) 

0.83 (satisfactory) 

0.9 (above average) 

1.0 (excellent) 

0.8 (satisfactory) 

0.93 (above average) 

0.83 (satisfactory) 

0.8 (satisfactory) 

GAO determinations of compliance and 

associated subsections of section 15(k) 

(as of May 19, 2017; out of 4 or 5b) 

Not demonstrated for 2 of 4· 

(k)(2) and (k)(15) 

Not demonstrated for 2 of 5: 

(k)(3) and (k)(B) 

Demonstrated for 4 of 4 

Not demonstrated for 2 of 5: 

(k)(2) and (k)(15) 

Not demonstrated for 1 of 5 

(k)(B) 

Not demonstrated for 2 of 5 

(k)(3) and (k)(B) 

Not demonstrated for 1 of 4· 

(k)(15) 

Not demonstrated for 2 of 4: 

(k)(2) and (k)(8) 

Not demonstrated for 4 of 5 

(k)(2). (k)(3), (k)(8), and (k)(15) 

Legend. FY"' fiscal year. SBPAC"' Small Busmess PrOCI,/rement AOY1Sory Counal 

Sources. Small Bustno>ss Admmistratton and GAO I GA0-18-191T 

Note: This table compares selected agencies for Ymich the SBPAC scores for "organization success 

factor" were not consistent with our determinations of compliance with similar section 15(k) 

requirements. We were unable to compare SBPAC scores to our determinations of compliance for 

the five Department of Defense agencies we reviewed (Office of the Secretary, Defense Logistics 

Agency. and Departments of the Air Force, Army, arld Navy) because SBPAC scores the Department 

of Defense as a whole rather than by component. 

aSBA's peer review panel guidance provides the following grading scale for success factor scores: 1.0 

{exceUent), 0.9 {above average), 0.8 (satisfactory), 0.7 (below average), and 0.6 {unsatisfactory) 

Individual reviewers provide a score for each success factor, and the scores are then averaged 

across reviewers to determine an agency's overall score for each success factor. Thus. some 

agencies' scores fall in bet'NE!en two categories on the grading scale (e.g., between o.g, above 

average, and 1.0, excellent). !f agencies had scores between two categories. 'N8 listed the category 

to Ymich the score most closely approached. 

We reviewed compliance with section 15(k)(3), Ymich generally requires the OSDBU director to 

report to the head or deputy head of the agency, for 10 of the 24 agencies. Therefore, only some of 

the agencies listed in the table were assessed on aU five section 15(k) requirements considered for 

this comparison, while other agencies were assessed on the other four requirements: (k)(2), 

compensation/seniority of the OSDBU director; (k)(7). supervisory duties of the OSDBU director; 

(k}(B), assigning small business technical advisers; and {k)(15), collateral duties of the OSOBU 

director. 

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Other than reviewing documentation agencies choose to provide, SBA's 

guidance for the review panel does not indicate any other means by 

which reviewers could obtain or clarify information about agencies' 

compliance with section 15(k) requirements. In contrast, our review of 

demonstrated compliance included follow-up discussions with agency 

officials. According to federal standards for internal control, management 

should use quality information to make informed decisions. Although SBA 

has been developing a new review process, preliminary information we 

reviewed indicates the process will be similar to the current one. Under 

the new process, the review results will carry twice as much weight in 

another process that SBA uses to determine an agency's overall grade 

for small business contracting-underscoring the importance ofthe 

SBPAC review results. 

We made one recommendation to SBA in our August 2017 report to 

include more detailed guidance to SBPAC members for the annual 

reviews. SBA agreed with our recommendation and stated it had begun 

developing more detailed guidelines that provide more objective criteria 

for determining compliance that will be used for the fiscal year 2017 

review. 

In summary, agencies generally demonstrated high levels of compliance 

with some section 15(k) requirements but less so for others. Some 

agencies explained they carried out the required activities outside of the 

OSDBU or by using different processes than those specified in the 

requirements. But continued noncompliance may undermine the extent to 

which OSDBUs can advocate for small businesses. If agencies still 

believe their procedures for certain activities are sufficient to advocate for 

small business contracts, they should explain their noncompliance to 

Congress and provide support for their views, including requesting any 

statutory flexibilities to permit exceptions. The reliability of the SBPAC 

review will take on greater importance because SBA proposes to make 

the scores count for more of an agency's scorecard grade. However, the 

divergence in results between our review and SBPAC scores suggests 

the review could be enhanced. For instance, improving SBA's guidance 

can help increase the reliability of the peer review determinations and 

increase consistency with federal internal control standards. 

Chairman Knight, Ranking Member Murphy, and members of the 

Subcommittee, this concludes my statement. I would be pleased to 

answer any questions that you may have at this time related to our work 

on OSDBUs and section 15{k) compliance. 

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GAO Contact and 

Staff 

Acknowledgments 

GAO Contact: William B. Shear, (202) 512-8678, shearw@gao.gov 

Staff Acknowledgments: In addition to the contact named above, Andy 

Pauline (Assistant Director), Janet Fang (Analyst in Charge), Pamela 

Davidson, Hannah Dodd, Barbara Roesmann, Jessica Sandier, Jena 

Sinkfield, and Tyler Spunaugle made key contributions to this report. 

Page 13 GA0-18-191T 
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Appendix I: Objectives, Scope, and 

Methodology 

This testimony is based on our August 2017 report (GA0-17-675) on 

Offices of Small and Disadvantaged Business Utilization (OSDBU) at 

selected federal agencies. 1 More specifically, the report examined (1) the 

extent to which selected federal agencies demonstrated compliance with 

five section 15(k) requirements relating to the OSDBU director; (2) the 

extent to which selected federal agencies demonstrated compliance with 

eight section 15(k) requirements on OSDBU functions or activities; and 

(3) the review by the Small Business Procurement Advisory Council 

(SBPAC) of OSDBU compliance with section 15(k) requirements. 

To determine how agencies demonstrated compliance with the OSDBUrelated requirements, we first selected 24 agencies (civilian and military) 

for review. 

Of the 24 agencies, 23 were selected due to high contracting 

obligations; each of the 23 procured more than $900 million in goods 

and services in fiscal year 2015. Together, they accounted for 87 

percent of all federal contracting obligations. 

We selected the 24th agency, the Office of the Secretary within the 

Department of Defense, due to its role as a policy office in the 

department. 

We then selected the following section 15(k) requirements for review (5 

requirements relating to OSDBU directors and 8 relating to OSDBU 

functions): 

15(k): Director experience 

15(k)(2): Compensation/seniority 

15(k)(3): Reporting requirement (head of agency or deputy head) 

15(k)(5): Identify and address bundling of contract requirements 

15(k)(6): Provide assistance on payments 

15(k)(7): Supervisory duties 

15(k)(8): Assign small business technical advisers 

15(k)(11): Advise on in-sourcing 

1

See GAO, Small Business Contracting: Actions Needed to Demonstrate and Better 

Review Compliance with Select Requirements for Small Business Advocates, 

GA0-17-675 (Washington, D.C.: Aug. 25, 2017). 

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Appendix 1: Objectives, Scope, and 

Methodology 

15(k)(12): Provide advice to chief acquisition officer and senior 

procurement executive 

15(k)(13): Provide training' 

15(k)(14): Receive unsolicited proposals and forward them when 

appropriate 

15(k)(15): Collateral duties 

15(k)(16): Submit training reports to Congress' 

15(k)(17): Respond to notification of an undue restriction on ability of 

small business to compete 

For the section 15(k)(3) requirement relating to OSDBU directors 

reporting to a head or deputy head of an agency, we reviewed whether 10 

agencies demonstrated compliance (Departments of Education, Energy, 

Labor, State, Air Force, Army, Navy, and Veterans Affairs; the National 

Aeronautics and Space Administration; and the Social Security 

Administration). We selected the 10 agencies based on contracting 

obligations (6 each had more than $10 billion in obligations, and 4 each 

had fewer) and for variety. Of the 6 agencies with more than $10 billion in 

obligations, we selected 3 Department of Defense components and 3 

other agencies. To determine whether agencies demonstrated 

compliance, we analyzed documents such as reports, position 

descriptions, and performance appraisals and interviewed OSDBU 

directors and other agency officials. 

To determine if agencies demonstrated compliance with other provisions 

of section 15(k)-fourthat relate to other requirements for OSDBU 

directors (such as rank and responsibilities) and eight that relate to 

OSDBU functions or activities-we surveyed OSDBU directors at 24 

agencies. The survey questions focused on acquisition planning, 

2Section 15(k)(13) does not mandate that the OSDBU provide training to small 

businesses, but we included the pennissive training language in 15 U.S.C. § 644(k)(13) in 

our discussion of "requirements" and reviewed the agencies' training offered under this 

provision. 

30ur review of individual agencies' demonstrated compliance encompasses 13 

requirements. As discussed in GA0-17-675, an additional requirement-section 

15(k){16}---directs agencies to submit an annual training and travel report to Congress 

During our review, the Small Business Administration established new procedures to 

submit a consolidated report to Congress, rather than having each agency submit an 

individual report. Due to the new procedures, we do not include this requirement in the 

tables about agencies' demonstrated compliance in GA0-17-675 or in this testimony. 

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Appendix 1: Objectives, Scope, and 

Methodology 

solicitation development, proposal evaluation, obtaining payments, 

training, interaction with SBA, and other functions. The response rate to 

our survey was 100 percent. We also reviewed agency information such 

as policy documents and position descriptions and interviewed OSDBU 

directors and other agency officials. 

We determined if an agency demonstrated compliance with a particular 

requirement by reviewing agency documentation, survey responses, and 

responses to follow-up we conducted with agencies (for instance, to 

clarify survey responses and to obtain additional information in instances 

in which respondents indicated they did not perform a section 15(k) 

requirement). In cases in which supporting documentation was not 

available, we made the determination based solely on the agency's 

survey response, follow-up with agency officials, or both. See appendix II 

for more information on the requirements. 

To examine the SBPAC review, we reviewed documentation and data 

related to the Small Business Administration's (SBA) scorecard for small 

business procurement and SBPAC's peer review process. We also spoke 

with SBA officials about this program. We compared SBA's "OSDBU 

organization" success factor scores to the compliance information we 

obtained from our review to determine whether these scores correlated 

with our compliance determinations. 

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Appendix II: Select Statutory Requirements 

for Office of Small and Disadvantaged 

Business Utilization 

Section 15(k) of the Small Business Act, as amended, requires each 

Office of Small and Disadvantaged Business Utilization (OSDBU) and 

each OSDBU director to meet certain requirements. We selected 14 

requirements from section 15(k) for closer review. This appendix details 

each requirement and, where appropriate, elaborates on how we 

determined that agencies demonstrated compliance with each 

requirement. 

Table 4: Requirements of Section 15(k) of the Small Business Act Selected for Our Review 

Requirement Description 

Director experie--=n-=-ce:o-----;1;;5-,(k7) ----,T"h"e_m_a:.,nccaccge=-=m=-e:-:n7t '"of"'e-=accch:-O;;cS;cD;::;B;;;U-;-coffi"'tc"'e"m::-uc-:s7t ~be,_v__,e-s"'te-,d in,.-a:-n-o'"'ffi;-ce--,-r o:-:r-:e-:cm:-::p"'lo.,-ye"'ec-oc;f:;th:-:eCompensation/seniorityc 15(k)(2) 

Reporting requirement 15(k)(3) 

(head of agency or deputy 

head) 

Identify and address 15(k)(5) 

bundling of contract 

requirements 

agency with experience serving in any combination of the following roles 

program manager, deputy program manager, or assistant program management for 

federal acquisition program: 

chief engineer, systems engineer, assistant engineer, or product support manager 

for federal acquisition program; 

federal contracting officer; 

small business technical adviser: 

contracts administrator for federal government contracts; 

attorney specializing in federal procurement law; 

small business liaison officer; 

off1cer or employee who managed federal contracts for a small business; or 

tndividual whose primary responsibilities were for the functions and duties of section 

8, 15, or 44 of the Small Business Act (15 U.S.C. § 637, 644, 657q) 

The officer or employee in the position of heading the OSDBU office must either: 

1. be appointed by the agency's head to a Senior Executive Service position, or 

2. only for an agency where the chief acquisition officer and the senior procurement 

executive are not Senior Executive Service positions, may be appointed to a position 

compensated not less than the minimum rate for a salary at !evel15 of the General 

Schedule 

The officer or employee in the position of heading the OSDBU office must be responsible 

only to, and report directly and exclusively to, the head of the agency or to the deputy of 

the agency, except that the OSDBU for the Office of the Secretary of Defense must be 

responsible only to and report directly and exclusively to the secretary or the secretary's 

designee 

These requirements include that the OSDBU director's performance appraisals be 

signed by either the agency head, deputy head, or in the case of the Department of 

Defense, the secretary or the secretary's designee. 

The officer or employee in the position of heading the OSDBU office must (1) identify 

proposed solicitations that involve significant bundling of contract requirements, and (2) 

work with the agency acquisition officials and the Small Business Administration to revise 

the procurement strategies for those proposed solicitations where appropriate to 

increase the probability of participation by small businesses as prime contractors, or, if 

the bundled solicitation is issued, to facilitate small business participation as 

subcontractors and suppliers. 

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Requirement 

Provide assistance on 

paymentsd 

Supervisory dutiese 

Assign small business 

technical advisers 

Advise on in~sourcing 

Provide advice to chief 

acquisition officer and 

senior procurement 

executivef 

Provide training 

Receive unsolicited 

proposals and forward 

them when appropriate 

Co!!aterai duties9 

Submit training report to 

Congressn 

15(k)(6) 

15(k)(7) 

15(k)(B) 

15(k)(11) 

15(k)(12) 

15(k)(13) 

15(k)(14) 

15(k)(15) 

15(k)(16) 

Appendix II: Select Statutory Requirements for 

Office of Small and Disadvantaged Business 

Utilization 

Description 

The officer or employee in the position of heading the OSDBU office must assist small 

businesses in obtaining: (1) payments, (2) required late payment interest penalties, or (3) 

infonnation regarding payments due to the businesses from an executive agency or a 

contractor, in conformity with certain statutory provisions, or any other protection for 

contractors or subcontractors (including suppliers) that is included in the Federal 

Acquisition Regulations or any individual agency's supplement to the Federal Acquisition 

Regulations. 

The officer or employee in the position of heading the OSDBU office must have 

supervisory authority over agency personnel to the extent that the functions and duties of 

the personnel relate to sections a and 15 of the Small Business Act (15 U.S. C. § 637 and 

644). 

The officer or employee in the position of heading the OSDBU office must assign a small 

business technical adviser to each office where the Small Business Administration has 

assigned a procurement center representative. The technical adviser: 

1. must be a full~time employee of the procuring activity and must be well qualified, 

technically trained, and familiar with the supplies or services purchased at the 

activity; and 

2. must have the principal duty to assist the Small Business Administration 

procurement center representative in the representative's duties and functions 

related to sections a and 15 of the Small Business Act (15 U.S. C.§ 637 and 644). 

The officer or employee in the position of heading the OSDBU office must rev1ew and 

advise the agency on any decision to convert an activity performed by a small business 

to an activity performed by a federal employee. 

The officer or employee in the position of heading the OSDBU office must provide the 

chief acquisition officer and senior procurement executive of the agency with advice and 

comments on acquisition strategies, market research, and justifications related to 

consolidation of contract requirements (15 U.S.C. § 657q). 

The officer or employee in the position of heading the OSDBU office may provide training 

to small businesses and contract specialists, except that the training may only be 

provided to the extent it does not interfere with the OSDBU director carrying out other 

responsibilities under section 15(k) (15 U.S.C. § 644(k)). 

The officer or errlployee in the position of heading the OSDBU office must receive 

unsolicited proposals and, when appropriate, forward them to personnel of the activity 

responsible for reviewing the proposals 

The officer or employee in the position of heading the OSDBU office must carry out 

exclusively the duties in section 15(k) (15 U.S.C. § 644(k)) and, while director, must not 

hold any other title, position, or responsibility, except as necessary to carry out the 

responsibilities of section 15(k) 

The officer or employee in the position of heading the OSDBU office each fiscal year 

must submit a report to the House of Representatives Committee on Small Business and 

the Senate Committee on Small Business and Entrepreneurship. The report must 

describe: 

1. the training by the director to small businesses and contract specialist completed in 

the recently completed fiscal year; 

2. the percentage of the director's budget used for the training in that fiscal year; and 

3. the percentage of the director's budget used for travel in that fiscal year. 

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Requirement 

Respond to notification of 15{k){17) 

an undue restric~on on 

ability of small business to 

compete 

Appendix II: Select Statutory Requirements for 

Office of Small and DlsadvantaQ(Id Business 

Utilization 

Description 

When notified by a small business prior to the award of a contract that the small business 

believes that a solicitation, request for proposal, or request for quotation unduly-restricts 

the ability of the small business to complete, the officer or employee in the position of 

heading the OSOBU office must: 

1. submit the notice to the contracting officer, and if necessary, recommend ways the 

solicitation, request for proposal, or request for quotation may be altered to increase 

the opportunity for competition: 

2. inform the agency's advocate for competition of the notice; and 

3. ensure that the small business is aware of other resources and processes available 

to address unduly restrictive provisions in a solicitation, request for proposal, or 

request for quotation, even if the resources and processes are provided by the 

agency, the Small Business Administration, the Government Accountability Office, or 

a procurement technical assistance program. 

Legend OSDBU-" Office of Small and OiSOOvant.ag.ed Business Utiliz.allon 

Sown:-.., GAO I GA0-18-191T 

(102353) 

Note: The table includes a breakdown of statutory language through 2016, but it does not include 

language added in the National Defense Authorization Act for Fiscal Year 2017. Pub_ l. No. 114-328. 

130 Stat. 2000 (2016). 

a All statutory sections are within 15 U.S.C. § 644(k). These sections all fall within section 15(k) of the 

Small Business Act and therefore are commonly cal!ed section 15(k) 

bAn individual who held one or more ofthe enumerated list of positions would meet requirements for 

our review 

"In instances in which an agency had an acting OSDBU director, we looked at the seniority of the 

director who served immediately prior to the acting director. 

<~An OSOBU that provides any assistance would meet requirements for our review 

"An OSOBU that supervises personnel within its office to the extent that the functions and duties of 

the personnel relate to sections 8 and 15 of the Small Business Act (15 U.S. C. § 637 and 644} would 

meet requirements for our review 

We would not determine that an OSOBU did not demonstrate comp!lance for failure to provide 

information to a chief acquisition officer or senior procurement executive if the agency did not have a 

chief acquisition officer or senior procurement executive 

a Acting OSDBU directors may hold other titles or positions while serving as the temporary OSDBU 

director as long as while so serving they exclusively carry out the dulles in section 15(k) 

hTo fulfill this requirement, the Small Business Administration collected the training and travel reports 

on behalf of individual OSOBUs and submitted them to Congress in June 2017 

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U.S. Government Accountability Office, 441 G Street NW, Room 7814, 

Washington, DC 20548 

~.~ Please Print on Recycled Paper. 
38

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U.S. Small Business Administration 

TESTIMONY OF 

ROBBN. WONG 

Associate Administrator 

Office of Government Contracting and Business Development 

U.S. Small Business Administration 

House SmaU Business Committee 

Subcommittee on Contracting and Workforce 

W cdncsday, October 25, 201 7 
39

Chairman Knight, Ranking Member Murphy, and Members of

the Subcommittee, thank you for inviting me to testify before you

today. SBA and the Offices of Small and Disadvantaged Business

Utilization (OSDBU) at the federal agencies work side by side and

play a critical role in helping small businesses obtain access to federal contracts.

The Administrator, through the Office Government Contracting

& Business Development, chairs the Small Business Procurement

Advisory Council (SBPAC). The purpose of the SBPAC is to discuss

government contracting policies and share best practices with the

OSDBU directors at the federal agencies to further promote contracting opportunities for small business. The SBPAC meets on a

monthly basis. SBA, as the agency responsible for reporting on

small business federal government contracting achievement, establishes federal agency goals; so goaling, performance, and sharing of

best practices are regular topics of discussion for the SBPAC. Many

years ago, SBA created the Scorecard, which was intended to

evaluate federal agency effectiveness on achieving their small business contracting goals against performance. Over the years, it has

changed as Administrations have changed. The Scorecard has also

increased senior executive level engagement with small business

contracting, as it is a matter of public record, and has significantly

contributed toward the federal government meeting its statutory

small business prime contracting goal for the 4th year in a row in

FY 2016. In FY 2016, the government exceeded the Small Disadvantaged Business goal, and for the fifth consecutive year, the

Service-Disabled Veteran Owned Small Business goal; achieving its

highest performance ever in awards to concerns owned and controlled by service-disabled veterans.

Prior to FY 2017, each agency received a letter grade based on

its performance as follows: 80% of the grade was small business

prime contracting performance in each of the 5 socio-economic categories, 10% of the grade was the agencies’ subcontracting performance in each of the 5 socio-economic categories, and 10% of the

grade was a peer review of success factors, essentially steps and actions that federal agencies should take to meet the small business

prime contracting and subcontracting goals.

The success in meeting the small business prime contracting goal

has been accompanied by a review of the number of contracts actually awarded to individual small business concerns. Thus, in Section 868 of the National Defense Authorization Act of 2016, Congress directed SBA to adjust the Scorecard rating values and bring

greater balance to better understand small business engagement.

As a result, beginning in FY 2017, the small business prime contracting weighted goal is lowered from 80% to 50% of the agency’s

grade, subcontracting is raised from 10% to 20%, and a new required factor is the comparison of the number of small business

concerns awarded prime contracts in one fiscal year compared to a

prior fiscal year. In FY 2017, this comparison will account for 10%

of an agency’s grade. In addition, the National Defense4 Authorization Act of 2013 directed the SBPAC to conduct a peer review of

OSDBU compliance with the requirements of Section 15(k) of the

Small Business Act. For FY 2017, SBA has implemented OSDBU

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peer review changes as part of the Scorecard process. As the Government Accountability Office (GAO) noted, this OSDBU peer review will now account for 20% of an Agency’s grade (in FY 2017).

In accordance with GAO’s recommendations, SBA will provide

agencies with more detailed guidelines on the peer review process.

The Scorecard and peer review process is an iterative process, and

we annually adjust various aspects in response to changes in law,

policies or priorities. The point of all of this, SBA, the OSDBUs,

and the Scorecard process, is to encourage agencies to provide

small businesses access to government prime contracts and subcontracts.

The Scorecard is typically released in the spring or summer, several months after conclusion of the fiscal year. There are several

reasons for this. Agencies are given several months to validate

their data in the Federal Procurement Data System. Large Prime

Contractors and contracting officers are also given several months

to enter and validate data in the electronic subcontract reporting

system. At a point to be determined in February 2018, we will receive the official data for FY 2017 prime contracting. Subcontracting data will follow and we will use this information to calculate the agencies’ performance for goaling purposes and for the

number of contracts awarded to small businesses. While this is

going on, the peer review process will be going on. At some point

in the spring or summer of 2018, we will announce the FY 2017

scorecard performance.

As the Associate Administrator for Government Contracting and

Business Development, I intend to use the SBPAC to increase collaboration between SBA and the OSDBU directors to serve our customers, the agencies that award contracts to small business concerns. Sharing best practices but also sharing opportunities so that

we can increase access across agencies. Collaboration between the

OSDBUs and SBA will enable us, as advocates for small business,

to pivot and meet the challenges of the ever-changing marketplace.

For example, as work shifts to category management, we need to

shift our focus to ensure open and on-going small business access

to these prime contracts and to also focus on small business subcontracting, holding prime contractors accountable if they do not

meet their subcontracting plan goals. With the help of the OSDBU

community, we can work together to find solutions and ideas that

will ensure and improve small business participation.

Thank you once again for your support of SBA and the small

business community, and for the opportunity to appear before you

today.

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STATEMENT OF 

KEVIN BOSHEARS 

Director, Office of Small and Disadvantaged Business Utilization 

U.S. Department of Homeland Security 

FOR A HEARING ON 

"GAO Audit Reveals Half-Measures Taken by Small Business Advocates" 

BEFORE THE 

United States House of Representatives 

Committee on Small Business, Subcommittee on Contracting and Workforce 

October 25, 2017 
42

Introduction

Chairman Knight, Ranking Member Murphy, and distinguished

Members of the Subcommittee, I appreciate the opportunity to appear before you today as the Department of Homeland Security’s

(DHS) Director of the Office of Small and Disadvantaged Business

Utilization (OSDBU) to discuss DHS’s small business contracting

program. I am honored to serve in this role and the others I have

enjoyed as a career public servant for over 27 years, which includes

my time with the Department of Treasury and Justice.

In support of the DHS mission, the primary role of the OSDBU

is to promote and develop strategies for small business participation in the DHS contracting program. In accordance with the Small

Business Act, similar offices exist in all major federal agencies because small business inclusion in federal contracting is a government-wide policy objective. Small businesses make substantial contributions to the American economy and taxpayers through innovation, job creation, cost savings, and tax revenue.

DHS has a robust, award-winning small business contracting

program that promotes small business prime contracts and small

business subcontracts under large business prime contractors. In

fiscal year (FY) 2009, the U.S. Small Business Administration

(SBA) developed the annual Small Business Procurement Scorecard

for the 24 Chief Financial Officer federal agencies. The scorecard

uses a letter grade based methodology with six potential grades

(A+, A, B, C, D, and F). The scorecard measures small business

prime contracting accomplishments, small business subcontracting

accomplishments, and other factors prescribed by SBA. DHS has

received a grade of ‘‘A’’ or ‘‘A+’’ each year between FY 2009

and FY 2016, making DHS the largest federal agency to have

such a consistent success record. Based on DHS’s FY 2017 anticipated achievements and DHS’s understanding of SBA’s methodology, the Department anticipates receiving another favorable score

for FY 2017 when SBA releases its scorecard in 2018.

Implementation

Since its inception, DHS has always been committed to small

business inclusion in its contracting program. To implement the

program, the DHS OSDBU Director reports to the Deputy Secretary, and works closely with the Under Secretary for Management, the Chief Procurement Office, and each of the Component

Heads of Contracting Activity. Also, the DHS OSDBU Director

serves as a member of the Small Business Procurement Advisory

Council (SBPAC) and actively participates in the monthly SBPAC

meetings hosted by SBA. Moreover, the DHS OSDBU plays a key

role in the Department’s efforts to promote meaningful communications with industry.

Acting Secretary Elaine Duke and Under Secretary for Management Claire Grady, the Senior Official Performing the Duties of the

Deputy Secretary, are both long-time supporters of the federal

small business contracting program throughout their distinguished

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43

careers. They continue to offer strong support to the DHS OSDBU

in their current positions.

Over the years, the DHS small business contracting program has

been successful due to a number of innovative and inclusive initiatives, such as:

• Maintaining a web presence with helpful and timely resources for small businesses;

• Supporting Small Business Specialists in each contracting

activity;

• Publishing an annual forecast of contracting opportunities;

• Conducting outreach activities, including monthly vendor

outreach sessions featuring pre-arranged 15 minute appointments with DHS Small Business Specialists and DHS Large

Business Prime Contractor representatives;

• Listing large business prime contractors with subcontracting opportunities;

• Promoting the DHS Mentor-Prote ́ge ́ program;

• Hosting an annual small business awards ceremony to recognize DHS small business contractors and DHS employees;

• Overseeing a small business review process for all procurements expected to exceed $150,000 in order to ensure contracting to small businesses is considered prior to using unrestricted competition;

• Setting and monitoring DHS-wide and Component small

business goals;

• Conducting an annual three-day small business training

session for DHS Component Small Business Specialists and

OSDBU personnel; and

• Helping design DHS-wide multiple award contracts with

built-in set aside authority (using Section 1331 of the Small

Business Jobs Act).

In a recent U.S. Government Accountability Office (GAO) report

titled, ‘‘Actions Needed to Demonstrate and Better Review Compliance with Select Requirements for Small Business Advocates,’’

DHS demonstrated compliance with all 12 of the 12 requirements

selected by GAO for review. The GAO report had no recommendations for DHS.

Conclusion

Chairman Knight, Ranking Member Murphy, and distinguished

Members of the Subcommittee, thank you again for the opportunity

to testify today and I look forward to your questions.

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August 2017 

GA0-17-675 

United States Government Accountability Office 

Report to the Committee on Small 

Business, House of Representatives 

SMALL BUSINESS 

CONTRACTING 

Actions Needed to 

Demonstrate and 

Better Review 

Compliance with 

Select Requirements 

for Small Business 

Advocates 
45

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SMALL BUSINESS CONTRACTING 

Actions Needed to Demonstrate and Better Review 

Compliance with Select Requirements for Small 

Business Advocates 

What GAO Found 

Demonstrated compliance with selected section 15(k) requirements for the Office 

of Small and Disadvantaged Business Utilization (OSDBU) varied across the 24 

agencies GAO surveyed. Five agencies demonstrated compliance with all the 

requirements, four agencies demonstrated compliance with all but one 

requirement, and 15 agencies did not demonstrate compliance with two or more 

requirements. Examples of GAO findings include the following: 

Four OSDBU directors did not report directly to the agency head or deputy 

(the one requirement for which GAO reviewed only 10 agencies). 

Five agencies did not demonstrate compliance with a requirement for 

collateral duties of OSDBU directors. 

Six agencies did not demonstrate compliance with a requirement for 

compensation and seniority of OSDBU directors. 

Twenty-three agencies demonstrated compliance for four requirements on 

OSDBU director experience, supervisory duties of the OSDBU director, 

identifying and addressing significant bundling of contracts (consolidation of 

two or more procurement requirements into a solicitation for a single 

contract), and providing assistance on payments. 

Fifteen agencies demonstrated compliance with a requirement to respond to 

notifications that solicitations unduly restricted the ability of small businesses 

to compete for contracts. 

Noncompliance with section 15(k) requirements may limit the extent to which an 

OSOBU can advocate for small businesses. For example, OSDBU influence in 

agencies might be limited if directors reported to tower levels of management 

Directors with other duties might be less able to carry out all section 15(k) duties. 

Results of the Small Business Procurement Advisory Councirs (SBPAC) annual 

review of compliance with section 15(k} requirements differed from GAO's 

assessments. The Small Business Administration (SBA) chairs SBPAC, and its 

members are nearly all OSDBU directors. All agencies in the most recent review 

scored 94-98 percent. But where GAO's review considered the same section 

15(k) requirements as the SBPAC review, GAO found some agencies had not 

demonstrated compliance with multiple requirements. Other than reviewing 

documentation agencies choose to provide, SBA's guidance for the review panel 

does not indicate any other means by which reviewers could obtain or clarify 

information. GAO's review included follow-up discussions with agency officials to 

obtain or clarify information. SBA has been developing a new review process, 

but preliminary information GAO reviewed indicates the process will be similar to 

the current one. According to federal standards for internal control, management 

should use quality information to make informed decisions. Under the new 

process, the review results (which SBA uses in another process that determines 

an agency's overall grade for small business contracting) also will carry twice as 

much weight as under the current process-underscoring the importance of the 

review results. A new review process substantially similar to the old one 

(especially in relation to guidance) may not provide a reliable indicator of OSDBU 

compliance with section 15(k) requirements. 

-------------United States Government Accountability Office 
46

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Contents 

Letter 

Background 4 

Agencies Demonstrated High Levels of Compliance with Two 

OSDBU Director Requirements, but Three Other Requirements 

Had Lower Rates of Compliance 8 

Agency Compliance Varied by Functional Requirement 18 

Some SBPAC Compliance Review Scores Were Not Consistent 

with Our Compliance Determinations 27 

Conclusions 31 

Recommendations for Executive Action 32 

Agency Comments and Our Evaluation 34 

Appendix I Objectives, Scope, and Methodology 46 

Appendix II Select Statutory Requirements for Office of Small and 

Disadvantaged Business Utilization 53 

Appendix Ill Overall Agencies' Demonstrated Compliance with 

Select Section 15(k) Requirements 56 

Appendix IV Demonstrated Compliance with Section 15(k), 

Defense Logistics Agency 58 

Appendix V Demonstrated Compliance with Section 15(k), 

Department of Agriculture 61 

Appendix VI Demonstrated Compliance with Section 15(k), 

Department of the Air Force 64 

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47

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Appendix VII Demonstrated Compliance with Section 15(k), 

Department of the Army 65 

Appendix VIII Demonstrated Compliance with Section 15(k), 

Department of Commerce 67 

Appendix IX Demonstrated Compliance with Section 15(k), 

Department of Defense - Office of the Secretary 70 

Appendix X Demonstrated Compliance with Section 15(k), 

Department of Education 73 

Appendix XI Demonstrated Compliance with Section 15(k), 

Department of Energy 75 

Appendix XII Demonstrated Compliance with Section 15(k), 

Department of Homeland Security 78 

Appendix XIII Demonstrated Compliance with Section 15(k), 

Department of Housing and Urban Development 79 

Appendix XIV Demonstrated Compliance with Section 15(k), 

Department of the Interior 82 

Appendix XV Demonstrated Compliance with Section 15(k), 

Department of Justice 85 

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Appendix XVI Demonstrated Compliance with Section 15(k), 

Department of Labor 86 

Appendix XVII Demonstrated Compliance with Section 15(k), 

Department of the Navy 89 

Appendix XVIII Demonstrated Compliance with Section 15(k), 

Department of State 91 

Appendix XIX Demonstrated Compliance with Section 15(k), 

Department of Transportation 93 

Appendix XX Demonstrated Compliance with Section 15(k), 

Department of the Treasury 94 

Appendix XXI Demonstrated Compliance with Section 15(k), 

Department of Veterans Affairs 97 

Appendix XXII Demonstrated Compliance with Section 15(k), 

Environmental Protection Agency 99 

Appendix XXIII Demonstrated Compliance with Section 15(k), 

General Services Administration 102 

Appendix XXIV Demonstrated Compliance with Section 15(k), 

National Aeronautics and Space Administration 104 

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Appendix XXV Demonstrated Compliance with Section 15(k), 

Office of Personnel Management 106 

Appendix XXVI Demonstrated Compliance with Section 15(k), 

Social Security Administration 109 

Appendix XXVII Demonstrated Compliance with Section 15(k), 

U.S. Agency for International Development 112 

Appendix XXVIII Comments from the Department of Commerce 115 

Appendix XXIX Comments from the Department of Defense 118 

Appendix XXX Comments from the Department of Education 121 

Appendix XXXI Comments from the Department of Energy 123 

Appendix XXXII Comments from the Department of the Interior 125 

Appendix XXXIII Comments from the Department of Labor 126 

Appendix XXXIV Comments from the Department of State 127 

Appendix XXXV Comments from the Small Business Administration 130 

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Appendix XXXVI 

Appendix XXXVII 

Appendix XXXVIII 

Appendix XXXIX 

Appendix XXXX 

Appendix XXXXI 

Appendix XXXXII 

Tables 

Comments from the Department of Veterans Affairs 

Comments from the Environmental Protection Agency 

Comments from the National Aeronautics and 

Space Administration 

Comments from the Office of Personnel Management 

Comments from the Social Security Administration 

Comments from the U.S. Agency for International Development 

GAO Contact and Staff Acknowledgments 

Table 1: Agencies' Demonstrated Compliance with Section 15(k) 

Requirements Related to OSDBU Director as of May 19, 

131 

134 

137 

139 

141 

144 

146 

2017 9 

Table 2: Agencies' Demonstrated Compliance with Section 15(k) 

Requirements for Select OSDBU Functions as of May 19, 

2017 19 

Table 3: Peer Review Scores for Organization Success Factor (FY 

2016) Compared with GAO Determinations of Compliance 

for Related Section 15(k) Requirements (as of May 19, 

2017), Selected Agencies 29 

Table 4: Requirements of Section 15(k) of the Small Business Act 

Selected for Our Review 53 

Table 5: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19,2017, Defense Logistics 

Agency 59 

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Table 6: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Agriculture 62 

Table 7: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of the Air 

~roe M 

Table 8: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of the 

Army 65 

Table 9: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Commerce 68 

Table 10: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Defense- Office of the Secretary 71 

Table 11: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Education 73 

Table 12: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of Energy 76 

Table 13: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Homeland Security 78 

Table 14: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Housing and Urban Development 80 

Table 15: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of the 

Interior 83 

Table 16: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of Justice 85 

Table 17: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of Labor 87 

Table 18: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of the 

Navy 89 

Table 19: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of State 91 

Table 20: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of 

Transportation 93 

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Figure 

Table 21: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Department of the 

Treasury 95 

Table 22: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19,2017, Department of 

Veterans Affairs 97 

Table 23: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Environmental 

Protection Agency 1 00 

Table 24: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, General Services 

Administration 103 

Table 25: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, National Aeronautics 

and Space Administration 104 

Table 26: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Office of Personnel 

Management 107 

Table 27: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, Social Security 

Administration 11 0 

Table 28: Demonstrated Compliance with Section 15(k) 

Requirements as of May 19, 2017, U.S. Agency for 

International Development 113 

Figure 1: Overall Agencies' Demonstrated Compliance with Select 

Section 15(k) Requirements as of May 19,2017 57 

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Abbreviations 

Air Force 

Army 

CAO 

Commerce 

DLA 

DOD 

Education 

Energy 

EPA 

HUD 

Interior 

Labor 

NASA 

Navy 

OPM 

OSDBU 

SBA 

SBPAC 

SES 

SPE 

SSA 

Stale 

Treasury 

USAID 

USDA 

VA 

Department of the Air Force 

Department of the Army 

Chief Acquisition Officer 

Department of Commerce 

Defense Logistics Agency 

Department of Defense 

Department of Education 

Department of Energy 

Environmental Protection Agency 

Department of Housing and Urban Development 

Department of the Interior 

Department of Labor 

National Aeronautics and Space Administration 

Department of the Navy 

Office of Personnel Management 

Office of Small and Disadvantaged Business Utilization 

Small Business Administration 

Small Business Procurement Advisory Council 

Senior Executive Service 

Senior Procurement Executive 

Social Security Administration 

Department of State 

Department of the Treasury 

U.S. Agency for International Development 

U.S. Department of Agriculture 

Department of Veterans Affairs 

Thfs is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other materia!, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 

Page viii GA0-17-675 Small Business Contracting 
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GAO u.s. GOVERNMENT ACCOUNTABILITY OFFICE 

441 G St. N.W. 

Washington, DC 20548 

August 25, 2017 

The Honorable Steve Chabot 

Chairman 

The Honorable Nydia Velazquez 

Ranking Member 

Committee on Small Business 

House of Representatives 

In fiscal year 2016, small businesses accounted for almost $100 billion in 

federal contracts. To help increase small businesses' visibility among 

federal agencies, in 1978 Congress amended the Small Business Act to 

require that all federal agencies with procurement powers establish an 

Office of Small and Disadvantaged Business Utilization (OSDBU), which 

would advocate for small businesses in procurement and contracting 

processes.' OSDBUs would be managed by a director. Section 15(k)(3) 

of the act, as amended, requires that OSDBU directors generally be 

responsible only to and report directly to agency heads or their deputies. 2 

The purpose of this provision is to help ensure that OSDBU directors 

have direct access to their agencies' top decision makers to advocate 

effectively for small businesses. Subsequent amendments have specified 

minimum seniority or pay levels for directors, enumerated qualifying prior 

work experience, specified who would sign the director's performance 

appraisals, and outlined the responsibilities of the position. 

Section 15(k), as amended, also establishes a number of functions for 

which OSDBU directors are responsible. These functions include 

identifying proposed solicitations that bundle contract requirements; 

1

The provisions regarding OSDBUs have been amended multiple times throughout the 

years, including in the National Defense Authorization Act for Fiscal Year 2013 (Pub. L 

No. 112-239, § 1691, 126 Stat 1632, 2087 (2013)); the National Defense Authorization 

Act for Fiscal Year 2016 (Pub. L. No. 114-92, § 870, 129 Stat 726, 938 (2015)); and the 

National Defense Authorization Act for Fiscal Year 2017 (Pub. L. No. 114-328, §§ 1812, 

1813, 1821, 130 Stat 2000,2652, 2654 (2016)). We did not include amendments in the 

National Defense Authorization Act for Fiscal Year 2017 because the statute was 

amended during our review. 

2For purposes of this report, aU references to section 15(k) will refer to section 15 of the 

Small Business Act, codified at 15 U.S.C. § 644(k). In 1988, Congress amended section 

15(k)(3) and allowed the secretary of Defense the discretion to designate the officials to 

whom the Defense OSDBU director should report Pub. L. No. 100-656, § 603, 102 Stat 

3853, 3888 (1988) 

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working with agency acquisitions officials to revise solicitations to 

increase the probability of small business participation; and assisting 

small businesses in obtaining payments from agencies. 3 Additionally, 

OSDBUs are to provide senior agency officials with advice and comments 

on acquisition strategies and market research. 

In three earlier reports (2003, 2004, and 2011), we reviewed federal 

agencies' compliance with the section 15(k)(3) requirement on reporting 

to agency heads or their deputies. 4 In these reports, we also examined 

the extent to which OSDBU directors viewed the functions listed in 

section 15(k) as duties of their offices. In the 2011 report, we found that 7 

of the 16 agencies in our review were not in compliance with the 

requirement for the OSDBU director to report to the head or deputy head 

of the agency. Since then, all 7 of the agencies have implemented our 

recommendation to comply with the reporting requirement that was in 

effect at the time of our review. 

You requested that we evaluate how OSDBUs have implemented the 

requirements of section 15(k). For this report, we examined (1) the extent 

to which selected federal agencies with procurement powers 

demonstrated compliance with five requirements of section 15(k) relating 

to the OSDBU director (including reporting relationships, qualifications, 

and supervisory duties); (2) the extent to which selected federal agencies 

demonstrated compliance with eight section 15(k) requirements for 

carrying out selected OSDBU functions or activities; and (3) the Small 

Business Procurement Advisory Council review of OSDBU compliance 

with section 15(k) requirements. 

3The Small Business Reauthorization Act of 1997 defines the bundling of contract 

requirements as the consolidation of two or more procurement requirements for goods or 

services previously provided or performed under separate smaller contracts into a 

solicitation of offers for a single contract likely to be unsuitable for award to a small 

business due to (1) the diversity, size, or specialized nature of the elements of the 

performance specified; (2) the aggregate dollar value of the anticipated award; (3) the 

geographical dispersion of the contract performance sites; or (4) any combination of the 

factors described. Pub. L. No. 105-135, § 412, 111 Stat 2592, 2617 (1997), codified at 15 

U.S. C.§ 632(o) 

4See GAO, Small and Disadvantaged Business: Some Agencies' Advocates Do Not 

Report to the Required Management Level, GA0~03~863 (Washington, D.C .. Sept 4, 

2003); Small and Disadvantaged Businesses: Most Agency Advocates View Their Roles 

Similarly, GAO~D4-451 (Washington, D.C.: Mar. 22, 2004); and Small Business 

Contracting: Action Needed by Those Agencies VVhose Advocates Do Not Report to 

Agency Heads as Required, GA0-11-418 (Washington, D.C .. June 3. 2011). 

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We reviewed a total of 14 section 15(k) requirements and primarily 

focused on 5 requirements relating to OSDBU directors and 8 relating to 

OSDBU functions-' We reviewed 24 agencies (civilian and military), which 

were selected based on contracting obligations. 6 

For the section 15(k)(3) requirement relating to OSDBU directors 

reporting to a head or deputy head of an agency, we reviewed 

whether 10 agencies demonstrated compliance (the Departments of 

Education, Energy, Labor, State, Air Force, Army, Navy, and Veterans 

Affairs; the National Aeronautics and Space Administration; and the 

Social Security Administration). We selected the 10 agencies based 

on contracting obligations (6 each had more than $10 billion in 

obligations, and 4 each had fewer) and also for variety. Of the 6 

agencies with more than $10 billion in obligations, we selected 3 

Department of Defense (DOD) components and 3 non-DOD 

agencies. 7 To determine whether agencies demonstrated compliance, 

we analyzed documents such as reports, position descriptions, and 

performance appraisals and interviewed OSDBU directors and other 

agency officials. 

To determine if agencies demonstrated compliance with other 

provisions of section 15(k)-four that relate to other requirements for 

OSDBU directors (such as rank and responsibilities), eight that relate 

to OSDBU functions or activities, and one that relates to reports to 

5our review of individual agencies' demonstrated compliance encompasses 13 

requirements. As discussed in this report, an additional requirement, section 15(k)(16), 

requires agencies to submit an annual training and travel report to Congress. During the 

course of our review, the Small Business Administration (SBA) established new 

procedures to submit a consolidated report to Congress, rather than having each agency 

submit an individual report. Due to the new procedures, we do not include this 

requirement in the summary tables or agency appendixes 

60f the 24 agencies, 23 were selected due to high contracting obligations; each of the 23 

procured more than $900 million in goods and services in fiscal year 2015, and together, 

they accounted for 87 percent of all federal contracting obligations. We selected the 24th 

agency, the Office of the Secretary within the Department of Defense, due to its role as a 

policy office within the Department of Defense, 

7 DOD does not have a single OSDBU director for the department The services (the 

Departments of the Air Force, Army, and Navy and the Defense Logistics Agency) and 

other DOD command units have established separate OSDBUs, each headed by a 

director. These organizational units carry out procurement for most of DOD, For purposes 

of this report, we refer to the five DOD components we reviewed (the four services plus 

the Office of the Secretary) as agencles. The DOD agencies, as well as some other 

agencies in our report, refer to their OSDBU as the Office of Small Business Programs. 

For simplicity, we use OSDBU for all agencies in this report 

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Background 

Congress-we surveyed OSDBU directors at 24 agencies.' The 

response rate to our survey was 1 00 percent We also reviewed 

agency information such as policy documents and position 

descriptions and interviewed OSDBU directors and other agency 

officials. 

In cases in which supporting documentation was not available, we made 

the determination based solely on the agency's survey response and/or 

follow-up with agency officials. We also reviewed documentation and data 

related to the Small Business Administration's (SBA) scorecard for small 

business procurement and the peer review process of the Small Business 

Procurement Advisory Council and spoke with SBA officials about this 

program. We compared SBA's "OSDBU organization" success factor 

scores to the compliance information we obtained from our review to 

determine whether these scores correlated with our compliance 

determinations. Appendix I contains additional information on our scope 

and methodology, including the types of evidence considered to find that 

an agency demonstrated compliance. 9 

We conducted our work from May 2016 to August 2017 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and pertorm the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our audit 

objectives. 

The federal government has a long-standing policy to maximize 

contracting opportunities for small businesses. For example, the Business 

Opportunity Development Reform Act of 1988 amended the Small 

Business Act to establish an annual government-wide goal of awarding at 

least 20 percent of prime contract dollars to small businesses. The Small 

Business Reauthorization Act of 1997 further amended the Small 

Business Act to increase the goal to at least 23 percent To help meet this 

8

Section 15(k){13) does not mandate that the OSDBU provide traimng to small 

businesses, but we 1nclude the permissive training language in 15 U.S.C. § 644{k)(13) in 

our discussion of "requirements" and reviewed the agencies' training offered under this 

provision 

9

We used the Federal Procurement Data System-Next Generation to analyze fiscal year 

2015 data on federal agencies' contracting activity. We determined that the data were 

reliable for the purposes a four work. 

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goal, SBA annually establishes prime contract goals for various 

categories of small businesses for each federal agency. Although SBA is 

responsible for coordinating with executive branch agencies on this goal, 

agency heads are responsible for achieving small business goals for their 

agencies. As previously discussed, in 1978 Congress also established an 

OSDBU in each federal agency with procurement powers. These offices 

are intended to advocate for small businesses within the agencies and 

thus also work with agencies to achieve contracting goals. 

Duties of OSDBU directors and functions of OSDBUs. The Small 

Business Act, as amended, establishes a number of requirements related 

to the functions and duties of OSDBUs. For instance, section 15(k)(3) 

generally establishes a direct reporting relationship between the OSDBU 

director and the agency head or deputy head. Other requirements in the 

act specify that the director must have supervisory authority over staff 

performing certain duties, implement and execute the functions and 

duties under the relevant sections of the Small Business Act, and identify 

proposed solicitations that involve the bundling of contract requirements. 

The National Defense Authorization Acttor Fiscal Year 2013 further 

amended the Small Business Act to include provisions that specify 

minimum seniority and pay levels for OSDBU directors, require that their 

performance appraisals be signed by the agency head or deputy head, 

and require that the OSDBU director have certain prior experience. 10 

Section 15(k)(2) specifies that the OSDBU director must be appointed 

to a position in the Senior Executive Service (SES), or in certain 

cases be compensated at not less than the minimum rate of basic pay 

for grade GS-15 of the General Schedule. 

Section 15(k)(3) specifies that the agency head or deputy head 

generally be solely responsible for the performance appraisals of the 

director. 

The act also added a number of additional requirements to the duties 

of the OSDBU director, and specified that the director not hold any 

other title, position, or responsibility, except as necessary to carry out 

the responsibilities of the OSDBU as described in section 15(k). 

10The director of the Office of Small Business Programs within the Office of the Secretary 

of Defense is responsible only to, and reports directly and exclusively to, the secretary or 

the secretary's designee (including for perfonnance appraisals). 

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Some of the required functions of the OSDBU director in section 15(k) of 

the Small Business Act include the following: 

identifying proposed solicitations that involve significant bundling of 

contract requirements; 

working with agency acquisition officials, where appropriate, to revise 

such proposed solicitations to increase the probability of participation 

by a small business; 

assisting small businesses in obtaining payments from an agency (or 

prime contractor) with which they have contracted; 

assigning a small business technical adviser to each office with an 

SBA-appointed procurement center representative (an SBA staff 

member assigned to federal agencies or contract administration 

offices and who carries out SBA policies and programs);" and 

providing the chief acquisition officer and senior procurement 

executive of the agency with advice and comments on acquisition 

strategies, market research, and justifications related to certain 

provisions of the act. 12 

To carry out the functions listed in section 15(k) of the Small Business 

Act, OSDBU directors provide advice on small business matters and 

collaborate with the small business community. Some of the primary 

duties of OSDBU directors include 

advising agency leadership on small business matters; 

providing direction for developing and implementing policies and 

initiatives to help ensure that small businesses have the opportunity to 

compete for and receive a fair share of agency procurement; 

providing agency acquisition and program personnel with leadership 

and oversight of education and training related to small business 

contracting; 

conducting reviews of small business programs; and 

11Duties of procurement center representatives include reviewing proposed acquisitions 

and making recommendations and conducting periodic reviews of their assigned 

contracting activities for compliance with sma!! business policies. 48 C.F.R. § 19.402(c). 

12See appendix II for more information on section 15(k) requirements included in this 

review. 

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serving as the agency liaison to SBA, including providing annual 

reports on agency activities, performance, and efforts to improve 

performance. 

Reviews by Small Business Procurement Advisory Council. The 

National Defense Authorization Act for Fiscal Year 2013 amended the 

statutory requirements of 15 U.S. C.§ 644a to require the interagency 

council known as the Small Business Procurement Advisory Council 

(SBPAC) to annually review each OSDBU to determine compliance with 

section 15(k) requirements.'' These reviews are used to help determine 

SBA's annual scorecard grade for each agency." SBPAC must report the 

results to the House and Senate Small Business committees. SBA chairs 

the council, which serves to assist agencies in their acquisition planning 

efforts. The council is also directed to identify best practices for 

maximizing small business utilization in federal contracting. 

Roles of other procurement officials. OSDBU directors are not the only 

officials responsible for helping small businesses participate in federal 

procurement. 

At the agency level, the heads of procurement departments 

(sometimes with a title of senior procurement executive) are 

responsible for implementing the small business programs at their 

agencies, including achieving program goals. 

Generally, staff in agency procurement departments assigned to work 

on small business issues (small business specialists) coordinate with 

OSDBU directors on their agencies' small business programs. 

Chief acquisition officers provide a focal point for acquisition in agency 

operations. Key functions of the chief acquisition officers include 

monitoring and evaluating agency acquisition activities, increasing the 

use of full and open competition, increasing performance-based 

contracting, making acquisition decisions, managing agency 

13SBPAC comprises the SBA administrator or the designee of the administrator, the 

director of the Minority Business Development Agency, and the head of each OSDBU in 

each federal agency having procurement powers 

14According to SBA, the annual scorecard is used for purposes including measuring how 

well federal agencies reach their small business and socioeconomic prime contracting and 

subcontracting goals and reporting agency-specific progress, Scorecard grades are based 

on the extent to which (or how well) agencies met goals for prime contracts and 

subcontracts and on their progress plans for meeting goals. 

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Agencies 

Demonstrated High 

Levels of Compliance 

with Two OSDBU 

Director 

Requirements, but 

Three Other 

Requirements Had 

Lower Rates of 

Compliance 

Not All OSDBU Directors 

Reported to the Head or 

Deputy Head of the 

Agency 

acquisition policy, acquisition career management, acquisition 

resources planning, and conducting acquisition assessments. 

Of the five director-related requirements we reviewed, the level of 

demonstrated compliance varied, but was not universal for any one 

requirement (see table 1): 

Four of the 10 agencies we reviewed for the requirement that the 

director report to the head or deputy head of the agency did not 

demonstrate compliance. 

Twenty-three of the 24 agencies we surveyed demonstrated 

compliance for two requirements on director experience and 

supervisory duties. 

Nineteen of 24 agencies demonstrated compliance with a requirement 

for collateral duties of the director. 

Eighteen of 24 agencies demonstrated compliance with a requirement 

for the director's compensation and seniority. 

Appendix II discusses the section 15(k) requirements included in this 

review. See appendixes III-XXVII for our overall determinations of 

demonstrated compliance with section 15(k) requirements and 

determinations of demonstrated compliance at each agency. 

Section 15(k)(3) generally requires that the OSDBU director report 

directly to and be responsible only to the agency head or the deputy 

head. 15 Documentation we reviewed and discussions we held at 6 of the 

10 agencies indicated that the directors reported as required. Other 

documents such as organizational charts, position descriptions and 

performance appraisals from the Departments of the Air Force, Army, 

Labor, Navy, and State and from the National Aeronautics and Space 

Administration (NASA) support this finding. 

The remaining four OSDBU directors reported to officials at lower levels 

than the agency head or deputy head. Three of the four-at the 

Departments of Energy and Veterans Affairs (VA) and the Social Security 

15The director of the Office of Small Business Programs within the Office of the Secretary 

of Defense must report directly to and be responsible only to the secretary or the 

secretary's designee. 15 U.S. C. § 644{k)(3). Our report did not review the Department of 

Defense- Off1ce of the Secretary for section 15(k)(3) compliance. 

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Administration (SSA)-reported to chiefs of staff. At the Department of 

Education, the OSDBU director reported to the senior policy adviser. 

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Agency 

15(&): 

Director 

experienCe 

15(k)(2): 

C<:lmp&nsatlonl 

Seniority 

1~(k){3}: 

f'lep6rtlilg 

requirement, 

(head of agen¢yor 

deputy head)' 

15{k)(1): 

ll<Jl:i$rYHiory duties 

15(~)(15): 

Collateral 

dull""' 

Legend OSDBU "Of!tce t>l Smllli and DISadvantaged Susmess U\tliza\lon. ,/"'demonstrated compltance, 0., did lla\ demonstrate corr:plianca, NIA:: r1ot assessed 

SourcC'I GAO i GA0·17-67S 

Note: The information we collected to mak.e the determination for the director-related requirements 

included survey responses: follow-up responses; and documentation such as policies. position 

descriptions, organizational charts, and reports. If supporting documentation was not available, we 

made the determination based solely on the agency's survey response and/or follow-up with agency 

officials. We followed up with a!l 24 OSDBU offices to clarify responses and obtain additional 

information in instances in which they indicated they did not perform a section 15(k) requirement 

"We reviewed compliance INith this requirement for 10 agencies (the Departments of Education, 

Energy, Labor. State, Air Force, Army, Navy, and Veterans Affairs; the National Aeronautics and 

Space Administration; and the Social Security Administration). Agencies for which we did not assess 

this requirement are indicated in the table by "N/A" 

Energy. The position description states that the director reports 

directly to the secretary, However, the performance appraisals we 

reviewed were signed by the deputy chief of staff and the chief of 

staff. 16 An Energy official stated that the secretary provides input into 

the OSDBU director's rating. 

VA. Based on documentation we received from and discussions we 

held with VA, the OSOBU director reports to the chief of staff, who 

signs the performance appraisals. An OSDBU official told us that if a 

matter required the attention of the secretary, the director would first 

advise the chief of staff. However, the official stated that the director 

16At the Department of Energy, we reviewed the performance appraisals for the former 

OSOBU director because the current OSDBU director's tenure started in January 2017. 

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Twenty-three of 24 

Agencies We Surveyed 

Demonstrated Compliance 

with Requirements for 

Director Qualifications and 

Supervisory Duties, but 

Five Directors Had 

Collateral Duties 

has all the access to the secretary and deputy secretary that he 

needs. 

SSA. The organizational chart and performance appraisal show that 

the OSDBU director reports to the chief of staff. Agency officials 

explained that, since 2013, the commissioner has delegated this duty 

to the deputy commissioner. As of May 10, 2017, the agency did not 

have a deputy commissioner because the deputy commissioner was 

serving as the acting commissioner. In the absence of a deputy 

commissioner, the responsibilities were transferred to the chief of 

staff. 

Education. The performance appraisal indicates that the OSDBU 

director reports to the senior policy adviser. An OSDBU official 

explained that, currently, the agency does not have a deputy 

secretary and that this duty had been delegated to the senior policy 

adviser. The official also stated that, in the past, the director typically 

met with the deputy secretary on a monthly basis and provided an 

update to the deputy secretary on small business activities. 

Levels of demonstrated compliance with three other requirements for 

directors (experience, supervisory duties, and collateral duties) varied 

somewhat by requirement at the 24 agencies we surveyed, but were high 

across all three requirements. 

Director experience. Section 15(k) requires that the OSDBU director 

have prior experience from among a number of enumerated roles (such 

as federal contracting officer, program manager for a federal acquisition 

program, or attorney specializing in federal procurement law). Based on 

their survey responses and follow-up discussion with officials at the 

agencies, 23 of the 24 agencies demonstrated compliance with the 

requirement relating to prior experience of OSDBU directors (examples 

follow). 

State. According to the survey response, the OSDBU director has 

prior experience in program management for a federal acquisition 

program and also was a small business technical adviser and small 

business liaison officer. 

Education. The survey response from the Department of Education 

indicated the director had prior experience as a federal contracting 

officer, contracts administrator, and federal small business contracts 

manager. 

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Interior. Survey responses from the Department of the Interior 

indicated the director had prior experience as a contracts 

administrator and small business liaison officer. 

The OSDBU director at the Department of Housing and Urban 

Development (HUD) did not demonstrate compliance. While the OSDBU 

director had experience in related jobs, the director had not had any of 

the jobs specifically identified in section 15(k). The survey response cited 

the director's prior experience as the deputy assistant secretary for 

operations and management and deputy chief human capital officer. The 

director also served in several positions in which contracting was a 

responsibility. An OSDBU official stated that the director has had a long 

work history in a variety of jobs and felt that the director was prepared for 

the role of the OSDBU director. 

Supervisory duties. Section 15(k)(7) requires that the OSDBU director 

have supervisory authority over agency personnel to the extent that the 

functions and duties of such personnel are related to the functions or 

duties implemented and executed by the OSDBU. Based on the survey 

responses, follow-up with agency officials, and review of position 

descriptions, 23 of 24 agencies demonstrated compliance with the 

requirement relating to supervisory duties of the OSDBU director. 

For instance, at the Departments of the Army and Homeland Security, the 

position descriptions and survey responses we reviewed indicated that 

the directors have such supervisory authority over agency personnel (to 

the extent that the functions and duties of the personnel relate to sections 

8 and 15 of the Small Business Act). 17 At the Department of Justice, the 

survey response indicated that the OSDBU director oversees OSDBU 

staff and has supervisory authority over small business specialists whose 

duties are related to sections 8 and 15 of the Small Business Act. Also, in 

a follow-up discussion, an OSDBU official told us that the director works 

regularly with each small business specialist in executing the 

department's small business programs. 

17The Small Business Act created many small business programs and 

requirements. Section 8 creates a system through which small business government 

contracting is encouraged and outlines certain requirements for agencies contracting with 

small businesses. Section 8 also includes the women-owned small business procurement 

program and empowers the Small Business Administration to provide assistance in 

multiple ways to small businesses. See 15 U.S.C. § 637. 

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In contrast, the Defense Logistics Agency (DLA) did not demonstrate 

compliance with the requirement relating to supervisory duties. An official 

in the OSDBU explained that, while the director appointed small business 

associates to work in the field, the director does not directly supervise 

field staff. The office provides policy and program oversight, and the field 

staff report to deputy commanders at their sites. 

Collateral duties. Section 15(k)(15) requires that the person in the 

position of the director exclusively carry out the duties enumerated in 

Small Business Act and that the OSDBU director not hold any other title, 

position, or responsibility, except as necessary to carry out 

responsibilities under this subsection. Based on the survey responses 

and follow-up interviews with officials at selected agencies, we 

determined that 19 of 24 agencies demonstrated compliance with this 

requirement." 

The remaining five OSDBU directors or acting directors at the lime of our 

review at the U.S. Department of Agriculture (USDA), Department of 

Labor, Environmental Protection Agency (EPA), SSA, and U.S. Agency 

for International Development (USAID) indicated they had collateral 

responsibilities. 19 

USDA. An OSDBU official indicated that the acting director holds 

another position as the acting assistant secretary for administration. 

The official indicated that the acting director spends 40-60 hours a 

week on duties related to the acting assistant secretary position. The 

official explained that the agency has had an acting OSDBU director 

since January 2017, when the prior OSDBU director's position as a 

political appointee ended. The official stated that past OSDBU 

1eThe VA OSDBU director has responsibilities that include verification functions for 

service-disabled veteran~owned small businesses and veteran-owned small businesses 

On February 13, 2017, the VA OSDBU director sought a legal opinion from VA's Office of 

General Counsel to determine if the pertormance of the verification function for the 2 small 

business categories was within the scope of the responsibilities authorized for the OSDBU 

director under 15 U.S. C.§ 644(k)(15). On April 6, 2017, VA's Office of General Counsel 

determined that performing the verification function was necessary for the OSDBU director 

to pertorm the responsibilities set forth in 15 U.S. C.§ 644(k)(4) and 15 U.S. C.§ 637, and 

that performing the verification function was not prohibited by 15 U,S.C. § 644{k){15). 

19We also assessed the acting OSDBU directors for certain compliance determinations for 

section 15{k) director requirements, such as reporting to the agency head or deputy head 

or collateral duties. At the time of our review, two of the five agencies that did not 

demonstrate compliance-USDA and the Department of Labor-had acting OSDBU 

directors. 

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directors worked exclusively as OSDBU directors and that, when the 

permanent OSDBU director is appointed, that person will not have 

other duties. The official stated that he does not know when the 

director position will be filled. He said that the secretary of USDA, who 

was recently confirmed, would likely make the political appointment. 

Labor. Based on information we received from and discussions we 

held with the Department of Labor, the acting OSDBU director holds 

other positions and titles, including assistant secretary of 

management and administration and chief acquisition officer. 20 

According to a March 2010 department order, the goal of realigning 

the agency's small business-related functions under the assistant 

secretary for administration and management is to better integrate 

small business outreach and small business procurement within the 

overall procurement function of the department. The assistant 

secretary for administration and management was appointed to serve 

as the OSDBU director. 

EPA. According to an agency official, the director also oversees two 

EPA-wide programs: (1) the Disadvantaged Business Enterprise 

Program, which is designed to increase the use of such businesses in 

procurements funded under EPA's financial assistance agreements; 

and (2) the Asbestos and Small Business Ombudsman Program, 

which advocates for small businesses on regulatory and 

environmental compliance issues. The official stated that the intent is 

to increase cost efficiencies and effectiveness in overlapping functions 

directed at small businesses. The official also stated that sharing 

resources to accomplish these complementary agendas makes sense 

for the agency. Further, the official said that the director helps to 

provide administrative support to the procurement manager for the 

Disadvantaged Business Enterprise Program. Finally, the Clean Air 

Act of 1990 requires the OSDBU, through the program ombudsman, 

20The Department of Labor refers to the OSDBU director as the director of the Small and 

Disadvantaged Business Utilization Program. 

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to monitor activities for the Asbestos and Small Business 

Ombudsman Program. 21 

SSA. The survey response and follow-up discussion indicated that the 

OSDBU director held a collateral position as agency coordinator for 

the Electronic Subcontracting Reporting System. SSA officials 

explained that, originally, the subcontracting reporting was manually 

collected. When the reporting went to an electronic collection system, 

the OSDBU director was named as the agency contact. This resulted 

in the OSDBU accepting responsibility for this reporting system, which 

contracting officers use. An OSDBU official stated that the time the 

director spends on this activity is minimal-occasionally addressing a 

few e-mails. The official said the system is critical to the director's 

role, but the coordination work is not critical. The OSDBU official does 

not view this to be a collateral duty. 

USAID. The survey response stated that the OSDBU director 

oversees the Minority Servicing Institutions Program. In a follow-up 

meeting, an OSDBU official told us that this activity was not essential 

to carrying out OSDBU duties. The program involves both advocacy 

and outreach and has a full-time coordinator. The OSDBU official 

stated that during most weeks the director spends less than 2-3 hours 

on activities related to the Minority Servicing Program but on occasion 

may spend more time on such work. The official added that the 

OSDBU director overseeing this responsibility made sense from an 

agency perspective because the OSDBU's role includes promoting 

and assisting disadvantaged businesses. 

21 According to the Clean Air Act of 1990, the administrator shall direct the agency's 

OSDBU through the small business ombudsman to monitor the Small Business Stationary 

Source Technical and Environmental Compliance Assistance Program under this Clean 

Air Act section. The monitoring activities include (1) rendering advisory opinions on the 

overall effectiveness of the assistance program, difficulties encountered, and degree and 

severity of enforcement; (2) periodic reporting to Congress on program compliance with 

requirements of the Paperwork Reduction Act, Regulatory Flexibility Act [5 U.S.C. 601 et 

seq.], and Equal Access to Justice Act; (3) reviewing information to be issued by the 

program to ensure the layperson can understand the information; and (4) having the 

program serve as the secretariat for the development and dissemination of such reports 

and advisory opinions. 42 U.S.C. § 7661f(d). 

For purposes of our report, we did not include this responsibility as the determining factor 

for our assessment. Instead, we relied on the Disadvantaged Business Enterprise 

Program responsibility when making our determination that EPA did not demonstrate 

compliance with section 15(k)(15)_ 

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Most OSDBU Directors 

Demonstrated Compliance 

with Requirement for 

Compensation and 

Seniority 

Section 15(k)(2) generally requires that the OSDBU director be appointed 

by the agency head to an SES position-" However, in cases in which the 

positions of chief acquisition officer and senior procurement executive at 

an agency are not SES positions, the OSDBU director may be appointed 

to a position compensated at not less than the minimum rate of basic pay 

for grade 15 of the General Schedule. 

Survey responses and agency documents we reviewed at the 24 

agencies show that the positions of most permanent OSDBU directors 

(18 of 24) were at theSES level." However, 6 OSDBU directors-at 

USDA, the Departments of Commerce and Labor, DLA, the Office of 

Personnel Management (OPM), and SSA-held positions at other levels, 

such as at GS-15, while the chief acquisition officers or senior 

procurement executives in these agencies held SES-Ievel positions or 

were executive schedule political appointees who were not in SES 

positions. 

USDA. At the lime of our review, the current OSDBU director was an 

acting director. OSDBU officials at USDA explained that, historically, 

the permanent director was a political appointee holding an SES 

position. However, the prior director was a political appointee holding 

a GS-15 position. The officials explained that the position was 

temporary (6 months) and that it would have been difficult to fill the 

position with a member of the SES on a short-term basis. According 

to the survey, both the senior procurement executive and the chief 

acquisition officer held SES positions. 

SES position is any position in an agency classified above GS-15 or in Level IV or V 

executive schedule, or an equivalent position, not required to be filled by an 

appointment by the President (with the consent of the Senate). An employee in such a 

position (1) directs the work of an organizational unit; {2) is held accountable for the 

success of 1 or more specific programs or projects; (3) monitors progress toward 

organizational goals and periodically evaluates and makes appropriate adjustments to the 

goals: (4) supervises the work of employees other than personal assistants; or (5) 

otherwise exercises important policy-making, policy-determining, or other executive 

functions, wlth certain enumerated exceptions. 5 U.S. C. § 3132(a)(2). Therefore, a 

presidentially appointed, Senate-confirmed position compensated under the executive 

schedule does not meet the definition of SES. 

23!n cases in which the agency had an acting director, we assessed whether agencies 

demonstrated compliance based on the seniority and compensation of the immediate prior 

permanent director. 

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Commerce. Officials told us that they have been discussing the 

possibility of converting the OSDBU director position to an SES 

position and were discussing the process for securing additional 

resources for this conversion. 

Labor. At the time of our review, Labor had an acting director who 

held an SES position. We assessed compliance based on the 

immediate prior permanent OSDBU director. An official from the 

Department of Labor stated in an e-mail that the prior permanent 

OSDBU director was a presidentially appointed, Senate-confirmed 

position compensated under the executive schedule. 

DLA. The survey response and the position description indicated that 

the director held a General Schedule position (GS-15). According to 

the survey, the chief acquisition officer and senior procurement 

executive are SES positions. In a follow-up meeting, agency officials 

stated that the agency has requested that DOD seek congressional 

approval to add an SES position for the OSDBU director. They stated 

that the agency has been waiting for authorization to make this 

change. 

OPM. An OSDBU official told us that, since the enactment of this 

requirement in 2013, the director has held a GS-15 position. The 

agency has been considering making this an SES position, but the 

official explained that, until the agency administrator position was 

filled, the agency would not act on this matter. 

SSA. Officials said that, although the law requires the OSDBU director 

to be an equivalent position to the senior procurement executive, they 

believe this does not work at SSA. They explained that SSA is a small 

agency in terms of acquisitions. They further stated that GS-15 is the 

level appropriate for the OSDBU director. 

Ongoing demonstration of noncompliance with section 15(k) OSDBU 

director-related requirements, described in this section of the report, 

potentially undermines the intent of the act. Reporting to lower levels of 

management may result in OSDBU directors not having direct access to 

top agency management, which may limit their influence. Collateral duties 

may take time away from the critical functions within section 15(k) duties. 

While some OSDBU officials believed that these collateral duties are 

minimal or are appropriate, the agencies have not reported their concerns 

to Congress. Also, if an OSDBU director holds a General Schedule 

position and the agency's chief acquisition officer and senior procurement 

executive are SES positions, the OSDBU director's ability to effectively 

advocate for small businesses may be affected. 

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Agency Compliance 

Varied by Functional 

Requirement 

All OSDBUs 

Demonstrated Compliance 

with Certain Requirements 

Levels of demonstrated compliance were high for five of eight functional 

requirements, but were much lower for the remaining three requirements 

(see table 2). 

All 24 agencies demonstrated compliance with three section 15(k) 

areas related to providing advice to officials, providing training to small 

businesses or acquisition personnel, and receiving unsolicited 

proposals and forwarding them when appropriate. 

Twenty-three of the 24 agencies demonstrated compliance related to 

identifying and addressing significant bundling of contract 

requirements and providing payment assistance to small businesses. 

Ten and eight of the 24 agencies, respectively, did not demonstrate 

compliance with requirements for assigning small business technical 

advisers and providing advice on proposed in-sourcing decisions. 

Nine of the 24 agencies did not demonstrate compliance with the 

requirement to respond to notifications of undue restrictions on the 

ability of small businesses to compete. 

Our review of survey responses, agency documents, and interviews with 

agency officials showed that all 24 agency OSDBUs demonstrated 

compliance in three areas-providing advice to officials, providing training 

to small businesses or acquisition personnel, and forwarding unsolicited 

proposals. 

Provide advice to chief acquisition officer and senior procurement 

executive. Section 15(k}(12) requires that an officer or employee in the 

position of the OSDBU director must provide the chief acquisition officer 

and senior procurement executive of the agency with advice and 

comments on acquisition strategies, market research, and justifications 

related to the consolidation of contract requirements. All 24 agencies we 

reviewed demonstrated compliance with the requirement to provide such 

advice and comments. Survey and follow-up responses from agency 

officials revealed that the frequency and manner of such advice varied 

across OSDBUs. Some agencies had meetings with various acquisition 

personnel to discuss issues for which the OSDBU director provided input 

to the chief acquisition officer and senior procurement executive. For 

example, policy documents and survey responses from USDA showed 

that the director participates in the procurement council that advises the 

chief acquisition officer and senior procurement executive. Other 

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agencies had scheduled meetings between the OSDBU director and the 

chief acquisition officer, senior procurement executive, or both. 

Table 2: Agencies' Demonstrated Compliance with Seetlon 15(k) Requirements for Select OSDBU f'unctions as of May 19, 

2017 

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Provide training to small businesses. Section 15(k)(13) states that an 

officer or employee of the OSDBU may provide training to small 

businesses and contract specialists. Each of the 24 agencies 

demonstrated compliance with the requirement Agencies provided 

training to contracting personnel, small businesses, or both. The scope of 

the training varied from presentations to staff on the fundamentals of 

small business contracting and SBA's socioeconomic contracting goals to 

one-on-one coaching with small businesses. One OSDBU official told us 

that the agency provided regular, ongoing, ad-hoc small business training 

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Nearly All OSDBUs 

Demonstrated Compliance 

with Requirements to 

Identify Significant 

Bundling and Provide 

Payment Assistance 

to acquisition and program staff on an almost daily basis as part of its 

work. Another OSDBU official told us they provided both in-person and 

virtual training to small businesses and contracting specialists. An 

additional OSDBU official told us that the OSDBU manages an annual 

training program that consists of 18 to 25 individual training courses 

which cover a wide variety of issues from specific small business 

programs to using third-party contracts. 

Receive unsolicited proposals and forward them when appropriate. 

Section 15(k)(14) requires OSDBUs to receive unsolicited proposals and 

to forward them, when appropriate, to personnel of the activity 

responsible for reviewing such proposals. All 24 OSDBUs indicated that, 

if the office were to receive an unsolicited proposal, they would forward it 

to appropriate agency personnel. Some OSDBUs indicated that it was a 

rare occurrence for the OSDBU office to receive an unsolicited proposal. 

Several agencies, including NASA and HUD, had publicly available 

procedures and guidelines for submitting an unsolicited proposal to the 

appropriate office. 

Based on our review of survey responses, policy documents, and 

interviews with agency officials, 23 of the 24 agencies demonstrated 

compliance with identifying and addressing significant bundling of 

contract requirements and with providing payment assistance to small 

businesses. 

Identify and address bundling of contract requirements. Section 

15(k)(5) requires OSDBUs to identify proposed solicitations that involve 

significant bundling of contract requirements and, where appropriate, to 

work with agency officials to mitigate the effects to small businesses. 

Twenty-three of 24 OSDBUs demonstrated compliance with this 

requirement. Most agencies indicated they had policies for the OSDBU to 

review proposed solicitations and many cited having a certain dollar 

threshold to review for any bundling. For example, OPM's survey 

response and submitted policy documentation indicated that small 

business specialists review all proposed procurements over $150,000. 

One agency did not demonstrate compliance. Within the Department of 

Defense- Office of the Secretary, the OSDBU director has an oversight 

role in relation to identifying proposed bundling, rather than an 

implementation role. According to OSDBU officials, the Office of the 

Secretary's small business staff work with contracting officers to review 

proposed acquisitions and mitigate the effects of bundling. However, due 

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to the size and decentralized nature of contracting at the Office of the 

Secretary, these personnel are not part of the OSDBU. 

Provide assistance on payments. Section 15(k)(6) requires OSDBUs to 

assist small businesses in obtaining payments, required late payment 

interest penalties, or information on payments. Twenty-three of 24 

OSDBUs helped small businesses seeking assistance with payments, 

whether from the agency or from a prime contractor (when the small 

business is a subcontractor). 

The types and scope of payment assistance varied, but most agencies 

had policies to address small business payments. For example, the 

survey response from the Department of Justice indicated that the agency 

has a policy to pay small businesses within 15 days of receiving an 

invoice. An agency official thought this policy greatly reduced the 

requests for assistance the OSDBU received, but the official noted that, 

should a small business ask for assistance. the OSDBU would provide 

assistance as needed. In contrast, SSA did not demonstrate compliance. 

Officials we interviewed said the OSDBU only assists in limited instances 

involving a small business seeking help with payment issues, usually by 

referring the business to the contracting office. The officials said that the 

OSDBU generally does not get involved when a small business seeks 

payment from a prime contractor. 

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Some OSDBUs Did Not 

Demonstrate Compliance 

for Assigning Small 

Business Technical 

Advisers, Advising on InSourcing, and Responding 

to Notifications of Undue 

Restrictions 

In reviewing information from our survey, follow-up questions, interviews, 

and policy documentation, we determined that 10 of the 24 agencies did 

not demonstrate compliance with the requirement for assigning small 

business technical advisers, and 8 of the 24 agencies did not 

demonstrate compliance with providing advice on proposed in-sourcing 

decisions. Nine of the 24 agencies did not demonstrate compliance with 

the requirement to respond to notifications of an undue restriction on the 

ability of small businesses to compete. 

Assign small business technical advisers. Section 15(k)(8) requires 

the OSDBU director to assign a small business technical adviser to each 

office in which SBA has assigned a procurement center representative. 24 

Fourteen of 24 agencies demonstrated compliance with this requirement, 

while 10 did not. OSDBU officials frequently cited organizational structure 

as a barrier to assigning technical advisers. However, we determined that 

they did not demonstrate compliance, illustrated in the following 

examples. 

State. An agency official stated that the OSDBU director does assign 

small business technical advisers to offices with an SBA procurement 

center representative; however, the technical advisers are not full-time 

employees of the procuring activity and are only assigned to work with 

the procurement center representative as required. There is 1 

procurement center representative assigned to cover a1146 bureaus at 

the Department of State. Small business technical advisers within the 

OSDBU are assigned to work with the bureaus based on need. All 

technical advisers are full-time employees in the OSDBU and have at 

least 8 years of experience. 

SSA. Agency officials commented that the statute was intended for 

agencies with larger acquisition operations with multiple acquisition 

offices. SSA is a smaller procurement agency (one acquisition office) 

and does not assign a technical adviser. The officials stated that the 

agency does have an adviser position (which is termed the Small and 

Disadvantaged Business Utilization Specialist), but that position is 

managed by another office. 

24The small business technical advisers must be fu!!-time employees of the procuring 

activity and well qualified, technically trained, and familiar with the supplies or services 

purchased at the activity. In addition, the adviser's principal duty must be to assist the 

SBA procurement center representative in his or her duties and functions relating to 15 

U.S.C. § 637 and 644. 15 U.S.C. § 644(k)(8)(A)-(B). 

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Army and Navy. The Departments of the Army and Navy told us that 

their OSDBU directors did not assign small business technical 

advisers because the technical advisers were hired by and reported to 

the head of the contracting activity at the procurement center in which 

they were located. At Navy, an agency official stated that law and 

regulation disagree on this requirement. The Defense Federal 

Acquisition Regulation delegated the responsibility to hire technical 

advisers to the head of contracting. An agency official stated that this 

is an effective way to implement the Small Business Act. However, 

when statutory provisions, such as section 15(k), conflict with 

regulations, such as the acquisition regulation, the statute controls. 

Advise on in-sourcing. Section 15(k)(11) requires the OSDBU director 

to review and advise the agency on any decision to convert an activity 

performed by a small business to an activity performed by a federal 

employee (known as in-sourcing). Based on the survey responses and 

interviews, we determined that 8 agencies did not demonstrate 

compliance with this requirement. Agencies not demonstrating 

compliance typically said that OSDBUs did not have a role in reviewing 

every decision to in-source an activity but that the office might be 

consulted in some cases, as shown in the following examples. 

HUD. An OSDBU official told us that in-sourcing was generally 

considered a business decision and carried out by the Office of the 

Chief Procurement Officer, and that the OSDBU was not consulted. 

SSA. The officials told us that the budget office handles in-sourcing 

conversions, but that the budget office might contact the OSDBU 

regarding in-sourcing on an informal basis. 

Respond to notification of an undue restriction on ability of small 

business to compete. Section 15(k)(17) requires that, when notified by a 

small business (before contract award) that the small business believes 

that a solicitation, request for proposal, or request for quotation unduly 

restricts the ability of the small business to compete for the award, the 

OSDBU director must (1) submit the notice to the contracting officer, and 

if necessary, recommend ways to increase the opportunity for 

competition; (2) inform the agency's advocate for competition; and (3) 

ensure that the small business is aware of other resources and processes 

available to address unduly restrictive provisions. 

Nine of the agencies did not demonstrate compliance with all of the 

required steps. OSDBU officials from the nine agencies not 

demonstrating compliance told us that they would carry out two of the 

three required follow-up actions. For instance, OSDBU officials at some 

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agencies told us that, after receiving a notification, the directors would 

discuss the issue with the contracting officer working on the solicitation or 

proposal and that they also would ensure the small business was aware 

of resources to address the issue, but they would not consistently notify 

the agency's advocate for competition (examples follow). 

NASA, USDA, and DLA. The OSDBU officials from these agencies 

indicated that the goal was to resolve the competition issue at the 

lowest level possible, meaning directly with the contracting officer, and 

thus not inform the agency's competition advocate. Additionally, the 

officials thought that it was more efficient to work to resolve issues at 

the lowest levels rather than notifying the agency advocate for 

competition. At USDA, OSDBU officials indicated that, ~direct 

resolution with the contracting officer was unsuccessful, the situation 

could be elevated, possibly to the level of advocate for competition. 

Additionally, an OSDBU official at NASA said it was rare to receive 

notifications of this type because the agency proactively makes 

solicitations work for small businesses. 

USAID. The survey response indicated that the OSDBU does not 

inform the agency's advocate for competition of the notice. An agency 

official told us that the office goes directly to the procurement officer 

and ombudsman to resolve competition issues. 

In addition to survey responses about individual functions, a few agencies 

commented on how staffing levels affected their ability to fully carry out 

section 15(k) functions. The Department of Commerce said the OSDBU 

was significantly affected by low staffing levels, limiting it in efforts such 

as creating and updating small business contracting policies, reviewing 

broader acquisition policies that may affect small businesses, and 

conducting training for small businesses. SSA stated that staffing levels 

prevented the OSDBU from attending outreach events and meeting 

individually with small business owners due to scheduling conflicts. 

Additionally, the Air Force indicated that its OSDBU could do more, or 

have a more robust program implementation, if it had additional staff. 

For the agencies we identified as not having demonstrated compliance 

with certain OSDBU function requirements (such as assigning small 

business technical advisers or responding to notifications of an undue 

restriction on competition), some agencies felt that their existing 

organization structure was a barrier to carrying out an activity or that their 

goal was to resolve issues at the lowest levels possible without notifying 

the agency advocate for competition. But continued demonstration of 

noncompliance with these requirements may undermine the intent of the 

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SBA Has Begun to Collect 

OSDBU Training and 

Travel Reports for 

Consolidated Submission 

to Congress 

provisions and may limit the extent to which OSDBUs can advocate for 

small businesses. Additionally, by not having a role in carrying out certain 

section 15(k) requirements, OSDBUs may be unaware of small business 

matters that might require further attention. 

In addition to the 13 requirements relating to OSDBU directors or to 

OSDBU functions, we reviewed an additional requirement. Section 

15(k)(16) requires that each fiscal year the OSDBU director submit a 

report to the House Committee on Small Business and the Senate 

Committee on Small Business and Entrepreneurship describing training 

provided and training and travel expenditures in the past fiscal year. Most 

OSDBUs (22 of 24) told us they did not submit these reports to Congress 

or SBA in past years. Some of the agencies told us in interviews that they 

had not submitted this report because SBA or the committees had not 

provided guidance on how to do so. Other agencies indicated they were 

unaware of this requirement. Two agencies (the Department of 

Transportation and USAID) indicated that they had submitted fiscal year 

2014 and 2015 reports to Congress, and they provided us with copies. 

During the course of our review, SBA established new procedures to 

collect training and travel reports from all the OSDBUs. According to SBA, 

all of the 24 agencies submitted their fiscal year 2016 reports to SBA, 

which SBA compiled and submitted as a consolidated report to Congress 

in June 2017. 25 

25According to SBA, in an open discussion at the October 2016 SBPAC meeting, an 

agency OSDBU director suggested that there might be a benefit in SBA collecting and 

forwarding a summary report on behalf of the OSDBU directors (rather than individual 

reports of varying fonnats and submission dates) to satisfy the requirements of section 

15(k)(16). SBA concurred that having a single summary report would provide a more 

coherent report to Congress. At the November 2016 SBPAC meeting, SBA established an 

agency report submission date of March 7, 2017, and a target date of June 9, 2017, to 

forward a consolidated report to Congress (after resolving discrepancies, compiling the 

summary report, and obtaining agency clearances). 

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Some SBPAC 

Compliance Review 

Scores Were Not 

Consistent with Our 

Compliance 

Determinations 

We found that some SBPAC peer review scores were inconsistent with 

our demonstrated compliance determinations (for the section 15(k) 

requirements we both considered). As required, the SBPAC peer review 

panel annually conducts reviews of each OSDBU to determine 

compliance with section 15(k) requirements." The review assesses an 

agency's progress plan by considering seven success factors for 

achievement of and commitment to small business contracting. 27 SBPAC 

must report the results to the House and Senate Small Business 

committees. The peer reviews are a form of internal control that is 

intended to provide some assurance that OSDBUs comply wrth section 

15(k) requirements. 

More specifically, for several agencies, our compliance determinations for 

the section 15(k) requirements related to organizational structure did not 

align with SBPAC's fiscal year 2016 scores for the "OSDBU organization" 

success factor (see table 3). 26 For example, the Department of Labor's 

OSDBU organization score was 0.9 (classified by SBA as above 

average), but we determined that the agency did not demonstrate 

compliance with two of five section 15(k) requirements related to 

organizational structure. Similarly, SSA received an OSDBU organization 

score of 0.8 (satisfactory), but we determined that it had not 

demonstrated compliance with four of five section 15(k) requirements 

related to organizational structure. Table 3 provides additional examples 

of inconsistencies between the SBPAC scores and our determinations. In 

26The National Defense Authorization Act for Fiscal Year 2013 amended the statutory 

requirements of 15 U.S. C.§ 644a to require SBPAC to annually review each OSDBU to 

determine compliance with section 15(k) requirements and report the results to House and 

Senate Small Business committees. The peer review pane! comprises nine OSDBU 

directors who volunteer to review the agency submissions and assign a numeric score for 

each success factor, which 1s averaged to determine an avera!! score 

27 Some success factors closely mirror requirements and areas of section 15(k), while 

others are more general and do not align with section 15(k) specifically. 

28For purposes of comparing SBPAC scores and our determinations, we focused on the 

organization success factor because it aligned most directly with five section 15(k) 

requirements-sections 15(k)(2), (k)(3), (k)(7), (k)(8), and (k)(15). As noted earlier, we 

reviewed 10 agencies in relation to compliance with section 15(k}(3). Other success 

factors are less directly related to the additional section 15(k) requirements in our review. 

The nine members of the peer review pane! each provide a score of 0.6, 0.7, 0.8, 0.9, or 

1.0 for each success factor, and SBA then calculates an average of each success factor 

score. SBA's peer review panel guidance provides the following grading scale for success 

factor scores: 1.0 (excellent), 0.9 {above average), 0.8 (satisfactory), 0.7 (below average), 

and 0.6 (unsatisfactory). 

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addition, agencies in the most recent review received overall scores 

(across the seven success factors) of 94-98 percent 

For each success factor, agencies provide SBPAC reviewers with a brief 

narrative explaining their efforts and can (but are not required to) submit 

up to three supporting documents. The resulting assessment scores are 

then used in developing SBA's annual scorecard grade for each 

agency. 29 According to federal standards for internal control, 

management should use quality information to make informed decisions 

and evaluate an entity's performance in achieving key objectives. 30 

Additionally, these standards state that management should design 

control activities to achieve objectives. 31 

29Scorecards report an overall letter grade (BO percent of which is determined by prime 

contracting achievement, 10 percent by subcontracting achievement, and 10 percent by an agency's achievement of its progress plan). 

30See GAO, Standards for Internal Control in the Federal Government, GA0-14-704G 

(Washington, D.C.: Sept. 10, 2014). 

31 Control activities are the actions management establishes through po!lcles and 

procedures to achieve objectives and respond to risks in an internal control system. 

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Table 3: Peer Review Scores for Organization Success Factor (FY 2016) Compared with GAO Determinations of Compliance 

for Related Section 15(k) Requirements (as of May 19, 2017), Selected Agencies 

Agency 

Department of Agriculture 

Department of Energy 

Department of Justice 

Department of Labor 

Department of State 

Department of Veterans Affairs 

Environmental Protection Agency 

Office of Personnel Management 

Social Security Administration 

SBPAC peer review score for 

organization success factor11 

(FY 2016) 

1. 0 (excellent) 

0.83 (satisfactory) 

0.83 (satisfactory) 

0.9 (above average) 

1.0 (excellent) 

0.8 (satisfactory) 

0.93 {above average) 

0. 83 (satisfactory) 

0.8 (satisfactory) 

GAO determinations of compliance and 

associated subsections of section 15(k) 

(as of May 19, 2017; out of 4 or Sb) 

Not demonstrated for 2 of 4 

(k)(2) and (k)(15) 

Not demonstrated for 2 of 5: 

(k)(3) and (k)(8) 

Demonstrated for 4 of 4 

Not demonstrated for 2 of 5 

(k)(2) and (k)(15) 

Not demonstrated for 1 of 5 

(k)(8) 

Not demonstrated for 2 of 5: 

(k)(3) and (k)(B) 

Not demonstrated for 1 of 4· 

(k)(15) 

Not demonstrated for 2 of 4: 

(k)(2) and (k)(B) 

Not demonstrated for 4 of S· 

(k)(2), (k)(3), (k)(B), and (k)(15) 

Legend FY ~ fiscal year, SBPAC "SmaU EIU$11'1ess ?mcurement Advisory COUI1al 

Sources SmaJIBus.mess AdrrtJmstratioo and GAO I GA0"1T.{l75 

Note: This table compares selected agencies for whictl the SBPAC scores for "organization success 

factor" were not consistent with our determinations of compliance with similar section 15(k) 

requirements. We were unable to compare SBPAC scores to our determinations of compliance for 

the five Department of Defense agencies we reviewed (Office of the Secretary, Defense Logistics 

Agency, and Departments of the Air Farce, Army, and Na-.y) because the SBPAC scores the 

Department of Defense as a whole rather than by component. 

"SBA's peer review panel guidance provides the following grading scale for success factor scores: 1.0 

(excellent), 0.9 (above average), 0.8 (satisfactory), 0.7 (below average), and 0.6 (unsatisfactory). 

Individual reviewers provide a score for each success factor, and the scores are then averaged 

across reviewers to determine an agency's overall score for each success factor. Therefore, some 

agencies' success factor scores fall in behveen two categories on the grading scale (e.g .. between 

0.9 and 1.0). !n this table, we identified agencies with scores in between two categories as 

corresponding to the category to which they were closest 

We reviewed compliance with section 15(k)(3), which generally requires the OSDBU director to 

report to the head or deputy head of the agency, for 10 of the 24 agencies in our review. Therefore, 

only some of the agencies listed in the table were assessed on a!! five section 15(k) requirements 

considered for this comparison, while other agencies were assessed on the other four requirements· 

(k)(2), compensation/seniority of the OSDBU director; (k)(7), supervisory duties of the OSDBU 

director; {k}(B), assigning small business technical advisers: and (k)(15). collateral duties of the 

OSDBU director. 

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For example, SBA provides guidance to peer reviewers and agencies that 

lists two examples of documentation that agencies may submit to support 

their compliance with the five 15(k) sections included under the success 

factor for OSDBU organization. Section 15(k)(3) requires that the OSDBU 

director's performance appraisal be signed by the agency head, deputy 

head, or, in the case of DOD, the secretary or secretary's designee. But 

the only two examples of documentation that are included in the SBA 

guidance are an organizational chart and an employee job description. 

Reviewing these two types of documents may allow for some 

determination of the reporting chain at an agency, but it would not allow 

for a determination of whether the required official signed a director's 

performance appraisal. 

During our review, we requested these documents and also a copy of the 

performance appraisal from each agency to support our determination of 

whether the OSDBU director reported directly to the agency head or 

deputy head as generally required in section 15(k)(3). Additionally, we 

discussed the section 15(k) requirements with agency staff to clarify 

information and assess the extent to which the OSDBU met this 

requirement. Other than reviewing the documentation provided by 

agencies, SBA's guidance for the peer review panel does not indicate any 

other means by which peer reviewers could obtain or clarify information. 

SBA officials told us they rely on members of SBPAC to oversee the 

review of their peers and determine thresholds of evidence, and also on 

the agencies to provide information in good faith. As a result of this 

approach and as differences between the peer review scores and our 

compliance determinations suggest, SBPAC scores may not accurately 

reflect an agency's compliance with section 15(k) requirements. 

Planned changes to scoring in the peer review process also may affect 

the reliability of the scores and information reported about agency 

achievements in small business contracting. SBA has been updating its 

SBPAC peer review process and also plans to update its scoring 

methodology. SBA officials told us the updates to the peer review process 

will result in an expanded review that addresses 18, and possibly as 

many as 21, requirements of section 15(k). Officials said they expect that 

updated peer review panel guidance will be finalized later this year for 

use with the fiscal year 2017 scorecard and peer review. Preliminary 

information that SBA provided in a description of changes to the fiscal 

year 2017 scorecard suggests that the new review process will be similar 

to the current process. 

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Conclusions 

In response to a requirement in the National Defense Authorization Act 

for Fiscal Year 2016, SBA also will change its scorecard methodology for 

fiscal year 2017. 32 The provision specifies that an agency's performance 

towards its prime contracting goals will account for 50 percent of an 

agency's grade (versus 80 percent in the current formulation). The 

remaining 50 percent is to be weighted in a manner determined by the 

administrator of SBA based on certain legal requirements. SBA has 

preliminarily determined that the remaining 50 percent will be allocated as 

follows: 20 percent for the results of the peer review of section 15(k) 

requirements (versus the current10 percent), 20 percent for 

subcontracting, and 10 percent for a comparison of awarded contracts on 

a year-over-year basis. 

Applying similar standards to an updated peer review process that is 

weighted more heavily in calculating agencies' overall SBA scorecard 

grades could result in a greater lack of reliability in these scorecard 

grades and information reported to Congress. And without reliable 

information from the SBPAC peer review, Congress's ability to oversee 

federal advocacy for small businesses through OSDBUs may be 

hindered. When we spoke to SBA officials about the differences between 

the results of the peer review and our review of compliance with section 

15(k) requirements, the officials indicated that they have been developing 

additional guidance and were considering increasing the threshold of 

evidence used in the peer review but had no firm plans to do so. 

Agencies generally demonstrated high levels of compliance with some 

section 15(k) requirements but less so for others. For a few section 15(k) 

requirements for which agencies did not demonstrate compliance, staff at 

some agencies explained that their agencies had carried out the required 

activities outside of the OSDBU or by using different processes than 

specified in the requirements. In a few instances, some staff thought that 

the differing processes were more efficient for their agency. We did not 

assess whether these different approaches facilitated the execution of 

required activities, but focused on whether agencies demonstrated 

compliance with the requirements as described in section 15(k). 

Continued demonstrated noncompliance with these requirements may 

undermine the intent of the provisions and may limit the extent to which 

32National Defense Authorization Act for Fiscal Year 2016, Pub. L No. 114~92, § 868, 129 

Stat. 726, 933 (2015). 

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Recommendations for 

Executive Action 

OSDBUs can advocate for small businesses. If agencies still believe that 

their procedures for certain activities are sufficient to advocate for small 

business contracts, at a minimum agencies have the obligation to explain 

their noncompliance to Congress and provide support for their views, 

including requesting any statutory flexibilities to permit exceptions as 

appropriate. 

With SBPAC reviews potentially constituting 20 percent of agency overall 

SBA scorecard grades under the revised process, the reliability of the 

SBPAC peer review takes on greater importance. However, the results of 

our review often diverged from SBPAC's in areas that overlapped (our 

review also included section 15(k) requirements that are not part of the 

peer review). The divergence in results suggests that the process could 

be enhanced. For instance, current SBA guidance is limited in describing 

procedures and methods for the peer review. Enhancing SBA's peer 

review guidance can help increase the reliability of the peer review 

compliance determinations and provide more consistency with federal 

internal control standards. 

We are making the following 20 recommendations: 

To address demonstrated noncompliance with section 15(k) of the Small 

Business Act, as amended, we are making recommendations to the 

heads of 19 agencies. 

The Director of the Defense Logistics Agency should comply with 

sections 15(k)(2), (k)(7), (k)(11), and (k)(17) or report to Congress on 

why the agency has not complied, including seeking any statutory 

ftexibilities or exceptions believed appropriate. 

The Secretary of Agriculture should comply with sections 15(k)(2), 

(k)(15), and (k)(17) or report to Congress on why the agency has not 

complied, including seeking any statutory flexibilities or exceptions 

believed appropriate. 

The Secretary of the Army should comply with section 15(k)(8) or 

report to Congress on why the agency has not complied, including 

seeking any statutory fiexibilities or exceptions believed appropriate. 

The Secretary of Commerce should comply with sections 15(k)(2), 

(k)(8), (k)(11 ), and (k)(17) or report to Congress on why the agency 

has not complied, including seeking any statutory flexibilities or 

exceptions believed appropriate. 

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The Secretary of Defense should comply with sections 15(k)(5) and 

(k)(B) or report to Congress on why the agency has not complied, 

including seeking any statutory flexibilities or exceptions believed 

appropriate. 

The Secretary of Education should comply with sections 15(k)(3) and 

(k)(11) or report to Congress on why the agency has not complied, 

including seeking any statutory flexibilities or exceptions believed 

appropriate. 

The Secretary of Energy should comply with sections 15(k)(3), (k)(B), 

and (k)(17) or report to Congress on why the agency has not 

complied, including seeking any statutory flexibilities or exceptions 

believed appropriate. 

The Secretary of HUD should comply with sections 15(k) and (k)(11) 

or report to Congress on why the agency has not complied, including 

seeking any statutory flexibilities or exceptions believed appropriate. 

The Secretary of the Interior should comply with sections 15(k)(11) 

and (k)(17) or report to Congress on why the agency has not 

complied, including seeking any statutory flexibilities or exceptions 

believed appropriate. 

The Secretary of Labor should comply with sections 15(k)(2) and 

(k)(15) or report to Congress on why the agency has not complied, 

including seeking any statutory flexibilities or exceptions believed 

appropriate. 

The Secretary of the Navy should comply with section 15(k)(8) or 

report to Congress on why the agency has not complied, including 

seeking any statutory flexibilities or exceptions believed appropriate. 

The Secretary of State should comply with sections 15(k)(8) and 

(k)(17) or report to Congress on why the agency has not complied, 

including seeking any statutory flexibilities or exceptions believed 

appropriate. 

The Secretary of the Treasury should comply with sections 15(k)(8) 

and (k)(11) or report to Congress on why the agency has not 

complied, including seeking any statutory flexibilities or exceptions 

believed appropriate. 

The Secretary of Veterans Affairs should comply with sections 

15(k)(3), (k)(B), and (k)(11) or report to Congress on why the agency 

has not complied, including seeking any statutory flexibilities or 

exceptions believed appropriate. 

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Agency Comments 

and Our Evaluation 

The Administrator of EPA should comply with section 15(k)(15) or 

report to Congress on why the agency has not complied, including 

seeking any statutory flexibilities or exceptions believed appropriate. 

The Administrator of NASA should comply with section 15(k)(17) or 

report to Congress on why the agency has not complied, including 

seeking any statutory flexibilities or exceptions believed appropriate. 

The Director of OPM should comply with sections 15(k)(2), (k)(B), and 

(k)(17) or report to Congress on why the agency has not complied, 

including seeking any statutory flexibilities or exceptions believed 

appropriate. 

The Commissioner of SSA should comply with sections 15(k)(2), 

(k)(3), (k)(6), (k)(8), (k)(11), and (k)(15) or report to Congress on why 

the agency has not complied, including seeking any statutory 

flexibilities or exceptions believed appropriate. 

The Administrator of USAID should comply with sections 15(k)(15) 

and (k)(17) or report to Congress on why the agency has not 

complied, including seeking any statutory flexibilities or exceptions 

believed appropriate. 

As SBA continues to enhance the SBPAC peer review process, the SBA 

Administrator in her capacity as head of SBPAC should include more 

detailed guidelines than those used for the current process to facilitate a 

more in-depth review of agencies' compliance with section 15(k) 

requirements. 

We provided a draft of this report for comment to the 24 agencies with 

OSDBU directors in our review as well as SBA. Four agencies that 

demonstrated compliance with section 15(k) requirements-the 

Departments of Homeland Security, Justice, and Transportation and the 

General Services Administration-indicated that they did not have 

comments. In addition, USDA-which did not demonstrate compliance 

with three section 15(k) requirements-responded that it did not have 

comments. We received comments from DOD on behalf of all 5 DOD 

agencies in our review (Air Force, Army, Navy, DLA, and the Office of the 

Secretary). Air Force demonstrated compliance with the requirements, 

and DOD did not comment on our findings for Air Force. DOD partially 

agreed with our recommendation to DLA and did not agree with our 

recommendations to Army, Navy, and the Office of the Secretary. Of the 

15 non-DOD agencies to which we made recommendations and which 

provided comments, 5 agreed, 4 partially agreed, 1 agreed in principle, 

and 5 neither agreed nor disagreed with our recommendations. The 

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agencies' comments and our responses are summarized below. Unless 

otherwise noted, these agencies provided comment letters that are 

reproduced in appendixes XXVIII-XXXXI. SBA and Commerce also 

provided technical comments that we have incorporated, as appropriate. 

Commerce agreed with four of five parts of our recommendation 

relating to sections 15(k)(2), compensation/seniority; 15(k)(8), assign 

small business technical advisers; 15(k)(11), advise on in-sourcing; 

and 15(k)(17), respond to a notification of an undue restriction on the 

ability of a small business to compete. Commerce noted that, in 

response, it intends to change the position of the OSDBU director to 

an SES position in fiscal year 2018; the OSDBU director is in the 

process of appointing small business technical advisers; and the 

agency has been updating the Commerce Acquisition Manual to 

address procedures for in-sourcing and unduly restrictive solicitations. 

However, Commerce disagreed with one part of our recommendation 

for section 15(k)(5), identify and address bundling of contract 

requirements. The agency stated that small business set-asides 

valued over $150,000 are subjected to a review and approval process 

that includes the bureau small business specialist, procurement 

center representative, OSDBU director, and sometimes the senior 

procurement executive. Commerce also said that when the review 

package does not indicate a bundling action, the small business 

specialist and OSDBU may investigate the possibility of bundling 

based on supporting documentation submitted with the review form. 

Commerce had not previously provided this information at the lime of 

our review. Based on this new information, we are no longer including 

this part of our recommendation and have made the relevant changes 

in the report. The department's comments are reprinted in appendix 

XXVIII. 

DOD agreed with three of four parts of our recommendation to DLA 

relating to sections 15(k)(2), compensation/seniority; 15(k)(11 ), advise 

on in-sourcing; and 15(k)(17), respond to a notification of an undue 

restriction on the ability of a small business to compete. It noted that 

DLA will continue to submit requests to elevate the OSDBU director to 

an SES position; future in-sourcing actions will be coordinated with 

the OSDBU as required; and, when notified by a small business of 

undue restriction on competition, the OSDBU will forward a copy of 

the notification to the DLA competition advocate as required. 

However, DOD disagreed with the part of the recommendation for 

section 15(k)(7), supervisory duties. The agency stated that the 

headquarters DLA OSDBU director supervises all employees in the 

headquarters OSDBU. The agency also stated that DLA is a relatively 

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large agency comprising many subordinate field activities, each of 

which has a small business office, and a director in each of those 

offices supervises all the small business professionals within that 

activity. As noted in the report, a DLA OSDBU official explained that 

the ODSBU director appointed small business associates to work in 

the field, but did not directly supervise field staff. Section 15(k)(7) 

requires that the OSDBU director have supervisory authority over 

agency personnel to the extent that the responsibilities of such 

personnel are related to the functions and duties implemented and 

executed by the OSDBU. We maintain our recommendation. 

DOD disagreed with our recommendation relating to section 15(k)(8), 

assign small business technical advisers, which we made separately 

to three agencies-the Department of the Army, Office of the 

Secretary of Defense, and Department of the Navy. It noted that the 

Defense Federal Acquisition Regulation Supplement delegates the 

authOrity to appoint small business technical advisers to the head of 

the contracting activity. As noted in the report, a DOD official stated 

that the law and regulation disagree on this requirement However, 

when a statutory provision such as section 15(k) and regulations such 

as the acquisition regulation conflict, the statute controls. We maintain 

our recommendation. 

DOD also disagreed with our recommendation to the Office of the 

Secretary of Defense relating to section 15(k)(5), identify and address 

bundling of contract requirements. It noted that no contracting or 

bundling occurs at the level of the Office of the Secretary of Defense. 

DOD stated that contracting and bundling occurs in acquisitions 

conducted at the lower-level components of DOD. As noted in the 

report, the OSDBU director has an oversight role in relation to 

identifying proposed bundling, rather than an implementation role. 

However, section 15(k)(5) requires OSDBUs to identify proposed 

solicitations that involve significant bundling of contract requirements 

and, where appropriate, work with agency officials to mitigate the 

effects on small businesses. If DOD believes that the unique situation 

of this office warrants its demonstrated noncompliance with this 

provision, the agency should explain its demonstrated noncompliance 

to Congress and provide support for the agency's views. Absent this, 

we maintain our recommendation. The department's comments are 

reprinted in appendix XXIX. 

Education disagreed with our determination that the agency did not 

demonstrate compliance with section 15(k)(3), which requires the 

OSDBU director to report to the head of the agency or deputy head. 

Education stated that, as we reported, the former deputy secretary 

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delegated the responsibility for the OSDBU director's performance 

appraisal to the senior policy adviser. The agency also stated that its 

performance appraisals are done at two levels: the initial appraisal 

and the approval by a higher-level official. Education said that, in the 

case of the OSDBU director, the deputy secretary was the second 

level of approval. Education stated that, since January 2017, the 

position of deputy secretary has been vacant, and, as noted in the 

report, the director's performance appraisal was signed by the senior 

policy adviser. However, for the two performance appraisals we 

reviewed, neither the agency head nor the deputy head signed these 

appraisals as required by section 15(k)(3). We maintain our 

recommendation. 

Education did not explicitly agree or disagree with our 

recommendation on section 15(k)(11), advise on in-sourcing. 

Education said that, due to limited OSDBU resources, the agency 

delegated the responsibility to review in-sourcing to another office. 

Education stated that, given anticipated budget reductions, the 

agency would evaluate how best to implement section 15(k)(11). As 

noted in the draft report, section 15(k)(11) requires thatthe person 

heading the OSDBU office must review and advise the agency on any 

decision to convert an activity performed by a small business to an 

activity performed by a federal employee. Therefore, we maintain our 

recommendation. The department's comments are reprinted in 

appendix XXX. 

Energy agreed with our recommendation relating to sections 15(k)(3), 

reporting requirement (head of the agency or deputy head); 15(k)(8), 

assign small business technical advisers; and 15(k)(17), respond to a 

notification of an undue restriction on the ability of a small business to 

compete. The agency stated that the OSDBU director's performance 

appraisals will be completed by the secretary or deputy secretary; the 

OSDBU will appoint at least one small business technical adviser for 

each business line (three in total); and the OSDBU will complete a 

data call to its small business program managers to determine if there 

have been any undue restrictions on small business. We note that 

completing a data call to retrospectively look at prior instances of 

undue restrictions will not address the section 15(k)(17) requirement, 

which requires the OSDBU director to respond to concerns of undue 

restriction on an ongoing basis. The agency estimated that the actions 

will be completed by September 30, 2017. The department's 

comments are reprinted in appendix XXXI. 

HUD did not state whether it agreed or disagreed with our 

recommendation. In an e-mail, the senior small business utilization 

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specialist in HUD's OSDBU stated that the department did not have 

additional comments on the draft report. The official noted the two 

deficiencies we cited (the director's experience and the OSDBU's 

involvement with in-sourcing decisions) and reiterated the OSDBU 

director's statement that her previous experience prepared her well for 

the OSDBU director position. The official further stated that the 

OSDBU director had discussed developing policy for OSDBU 

involvement with in-sourcing decisions. As we reported, section 15(k) 

lists specific prior experiences which the OSDBU director did not 

have. We maintain our recommendations. 

Interior agreed with our two-part recommendation related to sections 

15(k)(11), advise on in-sourcing, and 15(k)(17), respond to a 

notification of an undue restriction on the ability of a small business to 

compete. The agency stated that, for section 15(k)(11), its OSDBU 

will implement procedures to involve the OSDBU director in insourcing decisions that affect small business concerns, and for 

section 15(k)(17), the OSDBU will implement procedures for 

responding to notifications of undue restrictions on the ability of small 

businesses to compete. The department's comments are reprinted in 

appendix XXXII. 

Labor stated that it neither agreed nor disagreed with our two-part 

recommendation relating to sections 15(k)(2), compensation/seniority 

of the OSDBU director, and 15(k)(15), collateral duties of the OSDBU 

director. The agency noted that it is committed to reviewing its 

compliance with the relevant statutes. We maintain our 

recommendation to Labor, based on the agency not demonstrating 

compliance with sections 15(k)(2) and 15(k)(15). The department's 

comments are reprinted in appendix XXXIII. 

State agreed with the part of the recommendation on section 

15(k)(17), respond to a notification of an undue restriction on the 

ability of a small business to compete, and disagreed with the part of 

the recommendation on section 15(k)(8), assign small business 

technical advisers. For section 15(k)(17), State said that its OSDBU 

will affirm internal policy to refer all claims of unduly restricting the 

ability of a small business to compete, regardless of their resolution at 

a lower level, to the agency's competition advocate. This is consistent 

with what we recommended. 

For section 15(k)(8), the agency asserted that it is currently in 

compliance, noting that it assigns small business technical advisers at 

the department level and that staffing each of its 46 bureaus with a 

full-time qualified small business technical adviser would be 

impractical, inefficient, and unnecessary. As noted in our report, 

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State's OSDBU director assigns a small business technical adviser as 

a full-time employee of the OSDBU, rather than of the procuring 

activity, which is not consistent with the section 15(k)(8) requirement. 

We maintain our recommendation to State regarding section 15(k)(8). 

The department's comments are reprinted in appendix XXXIV. 

Treasury did not agree or disagree with our two-part recommendation 

related to sections 15(k)(8), assign small business technical advisers, 

and 15(k)(11), advise on in-sourcing. In an attachment to an e-mail, 

Treasury stated that the authority to appoint a small business 

technical adviser (termed small business specialist at Treasury) was 

delegated to the chief procurement officer for a bureau. As noted in 

the report, an agency official stated that the OSDBU does not assign 

a small business specialist to each of its bureaus. Section 15(k)(8) 

requires the OSDBU director to assign a small business technical 

adviser to each office to which SBA has assigned a procurement 

center representative. We maintain our recommendation. Treasury 

also stated that, if conversions from private to federal performance 

occurred, the department's human resources office would coordinate 

this action with the OSDBU and the acquisition office. The department 

plans to formally incorporate the small business provision in its 

workforce planning guidance and develop and document procedures 

for in-sourcing review as part of the OSDBU's effort to develop a 

Human Capital Workforce Planning process. 

VA agreed with the part of our recommendation related to section 

15(k)(11 ), advise on in-sourcing, and concurred in principle with the 

other two parts of the recommendation related to sections 15(k)(3), 

reporting requirement (head of the agency or deputy head), and 

15(k)(8), assign small business technical advisers. For section 

15(k)(11), VA stated that the agency's OSDBU has drafted language 

for its review policy for procurements to address this requirement. VA 

plans to implement the revised policy in fiscal year 2018. 

For section 15(k)(3), VA asserted that it is in compliance with this 

requirement but acknowledged that its chief of staff is the rating 

official for the OSDBU director. VA further noted that the deputy 

secretary is the reviewing official and the secretary the appointing 

official. VA said that federal law, regulation, and the VA handbook on 

the performance appraisal system require this separation of duties 

and roles. VA also said that, while the chief of staff prepares and 

signs the initial summary rating and performance appraisal, the 

appraisal is subject to review by the secretary and deputy secretary. 

VA stated that removing the chief of staff from the performance 

appraisal process would require merging some of the aforementioned 

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duties into the same person, eliminating the independent reviews 

required by law and regulation. However, as we note in appendix II, 

section 15(k)(3) requires that the OSDBU director report exclusively to 

the agency's secretary or deputy secretary, including with respect to 

performance appraisals. Therefore, we maintain our recommendation. 

VA also said that it will report to Congress on the reasons for its 

current reporting structure for the OSDBU director, with a target 

completion date of September 30, 2017. 

For the part of the recommendation related to section 15(k)(8), VA 

acknowledged the value of contract activities having a knowledgeable 

on-site small business technical adviser who is able to collaborate 

with the procurement center representative and noted that, to the 

extent that the adviser addresses matters within the OSDBU's 

responsibility, it is essential for the OSDBU to provide guidance and 

direction. However, the agency stated that the requirement for the 

OSDBU to select an employee of the contracting activity and direct 

that person's principal work efforts to assist the procurement center 

representative requires an unusual degree of matrixed reporting 

relationships and will entail a high level of collaboration with the 

contracting activity's leadership. VA said that its OSDBU will seek to 

collaborate with the cognizant contracting activities through VA's 

Senior Procurement Council and develop a memorandum of 

understanding outlining roles and responsibilities. VA stated that its 

target completion date for the memorandum is September 30, 2017 

(so as to go into effect at the start of fiscal year 2018). We maintain 

our recommendation, as VA's comments do not make it clear if the 

OSDBU director will assign a small business technical adviser to the 

procuring activity or if the assigned staff would be a full-time employee 

of this activity. The department's comments are reprinted in appendix 

XXXVI. 

EPA did not say whether it agreed or disagreed with our 

recommendation relating to requirements for section 15(k)(15), 

collateral duties. As we noted in the report, EPA's OSDBU director 

oversees two EPA-wide programs, the Disadvantaged Business 

Enterprise Program and the Asbestos and Small Business 

Ombudsman Program. EPA stated that we mischaracterized 

provisions of the Clean Air Act of 1990 (as requiring EPA's OSDBU 

director to serve as the ombudsman for the Asbestos and Small 

Business Ombudsman Program) as part of our determination of 

whether EPA demonstrated compliance. EPA stated that, instead, the 

act requires that the relevant programs be monitored through the 

ombudsman (not the OSDBU director). The agency stated that EPA 

appointed an official other than the OSDBU director to serve as the 

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ombudsman and that our report should be revised to correctly indicate 

that the OSDBU director does not hold the ombudsman position. 

Based on EPA's comments, we removed references in the report to 

the Clean Air Act requirements being inconsistent with section 

15(k)(15) requirements. We also made it clear thatthe OSDBU, 

through the program ombudsman, monitors the activities of the 

Asbestos and Small Business Ombudsman Program. As noted in the 

report, we did not consider the provisions of the Clean Air Act and the 

corresponding responsibilities of the OSDBU as a factor for our 

assessment of demonstrated compliance with section 15(k)(15). 

EPA also stated that the Disadvantaged Business Enterprise Program 

is structured so that the OSDBU director does not serve as the 

program manager or carry out the day-to-day programmatic 

responsibilities in contravention of section 15(k)(15). However, as we 

noted in the report, the OSDBU director oversees the Disadvantaged 

Business Enterprise Program. This is inconsistent with section 

15(k)(15), which requires that the OSDBU director not hold 

responsibilities except as necessary to carry out responsibilities under 

section 15(k). Thus, we maintain our recommendation to EPA. The 

agency's comments are reprinted in appendix XXXVII. 

NASA partially agreed with our recommendation related to section 

15(k)(17), respond to a notification of an undue restriction on the 

ability of a small business to compete. The agency agreed that, as our 

report supports, it is currently in compliance with two required steps 

under section 15(k)(17), subparagraphs (A) and (C), but not with the 

third required step, subparagraph (B), which requires the OSDBU 

director to inform the agency's advocate for competition when notified 

by a small business of a solicitation that unduly restricts its ability to 

complete. But NASA added that it believes that the most practical and 

effective way to address such notifications is for the OSDBU, in 

consultation with the contracting officer, to resolve issues at the 

lowest level possible. However, to comply with the statute, the agency 

said that the OSDBU will begin notifying the advocate for competition. 

The agency also said that the OSDBU will notify the cognizant Centerlevel competition advocate. NASA said that the OSDBU, in 

coordination with the agency's Office of Procurement, intends to issue 

formal correspondence to the acquisition community on the new 

procedures within 6 months and that it plans to begin carrying out the 

new procedures the next time it receives a notification of an unduly 

restrictive solicitation. The agency's comments are reprinted in 

appendix XXXVIII. 

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OPM agreed with one part of our recommendation and partially 

agreed with two parts of the recommendation. OPM concurred with 

the part of the recommendation regarding section 15(k)(17), respond 

to a notification of an undue restriction on the ability of a small 

business to compete. In response, OPM said it prepared draft 

guidance (standard operating procedures) on the topic that would 

address the issue of communicating such notices to the agency's 

advocate for competition. OPM said that it is currently reviewing the 

guidance. 

OPM partially agreed with the part of the recommendation regarding 

section 15(k)(2), compensation/seniority of the OSDBU director. The 

agency stated that, at the time it became a requirement for the 

OSDBU director to be a member of the SES, the OSDBU director held 

a General Schedule position (GS-15). OPM said that the current 

nominee for OPM director, if confirmed, will evaluate and take 

appropriate action to comply or report to Congress on why the agency 

has not complied, including, if appropriate, seeking statutory flexibility 

or an exception. 

OPM also partially concurred with the part of our recommendation 

related to section 15(k)(8), assign small business technical advisers. 

OPM stated that we did not take into account that the OSDBU has two 

staff members qualified to work with the procurement center 

representative who each spend 50 percent of their time working with 

the procurement center representative, which equates to full-time 

coverage. We maintain our recommendation as section 15(k)(8) 

requires that the technical adviser must be a full-time employee of the 

procuring activity. The agency's comments are reprinted in appendix 

XXXIX. 

SSA agreed with our recommendation relating to sections 15(k)(2), 

compensation/seniority; 15(k)(3), reporting requirement (head of the 

agency or deputy head); 15(k)(6), provide assistance on payments; 

15(k)(8), assign small business technical advisers; 15(k)(11), advise 

on in-sourcing; and 15(k)(15), collateral duties. SSA summarized the 

actions it has taken or plans to take in response. For sections 15(k)(2) 

and (k)(3), SSA stated that, given the OSDBU director's duties and 

responsibilities and the agency's small size and structure, it intended 

to explore obtaining an exception to keep the director position at the 

GS-15 level and an exception to the reporting requirement. For 

section 15(k)(6), SSA said it will refer small businesses seeking 

assistance with payments to the OSDBU director. For section 

15(k)(8), SSA said its OSDBU will officially assign a small business 

technical adviser to the relevant office. For section 15(k)(11), SSA 

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noted an existing analysis it performs of contractor functions, which 

helps ensure that SSA takes appropriate steps to guard against 

improper reliance on contractors and that contractor personnel do not 

perform inherently governmental functions. SSA said any proposed insourcing based on the analysis would be discussed w~h the 

component, the Office of Acquisition and Grants, and the OSDBU if 

warranted. Finally, for section 15(k)(15), SSA said that it would 

delegate coordinating responsibilities for the Electronic 

Subcontracting Reporting System from the OSDBU director to its 

small business technical adviser. The agency's comments are 

reprinted in appendix XXXX. 

USAID agreed with our recommendation relating to section 15(k)(15), 

collateral duties, and 15(k)(17), respond to a notification of an undue 

restriction on the ability of a small business to compete. For the part of 

the recommendation relating to section 15(k)(15), collateral duties, 

USAID said it would not gain efficiencies by moving responsibility for 

the Minority Serving Institution (MSI) program from the OSDBU. 

Instead, it would explore requesting statutory flexibility or an exception 

to allow the OSDBU director to continue to advocate for the MSI. In 

response to the other part of the recommendation relating to section 

15(k)(17), USAID said the OSDBU director simultaneously will notify 

the advocate for competition, contracting officer, and ombudsman in 

instances in which a notice falls within the parameters of section 

15(k)(17). The agency's comments are reprinted in appendix XXXXI. 

In its comment letter, SBA agreed with our recommendation to include 

more detailed guidelines for the SBPAC peer review to facilitate a 

more in-depth review of agencies' compliance with section 15(k) 

provisions. The agency said that it has begun to implement the 

recommendation for fiscal year 2017 and that it has been developing 

more detailed guidelines that provide more objective criteria than the 

current guidelines, such as indicating whether agencies comply with 

the 21 section 15(k) requirements. The agency also stated that the 

new peer review process will count for a higher percentage of each 

agency's overall scorecard grade (an increase from 10 percent to 20 

percent). SBA said that the changes will be implemented for the fiscal 

year 2017 peer review. The agency's comments are reprinted in 

appendix XXXV. 

SBA provided additional comments, which the agency identified as 

technical comments, in an e-mail from the program manager, GAO 

liaison, Office of Congressional and Legislative Affairs. While these 

comments did not address our recommendation to SBA, in some 

instances they appeared to question our approach and the findings 

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that provided a basis for our conclusions and recommendation. In 

particular, the comments stated that there is little value in a 

comparison of SBA's success factor peer review (we refer to this in 

the report as the SBPAC peer review) with the requirement for SBA to 

conduct a full peer review of all of the requirements in section 15(k). 

given that the success factors were developed before the 2013 

statutory requirement was put in place. In addition, the comments 

questioned the relevance of our findings for agency compliance with 

its peer review process. 

However, as we state in the report, the SBPAC peer review assesses 

compliance with certain section 15(k) requirements, particularly the 

"organization" success factor focusing on five section 15(k) provisions. 

Our analysis focuses primarily on the methods SBA used and the 

guidance it provided for assessing OSDBUs' compliance with these 

section 15(k) requirements. We also note that the documentation SBA 

provided on its plans for the revised process suggests that similar 

methods to assess compliance will be used in the new process as 

under the current process. As in the current process, the 

documentation indicates that compliance determinations will be made 

based on a review of documents agencies voluntarily submit, rather 

than on a more in-depth assessment. For these reasons, we maintain 

that our discussion of the success factor peer review is relevant when 

considering how SBA may implement the new review process. In 

addition, our analysis does not equate our findings for agency 

compliance with those of the success factor peer review. Rather, it 

examines the alignment of the results. This allows for a valid 

assessment of whether the scores generally correspond with our 

findings. Our recommendation is intended to help ensure that SBA 

implements a more robust approach to assessing section 15(k) 

compliance through the SBPAC peer review, as compared to the 

success factor peer review. SBA slated that our report will help inform 

the structure of the new peer review checklist being developed. 

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As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Chairman and 

Ranking Member of the House Committee on Small Business, and other 

interested congressional committees. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions regarding this report, please 

contact me at (202) 512-8678 or by e-mail at shearw@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Key contributors to this report are 

listed in appendix XXXXII. 

William B. Shear 

Director, Financial Markets and 

Community Investment 

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Appendix 1: Objectives, Scope, and 

Methodology 

Identification of Federal 

Agencies in Our Review 

We reviewed practices of the Offices of Small and Disadvantaged 

Business Utilization (OSDBU) at 24 agencies for carrying out the 

requirements of the Small Business Act. 1 More specifically, we examined 

(1) the extent to which selected federal agencies with procurement 

powers demonstrated compliance with five requirements of section 15(k) 

relating to the OSDBU director (including reporting relationships, 

qualifications, and supervisory duties); (2) the extent to which selected 

federal agencies demonstrated compliance with eight section 15(k) 

requirements for carrying out selected OSDBU functions or activities; and 

(3) the Small Business Procurement Advisory Council review of OSDBU 

compliance with section 15(k) requirements. 

To determine which federal agencies to include in our review, we 

reviewed fiscal year 2015 data from the Federal Procurement Data 

System-Next Generation. Government agencies are responsible for 

collecting and reporting data on federal procurements through this data 

system. (These were the most recent data available at the time of our 

review.) Using these data, we selected 23 agencies that each procured 

more than $900 million in goods and services in fiscal year 2015, 

accounting for 87 percent of all federal contracting obligations. 2 Among 

the 23 agencies, 4 agencies were within the Department of Defense 

(DOD}-the Departments of the Air Force, Army, and Navy and the 

Defense Logistics Agency (DLA). Together, these 4 DOD components 

were responsible for 88 percent of DOD's contracting obligations. We 

also selected 1 additional agency, the DOD Office of the Secretary, due 

to its role as a policy office within DOD. Thus, we selected 24 agencies in 

total. 

1

For the purposes for this review, we included amendments to the OSDBU section 15(k) 

requirements through mid~2016, but we did not include amendments added in the National 

Defense Authorization Act for Fiscal Year 2017, Pub. L No. 114-328, 130 Stat 2000 

(2016). 

Z.We did not include the Department of Health and Human Services in our review because 

we noted there was ongoing litigation involving the matters of fact and law we analyzed for 

this report GAO's policy is to avoid addressing disputed factual or legal matters pending 

in litigation. 

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Appendix 1: Objectives, Scope, and 

Methodology 

The 24 agencies in our review are listed below. The 10 agencies shown 

in italics were assessed for the section 15(k)(3) requirement about the 

OSDBU director reporting to the head or deputy head of the agency. 

1. Defense Logistics Agency 

2. Department of Agriculture 

3. Department of the Air Force 

4. Department of the Army 

5. Department of Commerce 

6. Department of Defense- Office of the Secretary 

7. Department of Education 

8. Department of Energy 

9. Department of Homeland Security 

10. Department of Housing and Urban Development 

11. Department of the Interior 

12. Department of Justice 

13. Department of Labor 

14. Department of the Navy 

15. Department of State 

16. Department of Transportation 

17. Department of the Treasury 

18. Department of Veterans Affairs 

19. Environmental Protection Agency 

20. General Services Administration 

21. National Aeronautics and Space Administration 

22. Office of Personnel Management 

23. Social Securi1y Administration 

24. U.S. Agency for International Development 

See appendixes III-XXVII for our determinations of overall demonstrated 

compliance with section 15(k) requirements and for our determinations of 

demonstrated compliance at each agency. 

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Selection of Section 15(k) 

Requirements for Review 

and Information on 

Demonstrated Compliance 

Appendix 1: Objectives, Scope, and 

Methodology 

We selected the following 14 requirements of section 15(k) for our review, 

but focused only on 13 in our discussion of individual agencies' 

demonstrated compliance. As discussed in this report, we evaluated 

demonstrated compliance with the section 15(k)(16) requirement for 

agencies to submit an annual training and travel report to Congress. 

During the course of our review, the Small Business Administration (SBA) 

established new procedures to submit a consolidated report to Congress, 

rather than having each agency submit an individual report. Due to the 

new procedures, we do not include this requirement in the summary 

tables or agency appendixes. See appendix II for more information on the 

requirements. 

15(k): Director experience 

15(k)(2): Compensation/seniority 

15(k)(3): Reporting requirement (head of agency or deputy head) 

15(k)(5): Identify and address bundling of contract requirements 

15(k)(6): Provide assistance on payments 

15(k)(7): Supervisory duties 

15(k)(8): Assign small business technical advisers 

15(k)( 11 ): Advise on in-sourcing 

15(k)(12): Provide advice to chief acquisition officer and senior 

procurement executive 

15(k)(13): Provide training' 

15(k)(14): Receive unsolicited proposals and forward them when 

appropriate 

15(k)(15): Collateral duties 

15(k)(16): Submit training reports to Congress 

15(k)(17): Respond to notification of an undue restriction on ability of 

small business to compete 

3For the purposes of this report, we include the permissive training language in 15 U.S.C 

§ 644(k)(13) in our discussion of"requirements." Section 15(k)(13) does not mandate that 

the OSDBU provide training to small businesses, but we reviewed the agencies' training 

offered under this provision. 

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Assessment of 

Demonstrated Compliance 

with Section 15(k)(3) of 

the Small Business Act 

Appendix 1: Objectives, Scope, and 

Methodology 

We focused our review on whether agencies had demonstrated 

compliance with each of these requirements. While we could not 

determine the compliance status with certainty, our approach allowed for 

a sufficiently reliable measure of demonstrated compliance, since it relied 

on self-reported accounts of compliance through interviews and survey 

responses, documentary evidence of compliance through agency 

materials and documents, or both. Specifically, categorizing an agency as 

demonstrating compliance with a section 15(k) requirement required 

evidence of compliance in our review of documents, interview materials, 

and/or questionnaire responses. In cases in which supporting 

documentation was not available, we made the determination based 

solely on the agency's survey response and/or follow-up with agency 

officials. 

To assess whether the OSDBU director reports directly to the agency 

head or the deputy head, as generally required by section 15(k)(3) of the 

Small Business Act, we focused on 6 agencies with major contracting 

activity (greater than $10 billion in obligations) and 4 agencies with 

contracting activity under $10 billion' These 10 agencies were the 

Departments of Education, Energy, Labor, State, Air Force, Army, Navy, 

and Veterans Affairs; the National Aeronautics and Space Administration; 

and the Social Security Administration. We considered agencies to 

demonstrate compliance if the designated OSDBU directors exercised the 

OSDBU responsibilities, if they reported directly to and were responsible 

only to the agency head or the agency head's deputy, and if these 

officials signed the director's performance appraisals. To determine 

compliance, we reviewed 

organization charts to identify where the OSDBU was situated in 

relation to the agency head or deputy head; 

4The 6 agencies with major contracting activity consisted of the 3 DOD components with 

the highest contracting obligations in fiscal year 2015 (the Air Force, Army, and Navy), as 

well as the 3 non-DOD agencies with the highest obligations (the Department of Energy, 

the National Aeronautics and Space Administration, and the Department of Veterans 

Affairs}, We selected these agencies to provide variety in the type of agency. Of the 4 

agencies with contracting activity under $10 billion, 2 were selected purposively based on 

preliminary infonnatton (the Social Security Administration and the Department of 

Education}, and 2 were selected randomly (the Departments of State and Labor). 

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Assessment of Compliance 

with Other Selected Section 

15(k) Requirements 

Survey of OSDBU 

Directors 

Appendix 1: Objectives, Scope, and 

Methodology 

OSDBU directors' performance appraisals for the previous 2 years to 

identify the agency official(s) who evaluated the OSDBU director's 

performance;' 

the position description of the OSDBU director to identify the OSDBU 

director's supervisor; and 

other agency documents, such as reports and memoranda, 

discussing the agency's small business programs. 

We also interviewed the designated OSDBU directors at each agency to 

identify the official(s) to whom they had reported during the past year and 

asked them to provide information characterizing the reporting 

relationship, such as the extent to which small business issues were 

discussed. In addition, we reviewed and analyzed section 15(k)(3). 

We surveyed OSDBU directors at the 24 agencies about the other section 

15(k) requirements relating to OSDBU directors (such as rank and 

responsibilities) and about OSDBU functions. We reviewed available 

documents, such as policy statements issued by agency leadership on 

OSDBU practices or small business efforts, small business manuals or 

operating plans, and guidance and reports, when available. We also 

interviewed the designated OSDBU directors and other officials at each 

agency to discuss the extent to which they carry out each of the 

requirements. 

To obtain information on the functions performed by OSDBUs and actions 

the offices took to further small business contracting opportunities, we 

surveyed the OSDBU directors at 24 federal agencies using a web-based 

survey. The survey asked the OSDBU directors about their roles and 

functions. In this survey, we focused on seven areas: acquisition 

planning, solicitation development, proposal evaluation, obtaining 

payments, training, interaction with SBA, and other functions. The survey 

questions covered certain OSDBU functions listed in section 15(k) of the 

Small Business Act. 

SWe generally reviewed the two most recently available OSDBU director performance 

appraisals at the time of our review. 

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Survey Design and 

Administration 

Small Business 

Procurement Scorecard 

and Peer Review Process 

of Small Business 

Procurement Advisory 

Council 

Appendix 1: Objectives, Scope, and 

Methodology 

To obtain comparable data with the 2011 survey of OSDBU directors, our 

survey instrument listed similar questions and response choices as the 

2011 survey.• Updates to the 2011 survey included adding some new 

questions, reordering a few questions, and deleting several questions that 

were no longer relevant. We obtained input from GAO experts on survey 

design. We also pretested the survey instrument with two OSDBU 

directors to help ensure that the questions would be correctly interpreted 

by respondents. Agency officials, including the OSDBU directors, were 

notified about the survey before it was launched on November 1, 2016. 

The survey closed on February 24, 2017. We had a 100 percent 

response rate. 

We conducted follow-up with OSDBU directors to clarify their responses 

and to obtain additional information in instances in which they indicated 

they did not perform a section 15(k) requirement. The purpose of the 

follow-up was to determine which office, if not the OSDBU, carried out 

these functions at their agency, to collect answers from OSDBU directors 

who did not provide them initially, or to determine why the OSDBU did not 

carry out a specific function. To do this, we conducted interviews with 

OSDBU directors. A few agencies also provided written responses to our 

follow-up questions. 

We reviewed documentation and data related to SBA's scorecard for 

small business procurement and the peer review process of the Small 

Business Procurement Advisory Council (SBPAC) and spoke with SBA 

officials about this program. We compared SBA's "OSDBU organization" 

success factor scores to the compliance information we obtained from our 

review to determine whether they correlated with our compliance 

determinations. 

SBPAC is an interagency council chaired by SBA, and its members are 

mainly OSDBU directors. SBPAC annually reviews each OSDBU to 

determine compliance with certain OSDBU functions pertaining to section 

6GAO, Small Business Contracting,- Action Needed by Those Agencies Whose Advocates 

Do Not Report to Agency Heads as Required, GA0-11-418 (Washington, O_C: June 3, 

2011). 

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Appendix 1: Objectives, Scope., and 

Methodology 

15(k). These reviews are used to help determine SBA's annual scorecard 

grade for each agency-' 

We conducted our work from May 2016 to August 2017 in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe the evidence obtained provides 

a reasonable basis for our findings and conclusions based on our audit 

objectives. 

7 SBA uses the scorecard for purposes including measuring how we!! federal agencies 

reach their small business prime contracting and subcontracting goals and reporting 

agency-specific progress. Scorecard grades are based on the extent to which (or how 

well) agencies met goals for prime contracts and subcontracts and on their progress plans 

for meeting goals. 

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Appendix II: Select Statutory Requirements 

for Office of Small and Disadvantaged 

Business Utilization 

Section 15(k) of the Small Business Act, as amended, requires each 

Office of Small and Disadvantaged Business Utilization (OSDBU) and 

each OSDBU director to meet certain requirements. Our review selected 

14 requirements from section 15(k) for closer review. This appendix 

details each of those requirements and, where appropriate, elaborates on 

how we determined demonstrated compliance with each section. 

Table 4: Requirements of Section 15(k) of the Small Business Act Selected for Our Review 

Requirement 

Director experience 15{k) 

Compensation/senioritl 15(k)(2) 

Reporting requirement 15(k)(3) 

(head of agency or deputy 

head) 

Identify and address 15(k){5) 

bundling of contract 

requirements 

Description 

The management of each OSDBU office must be vested in an officer or employee of the 

agency with experience serving in any combination of the following roles: 

program manager, deputy program manager, or assistant program management for 

federal acquisition program; 

chief engineer, systems engineer, assistant engineer, or product support manager 

for federal acquisition program; 

federal contracting officer; 

small business technical adviser; 

contracts administrator for federal government contracts; 

attorney specializing in federal procurement law; 

small business liaison officer; 

officer or employee who managed federal contracts for a small business; or 

individual whose primary responsibilities were for the functions and duties of section 

8, 15, or 44 of the Small Business Act {15 U.S. C.§ 637, 644, 657q}. 

The officer or employee in the position of heading the OSDBU office must either: 

1. be appointed by the agency's head to a Senior Executive Service position, or 

2. only for an agency where the chief acquisition officer and the senior procurement 

executive are not Senior Executive Service positions, may be appointed to a position 

compensated not less than the minimum rate for a salary at level15 of the General 

Schedule. 

The officer or employee in the position of heading the OSDBU office must be responsible 

only to, and report directly and exclusively to, the head of the agency or to the deputy of 

the agency, except that the OSDBU for the Office of the Secretary of Defense must be 

responsible only to and report directly and exclusively to the secretary or the secretary's 

designee. 

These requirements include that the OSDBU director's performance appraisals be 

signed by either the agency head, deputy head, or in the case of the Department of 

Defense, the secretary or the secretary's designee. 

The officer or employee in the position of heading the OSDBU office must (1) identify 

proposed solicitations that involve significant bundling of contract requirements, and (2) 

work with the agency acquisition officials and the Small Business Administration to revise 

the procurement strategies for those proposed solicitations where appropriate to 

increase the probability of participation by small businesses as prime contractors, or, if 

the bundled solicitation is issued, to facilitate small business participation as 

subcontractors and suppllers. 

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Requirement 

Provide assistance on 

paymentsd 

Supervisory dutiese 

Assign small business 

technical advisers 

Advise on inMsourcing 

Provide advice to chief 

acquisition officer and 

senior procurement 

executive' 

Provide training 

Receive unsolicited 

proposals and forward 

them when appropriate 

Collateral duties9 

Submit training report to 

Congressh 

15(k)(6) 

15(k)(7) 

15(k)(8) 

15(k)(11) 

15(k)(12) 

15(k)(13) 

1S(k)(14l 

15(k)(15) 

15(k)(16) 

Appendix II: Select Statutory Requirements for 

Office of Small and Disadvantaged Business 

UtlllzatJon 

Description 

The officer or employee in the position of heading the OSDBU office must assist small 

businesses in obtaining: (1) payments, (2) required late payment interest penalties, or (3) 

information regarding payments due to the businesses from an executive agency or a 

contractor, in conformity with certain statutory provisions, or any other protection for 

contractors or subcontractors (including suppliers) that is included in the Federal 

Acquisition Regulations or any individual agency's supplement to the Federal Acquisition 

Regulations. 

The officer or employee in the position of heading the OSDBU office must have 

supervisory authority over agency personnel to the extent that the functions and duties of 

the personnel relate to sections 8 and 15 of the Small Business Act (15 U.S.C. § 637 and 

644). 

The officer or employee in the position of heading the OSDBU office must assign a small 

business technical adviser to each office where the Small Business Administration has 

assigned a procurement center representative. The technical adviser 

1. must be a full·time employee of the procuring activity and must be well qualified, 

technically trained, and familiar with the supplies or services purchased at the 

activity; and 

2. must have the principal duty to assist the Small Business Administration 

procurement center representative in the representative's duties and functions 

related to sections 8 and 15 ofthe Small Business Act (15 U.S. C.§ 637 and 644). 

The officer or employee in the position of heading the OSDBU office must review and 

advise the agency on any decision to convert an activity performed by a small business 

to an activity performed by a federal employee. 

The offker or employee in the position of heading the OSDBU office must provide the 

chief acquisition officer and senior procurement executive of the agency with advice and 

comments on acquisition strategies, market research, and justifications related to 

consolidation of contract requirements (15 U.S.C< § 657q). 

The off1cer or employee in the position of heading the OSDBU office may provide training 

to small businesses and contract specialists, except that the training may only be 

provided to the extent it does not interfere with the OSDBU director carrying out other 

responsibilities under section 15(k) (15 U.S.C. § 644(k)). 

·The officer or emplOyee in the posJtion of heading the OSDBU office must receive 

unsolicited proposals and, when appropriate, forward them to personnel of the activity 

responsible for reviewing the proposals. 

The officer or employee in the position of heading the OSOBU office must carry out 

exclusively the duties in section 15(k) (15 U.S. C.§ 644{k)) and, while director, must not 

hold any other title, position, or responsibility, except as necessary to carry out the 

responsibilities of section 15(k). 

The officer or employee in the position of heading the OSDBU office each fiscal year 

must submit a report to the House of Representatives Committee on SmaU Business and 

the Senate Committee on Small Business and Entrepreneurship. The report must 

describe 

1. the training by the director to small businesses and contract specialist completed in 

the recently completed fiscal year; 

2. the percentage of the director's budget used for the training in that fiscal year; and 

3. the percentage of the director's budget used for travel in that fiscal year. 

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Requirement 

Respond to notification of 15(k)(17) 

an undue restriction on 

ability of small business to 

compete 

Appendix II: Select Statutory Requirements for 

Office of Small and Disadvantaged Business 

Utilization 

Description 

When notified by a small business prior to the award of a contract that the small business 

believes that a solicitation, request for proposal, or request for quotation unduly restricts 

the ability of the small business to complete, the officer or employee in the position of 

heading the OSDBU office must: 

1. submit the notice to the contracting officer, and if necessary, recommend ways the 

solicitation, request for proposal, or request for quotation may be altered to increase 

the opportunity for competition; 

2. inform the agency's advocate for competition of the notice: and 

3. ensure that the small business is aware of other resources and processes available 

to address unduly restriction provisions in a solicitation, request for proposal, or 

request for quotation, even if the resources and processes are provided by the 

agency, the Small Business Administration, the Government Accountability Office, or 

a procurement technical assistance program. 

Lagend QSDBU = Offl~ af Small and Disadvantaged 8us1r.ess U!lli:;:atOil 

Sou/'C!! GAO I GA0-17-675 

Note: The table includes a breakdown of statutory language through 2016, but it does not include 

language added in the National Defense Authorization Act for Fiscal Year 2017. Pub. L No. 114-328, 

130 Stat 2000 (2016). 

a All statutory sections are within 15 u.s_c_ § 644(k). These sections all fall within section 15{k) of the 

Small Business Act and therefore are commonly called section 15(k). 

bAn ind!viduai'Nho has held one or more of the enumerated list of positions would meet requirements 

for our review. 

cln instances in which an agency had an acting OSDBU director, 'We looked at the seniority of the 

director who served immediately prior to the acting. 

0

An OSDBU that prov-ides any assistance would meet requirements for our review. 

a An OSDBU that supervises personnel within its office to the extent that the functions and duties of 

the personnel relate to sections 8 and 15 of the Small Business Act (15 U.S.C- § 637 and 644) would 

meet requirements for our review. 

'we would not determine that an OSDBU did not demonstrate compliance for failure to provide 

information to a chief acquisition officer or senior procurement executive if the agency did not have a 

chief acquisition officer or senior procurement executive. 

0Acting OSDBU directors may hold other lit!es or positions while serving as the temporary OSDBU 

director as long as while so serving they exclusively carry out the duties in section 15{k). 

~To fu!ri!l this requirement. Small Business Administration has collected the training and travel reports 

on behalf of the OSDBUs and submitted them to Congress in June 2017 

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Appendix Ill: Overall Agencies' 

Demonstrated Compliance with Select 

Section 15(k) Requirements 

Listed below are the section 15(k) requirements we assessed to 

determine the extent to which the 24 agencies in this review 

demonstrated compliance. 

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Appendix Ill: Overall Agencies' Demonstrated 

Compliance with Select Section 15(k} 

Requirements 

Figure 1: Overall Agencies' Demonstrated Compliance with Select Section 15(k} Requirements as of May 19,2017 

~15:(k~):~D~i~~ct~oc~e~xp~er~ie~o~~~~~~~~~~~~~~~~~~o~~~~~~~ 24 15{k)(2): Compensation/senionty 

15(k)(3)· Reporting requirement (head of agency or deputy head)a 

15(k)(7): Supervisory duties 

15(k)(15): Collateral duties 

15(k)(5)· !denlify and address bundling of contract requirements 

15(k)(6): Provide assistance on payments 

1 5(k)(8): Assign small business technical advisors 

15(k)(11): Advise on in~sourc.lng 

15(k)( 12): Provide advice to chief acquisition officer and senior procurement 

executive 

15(k)(13); Provide training 

15{k)(14): Receive unso!lcited proposals and forward them when 

appropriate 

15(k)(17): Respond to notification of an undue restriction on abi!lty of small 

business to compete 

Demonstrated complianct! O!d not demonstrate cornpl!ance 

Source GAO analysis I GA0·17..£75 

12 

A. £] 12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

<\~ • \1 18 24 

18 24 

i1 18 24 

.: ,:$'<1 

',\'~ •'' 

18 24 

;~1 

18 24 

~1 18 24 

,\'Hf l 18 24 

',~:\~;Z:' I 18 24 

18 24 

18 24 

18 24 

;~ 

18 24 

YVe reviewed compliance 'Ni!h this requirement for 10 agencies (the Departments of Education, 

Energy, Labor, State, Air Force, Army, Navy, and Veterans Affairs; the National Aeronautics and 

Space Administration; and the Socia! Security Administration) 

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Appendix IV: Demonstrated Compliance with 

Section 15(k), Defense Logistics Agency 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Defense Logistics Agency (DLA) demonstrated 

compliance with 8 of the 12 section 15(k) requirements within our review 

(see table 5). The agency did not demonstrate compliance with 4 

requirements regarding compensation/seniority of the OSDBU director, 

supervisory duties of the director, providing advice on the conversion of 

activities from performance by a small business to performance by a 

federal employee (in-sourcing), and responding to a notification from a 

small business of an undue restriction on its ability to compete. For more 

information about our methodology, see appendix I. For more information 

about each statutory provision, see appendix II. 

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Relating to in Which 

DLA Did Not Demonstrate 

Section 15(k) Compliance 

Appendix !V: Demonstrated Complian<;e with 

Section 15(k), Defensa logistics Agency 

15(k){2}, compensation/seniority: The survey response and the position 

description indicated that the director held a General Schedule position 

(GS-15). According to the survey, the chief acquisition officer and senior 

procurement executive are Senior Executive Service positions. In a 

follow-up meeting, agency officials stated that the agency has requested 

that the Department of Defense seek Congressional approval to authorize 

a new Senior Executive Service position for the OSDBU director. The 

officials stated that the agency has been waiting for authorization to make 

this change. 

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Appendix IV: Demonstrated Compliance with 

Section 15(k), Defense Logistics Agency 

15(k)(7), supervisory duties: An agency official stated that the office 

provides policy and program oversight. The official explained that the 

director appoints small business associates to work in the field, but does 

not directly supervise field staff. Field staff report to deputy commanders 

at their sites. 

15(k)(11), advise on in-sourcing: An agency official stated that the 

director does not review decisions on the conversion of activities from 

performance by a small business to performance by a federal employee. 

Instead, the agency's human resource office performs that function in 

consultation with the acquisition office. The official also stated that the 

director does not view in-sourcing as negatively affecting small 

businesses but focuses on how to align the resources to best fulfill the 

assigned mission. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: An agency official explained that the 

director works to ensure such notifications are resolved as quickly as 

possible, which requires working with key staff at the operational level in 

the field. The official further stated that the director did not think that there 

is a need to notify the agency advocate for com petition unless there is a 

need to change an agency practice. 

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Appendix V: Demonstrated Compliance with 

Section 15(k), Department of Agriculture 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the U.S. Department of Agriculture (USDA) 

demonstrated compliance with 9 of the 12 section 15(k) requirements 

within our review (see table 6). The department did not demonstrate 

compliance with 3 requirements regarding compensation/seniority of the 

OSDBU director, collateral duties of the director, and responding to a 

notification from a small business of an undue restriction on its ability to 

compete. For more information about our methodology, see appendix I. 

For more information about each statutory provision, see appendix II. 

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to Areas in Which 

Not 

Demonstrate Section 15(k) 

Compliance 

Appendix V: Damonstrat(!d Compliance with 

Section 15(k), Department of Agriculture 

15(k)(2), compensation/seniority: Atthe time of our review, the current 

OSDBU director was an acting director. In cases in which an agency's 

OSDBU director was an acting director, we assessed compliance for 

section 15(k)(2) based on the seniority and compensation of the 

immediately prior permanent director. OSDBU officials explained that 

historically, the permanent OSDBU director was a political appointee 

holding a Senior Executive Service (SES) position. However, the prior 

director was a political appointee holding a General Schedule position 

(GS-151evel). The officials explained that the position was temporary (6 

Pagl2l62 GAO~i7·G75 Small Business Contracting 
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Appendix V: Demonstrated Compliance with 

Section 15{k), Department of Agriculture 

months) and it would have been difficult to fill the position with a member 

of the SES on a short-term basis. 

15(k)(15), collateral duties: The current OSDBU director holds the 

position in an acting capacity because there has not been a new political 

appointee, and he also holds the title of acting assistant secretary for 

administration. USDA officials stated that they did not know when a new 

OSDBU director would be appointed, but they expected that person to 

exclusively hold the OSDBU director position. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: OSDBU officials told us that the OSDBU 

would work to resolve such an issue at the lowest leveL The OSDBU 

director and the small business technical adviser would work on the issue 

with the contracting office to give recommendations. The agency 

advocate for competition would only be notified if the issue could not be 

resolved at a lower leveL 

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Append VI: Demonstrated Compliance with 

Section 15(k), Department of the Air Force 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of the Air Force demonstrated 

compliance with all13 of the 13 section 15(k) requirements Within our 

review (see table 7). For more information about our methodology, see 

appendix L For more information about each statutory provision, see 

appendix II. 

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Appendix VII: Demonstrated Compliance 

with Section 15(k), Department of the Army 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of the Army (Army) demonstrated 

compliance with 12 of the 13 section 15(k) requirements within our review 

(see table 8). The department did not demonstrate compliance with 1 

requirement regarding assigning small business technical advisers. For 

more information about our methodology, see appendix I. For more 

information about each statutory provision, see appendix II. 

Table 8: Demonstrated Compliance with Sectlon 15(k) Requirements as of May 191 2017, Dapartment of the Army 

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Agency Response 

Relating to Area in Which 

Army Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix VII: Demonstrated Compliance with 

Section 15(k), Department of the Anny 

15(k)(8), assign small business technical advisers: An agency official 

stated that Army personnel providing small business technical advice are 

assigned to their position by the procuring activity offices and not by the 

OSDBU. These personnel possess technical knowledge of the procuring 

activity and provide technical advice to the procurement center 

representatives on contracting matters. The official also stated that for 

issues involving particularly complex technical areas, the OSDBU will 

form a team with the appropriate staff to provide advice to the 

procurement center representative. 

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Appendix VIII: Demonstrated Compliance 

with Section 15(k), Department of 

Commerce 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Commerce (Commerce) 

demonstrated compliance with 8 of the 12 section 15(k) requirements 

within our review (see table 9). The department did not demonstrate 

compliance with 4 requirements regarding compensation/seniority of the 

OSDBU director, assigning small business technical advisers, providing 

advice on the conversion of activities from performance by a small 

business to performance by a federal employee (in-sourcing), and 

responding to a notification from a small business of an undue restriction 

on its ability to compete. For more information about our methodology, 

see appendix I. For more information about each statutory provision, see 

appendix II. 

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to Areas in Which 

Commerce Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix VIII; Demonstrated Compliance with 

Sect! on 15ik), Department of Commorce 

We revie-.ved compliance with this requirement for iO agencies (the Departments of Education, 

Energy, Labor, State, Air Fome, Am1y, Navy, and Veterans Affairs; the National Aeronautics and 

Space Administration; and !he Social Securtty Administration), 

had 

15(k)(2), compensation/seniority: The survey response indicated that 

the OSDBU director held a General Schedule position (GS-151evel) and 

the chief acquisition officer and senior procurement executive were 

Senior Executive Service (SES) positions. In a written response, the 

agency stated that it has begun discussions to elevate the OSDBU 

director position to an SES level. 

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Appendix VIII: Demonstrated Compliance with 

Section 15(k), Department of Commerce 

15(k)(8), assign small business technical advisers: A policy document 

provided by the agency provides evidence of an OSDBU process to 

assign small business technical advisers, however, agency officials told 

us that the head of each bureau procurement office rather than the 

OSDBU director is the official who appoints technical advisers. 

15(k)(11), advise on in-sourcing: The survey response indicated that 

providing advice on in-sourcing was not an OSDBU role. In a written 

response, the agency stated that it has been developing a review and 

advisory process on in-sourcing decisions. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: The survey response indicated that the 

OSDBU had not received any such notifications in the past three years. 

According to its written response, the agency stated that it has been 

developing an agency policy that would include procedures for 

addressing notifications by small businesses concerning solicitations that 

have been issued. 

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Appendix IX: Demonstrated Compliance with 

Section 15(k), Department of Defense 

Office of the Secretary 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Defense (DOD)- Office of the 

Secretary demonstrated compliance with 10 of the 12 section 15(k) 

requirements within our review (see table 1 0). DOD- Office of the 

Secretary did not demonstrate compliance with 2 requirements regarding 

identifying and addressing significant bundling of contract requirements 

and assigning small business technical advisers. For more information 

about our methodology, see appendix I. For more information about each 

statutory provision, see appendix II. 

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Appendix IX: Demonstrated Compliance with 

Section 15{k}, Department of Defonse- Office 

of the Secretary 

Table 10: Demonstrated Compliance with Section 15{k) Requirements as of May 19, 2017, Department of Defense- Office of 

the Secretaty 

Relating to Areas in Which 

DOD - Office of the 

Secretary Did Not 

Demonstrate Section 15(k) 

Compliance 

Note: The information we collected to make the determination for the director-retated requirements 

included survey responses; follow-up responses: and documentation such us policies, position 

descriptions, organizational charts, and reports. If supporting documentation was not available, we 

made the determination based solely on the agency's survey response and/or follow-up with agency 

officials. To obtain information for determinations on OSOBU functions. "We surveyed OSOBU 

dlrectors at 24 agencies about certain OSDBU functions listed in section 15(k) of the Sma1! Bus.iness 

Act We also reVie-wed relevant policy documents_ We fo!lo\I'Je'd up 'With a!! 24 OSDBU offices to clarify 

responses and oblain additional information in instances in 'Which they indicated they did not periorm 

a section 15(k) requirement. 

15(k)(5), identify and address bundling of contract requirements: 

According to the survey response and policy documentation, the OSDBU 

provides more of an oversight role than a direct implementation role. In an 

interview, OSDBU officials said that identification and mitigation of 

bundling typically occurs at the local level of the contracting office. In 

instances in which a small business notified the OSDBU that bundling 

had occurred, the OSDBU would report it to the contracting office. The 

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Appendix IX: Demonstrated Compliance wfth 

Section 15(k), Department of Defense- Office 

of the Secretary 

OSDBU also oversees bundling activity; for example, checking that 

bundled contracts are coded correctly. 

15(k)(8), assign small business technical advisers: The survey 

response indicated that the OSDBU director has not assigned small 

business technical advisers to each office in which the Small Business 

Administration has a procurement center representative. In a follow-up 

meeting, an agency official explained that the OSDBU does not have the 

resources to assign small business technical advisers. The contracting 

officer helps determine the need for a small business technical adviser on 

a case-by-case basis. According to OSDBU officials, the Department of 

Defense has about 700 small business professionals (generally known at 

other agencies as small business technical advisers). The small business 

professionals coordinate their work with the contracting office, but these 

staff reside in the small business office. 

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Demonstrated Compl 

, Department of Edu 

with 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Education (Education) 

demonstrated compliance with 11 of the 13 section 15(k) requirements 

within our review (see table 1 ). The department did not demonstrate 

compliance with 2 requirements regarding reporting to the head or deputy 

head of the agency and providing advice on the conversion of activities 

from performance by a small business to performance by a federal 

employee (in-sourcing). For more information about our methodology, see 

appendix I. For more information about each statutory provision, see 

appendix II. 

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Agency Response 

Relating to Areas in Which 

Education Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix X: Demonstrated Compliance with 

Section 15(k), Department of Education 

15(k)(3), reporting requirement (head of agency or deputy head): 

Information provided by Education officials indicated that the OSDBU 

director reports to the senior policy adviser (who is also the rating official). 

An agency official explained that the previous deputy secretary delegated 

the duties and functions to the senior policy adviser. The director's 

performance appraisal was signed by the senior policy adviser. According 

to the official, in the past, the director has typically met with the deputy 

secretary on a monthly basis and provided updates on small business 

activities. At the time GAO completed its review, Education had no deputy 

secretary. 

15(k)(11 ), advise on in-sourcing: According to the survey and follow-up 

response, advising on in-sourcing is not a function of the OSDBU and an 

OSDBU official could not identify any instances in which the OSDBU 

would be involved in this activity. An OSDBU official explained that this 

responsibility was delegated to the Office of Contract Operations because 

of limited OSDBU resources. The official stated that the agency 

understands that this requirement must be fulfilled by the OSDBU director 

and it has been developing a policy and procedures to address this 

responsibility. An OSDBU official said that the agency's Office of General 

Counsel would have to review and concur with the new policy and 

procedures. The agency's goal is to have a new policy approved for fiscal 

year 2018. 

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Appendix XI: Demonstrated Compliance with 

Section 15(k), Department of Energy 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Energy (Energy) demonstrated 

compliance with 10 of the 13 section 15(k) requirements within our review 

(see table 12). The department did not demonstrate compliance with 3 

requirements regarding reporting to the head or deputy head of the 

agency, assigning small business technical advisers, and responding to a 

notification from a small business of an undue restriction on its ability to 

compete. For more information about our methodology, see appendix I. 

For more information about each statutory provision, see appendix II. 

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to Areas in Which 

Energy Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix XI: Demonstrated Compliance with 

Section 15{k), 0Gpartment of Energy 

15(1<)(3), reporting requirement (head of agency or deputy head): 

Energy's position description for the OSDBU director states that the 

director reports directly to the agency's secretary. However, the 

performance appraisals for the director that we reviewed were signed by 

the deputy chief of staff and the chief of staff. An Energy official stated 

that the secretary provides input into the OSDBU director's rating. 

15(k)(8), assign small business technical advisers: According to an 

agency official, in March 2017,4 small business technical advisers were 

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Appendix XI: Demonstrated Compliance with 

Section 1S(k), Department of Energy 

appointed within the OSDBU. The official stated that the small business 

technical advisers do not report directly to the contracting office but are 

subject matter experts within the OSDBU who work with specific business 

lines such as science and energy. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: An agency official stated that on receiving a 

complaint of this nature, the director would investigate the situation and, if 

needed, elevate the complaint along the contracting chain of command. 

For instance, the progression would be to reach out to the small business, 

then to the agency's contracting office to obtain additional perspective, 

and if needed, to notify the agency advocate for competition. The official 

also said that the director would share information with the small business 

about available resources. The official stated that the director might not 

carry out all of these steps if the situation was resolved earlier in the 

process. The official said that the current OSDBU director had held the 

position of OSDBU director since January 2017 and had not yet 

encountered this situation. 

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I: Demonstrated Com pi nee 

Section 1 , Department Homeland 

Secu 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Homeland Security 

demonstrated compliance with all 12 of the 12 section 15(k) requirements 

within our review (see table 13)< For more information about our 

methodology, see appendix L For more information about each statutory 

provision, see appendix IL 

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Appendix XIII: Demonstrated Compliance 

with Section 15(k), Department of Housing 

and Urban Development 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Housing and Urban 

Development (HUD) demonstrated compliance with 10 of the 12 section 

15(k) requirements within our review (see table 14). The department did 

not demonstrate compliance with 2 requirements regarding the prior 

experience of the OSDBU director and providing advice on the 

conversion of activities from performance by a small business to 

performance by a federal employee (in-sourcing). For more information 

about our methodology, see appendix I. For more information about each 

statutory provision, see appendix II. 

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to Areas in Which 

Not Demonstrate 

Section 15(k) Compliance 

Appendix XU!; Demonstrated Compliaw;e with 

Section 15(k), Department of Housing and 

Urban Development 

15(1<), director experience: HUD officials stated !he OSDBU director has 

previously served as the deputy assistant secretary for operations and 

management and !he deputy chief human capital officer. As the deputy 

assistant secretary for operations and management. the director had 

oversight over all contracting functions in the Office of Fair Housing and 

Equal Opportunity. The director is an attorney and has served in several 

positions where contracting has been a responsibility. At the time we 

completed our review, the current director had served as head of the 

OSDBU for about 1-112 years. An OSDBU official stated that the director 

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Appendix XIII: Demonstrated Compliance with 

Section 15(k), Department of Housing and 

Urban Development 

has had a long work history in a variety of jobs and felt that the director 

was prepared for the role of the OSDBU director. 

15(k)(11), advise on in-sourcing: An OSDBU official told us that the 

OSDBU does not receive notices of in-sourcing proposals. According to 

the agency's survey response, the Office of the Chief Procurement Officer 

would review and advise the agency on decisions to convert an activity 

(to performance by a federal employee). An agency official stated that the 

OSDBU director plans to pursue discussions within the agency about a 

policy to address the OSDBU's involvement with in-sourcing decisions. A 

written response provided by HUD officials also indicated that the agency 

plans to examine its policy and ensure compliance with this requirement. 

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Appendix XIV: Demonstrated Compliance 

with Section 15(k), Department of the Interior 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of the Interior (Interior) 

demonstrated compliance with 10 of the 12 section 15(k) requirements 

within our review (see table 15). The department did not demonstrate 

compliance with 2 requirements regarding providing advice on the 

conversion of activities from performance by a small business to 

performance by a federal employee (in-sourcing) and responding to a 

notification from a small business of an undue restriction on its ability to 

compete. For more information about our methodology, see appendix I. 

For more information about each statutory provision, see appendix II. 

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to Areas in Which 

Interior Not 

Demonstrate Section 15(k) 

Compliance 

Appendix XIV: Demonstrated Compliance with 

Section 15{k), Department of the Interior 

15(1<)(11), advise on in-sourcing: The survey response indicated that 

this was not an OSDBU role, In a follow-up meeting, an agency official 

stated that the OSDBU does not have a formal process for giving advice 

on in-sourcing and that the official could not recall the OSDBU being 

involved with any in-sourcing decisions. The official does not think that insourcing is happening very often but said that there may be instances of 

this that the official is not aware of. The official further stated that if a 

small business is affected, the OSDBU would be consulted when relevant 

issues arise. 

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Appendix XIV: Demonstrated Compliance with 

Section 15(k), Department of tile Interior 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: An agency official stated that the OSDBU 

director resolves these issues at lower levels and that this approach 

works at Interior. The official explained that each bureau at Interior has 

advocates for competition and a bureau chief, who is a senior expert on 

contracting for that bureau. The OSDBU director will reach out to the 

bureau advocates and chiefs to obtain information on a specific issue. 

The official considers this to be the best place to identify the details of the 

undue restriction. However, the official stated that there may be other 

benefits to informing the primary agency advocate for competition, such 

as attempting to see broad trends within the agency rather than 

remedying an individual situation. 

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Append XV: Demonstrated Compliance 

with Section 15(k), Department of Justice 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Justice demonstrated 

compliance with all12 of the 12 section 15(k) requirements within our 

review (see table 16)0 For more information about our methodology, see 

appendix L For more information about each statutory provision, see 

appendix IL 

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Appendix XVI: Demonstrated Compliance 

with Section 15(k), Department of Labor 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Labor (Labor) demonstrated 

compliance with 11 of the 13 section 15(k) requirements within our review 

(see table 17). The department did not demonstrate compliance with 2 

requirements regarding compensation/seniority and collateral duties of 

the OSDBU director. For more information about our methodology, see 

appendix I. For more information about each statutory provision, see 

appendix II. 

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Appnndix XVI: Demonstrated Compliance with 

Section 15(k), Department of labor 

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Agency Response 

Relating to Areas in Which 

Labor Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix XVI: Demonstrated Compliance with 

Section 15{k), Department of Labor 

15(k){2), compensation/seniority: At the time of our review, the current 

OSDBU director was an acting director. In cases in which an agency's 

OSDBU director was an acting director, we assessed compliance for 

section 15(k)(2) based on the seniority and compensation of the 

immediately prior permanent director. In follow-up correspondence, a 

Labor staff member indicated that the prior permanent OSDBU director 

was a presidentially appointed, Senate-confirmed position compensated 

under an executive schedule. The position is not a Senior Executive 

Service (SES) position. This type of appointment does not meet the 

statutorily defined SES position requirements. 

15(k)(15), collateral duties: According to agency officials, the acting 

OSDBU director holds other positions and titles, including assistant 

secretary for administration and management and chief acquisition 

officer. When the position is permanently filled, the OSDBU director will 

hold the position of the assistant secretary for administration and 

management. The officials referenced a March 2010 department order, 

which explains that the agency realigned the small business-related 

functions under the assistant secretary for administration and 

management to better integrate small business outreach and small 

business procurement within the overall procurement function of the 

department. According to the officials, the assistant secretary for 

administration and management was appointed to simultaneously serve 

as the OSDBU director. 

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I: Demonstrated Com 

Section 15(k), Department the 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of the Navy (Navy) demonstrated 

compliance with 12 of the 13 section 15(k) requirements within our review 

(see table 18). The department did not demonstrate compliance with 1 

requirement regarding assigning small business technical advisers. For 

more information about our methodology, see appendix L For more 

Information about each statutory provision, see appendix IL 

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Agency Response 

Relating to Area in Which 

Navy Did Not Demonstrate 

Section 15(k) Compliance 

Appendix XVII: Demonstrated Compliance with 

Section 15{k), Department of the Navy 

15(k)(8), assign small business technical advisers: The survey 

response indicated that the OSDBU director does not assign small 

business technical advisers. In a follow-up discussion, an agency official 

stated that section 15(k) of the Small Business Act and the Defense 

Federal Acquisition Regulation (DFAR) differ in relation to how this 

function is to be carried out. The official explained that the DFAR 

delegates the responsibility of hiring technical advisers to the head of 

contracting. The official added that delegating this activity to the 

contracting office is effective and that the OSDBU is responsive to this 

office. The official also explained that the OSDBU is a policy-level office 

and does not have the staffing to oversee this activity. 

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Appendix XVIII: Demonstrated 

Section 1 , Department 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) a! the Department of State (State) demonstrated 

compliance with 11 of the 13 section 15(k) requirements within our review 

(see table 19). The department did not demonstrate compliance with 2 

requirements regarding assigning small business technical advisers and 

responding to a notification from a small business of an undue restriction 

on its ability to compete. For more information about our methodology, 

see appendix I. For more information about each statutory provision, see 

appendix II. 

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Agency Response 

Relating to Areas in Which 

State Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix XVIII: Demonstrated Compliance 

with Section 15(k), Department of State 

15(k)(8), assign small business technical advisers: The OSDBU 

director does not assign a small business technical adviser as a full-time 

employee of the procuring activity, but rather oversees small business 

technical advisers as employees of the OSDBU. There is 1 procurement 

center representative assigned to State, who covers all 46 bureaus of the 

department. When a question arises for the procurement center 

representative, the OSDBU director assigns a technical adviser to work 

(as needed) with the representative at the bureau procurement office. An 

agency official stated the director would like to assign small business 

specialists to each of the major bureaus at State, but resource constraints 

represent a significant barrier. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: Officials at State told us that the OSOBU 

interacts with a wide range of small businesses and that, in certain cases, 

the OSDBU would respond to a notification of an undue restriction on the 

ability of a small business to compete by completing the steps detailed in 

all three subsections of this requirement. But in other instances, the 

OSDBU would partially follow the subsections. For example, the OSDBU 

would not inform the agency's advocate for competition when they 

believed it was not warranted to do so. The officials stated that in these 

cases there was no need for the OSOBU to inform the agency's advocate 

for competition because the situation the small business raised was 

resolved at lower levels in the acquisition process. 

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Compliance 

, Department of 

We reviewed documents and survey and interview responses and 

determined that Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Transportation demonstrated 

compliance with all 12 of the 12 section 15(k) requirements within our 

review (see table 20). For more information about our methodology. see 

appendix I. For more information about each statutory provision, see 

appendix II. 

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Appendix XX: Demonstrated Compliance 

with Section 15(k), Department of the 

Treasury 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of the Treasury (Treasury) 

demonstrated compliance with 10 of the 12 section 15(k) requirements 

within our review (see table 21 ). The department did not demonstrate 

compliance with 2 requirements regarding assigning small business 

technical advisers and providing advice on the conversion of activities 

from performance by a small business to performance by a federal 

employee (in-sourcing). For more information about our methodology, see 

appendix I. For more information about each statutory provision, see 

appendix II. 

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Relating to Areas in Which 

Treasury Did Not 

Demonstrate Section 15(k) 

Compliance 

Appondix XX: Demonstrated Compliance with 

Section 15{k), Dop~rtment of tho Treasury 

15{k)(8), assign small business technical advisers: An agency official 

stated that the OSDBU does not assign a small business technical 

adviser (termed small business specialists at Treasury) to each of its 

bureaus. The official explained that it is important for bureau managers to 

assign technical advisers. The OSDBU provides input on the small 

business expertise the appointee holds. 

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Appendix XX: Demonstrated Compliance with 

Section 15(k), Department of the Treasury 

15(k)(11), advise on in-sourcing: Based on the survey response and 

follow-up discussion, an agency official indicated that this was not an 

OSDBU role. The official added that this activity falls under the human 

resources area. However, the official was not certain if human resources 

personnel would consult with the OSDBU, as in-sourcing does not 

happen that often. The official also referenced an Office of Management 

and Budget letter saying that in these cases, the OSDBU should be 

notified, but this guidance had not been incorporated into Treasury's 

policy. 

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Append XXI. Demonstrated Com 

Section 15(k), Department Veterans 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Department of Veterans Affairs (VA) 

demonstrated compliance with 10 of the 13 section 15(k) requirements 

within our review (see table 22)< The department did not demonstrate 

compliance with 3 requirements regarding reporting to the head or deputy 

head of the agency, assigning small business technical advisers, and 

providing advice on the conversion of activities from performance by a 

small business to pertormance by a federal employee (in-sourcing)< For 

more information about our methodology, see appendix For more 

information about each statutory provision, see appendix IL 

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Agency Response 

Relating to Areas in Which 

VA Did Not Demonstrate 

Section 15(k) Compliance 

Appendix XXI: Demonstrated Compliance with 

Section 15(k), Department of Veterans Affairs 

15(k)(3), reporting requirement (head of agency or deputy head): An 

agency official stated that the director reports to both the deputy secretary 

and the chief of staff, and the chief of staff signs the director's 

pertormance appraisals. The official added that, if there is a matter 

requiring the attention of the secretary, the OSDBU director will first 

advise the chief of staff. The official did not know why the secretary and 

deputy secretary do not sign the director's pertormance appraisals, but 

the official believes the director has adequate access to both the 

secretary and deputy secretary through the chief of staff. 

15(k)(8), assign small business technical advisers: According to an 

agency official, the director does not assign OSDBU personnel to the 

procuring activity, and the official believes the procuring office should 

pertorm this role. VA has 46 small business liaison officers (the term VA 

uses for personnel pertorming the role of small business technical 

advisers). The official stated that the small business liaison officers are 

full-time employees and well-qualified, but that their principal duty is not to 

assist the procurement center representatives. 

15(k)(11), advise on in-sourcing: An agency official stated that it is not 

common for agency personnel to send the OSDBU information when they 

are considering in-sourcing of activities. The official added that if a 

decision were made to convert sourcing, the agency would not submit the 

contract for re-competition. The official said that a draft policy (under 

development) will state that the OSDBU must be notified of potential insourcing. 

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Appendix XXII: Demonstrated Compliance 

with Section 15(k), Environmental Protection 

Agency 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Environmental Protection Agency (EPA) 

demonstrated compliance with 11 of the 12 section 15(k) requirements 

within our review (see table 23). The agency did not demonstrate 

compliance with 1 requirement regarding collateral duties of the OSDBU 

director. For more information about our methodology, see appendix I. 

For more information about each statutory provision, see appendix II. 

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Not Demonstrate 

Section 15(k) Compliance 

Appendix XXII: Demonstrated Cnmp!lanco with 

Section 15(k}, Environmental Protectloo 

Agency 

15(1<)(15), collateral duties: According to an EPA official, the OSDBU 

director also oversees 2 EPA-wide programs: (1) the Disadvantaged 

Business Enterprise Program, which is designed to increase the use of 

such businesses in procurements funded under EPA's financial 

assistance agreements; and (2) the Asbestos and Small Business 

Ombudsman Program, which advocates for small businesses on 

regulatory and environmental compliance issues. The official stated that 

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Appendix XXII: Demonstrated Compliance with 

Section 15{k), Environmental Protection 

Agency 

the intent of delegating these duties to the OSDBU was to increase cost 

efficiencies and effectiveness because of the functional overlap (all small 

business-related) and that sharing resources to accomplish these 

complementary agendas made sense for the agency. The OSDBU 

director provides administrative support to the procurement manager for 

the Disadvantaged Business Enterprise Program. The Clean Air Act of 

1990 requires the OSDBU, through the program ombudsman, to monitor 

activities for the Asbestos and Small Business Ombudsman Program. 1 

1 According to the Clean Air Act of 1990, the administrator shall direct the agency's Office 

of Small and Disadvantaged Business Utilization through the small business ombudsman 

to monitor the Small Business Stationary Source Technical and Environmental 

Compliance Assistance Program under this Clean Air Act section. The monitoring 

activities include (1) rendering advisory opinions on the overall effectiveness of the 

assistance program, difficulties encountered, and degree and severity of enforcement; (2) 

periodic reporting to Congress on program compliance with requirements of the 

Paperwork Reduction Act, Regulatory Flexibility Act [5 U.S.C. 601 et seq.J, and Equal 

Access to Justice Act; (3) reviewing information to be issued by the program to ensure the 

layperson can understand the information; and (4) having the program serve as the 

secretariat for the development and dissemination of such reports and advisory opinions 

42 U.S.C. § 7661f(d) 

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Appendix XXIII: Demonstrated Compliance 

with Section 15(k), General Services 

Administration 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the General Services Administration demonstrated 

compliance with all12 of the 12 section 15(k) requirements within our 

review (see table 24), For more information about our methodology, see 

appendix L For more information about each statutory provision, see 

appendix IL 

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Appendix XXI1!: Demonstrated Compliance 

with Section 15(kl, Geooral Services 

Administration 

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Append Demonstrated Com nee 

Section 15(k), National Aeronautics and 

S Adm istration 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the National Aeronautics and Space 

Administration (NASA) demonstrated compliance with 12 of the 13 

section 15(k) requirements within our review (see table 25). NASA did not 

demonstrate compliance with 1 requirement regarding responding to a 

notification from a small business of an undue restriction on its ability to 

compete. For more information about our methodology, see appendix I. 

For more information about each statutory provision, see appendix II. 

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Agency Response 

Relating to Area in Which 

NASA Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix XXIV: Demonstrated Compliance 

with Section 15(k), National Aeronautics and 

Space Administration 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: Officials at NASA stated that, on receiving 

a notification of an unduly restrictive solicitation, the OSDBU would 

respond by working directly with the appropriate contracting personnel at 

the relevant NASA buying center. The OSDBU would notify the 

contracting officer and ensure that the small business was aware of 

resources, but it would not inform the agency advocate for competition 

because the goal is to resolve issues at the lowest level. According to the 

officials, NASA has a decentralized structure consisting of 10 buying 

centers, and it is rare for an undue restriction issue to require the 

attention of the agency advocate for competition. Issues are generally 

resolved at the buying center offices. 

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Appendix XXV: Demonstrated Compliance 

with Section 15(k), Office of Personnel 

Management 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Office of Personnel Management (OPM) 

demonstrated compliance with 9 of the 12 section 15(k) requirements 

within our review (see table 26). OPM did not demonstrate compliance 

with 3 requirements regarding compensation/seniority of the OSDBU 

director, assigning small business technical advisers, and responding to a 

notification from a small business of an undue restriction on its ability to 

compete. For more information about our methodology, see appendix I. 

For more information about each statutory provision, see appendix II. 

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to Areas in Which 

OPM Did Not Demonstrate 

Section 15(k) Compliance 

App(lndlx XXV: Demonstratod Compllance wlth 

Section i5(k}, Office of Personnel Management 

15(k)(2), compensation/seniority: According to the survey response, 

the OSDBU director is a General Schedule position (GS-151evel), and 

the senior procurement executive is a Senior Executive Service position. 

The survey also stated that OPM does not have a chief acquisition officer. 

15(k)(8), assign small business technical advisers: An agency official 

stated that the OSDBU has hired one staff member who is technically 

qualified to work with the procurement center representative. The 

employee also does market research and helps with outreach events of 

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Appendix XXV: Demonstrated Compliance with 

Section 15(k), Office of Personnel Management 

the OSDBU, and in general mirrors the director's work. The official told us 

the staff member spends about 50 percent of her time working with the 

procurement center representative. The official also said the OPM 

OSDBU is small, and the director handles many tasks himself or may 

refer them to other relevant individuals. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: The survey response indicated that the 

OSDBU had not received a notification of an undue restriction in the past 

3 years. In a follow-up response, an agency official indicated that the 

director would take most of the steps specified in the notification 

requirement, but would only inform the agency's advocate for competition 

if the situation could not be resolved between contracting, the 

procurement center representative, and the OSDBU director. According 

to the official, the agency has created a draft standard operating 

procedure that will address the issue of communicating to the agency 

advocate for competition. However, the official also added that the draft 

review process is lengthy. The review process had not been completed 

as of May 19, 2017. 

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Appendix XXVI: Demonstrated Compliance 

with Section 15(k), Social Security 

Administration 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the Social Security Administration (SSA) 

demonstrated compliance with 7 of the 13 section 15(k) requirements 

within our review (see table 27). SSA did not demonstrate compliance 

with 6 requirements regarding compensation/seniority of the OSDBU 

director, reporting to the head or deputy head of the agency, collateral 

duties of the director, providing assistance on payments, assigning small 

business technical advisers, and providing advice on the conversion of 

activities from performance by a small business to performance by a 

federal employee (in-sourcing). For more information about our 

methodology, see appendix L For more information about each statutory 

provision, see appendix II. 

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to Areas in Which 

Not Demonstrate 

Section 15(k) Compliance 

Appendix XXVI: Demonstrated Compliance 

with Section 15{k), Social Security 

Administration 

15{k)(2), compensation/seniority: SSA officials explained that SSA's 

acquisition office is relatively small and they could not justify the OSDBU 

director holding a Senior Executive Service (SES) position. They said that 

they believe the OSDBU director is compensated appropriately at level15 

of the General Schedule given the responsibilities associated with a small 

procurement agency. 

15(k)(3), reporting requirement (head of agency or deputy head): 

According to SSA officials, the OSDBU director reports to the Office of the 

Commissioner on small business matters, but the chief of staff signs the 

performance appraisals of the director. In the past, the director's 

performance appraisals had been completed by the agency's deputy 

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Appendix XXVI: Demonstrated Compliance 

with Section 15(k), Social Security 

Administration 

commissioner. However, as of May 10, 2017, the SSA commissioner 

position remained vacant and the deputy director filled the role of acting 

commissioner; thus, the responsibilities for appraising the OSDBU 

director remain delegated to the chief of staff. 

15(k)(15), collateral duties: The OSDBU director is also the agency 

coordinator for the Electronic Subcontracting Reporting System, which 

collects information on subcontracts for use by the OSDBU and 

acquisition personnel. The agency officials added that the director does 

not spend a significant amount of time in this role. 

15(k)(6), provide assistance on payments: Agency officials said that 

the director would provide some limited assistance to small businesses 

seeking help with payment issues, usually by referring the business to the 

contracting office. The officials said that the OSDBU does not have formal 

procedures for providing payment assistance, and in cases in which a 

small business sought payment assistance from a prime contractor, the 

OSDBU generally would not get involved. 

15(k)(8), assign small business technical advisers: SSA officials noted 

that the agency has only one acquisition office; therefore, the OSDBU 

director did not assign technical advisers and the requirement did not 

make sense in the agency context. However, SSA has a specialist for 

small and disadvantaged business utilization, who is managed by another 

executive. Officials said that the specialist is a well-qualified, technically 

trained, full-time employee and has a principal duty to assist the 

procurement center representative, but is not assigned by the OSDBU. 

15(k)(11), advise on in-sourcing: According to SSA officials, the 

OSDBU is not generally involved in providing advice on a decision to 

convert an activity performed by a small business to an activity performed 

by a federal employee, although the budget office could contact the 

OSDBU for input on an informal basis. The budget office is responsible 

for preparing an analysis of proposed in-sourcing. 

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Appendix XXVII: Demonstrated Compliance 

with Section 15(k), U.S. Agency for 

International Development 

We reviewed policy documents and survey and interview responses and 

determined that the Office of Small and Disadvantaged Business 

Utilization (OSDBU) at the U.S. Agency for International Development 

(USAID) demonstrated compliance with 10 of the 12 section 15(k) 

requirements within our review (see table 28). USAID did not demonstrate 

compliance with 2 requirements regarding collateral duties of the OSDBU 

director and responding to a notification from a small business of an 

undue restriction on its ability to compete. For more information about our 

methodology, see appendix I. For more information about each statutory 

provision, see appendix II. 

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to Areas in Which 

USAID Did Not 

Demonstrate Section 15(k) 

Compliance 

Appendix XXVI!: Demonstrated Compliance 

with Section 15{k), U-S> Agency for 

International Development 

15(k)(15), collateral duties: The OSDBU director oversees the Minority 

Servicing Institutions Program for USAID. The director typically spends 

less than 2-3 hours per week in this role, and another OSDBU staff 

member serves as the full-time coordinator for the program. USAID 

officials stated that this role was moved from the agency's Office of 

General Counsel to the OSOBU about 10 years ago. They said that 

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Appendix XXVII: Demonstrated Compliance 

with Section 15(k), U.S, Agency for 

International Development 

bringing the responsibility under the OSDBU made sense from an agency 

perspective because the OSDBU assists disadvantaged businesses. 

15(k)(17), respond to notification of an undue restriction on ability of 

small business to compete: Agency officials stated that on receiving 

such a notification, the director would contact the procurement officer 

involved with the solicitation and ensure that the small business was 

aware of available options to address the situation. The officials stated 

that the director would not inform the agency's advocate for competition. 

They explained that discussing the issues with personnel directly involved 

with the solicitation was more effective than informing the advocate for 

competition. In the future, the officials indicated that the OSDBU may take 

steps to involve the agency advocate for competition in the process as 

required in section 15(k)(17). 

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Appendix XXVIII: Comments from the 

Department of Commerce 

(\~,_;'\ i UNITED STATES DEPARTMENT OF COMMERCE 

· """· • j The Secreta"Y at Commaroe 

\.,~.~~ VllllBhmgt.on. O.C 20230 

Ju1y25, 2017 

Mr. William B. Shear 

Director. Financial M;ulet~ und Community lrnrcstmcnt Issues 

U.S. (fovemmcnt Accountability Office 

441 U Street, NW 

Washington, DC 2054& 

DenrMr.Shear: 

Thank you for the opportunity to review and comment on the Government Accountability 

Office's draft report titled Small Busine.u ContractinK" Actions Needed 10 Denumstratl! anJ 

Belter Review Compliance with ,'J'elect Requirements fOr Sma!i Business Advocates 

(CiA0·17·675) 

On behalf of the Depanment of Commerce,! have enclosed our comments on the draft 

report. The repon discusses five recommendations to address non-compliance with section J 5 of 

the Small Business Act. We agree with the report's recommendations tOr S«tions 15(k)(2)-

SES designation for the Director position, (k)(8)- Appointment of Small Business Technical 

Advisers, (k)( 11)- In-sourcing, and (k)( 17)- Unduly re,.trictive solicitations. The Department 

has initiated appropriate corrective actions. However, the Depanment believes that we are in 

compliance with sections !5(k)(5)- bundling- and provided additional infonnation accordingly. 

If you have any yuc:;tions, please contact LaJucne Dcsmukcs at (202) 482-1472. 

Sincerely. 

GJL)'Jr<-<.4- ~~~Y~ Wi!hurRoss 

Enclosure 

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Appendix XXVIII: Comments from the 

Department of Commerce 

Depurtment ofCommcrce'!l Comments on 

GAO Dntft Report titled Small Busi11ess Contracting: Actions Needed to Demonstrate and 

Beller Re~·iew Compliance with Select Requiremetlls for Small Busimss Advocates 

(GA0-17-<175) 

The Department of Commerce has reviewed the draft report and we offer the following 

comments for GAO's consideration. Page nwnbers refer to page numbers in the report unless 

otherwise slated. 

{;eneral Comments 

The report on agencies' small business contracting programs, lllld in particular the review and 

Cl.)mpliance responsibilities of the Office of Small and Disadvantaged Bu.<>i.ness Utilization 

~OSDBU), Wf.l.S very infomlativ~. We agree with the report's discussion that noncompliance 

v.ith section 1S(k) requirements may lrmit the extent to which an OSDBU can advocate tOr small 

businesses. Overall. we fi.mnd the report generally well-informed and balanced. 

Comments on Recommendations 

The Government Accow1tability Oi1ice (GA.O) made one recommendation to lhe D~panmem of 

Commerce in the report. 

Recommendation: The Secretary of Commerce should comply \~lith sections l5(k)(2), 

(k)(5). (k){S), (k)(l 1), and (k)(l7) or report to Congress on why the agency has not complied, 

including any statutory tlexibilitics or exceptions believed appropriate. 

Commerce Response: The Depruiment ofCoauncrcc agrees with GAO's recommendation 

that we are not in compliance with section~ !5(k)(2), (k)(ll), (k)(t 1), and (k)(11), We are 

taking appropriate corrective actions. We imend to move forward with plans to chung.e the 

position of the director forOSDBU from GS-15 to an SES posilion in FY 2.018. The 

OSDBU Director is in the process of appointing Sma!l Business Technical Advisers (SETA} 

to bureaus in which SBA assigned PCRs. ln addition, the Department is in the proces;; of 

updating the Commerce Acquisition Manual (CAM) to address procedures for in-sourcing 

and unduly restrictive solicitatmns. 

The Oepartm(lnt of Commerce does not agree 1-'.'ith GAO's recommendation that we are not 

in compliance with sections l5(k)(5). 

(k)(5). Bundling- The Department has wel!~cstab!ished policy u..nd procedures in 

place to idcntif)', review, auc\ approve acquisition$ valued over $!50,000 that involve 

bundling of contract requirements prior to the issuana of ru1y ;;olicitatian. The 

contracting officer is required to submit fom1 CD-570, Small Ilusiness Set-Aside 

Review, mdicatc on the form if the planned a~uisition in\lolves bundling, aud attach 

supponing documentation and bundling analysis, The CD-570 package is subjected 

to a review and approval process, which includes the bureau small business specialist, 

PCR. OSDBU Director, and in eases <Jfsubst..1.IItial bundling. the Senior Proeurement 

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Appendix XXVIII: Comments from the 

Department of Commerce 

Executive. When the CD~570 fonn does not indicate a bundling action, the SllS and 

OSDBU may investigate the possibility of bundling b<lsed on supporting 

documentation submitted \\ith the CD-570 (i.e., acquisition history) or based on 

information other than lhnt provided with the CD-570 package, and require the 

contracting otf!cer to provide a bundling analysis to support the acquisition to bundle 

requirements, Tlle Department has reported zero bundled actions in fPDS since 

rv 2003 

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Append XXIX: Comments from the 

Department of Defense 

OFFICE OF THE UNDER SECRETARY OF DEFENSE 

3000 OEFENSE PENTAGON 

AC0Ul';'l('t10N, 

YEC><NOI..OGY 

~i;II..QGISTIC!I 

Mr.Wi!lirunSheat 

WA.SHINGTON, OC 20301-3000 

Director, rmuncia! MMk~ts and Community Investment 

U.S, Government Accmmtabi!i!y Office 

44IGStreet,NW 

JUL3i1GI1 

Washington DC 20548 

Dear Mr. Shear, 

Thls h; the Department of Defense (DoD) response to !he GAO Draft Rcpon 

GA0·17-67S, "SMALL BUSll"<'ESS CONTRACTJNG: Actions Needed to Demonstrate a..1d 

Better Review Compllance with Select Requirements for Small Business Advocates," d3ted June 

26,2017 (GAO Code !00820) 

The Department appreciates the opporttmity to comment on the draft report. Attached is DoD's 

prnpos~U rc~pon.>.c to th..: subject rep01t. My point of contact is Ms. Janke Buffler who can be 

reached atJJ!,niglh~nl.li<ro£frlbllJ.S.iLm.i1 and (57!}372- 6333. 

Enclosure; 

Asstate:d 

Page 11'8 

Sincerely, 

ct:ft~~ Acting Director, Office of 

Sma!!Busi11essPrograms 

GA0~17~675 Small Business Contracting 
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Appendix XXIX: Comments from the 

Department of Defense 

GAO Draft Report I>nted June 26,2017 

GA0·17-675 (GAO COHE 100820) 

"SMALL DUSINESS CONTRACTING~ ALIIONS NEEDED TO DEMO:SSTR4.TEAND DETTER REVU:W COMPLIANCE WITH SELECT REQUIREMENTS FOR 

S~1ALL BUSINESS ADVOCATES" 

DE:PARTMEJ\7 OF UEFENSE COM~E!\I'TS 

TO THE GAO RECOMMENOATION 

RECOMMENDATION 1: The GA.D recommends Lht1t the Director of the Defense f.ogist1cs 

Agency should comply with sections 15(k)(2), (k)(7), (k)(ll), and (k)(l7) or rep;Jrt lo C'ongress 

on why the agency h;t> not complied including seeking any statutory flc"iibi!ities or exceptions 

believed appropriate-. 

DoD RESPO:-iSE: Pamally concur. 

Concur with section 1 5(«)(2), Defense Logistics Agency (DLA) formally requested a 

Senior Executive Service (SES) billet for the pvsition of Direc!(lr. DLA Office of Small 

Business Programs 1.ia the- fiscal year 201 &/2019 executive resource allocation p;ocess 

admims!ewd b} the Olfice of Personnel Management. Although this initial request was 

not approved by the Office of the Secretary DfDcfense, Ofii-ce of the DepU\:1" Chief 

~lanagcment ()ffic~t, DLA will continue to ~ubmh requests to elevate the position to the 

SES k>cL 

::-.Ioru:()ncur with section 15(k)(7) beci:luse the h-eadquarters DLA OSBP Director 

supervises all <!mployces within 1he headquaners DLA OSBP, To cl01tify the othtr 

supervlsmy relationships, DLA is a relatively large agency which is comprised of many 

subordinat~ field acl!vnies, each of which has a small business office. In each small 

business office, t:Jcrc is<: Diw::tor who supervises aH of the small business professionals 

within thatll<:uvny. There tOre, DLA is in compliance with section l5(kX7). 

RECOMMEND A T!O':'i 2: fhe GAO t!.-'Commends that the Secretarv of the Arrnv should 

comply with sc:t.lJon l5(l)(1l) or report to Congress on why the agencY has not con;p!icd, 

including sceldng any sta1utory t1exibilities or exceptiens believed appropriate. 

DoD RESPO~SF.; 1'\,mcorwur. 

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Appendix XXIX: Comments from the 

Department of Defense 

The Defense Federal Acquisition Regulation Supplement (spedfic.p.l!y, DFARS 2l9.201(c}(8)) 

delegates the lluihority to appoint small business technical advi:mrs to lhe head of the conuacting 

activity. Numerous heads of contracting activity llcross DoD appointed more than 700 small 

business specialists, also referred lo as "~mall business professionals", to perform the technical 

advisor function. Tflcrd'on.'. tbc Anny is in compliance with :!;ection JS(k)(S). 

RECOMMENDATION 3: The GAO recommends that the Secretarv of Defense should 

comp!y with s~ctions l5(k)(5) and (k)(S} or report to Congress on whY the agency has not 

complied, including see.king any statutory t1exibi!iti!'s or c:o:ceptions bc-lievcd appropriale. 

Dol) RESl'ONSE: Nonconcur. 

At the level of1hc Office of \he Secretary ofDeii.::ns~, DoD Office of Small Busin~ss Progrmns, 

there is no contracting or bundling to review or mitigate. The contracting Emd bundling occurs ln 

acquisitions conducted at the !ower level DoD Components. ~evenhe!ess, each year, the DoD 

Oftice of Small Bl1siness Programs identifies aU contracts marked as bundled across the. entire 

DoD, creates a sunmwry bw1dling report, and submits the report to Congress through the Small 

Business Administration. The annual report summarizes the IDilllY individuu\ efforts 11cross the 

DoD to identify, mitigutc, and monilor bundled eomracts. lhcrdOrc, the DoD is in c.omp!iance 

with section J5(k)(5) 

Tne Defense federal Acquisition Regulntion Supplement (specifically, DFARS 219.20l(c)(8)) 

de!egntcs the authority to appnint small business techllicaladvhors to the head of the contracting 

a~.:thity. Numerous head:;; of contracting i:iCtivity across DoD appointed more than 700 small 

busines_<; specia!tsts, also referred to as ''small business professionals", to perform the teclmical 

advisor function. Therefore. the DoD is in compliance wi!h section ! 5(k)(S), 

RECO!\'IMENDATIO~ 4: The GAO recommends that the Secretary of the J'.<avy should 

comply with secthm 1 1(:.:)(8) or report to Congress nn why the agency has not compli~, 

including .seeking a'ly statutory f!exibilities or e:xceplions believed appropriate. 

DoD RESPONSE: :Joncon~ur. 

The Defense Peden:! Acquisition Regulation Supplement (specifically, DFARS 2i9.20l(c)(S)) 

delegates the nuthori!y to appoint small business tedmical advisors to the head of the contrncting 

activity, Nmncrou:; heads of contracting activity :\cross DoD appointed more than 7{10 smlll! 

business speciali~ts. also referred to as "small busmess professionals", to perform the technical 

advisor function. fherefore, the Navy is in compliance with section 15(k)(B) 

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Appendix XXX: Comments from the 

Department of Education 

U\iTr',D STATES l!EPARTMKt\T OF EDOCAT!O~ 

July25, 2017 

Mr. William B. Shear 

Dear Mr. Shear: 

ReeommeoJ::ttions 

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Appendix XXX; Comments from the 

Department of Education 

D~partme:nt's O\'eml! mi~si~1n 

Thank you for the oppNiumty to pmvidc th.:se comments 

Sin~ercly, 

Paga 122 GA0~17~675 Small Business Contracting 
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Appendix XXXI: Comments from the 

Department of Energy 

Mr. \Villiarn B. Sl<c:uDirector 

Department of Energy 

Wash ngton, OC 20585 

July ~8, 2017 

If you ha1re any qucstwn~, p!efu.~ contact me. Christy Jackicwicz, a! (202) 586.4620. 

SinC{:rcly, 

linclo:.ure 

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Appendix XXXI: Comments from the 

Department of Energy 

Resnouse to Renort Recommendatiuns 

M11nag~ment H~~ponse: Concur 

The Otlic,' of Small and !)isadvantagcd Bnsinessl:tilization (OSDBt:) will tukc the 

fol!O\\!ng n-:tion w ~nsart: compliance with section J5(k)(3): 

The OSDBli will take the ft)llowing m;tJ()n to ensure compliance with scctiun 15(k)(8la. Managt:JU{;llt and Operation'> 

h. 

N"imml NmJe<rr ··''""''" 

The OSDBL wiil tnkc the following ac-tion to en~urr compliance wilh section l5(k)(l7): 

'Ibc cstimarrd c!o~mc date of!hc nctions listed ahoYc is Scpt.:mbcr 30, ~017 

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Appendix XXXII: Comments from the 

Department of the Interior 

United States Department of the Interior 

Mr. Wil!imn R Shear 

Dirc<..1or, Financial Markets arK1 

Communilv hw.:stment Issues 

JUL 2S 2017 

U.S. Govcn;mcnl AccDuntabi!iry Office 

441 

Dear Mr. Shear 

The Depactment .concun; with the recommendation to comply \-Yith sections l5(k)( 11) and 

l5(k)( 17) of the Small Busincs~ t\ct or report lo Congress on why lhc agcacy has not complied, 

including seeking an} statutory flexibilitics or exceptions believed appropriate. 

Sincerely, 

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Appendix XXXIII: Comments from the 

Department of Labor 

U.S. Department of Labor 

JUL I 3 1011 

?vlr,WilliamB.Shear 

Offlwofll'leAnl&lartCSe.cl"l'toll)l 

for !O.!Imlnlt.tratkm and M•n~gr~l\t 

Wil$1llnaton,O,C:, :Z02Ht 

Director, Finam:ial Markets and Community Inve~ment 

Government Accountability Office 

441 GStreet, NW 

Washington, D.C. 20548 

OCAT Mr. Shear: 

Thank you for the opportunity to re\liew and comment on draft report GAO~I7~675 Small 

B11siness Contractfng/ Actions Needed to Demons/rare am/ Bomer Revie-w Compliance wilh 

Select Requir~mentsfor Small BusinesJ Advocates. We appreciate the Government 

Accountability Office's {GAO} efTMts and insights, 

Rc~:ommendation: The Secrt!toty of LalxJr shot1ld comply with sections J.S(k)(:Z) and (k}(/5) or 

report /o Corrgres.1· on why !he agency has not cmnplie.d, including .reeking any statutory 

fle.tibHities or e:n:epiian~· bdkved appropriaf~: 

DOL Response: The Department neither agrees nor disagrees with the recommendation, As 

cum:ntly structuretl, our s..."'lnl! business program has had eight consecutive years of' A' ratings 

on its small business scorecard - a clear demonstration of sustained suctess. This is due in part 

to the ongoing support from Depmtmenfal leadership and program agencies for the small 

business program. However, the Department is committed to reviewing its compliance with the 

re!evantst.llutes. 

Should you have any questions regarding the Department's responlie, plensc: have your staff 

contact CIU! Cll.lllpbell, Chief Procurement Officer, !lt Campbell Carl V@do! gov, 

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Appendix XXXIV: Comments from the 

Department of State 

Charles M. Johnson. Jr. 

Managing Director 

International AITairs and Trade 

Government Accountability Oflice 

441 G Stn.'Ct., N.W. 

Washington, D.C. 20548-000 I 

Dear Mr. Johnson: 

United States Department of State 

Comptroller 

IVashfngton. /)(_' 20520 

JUl21 2017 

We appreciate the opportunity to review your draft report, 

''SMALL BUSINESS CONfRACTING: Actions Needed to Demonstrate and 

Better Review Compliance with Select Requirement for Small Business 

Advocates" GAO Job Code 100820. 

The cnclosl'd Department of State comments are provided for incorporation 

with this letter as an appendix to the final report 

If you have any questions concerning this response, please contact 

Rich Virmcombc, Dt:puty Director, Office of Small and Disadvantaged Business 

Utilization, Bureau of Administration at (703) 875-7491. 

Sincerely, 

(j-ld '\~ 

Christopher H. Flaggs 

Enclosure: 

As stated 

cc: GAO-- William R Shear 

OSDBU~ G!.)orge L. Price 

St.1te/OIG - Nonnan Drown 

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Appendix XXXIV: Comments from the Department of State 

Department of State Commcnb on GAO Draft Report 

SMALL BUSINESS CONTRACTING: Actions Needed to 

Demonstrate and Better RC\"icw Comnliancc with Select 

Requiremenh for Sm:dl Business Advocates 

(GA0-17-675, GAO Code 100R20) 

Tbunk you t()l the opportunity to comment on your draft report entitled 

",Small Busilwss Contracting,· Actions ,Veeded to Demonstmt(! and D~tter Review 

CompliartC'(' wilh ,'o{:h•rt Requirt.'menrsfiJr Small Business Adv<xmes ". The report 

includes l\V() reeommendahons for the Department or Slale. T~ Depm1ment 

respe.::tfully non-concurs v.ith one of these recommendations and concurs mth the 

other that a:>sists us in maintmning a strung sm<Jll bLL-;iness program 

First, tJ S (hwenuncnt Accmmlithility (GAO) recommends lhat the 

Depnrtment take add1ttonal steps to comply with Sect1on l5(k) {R), which requires 

thnt the officer or employee in the position of the Office of Small and 

Disadvantaged Bu::;1ness Utilization (OSDBU) Director must assign a smaU 

hu.'iincs.'i It.-ehmen! <JdviSL."f lo each ofiice where the Sma1ll3w;lncs..o.; Administration 

(SBA) has t-t::>signcJ a Prucur'-''IJH.mt Ccnt~r RcprcS>..iltutivc (PCR)_ The tcdu1ical 

aU vi sec 

I. Must be a fulHime employee of the pnlcuring uctiYity m1d must be well 

quali!lcJ, tcchmetlll~· tmmcd unJ familiar \\ith the :mpphcs or SLTViccs 

purchaficd at the actrvit:o,;: and 

·1 heir principal duty must be M assi~t the SBA PCR in the PCR "s duties 

and functions ratrd to section 8 and 15 of the Small Business Act ( 15 U.S C ~ 637, (,44) 

The l )epartmcnt nonwcnncurs \Vlth this reconnnendution and a~se1ts that it is 

currently in compliance. As noted during the Agency interview, the U.S. Small 

Business Administration hns assigned the Department of State a single PCR at the 

Department leveL Likc\vise, the Dcpurtmcnt assigns small business technic~ I 

advisors ut the Dcpflrtment lcYcl. Stat11ng each of the J)cp<lrlmcnt's 46 Hurcau-. 

\\:ith a full time quahilcd small business technical Rdvisor is impractical, incflicicnt 

and mm<Xcs;;ury nt this time 

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Appendix XXXIV: Comments from the Department of State 

-2-

Secondl), GAO recommends that the Department take additional steps to 

comply v.ith Section 15(kX17), which requires that when notified by a small 

business pnor to the mvard of a contract that the small business believes that a 

solicitation, request for proposal, or request for quotation unduly restricts the 

ability of the small bu.<;iness to compete, the officer or employee in the position of 

the OSDBU Director must: 

l. Submit the noti..::e of the small business to the contracting officer, and if 

neccssury, recommend w<~ys in \vhich lhe solicitation, request ror 

proposal, or request for quotation may be altered to increase the 

opporttmity for competition, 

2. Infonn the agency's Advocate for Competition; and, 

3. Ensure that the small business is aware of other resources and processes 

available to address unduly restrictive provisions in a solicitation, request 

for proposal, or request for quotation, even if the resources and processes 

are provided by the agency, SBA, the GAO, or a procurement technical 

nssts:tance program. 

The Department agrees with this recommendation, As noted during the 

Agency mtervicw, claims of undue restriction are rare and the Department's 

OSDJ3U has successfully resolved the claims at the Contracting Officer's leveL 

However, OSDBU \'<ill ~1ffi.nn intema.l policy to refer all claims, regardless of their 

resolution at a lm.ver level, to the Competition Advocate 

In conclusion, the Department thanks the GAO for this constructive audit 

and will promptly implement the agreed recommendations 

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Appendix XXXV: Comments from the Small 

Business Administration 

Mr.Wiiliam!:i.Shcar 

Director 

U.S. SMAll 8U$1NESS AOMIN!STRATION 

WMH'i'IGTON, D.C. 20416 

hlly15.7D17 

5mr;r11 Busines5 Advowte-~". The draft r~<port analyzes the compli<mce of partlcipJtmg 

agencies w1th ~~~n1on l'>(k) of the SmaJI Bvsmess Act and exammes the SBPf,C re\'IE!W 

process SBA ag1ee~ w1th the recomrnendat1on to S[l.A .and h~s already begurt :o 

implement tne recomrnendation for FY2Dl7 

than those u~ed for tl,p ctJrrent prCIC~?SS to facihtiltE' a more m-depth review of agenc1es' 

compli<Jnce w1th $CCtiDn lS{k) 'equirernenh '" SBA has initiated act1on to enhance the SBP.-'\C 

Sincerelv, 

Associate Admin1~traltrr, 

Office of Gove1 nment Contra.cting and BJ.:'iines~ Dt>\lf'loprnent 

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Appendix XXXVI: Comments from the 

Department of Veterans Affairs 

DEPARTMENT OF VETERANS AFFAIRS 

WASHINGTON DC 20420 

July 24,2017 

Mr. William B. Shear 

Director, Financial Markets 

and Community Investment 

U S. Government Accountab-ility Office 

441 G Street, NW 

Washington, DC 20548 

Dear Mr. Shear: 

The Department of Veterans Affairs (VA) has reviewed the Government 

Accountabi!!ly Office's {GAO) draft report, "SMALL BUSINESS CONTRACTING: 

Actions Needed to Demonstrate and Better Review Compliance with Select 

Requirements for Small Business Advocates" {GA0~17-675). 

The enclosure sets forth the actions to be taken to address the GAO draft report 

recommendatton. 

VA appredates the opportunity to comment on your draft report. 

Enclosure 

Page 131 

Sincerely, 

~s75~_,_Q_, 

Gina$. Farrisee 

Deputy Chief of Staff 

GA0-17-675 Small Business Contracting 
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Appendix XXXVI: Comments from the 

Department of Veterans Affaino 

Department of Veterans Affairs (VA) Comments to 

Oovemment Accounte~bi!ity Office (GAO) Draft Report 

Enclosure 

'(SMALL BUSINESS CONTRAGTfNG: Actions Needed to Demon~frate and Better 

Review Compliance with Select Requirements for Small Bu3ir:tess Advocates" 

(GA0-17-675) 

GAO Recommendation: To address noncompliance with section 15{k) the Small 

Bustness Act, as amended, GAO recommends: 

Recommendation 1(a): Tho Secretary of Veterans Affairs should comply with 

section 15(k)(3) or report to Congress on why tho agency has not complied, 

including seeking any statutory flexibilities or exceptions belioved appropriate. 

VA Comment: Concur in principle. The Department of Veterans Affairs {VA) is 

compliant and no further action is needed, but VA wi!J notify Congress as the 

Government Accountability Office (GAO} recommends. GAO finds VA did not 

demonstrate compliance with the required reporting rclationsh!p for the Dlrector, Office 

of Small and Disadvantaged Business Utilization (OSDBU). Noting that the statute 

5pecifies the Director shall report exclusively to the Secretary or Deputy Secretary, 

~including With respect to performance appraisals," GAO construed this requirement as 

requiring the Secretary or Deputy Secretary sign the Director's perfom1ance appraisaL 

Because VA's Ch1et ot Staff signs tl'le Director's performance appraisal, GAO found VA 

deficient on this element 

VA's perfom1ance appraisal proces._c;. for the Director, OSDBU, properly provides for 

separation of duties among the Rating Official (the Chief of Staff), the Reviewing Official 

{the Deputy Secretary), and the Appointing Authority (the Secretary). These roles are 

required by title 5, United States Code, sections 4311-15; title 5, Code of Federal 

Regulations, subpart 430.3; and part VofVA Handbook 5027/2, Performance Appraisal 

System. The Chief of Staff prepares and signs an inilial summary rating and 

pertormance appraisal based on specific performance elements, subject to review by 

the Deputy Secretary and the Secretary, Removing the Ch1ef of Staff from this process 

would require merging some of these duties into the same pereon and eliminating the 

independent rev1ews mandated by law and regulation, 

The Director, OSDBU, is fully and directly accountable to the Secretary and Deputy 

Secretary "v.rith 1espect to performance appraisals," as section 15{k)(3) directs. The 

Chief of Staffs role in initiating this process does not alter that accountabllity, 

particularty in light of the Chief of Staff's own direct reporting relationships to the 

Secretary and Deputy Secretary. Moreover, the annual summary rating assigned by the 

Secretary is the official rating. In response to the recommendation for section 15(k}(3), 

VA will nat implement changes as OAO envisions them but will instead report to the 

Congress the reasons for !h1s arrangement VA will not characterize its policy as noncompliant. The target completion date for this action is September 30,2017. 

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Appendix XXXVI: Comments from the 

Department of Veterans Affairs 

Department of Veterans Affairs (VA) Comments to 

Government Accountability Office (GAO) Draft Report 

Enclosure 

"SMALL BUSINESS CONTRACTING: Actions Needed to Demonstrate and Better 

Review Compliance with Select Requirements far Small Busine$S AdVocates" 

(GA0-17 -675) 

Recommendation 1fbl: The Secretary ofVetetanlii Affairs should comply with section 15(k)(B) or report to Congress on why the agency has not compllod, 

Including seeking any statutory flexibiiiUes or exceptions believed appropriate. 

VA Comment: Concur in principle. VA acknowledges the value of a knowledgeable 

on.site technical adv1sor at a contracting activity able to collaborate with the Small 

Business Admlntstration's Procurement Center Representative (PCR}. where one has 

been assigned. To the extent that employee addresses matters within OSDBU subject 

matter responsibility, it is essential for OSDBU to provide guidance and direcUon to 

ensure consistency. 

In interviews with GAO, OSDBU noted the anomalous requirement to select an 

employee of the contracting activity and direct that the employee expend his or her 

principal efforts to assist the PCR For OSDBU to select an employee and direct that 

person's principal work efforts, while that person nominally remains accountable to and 

on the payro!! of the contracting activity, requires an unusual degree of "matti)(ed" 

reporting relationships not often found in any workplace. Successful Implementation will 

require a high degree of collaboration wlth the contracting activity's leadership to ensure 

the employee retains access to the information he or she will need to assist the PCR 

OSDBU will seek to collaborate with the cognizant contracting activities through VA's 

Senior Procurement Coune1l, and develop a clear Mitten understanding of roles and 

responsibillties in a memorandum of understanding, The target completion data for this 

memorandum is September 30,2017, to enable exewtlon of these responsibitlties in 

fiscal year 2018. 

Recommendation 1fc): The SQcrotary of Veterans. Affairs should comply with 

section 15{k){11) or report to Congress on why the agen~;y ha~ not complied, 

including tJeeklng any statutory nexibilities or a.xcaptions believe(~ appropriate. 

VA CommMt: Concur. GAO notes OSDBU has drafted language for its Procurement 

Review Po!tcy to this end 

The target completion date for this action is September 30, 2017, to enable eJ<ecution of 

the revised Procurement Review Pohcy in fiscal year 2018. 

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Appendix XXXVII: Comments from the 

Environmental Protection Agency 

Wi!liumB.Shear 

Directtw 

UNITED STAlES ENVIRONMENTAl PRDTECTtON AGENCY 

WASHINGTON. O.C. 20460. 

JUL 2 4 1017 

Wa.~hington. DC 205-l~ 

Denrr-.kShcar· 

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Appendix XXXVII: Comments from the Environmental 

Protection Agency 

With respect to \he DGF Program. (ff\0 acknowledges that the program is d~;;1gncd to mcn::asc the 

utili:wtion ofsmaU disadvanwgcd ;tJld women-owned husincs,ws in pmcuremcnls Ji.md .. ·d umkr th.: 

l:flA's tinanc1al as:-.lstancc agrccmcnts, It abo highlights some ofthccfficJcncics and benefits the EflA 

ha~ idcntit!ed 111 connection with the organization nftht''iC complementary programs within a single 

ovcr.w:hing offiL'c. (iA() dtd not, howcver, address the rckvant opcratiomll framework for carrying 

out the DBE responstbJ!itk$ through the EPA's OSDBI!. That consideration is rclcvunt W asscs:-.ing 

whether the OSDBL: Dir.:<:tor holds other title~ nr pnsiunn.s, or r~rfonns other work in a manner that is 

ln~on~ish::nt with S<ect:1'n l:'\fk)tl5). 

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Appendix XXXVII: Comments from the Environmental 

Protection Agency 

Accordingly, the DBL pn)gr:u11 ~~ ~lratcgica!ly housed within the EPA's. OSDBlJ to better achieve the 

common gonh of1hc pr~)grJms to expand contracting opportunities for small hu!>incsl>e~, whether the 

orpurtnnitics arc <ln lhc pnme or StlbC\mtracting levels. or whether they arc for procurement$ under 

financial tlssist:mcc agreements funded with ErA cx1ramoral dollars. The pmgram also i<; 

appropnately sttuctun:J so th<lt the OSDBU Dirccwr docs not serve as the DBE program manager or 

dif\x:t!y carryout the d,1y~t(Hlay lJBE programmatic responsibilities in contr<~vcntion of Section 

15(klt15). 

Page 136 

Sincerely. 

;1_~--- Dcmse Benjamin Smnons. Director 

OHicc of Small and Disad\·antagcd 

Bu~incss ll!ilizatJ011 

GA0·17-675 Small Business Contracting 
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Appendix XXXVIII: Comments from the 

National Aeronautics and Space 

Administration 

National Aor.on<:Jvtics and Space Admiilislration 

Hoodqu.arters 

Washing!cm, DC 20545-0001 

Office Sn1all Hu~iness Prngrams 

Mr. William B. Shel:il' 

Director 

Washingron, DC 20548 

DcarMcSlleitt: 

July24, :?:017 

The National ;\c:ronautlcs and Space Administration (~ASA) appreciates the opp.onunity 

to review and comment on 1hc Government Accountability Office (GAO) draft report 

enlitlcJ, "Sumll Husincs5 Contracting; Actions Needed to Demonstrate and 1Jct1cr 

Review Compliance with Select Requirements for Small Busin~s Advocalcs" 

(GA0-17-675), 1.l:J.tcd June: 26, 20!7. 

In the draft report, GAO makes one recommendation to the Acting Administtamr uf 

NASA intt.\ndcd tn het\er ensure comp!lancc wttb section 15(k) of1he Small Ru.<:ine!'s 

Act 

Sped(icully. (,A() rcc{)mmends the !hllo...,·ing: 

;\'lanagemcnt"~ H:rsponsc: :--iASA partially concurs with the reconunendation. NASA 

believes, and tl1e draft report suppons, thnt NASA already complies with subparagraphs 

{A) and {C) of paragraph (17). NASi\ concurs that it is not in compliance with 

subparagraph (B). which requires the Dirccl.or of Small and Disadvantaged Business 

Utili;r.ation (OSDBL:) infonn the advoN~tc for compdition ofsm:h Agency. NASA still 

beheves tht' mosr practical and d1t!cti••c solution is fDr the OSDBU, in c.on~tdtmion with 

the Contracting OlTiccr, to re>.olve issUf.'s at the Jo,..-est level possible. However, the 

OSDBU -v.;ll begm notifYing 1he Agency cDmpctition adV\)Cate in order to oomp!y with 

the slll11!tc. In ctdditiou, tht: OSDBC wiU als(l notify the cogniwnt Center~level 

competiti1H1 ~~koc::~te. The OSDBlJ in coordination with the Office ofProeurement will 

issue formal cnncspnndence to the acquisition c-ommunity on these 11ew procedure~. 

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Appendix XXXVIH: Comments from the 

National Aeronautics and Space 

Administration 

Rstilnated Completion D-afe: Rcgatdlng th~~ estimated campktion df!te, 1.\l:! inie.'tld to 

comply begianing whcnc>crtllc next ;;uch occunence takes place. 'KASi\ intend!> !Q 

issue formal cuw:spondcncc to the t~cquillition commtmity to fully implement this new 

pr(!ccdurc within s1x m(m\hs of the dute of this let!er 

Once agai11, thank you lOt the opportunity to comment on the subject draft rcpcrt lf you 

have any \jue<.tJOns or requirl:.' additional information. please contact Richard Mann on 

(202)358-24"38. 

Sincerely, 

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Appendix XXXIX Comments from the Office 

of Personnel Management 

t:r.:rnm S'L:\TES Of!'TCE OF flERSO~'NF.i. \1Ar-.;M;EME\.'T 

\'V';nh.ington, DC 20415 

Mr. William H. Shear 

Diw:IOT. Financi::ll Market~ and 

Commtmity lnvc<;lmcnt Issues 

Dcarfl.kShcar: 

July 26,20!7 

llumk you for providing us the oppommity to respond to the Government Accountability Otlkc 

(GAO) draH tcpnrt. Small Business Contracting -Actions Needed lo Ikmon~lrate and Hetter 

Review Compliance 1rilh Sc/<:ct R~Jquin•mcF~ts forSm!llf Business :lth·omles, GA0-17·075, 

GAO job wdc num~r ! OOH20. 

We recogni/..e th.ll 1!\t:-n the most welt-run progr<~ms benefit from external evaluations und we 

appreciate yotlr input us we continue to enhance our progn:uns. The response to your 

rcconunemlatwn is pmYided below. 

Recommendutinn: Tht>: DirectorofOl'M Rboub;l comply with sections IS(k)(2), (k)(R), and 

(k)( 17) or report to Congress on why the a.gCilcy has not complied, including seeking llii}' 

statutory t1exibi!iti(•::, ur exceptions believed appropriate. 

OPM Rt':!iponsc 

Section l5(k)(2), CompeDsati(>u/St>niorily: Generally requires that OSDBU Director bt: 

apJX>inted by tho: ag~'IH.:y head to an SES po~ition. According to the survey response. the osonn Director is a Gcn~·ral Sch~dule position (GS-15 !eve!) 3nd the Senior Procurement Executive is a 

Senior l:xccUllve Servic:e position. 

Man.llgcntcnt Hc!opons": We concur in part. OPM n::cognin::s that the National Defense 

Authod:tJl!ion Act for :::013, Section 691(a) Pub. L. No. 112·239 included the rcquiremem that 

the OSDBU Dm:ct.nr h.: a member of the Senior Executive Service (SES) if the chief acquisition 

offic~:;r (CAO} 01 the scniN prowromcnt cxcc.mive (SPE) Is an SFS. Ry statute, QIJM has no 

chiefu<,:qu.isilion oHit:er, but it docs have a senior procuremr.nt executive, wlm is a member of 

theseniorexecutivcscrvice 

AI the time of ~na~:tment of section 69l(a), OPM's OSDDU Director po.~ition WiiS encumbereU 

by an employee at the GS~!S pay grade. OPM is presently uwaitingthe conlirmnlion ofiis 

nominee for Directuc Should the nominee be confirmed, this requirement wm tK; one ofihc 

many items the new Director wi!! cvuluate and mkc appropriate action to comply, otto rcpo11 to 

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Appendix XXXIX Comments from the Office of 

Personnel Management 

or exception from thi~ provision. 

Stt·liun t5(k)(S), Assign ~mall Uus:ines:~ Technical Advisor. An agency ofllcia! stated that the 

OSDBU has hired ! swJfmcmber who is tedm!ca!!y qualified to '-Vork with the procuremellt 

center representative. The ~:mployee also do<.'s market research and helps wlth outreach events of 

the OSDBU. ami in genern! mirrors !he dire<.:tor's work. Tbe {)fficial tt~ld us the staff membe.r 

spcncts about 50 w:n:t!nt of her 11me working wilh tbc procurement center representative. The 

oftlcial also snid the OPM OSDUU is srnall and the director handks many tasks himself or may 

rdCr them 1(1 Clther rele-vant individuals. 

Management Respon~l': We partially concur. OPM agrees with OAO'~ summary for Section 

J5(k)(~); however, the SUOlll\ary does !lOt lake into account that OSDlllJ of'ficc has two fu!l-timc 

''FTEs" \-Vhn each share 50 percent of their time with the procurement center representative 

which equates t.o I 0\) pen.:ent full-t1me coverage. 

Section l5(k)(J7), Rc~pond to Xotitication of l:ndu.e Restriction on Ability of Small 

Business lo Compete; The survey re~pon;;c indicntcd that the OSDBU Md not received a 

notification of an undw!- restrietiun in the past 3 yeaN. !n a {()1\ow-up discussion. an agency 

otlieial inJicatcJ that the director would !!ike most of the steps ~pL'Cificd in the notification 

requl!'ement, but would only infom1 the advocate for cnmpctition if the situM!on could not be 

resolved among c0ntracti11g. the procure:m~:.nt c,;ntcr rcprcs~ntalive. and the OSDBli director. 

ACC1)rding. to the oHiciaL th~ agency h11s created a draft standard operating procedure that will 

address fh(' issue of communi(.;;.lfing, to the agency advocate for wmpetition. Hmvevcr, the 

official also added that dra(\ review proce~ is lengthy and had not yet bt:tm completed as of May 

19,2017. 

Man:~gt.ment lhspon.~c: We t•onct!r. ·nw Director of the OSDBU prepared a druft SOP entitled 

·• [hulue R(!striaion cn Smdll lh1~iness Ability lo Comp~te" which is undergoing Agency review. 

I !!pprcciatc the opporlunity 10 lCSpond to this Jraft report. lf you hJve any que-'l-tion.<t rcgaHling 

ourrcspon:~e. please contact Mr. Dcsm0nd Bro\m. Director OSDllU ut 202~ 606-2~62 or 

desmond b!ol-',:'[1(!:{\)l[m,.g(w 

Sincerely, 

Dennis Coleman 

Acting Chief :Vtamgcmenl Ollicer 

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Appendix XXXX: Comments from the Social 

Security Administration 

/vir. William B. Shear 

4-'ll{iStrcct.l'\\\ 

\\'asllinr;ti\n,DC 20:\-.1-8 

Dcar\·lt'.Shcm· 

COJI1!l1Cl1!S, 

Endosure 

Page 141 

July 26,2017 

GAOw17-B75 Small Business Contracting 
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Appendix XXXX: Comments from the Social 

Security Administration 

COMME:'>ITS 0;\ THE GOVERN!\U:r\T ACCOUNTABILITY OFFICE UHAf'T 

REPORT "S;\1ALL BUSJ:'I/ESS CONTRA(TING: ACTIONS !'<iEF:HlW TO 

DEMONSTHA'l E AND BETTER REVIEW COMPLIANCE WITH SELECT 

REOUIRE:\lF.NTS FOR SM.·U.L Bl!SI~ESS ADVOCATES" <GA0-17-675> 

! 5(1..)(6)- Pnl\ ide A:.:.i,;tmH:o< on Pa~ ment"- \\/e will rdCr smi\ll busin<.!sscs <>ecking 

as~l:--l,mcc \.\ith p<1ym.:nts umllak paym.:nt interest pcn3lti<:'i 10 lhc OSDl3U tlirectur. 

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Appendix XXXX: Comments from the Social 

Security Administration 

ddcgating \ht·~c du\Jc'5 to tht' SADBl:s 

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Appendix XXXXI: Comments from the U.S. 

Agency for International Development 

JUL 24 1017 

DcarMr.Shc.u 

Enclosure: 

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Appendix XXXXI: Comments from the U,S. 

Agency for International Development 

llSAID COMMF.NTS ON GAO DRAFTRI~POUT 

SMAU, llt:SrNESS CONTRACTING: At"tinns Ncedrd to l)emnnstrll.te and Better Review 

C()mpliancc with Sl'lcct Requirements for Smt~ll Dusinc~s Advocates (GA0-17·675) 

This report has one recomrncuda!wil for USAID as shown on paf,re 32 of the <:lraftreport: 

USAlD'~ Rl'~pnu~t·: l~SAfD Concurs with the ~~ommendatiou. 

21Page 

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Appendix XXXXII: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(100820) 

William B. Shear, (202) 512-8678, shearw@gao.gov 

In addition to the contact named above, Andy Pauline (Assistant 

Director), Janet Fang and Meredith Graves (Analysts in Charge), 

Benjamin Adrian, Pamela Davidson, Hannah Dodd, Ricki Gaber, Farrah 

Graham, Barbara Roes mann, Jessica Sandier, Jena Sinkfield, and Tyler 

Spunaugle made key contributions to this report 

Page 146 GA0·17~675 Small Business Contr<!ctlng 
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Testimony for the Record 

Submitted to the 

House Committee on Small Business 

Subcommittee on Economic Growth, Tax, and Capital Access 

For the Hearing 

"Financing through Fintech: Online Lending's Role in 

Improving Small Business Capital Access" 

October 25, 2017 

Submitted by Alison Feighan on behalf of the Responsible Business Lending Coalition 

Chairman Brat and Ranking Member Evans, on behalf of the Responsible Business Lending 

Coalition (RBLC) 1 thank you for convening this important hearing. We hope that today's discussion 

will launch an ongoing dialogue to encourage much needed innovation in small business lending, 

while also empowering and protecting small businesses borrowers from irresponsible lending 

practices and products. We appreciate the opportunity to contribute to this dialogue by submitting 

testimony related to the Small Business Borrowers' Bill of Rights and RBLC's efforts to drive 

responsible practice in the small business lending space. 

The RBLC is a diverse network of experienced for-profit and nonprofit lenders, brokers, and small 

business advocates organized to promote responsible innovation in small business lending and 

combat the rise of predatory and irresponsible lending practices and products in the market. The 

RBLC's members are the Aspen Institute, a nonpartisan policy forum; Funding Circle and Lending 

Club, two leading Fintech innovators in marketplace lending; Accion and Opportunity Fund, two of 

the largest nonprofit CDFl small business lenders; Fundera, a leading small business loan broker; 

Community Investing Management, an impact-driven investor in small business financing; and the 

Small Business Majority, a nonprofit trade association and advocate for small businesses. 

Members of the RBLC recognize that the way small businesses borrow money is changing and 

innovation is providing faster and easier access to capital, particularly in communities historically 

undcrserved by traditional lenders. The RBLC believes that in order to effectively empower small 

businesses, these innovations must place transparency, fairness, and borrowers' rights at the center 

of the lending process. To that end, the RBLC created the Small Business Borrowers' Bill of Rights, 

a cross-sector consensus on the responsible lending practices that all small business owners seeking 

financing deserve. More than simply a statement of principles, the Small Business Borrowers' Bill of 

Rights is a set of specific practices that lenders, marketplaces, and brokers should abide by to uphold 

the rights of their small business customers. The six rights are: 

The Responsible Business Lending Coalition 

www.responslblebuslnesslending.org. info@responsib!ebusiness!endlng.org 
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1. The Right to Transparent Pricing and Terms: A borrower has the right to have the cost and 

terms of any financing being offered presented to them in writing and in a form, that is clear, 

complete, and easy to compare with other financing options, so they can make the best decision 

for their business. 

2. The Right to Non-Abusive Products: A borrower has the right to expect that the financing 

products offered by a lender will not trap his/her business in an expensive cycle of re-borrowing. 

3. The Right to Responsible Underwriting: A borrower has the right to expect a lender is offering 

financing based on underwriting practices that assess the ability of the borrower's business to 

succeed and repay. 

4. The Right to Fair Treatment from Brokers: A borrower has the right to honest, transparent, 

and impartial communications with a broker regarding loan options, conflicts of interest, fees, 

and the financing options available. 

5. The Right to Inclusive Credit Access: A borrower has the right to fair and equal treatment 

when seeking a loan including protections guaranteed under the Equal Credit Opportunity Act. 

6. The Right to Fair Collections Practices: A borrower has the right to be treated fairly and 

respectfully throughout a collections process and the right to protections like those guaranteed 

under the Fair Debt Collection Practices Act. 

Since released two years ago, some 90 organizations including for-profit fintech innovators, 

nonprofit CDFllenders, advocacy and community groups, investors, brokers, and marketplaces have 

signed on to the Small Business Borrowers' Bill of Rights as Signatories or Endorsers. To become a 

"Signatory," the CEO or chief executive of a lender, marketplace, or broker must sign an attestation form 

affirming that the organization abides by each and every relevant practice set forth in the Small Business 

Borrowers 'Bill of Rights. There is no option to abide by certain requirements and ignore others. A 

Signatory's CEO is required to sign a standard Attestation Form designed for either a lender or 

marketplace, or a broker. Organizations that do not provide lending or brokering services, such as 

think tanks and advocates, can sign on as "Endorsers." 

At the end of this statement we have attached a copy of the Small Business Borrowers' Bill of 

Rights, lender and the broker Attestation Forms, and a current list of signatories and endorsers. 

Why a Small Business Borrowers' Bill of Rights? 

The small business financing landscape continues to change at a rapid pace, with new technologies, 

new lenders, and new products coming on line daily- some good and some not so good. While the 

RBLC supports efforts to make capital more accessible, particularly to entrepreneurs in underserved 

communities, we would like to see as much attention given to the quality of that capital and ensuring 

that in the long run, capital is helping and not harming small businesses. We continue to see 

evidence of the abusive and deceptive lending practices that led the formation of the RBLC and the 

launch ofthe Small Business Borrowers· Bill of Rights, including: 

a) Obfuscation of very high financing costs 

b) Misaligned incentives between lenders and borrowers 

The Responsible Business lending Coalition 

www.responsiblebusinesslending.org .Jnfo@responsib!ebusinesslending.org