Report to Congressional Requesters

United States General Accounting Office

GAO

November 2002 SMALL BUSINESS

ADMINISTRATION

The Commercial

Marketing

Representative Role

Needs to Be

Strategically Planned

and Assessed

GAO-03-54
Why GAO Did This Study

Subcontracting on federal

contracts is a large and growing

marketplace for small

businesses. The Small Business

Administration’s (SBA)

Commercial Marketing

Representatives (CMRs) have

long been considered to be key to

fostering small businesses’

participation in subcontracts.

GAO was asked to assess the role

that CMRs are playing in

administering SBA’s

subcontracting assistance

program.

November 2002

SMALL BUSINESS ADMINISTRATION

The Commercial Marketing Representative

Role Needs to Be Strategically Planned and

Assessed

This is a test for developing highlights for a GAO report. The full report, including GAO's objectives, scope, methodology, and analysis is available

at www.gao.gov/cgi-bin/getrpt?GAO-03-54. For additional information about the report, contact David E. Cooper (202) 512-4841. To provide comments on

this test highlights, contact Keith Fultz (202-512-3200) or email HighlightsTest@gao.gov.

Highlights of GAO-03-54, a report to Senator John Kerry, Chairman, Senate Committee on Small

Business and Entrepreneurship, and Senator Max Cleland.

What GAO Recommends

GAO is recommending that SBA

strategically assess, evaluate, and

plan the CMR role. In doing so, it

should address such issues as the

impact of assigning multiple roles

to CMRs and the effectiveness of

compliance-monitoring methods.

SBA neither concurred nor

disagreed with GAO’s

recommendations. However, SBA

did agree that it needs to rethink

the CMR role and develop

outcome and impact measures to

better assess CMRs’ effectiveness.

SBA also objected to some of

GAO’s conclusions but did not

provide sufficient evidence to

support its objections.

United States General Accounting Office

What GAO Found

CMRs are supposed to promote small business subcontracting in two

primary ways. First, they review prime contractors’ compliance with the

requirements of their subcontracting plans—either through on-site visits

to contractors or by simply reviewing their subcontractor activity

reports. Second, they conduct various marketing activities, such as

marketing small businesses to prime contractors.

In recent years, however, additional duties placed on CMRs have often

taken priority over these responsibilities. In fact, in fiscal year 2000, 87

percent of the CMRs had other substantial responsibilities. Moreover,

workloads and prime contractor coverage now vary greatly between

CMRs. Additionally, CMRs are relying more on “desk” reviews of

subcontractors’ activity to monitor compliance with subcontracting plans

as opposed to on-site reviews. This is a concern to some SBA officials

who believe that on-site reviews are more thorough, though others

believe the desk review offers the potential for greater coverage.

Declines in staffing and travel funds have contributed to the changing

role of the CMR. With downsizing and retirements taking place and no

staff assigned to replace lost personnel, the number of CMR full-time

equivalents (FTEs) has decreased significantly and has resulted in

workload imbalances.

While there are concerns about the changing nature of the CMR role,

SBA has not strategically planned for these changes or assessed their

collective impact. Instead, it has implemented ad hoc measures to deal

piecemeal with resource declines. Unless steps are taken to better

evaluate and plan for the future of CMRs, SBA will continue to lack an

understanding of their contributions to small business subcontracting.

CMRs are increasingly taking on other roles and responsibilities

G A O

Accountability Integrity Reliability

Highlights
Page i GAO-03-54 SBA Contracting Assistance

Letter 1

Results in Brief 2

Background 3

The CMR Role Is Conflicted and in Decline 5

Factors Affecting the CMR Role 15

Conclusions 18

Recommendations for Executive Action 18

Agency Comments and Our Evaluation 18

Scope and Methodology 19

Appendix I Comments from the U.S. Business Administration 21

Tables

Table 1: Detailed Data on Time That CMRs Spent in Compliance

Monitoring and Marketing in Fiscal Year 2000 9

Table 2: Number and Percentage of On-Site Versus Desk Reviews

Performed by Year 10

Table 3: Number of Prime Contractors per CMR FTE by Area

Office 11

Figures

Figure 1: Number of Full-Time and Number of Part-Time CMRs for

Selected Years 6

Figure 2: CMR Roles and Responsibilities in Fiscal Year 2000 7

Figure 3: Percentage of Time Spent in Compliance Monitoring and

Marketing in Fiscal Year 2000 8

Figure 4: Percentage of On-Site versus Desk Reviews Performed 10

Figure 5: Variances in CMR Workload 11

Contents
Page ii GAO-03-54 SBA Contracting Assistance

Abbreviations

CMR Commercial Marketing Representative

COC Certificate of Competency

FTE full-time equivalent

GAO General Accounting Office

HCA Head Contracting Authority

HUB Zones historically underutilized business zones

OGC Office of Government Contracting

OIG Office of the Inspector General

PCRs Procurement Center Representives

PRO-Net Procurement Marketing and Access Network

SBA Small Business Administration
Page 1 GAO-03-54 SBA Contracting Assistance

November 1, 2002

The Honorable John F. Kerry

Chairman, Committee on Small Business

 and Entrepreneurship

United States Senate

The Honorable Max Cleland

United States Senate

Subcontracting on large federal contracts is becoming increasingly

important to small businesses, principally because subcontracts may offer

the most opportunities for these businesses to participate in federal

procurement in the near future.1

 The number of prime contracts is

shrinking, and many prime contracts have become so large that small

businesses find it difficult to compete for them. Moreover, the Small

Business Administration (SBA) reported that dollars paid for subcontracts

increased 40 percent from fiscal year 1993 through fiscal 2001, growing

from $65 billion to $91.1 billion.2

SBA’s Subcontracting Assistance Program focuses on increasing

subcontracting opportunities for small businesses through major prime

contractors. Historically, SBA staff known as Commercial Marketing

Representatives (CMRs) have administered and implemented this

program.

You asked us to assess the CMR role, particularly with respect to (1) what

role CMRs are playing in administering and implementing the

Subcontracting Assistance Program and;(2) what factors have affected this

role. As part of our evaluation, we used data from a recent survey we

conducted of all staff working as CMRs in fiscal year 2000.3

 Our overall

response rate was 97 percent.

 1

 See the SBA Subcontracting Task Team Draft Recommendations, May 2001.

2

 All dollar figures in this report have been adjusted to 2001 dollars to account for inflation.

3

 We conducted the survey for our report entitled Small Business Subcontracting

Validation Can Be Improved, GAO-02-166R (Washington, D.C.: Dec. 13, 2001).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-03-54 SBA Contracting Assistance

The CMR role is conflicted and in decline. Most CMRs are now largely

part-time and have substantial additional roles and responsibilities that

often take priority over CMR duties. In addition, there are differences of

opinion and concerns within the agency about the focus of the CMR role.

Some SBA Area Directors, Supervisors, and CMRs believe that CMRs

should focus more on monitoring prime contractors’ compliance with their

subcontracting plans. Other SBA officials believe that CMRs should focus

more on helping small businesses connect with prime contractors for

subcontracting opportunities.

There are also differences of opinion and concerns within the agency

about the relative merits of the methods CMRs use to monitor compliance.

Some SBA officials and many CMRs believe that going on-site to conduct

detailed reviews of prime contractors is more effective than simply

reviewing their subcontracting activity reports, which is now the most

frequently used monitoring method. Other SBA officials argue that relying

on report reviews is not only effective but also necessary because it is

more cost-efficient. Finally, CMRs’ geographic distribution and workloads

are very uneven, as is their coverage of prime contractors.

Resource declines and the agency’s ad hoc, piecemeal response are the

main factors driving this situation. CMR roles and responsibilities have

been affected by cutbacks in staff and travel funds during the past decade.

For example, CMRs (and other staff) have been assigned multiple roles,

and on-site reviews of prime contractors have been curtailed as economy

measures. Workload distributions and prime contractor coverage have

been affected in turn. As resources have declined, the agency has

struggled to make adjustments piecemeal as particular situations have

arisen, rather than stepping back to strategically assess and plan the CMR

role. Thus, role change occurred not by design but by default.

Consequently, we do not know whether the CMR role is effective or not.

Even though CMRs are considered to be critical to the successful

implementation of SBA’s Subcontracting Assistance Program, the agency

does not have a clear strategic vision of what CMR roles and

responsibilities should be and has not developed outcome or impact

measures for the CMR role. In addition, the agency has not assessed or

evaluated the effects of the various adjustments it has made to the CMR

role in response to the resource challenges.

We are recommending that the agency strategically assess, evaluate, and

plan the CMR role. This should include a careful assessment of such issues

as the impact of assigning multiple roles to staff, appropriate role focus,

Results in Brief
Page 3 GAO-03-54 SBA Contracting Assistance

the effectiveness of different methods of compliance monitoring, uneven

distributions of CMRs and CMR workloads, and uneven prime contractor

coverage.

SBA neither concurred nor disagreed with our recommendations.

However, SBA did agree that it needs to rethink the CMR role and develop

outcome and impact measures to better assess CMRs’ effectiveness. SBA

also objected to some of our conclusions but did not provide sufficient

evidence to support its objections.

The federal government encourages federal prime contractors’ use of

small businesses as subcontractors by requiring prime contractors to

develop plans with stated goals for subcontracting to various types of

small businesses. Federal regulations require a subcontracting plan for

each contract or contract modification that exceeds $500,000 ($1 million

for construction contracts) and has subcontracting possibilities.4

The Subcontracting Assistance Program is SBA’s vehicle for increasing the

percentage of subcontract awards to small businesses and ensuring that

small businesses have the maximum practicable opportunity to participate

in the performance of federal government contracts.5

 SBA’s Office of

Government Contracting (OGC) oversees this program. SBA/OGC has six

Area Offices responsible for all prime contractors’ subcontracting

performance.6

The program is implemented by CMRs, who promote small business

subcontracting in two primary ways, as described in SBA regulations.7

First, CMRs review prime contractors’ compliance with the requirements

of their subcontracting plans. They conduct on-site compliance reviews at

prime contractors’ facilities and validate how well the prime contractors

are implementing their subcontracting plans. They also conduct “desk

 4

 See Federal Acquisition Regulation 19.702.

5

 SBA is authorized to assist federal agencies and businesses in complying with their

subcontracting responsibilities and to evaluate prime contractors’ compliance with their

subcontracting plans by 15 U.S.C. 637(d)(10)(C).

6

 The Department of Defense’s Defense Contract Management Agency also reviews

subcontracting plans for defense prime contractors.

7

 See 13 C.F.R. 125.3 (c)(d).

Background
Page 4 GAO-03-54 SBA Contracting Assistance

reviews,” which are reviews of relevant subcontracting reports that are

submitted by prime contractors and completed without on-site visits.

Second, CMRs conduct various marketing activities, such as marketing

small businesses to prime contractors or matching certain types of small

business subcontractors with prime contractors. CMRs perform this

“matchmaking” through both personal introductions and the use of Webbased tools that help to connect prime contractors and subcontractors.

CMRs also provide various educational activities (e.g., seminars and

workshops) for prime contractors, subcontractors, and agency officials as

part of their marketing activities. In describing the duties required of

CMRs, SBA regulations do not place a relative order of importance on any

of these responsibilities.8

In addition, CMRs work on various SBA special initiatives as part of their

marketing activities. For example, CMRs promote SBA’s special 8(a)

subcontracting initiative, which focuses on increasing the number of

subcontracts to small disadvantaged businesses. CMRs also promote

several special initiatives involving SBA’s Procurement Marketing and

Access Network (PRO-Net). PRO-Net is a Web-based system that allows

prime contractors to advertise potential subcontracting opportunities and

small businesses to advertise their capabilities as subcontractors.9 CMRs

install PRO-Net access stations at large prime contractor sites and public

libraries, and train interested businesses and agencies in the use of PRONet to match prime contractors and subcontractors. Finally, CMRs

conduct special training for agencies and contractors on SBA’s historically

underutilized business zones (HUB-Zone) Empowerment Contracting

Program, which encourages economic development in HUB Zones.

SBA/OGC also employs other contract specialists, who focus on small

businesses as prime contractors rather than subcontractors. These include

Procurement Center Representatives (PCRs), size determination

specialists, and Certificate of Competency (COC) specialists. PCRs work

with agencies to determine whether it is appropriate for acquisitions not

set aside for small businesses to be set aside.10 Size determination

specialists determine whether a small business meets existing size

 8

 See C.F.R. 125.3 (c)(d).

9

 Small businesses may also advertise their capabilities as prime contractors.

10 See 13 C.F.R. 125.2(b).
Page 5 GAO-03-54 SBA Contracting Assistance

standards for all procurement programs for which status as a small

business is required.11 COC specialists review a contracting officer’s

determination that the small business in question is not competent to

perform on a particular contract.12

The CMR role is conflicted and in decline. Over the past few years, the

CMR role has become part-time, and CMRs now usually have additional

roles that often take priority. CMRs appear to spend slightly more time on

marketing activities than on compliance monitoring, and they now rely

much more frequently on desk reviews than on-site visits for the latter. In

addition, workloads and prime contractor coverage vary greatly between

CMRs. SBA officials and CMRs have several concerns about the CMR role.

The CMR position is usually part-time. At the end of fiscal year 2001, about

90 percent of the CMRs had other substantial responsibilities in addition to

their CMR duties. At that time, only 4 of the 39 CMRs were full-time CMRs.

As figure 1 shows, the number of part-time CMRs has grown over time,

increasing twelve-fold since 1992. (SBA officials anticipate the continued

assignment of additional roles to CMRs and other contracting specialists.)

In addition, despite the fact that a larger number of staff had CMR duties

at the end of fiscal year 2001 than in fiscal 1992, the number of CMR fulltime equivalents (FTEs) declined 28 percent—from 25 to about 18—during

this period.

 11 See 13 C.F.R. 121.401.

12 See 13 C.F.R. 125.5(f).

The CMR Role Is

Conflicted and in

Decline

The CMR Role Is Usually

Part-Time and Often Lower

Priority
Page 6 GAO-03-54 SBA Contracting Assistance

Figure 1: Number of Full-Time and Number of Part-Time CMRs for Selected Years

Source: SBA’s personnel records.

The SBA officials and CMRs we interviewed told us that part-time CMRs

have a variety of additional responsibilities, including serving as PCRs,

COC specialists, and/or size determination specialists.13 For example, in

our survey, 87 percent of the CMRs responding reported that in fiscal year

2000, they served in one or even two additional roles, as figure 2 shows.14

PCR was the most frequent additional role; 59 percent of the part-time

CMRs also served as PCRs.

 13 Most of these positions are GS-13 positions.

14 Since fiscal year 2000, SBA has assigned 6 additional part-time CMRs. Our survey

includes 85 percent of the current population of 39 CMRs.
Page 7 GAO-03-54 SBA Contracting Assistance

Figure 2: CMR Roles and Responsibilities in Fiscal Year 2000

Source: GAO survey.

The CMRs and SBA officials we interviewed also told us that part-time

CMRs often give lower priority to their CMR work than to their PCR, COC,

and/or size determination work. This is consistent with our survey—57

percent of the part-time CMR respondents reported spending 60 to 89

percent of their time in fiscal year 2000 performing non-CMR duties. Only

31 percent reported spending less than 30 percent of their time on nonCMR duties. Apparently, there are several reasons for this, including not

only the workload demands of these other roles, but also the time frames

within which they must be performed. Generally, these roles are tied to

specific procurements, and staff performing them must meet the

procurement schedule. Regulations and guidance also mandate tight time

frames for certain tasks.15 In contrast, CMR work is generally not as time

sensitive, and several CMRs who perform these other roles told us they “fit

in CMR work” when they have time.

 15 See Federal Acquisition Regulation 19.4 and 19.6, SBA SOP 60 04 4, SOP 60 02 6.
Page 8 GAO-03-54 SBA Contracting Assistance

CMRs generally seem to spend slightly more time on marketing than on

compliance monitoring. Figure 3 and table 1 show details of how CMRs

spent their time in fiscal year 2000. However, the SBA officials and CMRs

we interviewed told us that the amount of time that both full- and parttime CMRs spend on the two primary CMR duties—compliance

monitoring and marketing—varies considerably between Area Offices and

between individual CMRs.

Figure 3: Percentage of Time Spent in Compliance Monitoring and Marketing in

Fiscal Year 2000

Source: GAO survey.

Time Spent on Compliance

Monitoring Versus

Marketing Varies
Page 9 GAO-03-54 SBA Contracting Assistance

Table 1: Detailed Data on Time That CMRs Spent in Compliance Monitoring and

Marketing in Fiscal Year 2000

Compliance monitoring Marketing

Percent of

time spent

 Number

of CMRs

Percent

of CMRs

Number

of CMRs

Percent

of CMRs

0 3 10 0 0

1-9 4 13 6 20

10-19 12 40 9 30

20-29 3 10 5 17

30-39 6 20 5 17

40-49 1 3 1 3

50-59 0 0 1 3

60-69 0 0 2 7

70-79 0 0 0 0

80-89 1 3 0 0

90-99 0 0 1 3

Total 30 99 30 100

Note: Two of the CMRs surveyed did not respond completely to this question and therefore were

omitted. Percents do not add to 100 because of rounding. Marketing includes outreach and marketing

activities, special initiatives, and ongoing prime contractor assistance.

Source: GAO survey.

CMRs use desk reviews far more frequently than on-site reviews to

monitor prime contractors’ compliance with subcontracting plans. In fiscal

year 2001, 70 percent of all compliance reviews were desk reviews.

Reliance on desk reviews has increased substantially since fiscal year

1992, when all compliance reviews were done on-site. Figure 4 and table 2

show more details.

Shift from On-Site to Desk

Reviews
Page 10 GAO-03-54 SBA Contracting Assistance

Figure 4: Percentage of On-Site versus Desk Reviews Performed

Source: SBA’s CMR database and SBA’s Area records.

Table 2: Number and Percentage of On-Site Versus Desk Reviews Performed by

Year

Fiscal year

All compliance

reviews On-site reviewsa

Desk reviews

1992 380 380 (100%) 0

1993 458 458 (100%) 0

1994 470 470 (100%) 0

1995 484 484 (100%) 0

1996 777 441 (57%) 336 (43%)

1997 1,786 290 (16%) 1,496 (84%)

1998 1,497 233 (16%) 1,264 (84%)

1999 1,425 345 (24%) 1,080 (76%)

2000 1,096 252 (23%) 844 (77%)

2001 896 269 (30%) 627 (70%)

a

Includes follow-up reviews, which are return visits to a contractor to determine whether

recommendations from the original on-site review have been made.

Source: SBA’s CMR database and SBA’s Area records.
Page 11 GAO-03-54 SBA Contracting Assistance

There is an uneven distribution of CMRs nationally and an uneven

distribution of CMR workload. According to SBA, at the end of fiscal year

2001, there were about 18 CMR FTEs nationally to monitor the

subcontracting activities of the 2,029 prime contractors under SBA’s

cognizance. Figure 5 and table 3 illustrate the wide range in CMR

workload.

Figure 5: Variances in CMR Workload

Source: SBA’s workload analysis.

Table 3: Number of Prime Contractors per CMR FTE by Area Office

Area Offices CMR FTEs

Number of prime

contractors

Number of

prime contractors

per CMR FTE

1 4.20 314 75

2 2.40 474 198

3 1.75 234 134

4 1.63 237 145

5 4.95 277 56

6 2.85 493 173

Total 17.78 2,029 114

Source: SBA’s workload analysis.

Uneven CMR Workload

and Prime Contractor

Coverage
Page 12 GAO-03-54 SBA Contracting Assistance

The SBA officials and CMRs we interviewed also acknowledged wide

variations in workload between individual CMRs, whether full-time or

part-time, in different Area Offices or within the same Area Office. For

example, in one Area Office, one CMR had 13 prime contractors to

monitor, while another had 65. Both spend about 10 percent of their time

as CMRs. Similarly, in another Area Office, one CMR had 120 prime

contractors to monitor, while a CMR in another had only 2. Both spend

about 20 percent of their time as CMRs.

Not surprisingly, the uneven distribution of CMRs and CMR FTEs has

contributed to wide variations in the number of on-site reviews performed

annually by Area Offices.16 For example, one Area Office conducted 15 onsite reviews in fiscal year 2001, while others conducted 40 or more. In

addition, uneven workload distribution has contributed to the existence of

large blocks of un-reviewed, that is, “uncovered,” prime contractors. For

example, in one Area, there are no SBA reviews of any kind—on-site or

desk—being done for 212 prime contractors, including all the prime

contractors in one state and half of those in another. SBA officials told us

that in fiscal year 2001, only 11.4 percent of the prime contractors

nationwide received an on-site SBA review.17

CMRs and SBA officials have a range of concerns about the focus of the

CMR role—particularly with regard to how CMRs should spend their time.

Some believe that CMRs should concentrate more on monitoring prime

contractors’ compliance with their subcontracting plans. Others believe

they should focus more on helping small businesses connect with prime

contractors for subcontracting opportunities. There are also differences of

opinion and concerns within the agency about the relative merits of the

methods that CMRs use to monitor compliance as well as with the uneven

distribution of the CMR workload.

 16 Differing emphasis by Area Directors and CMRs on compliance monitoring versus

marketing and the lack of travel funds (especially in geographically large areas) also appear

to be contributing factors.

17 SBA officials told us that agency-wide on-site review goals have not been set because of

travel fund restrictions.

Concerns about the CMR

Role
Page 13 GAO-03-54 SBA Contracting Assistance

There are disagreements within SBA about the most appropriate focus for

the CMR role, that is, the balance between compliance monitoring and

marketing. The Area Directors, Supervisors, and CMRs we interviewed

had different views about CMR work priorities. For example, one Area

Director stated that compliance monitoring should be the first priority for

CMRs and matchmaking (i.e., marketing) should be secondary. Another

Area Director said that the CMR role should be a combination of

compliance monitoring and matchmaking but that matchmaking should

get more emphasis.

In contrast, the May 2001 report of the SBA Subcontracting Task Team

clearly identifies compliance monitoring as the CMRs’ main function.18 The

report concludes that over the past several years, CMRs have spent a

disproportionate amount of their time on special initiatives. The report

recommends that compliance reviews become the CMRs’ primary focus

and that less emphasis be placed on ancillary duties, such as matchmaking

or special initiatives. The report even proposes a new job title for the

CMR, adding that “marketing” gives the wrong impression that

matchmaking is the CMR’s main role.

In contrast again, SBA’s Web site does not mention compliance monitoring

as part of the CMR role. Rather, the Web site, which is an important means

of communicating with both prime contractors and small businesses,

describes the CMR role as “assisting small businesses in obtaining

subcontracts by marketing small businesses and matching them with large

prime contractors.”

Concerns about the focus of the CMR role are not new. SBA’s Office of the

Inspector General (OIG) issued a report in October 1995 citing the need to

focus CMR efforts more effectively with respect to compliance monitoring

and matchmaking.19

SBA introduced desk reviews in fiscal year 1996 as an economy measure.

Because desk reviews take place in the CMRs’ offices rather than at the

prime contractors’ locations, CMRs do not have to travel. In addition, the

desk review takes substantially less time to accomplish than does the on-

 18 See SBA Subcontracting Task Team Draft Recommendations, May 1, 2001.

19 See SBA’s Inspector General report Prime Contracts and Subcontracting Program,

October 1995.

Disagreements about the

Balance between

Compliance Monitoring

and Marketing

Concerns about Desk

Reviews
Page 14 GAO-03-54 SBA Contracting Assistance

site review. Consequently, relying on desk reviews saves both travel

money and CMR time.

SBA staff opinions differ about the relative merits of on-site versus desk

reviews. Some SBA officials and many CMRs believe that on-site reviews

are more effective and question the relative value of desk reviews as a

means of monitoring compliance. During on-site reviews, CMRs determine

if prime contractors are complying with their subcontracting plans by

going to the prime contractor’s location, reviewing files and

documentation that support reported summaries of subcontracting

activities, and interviewing officials. The CMRs we spoke with said that

this type of in-depth review is one of their best tools to encourage the

maximum use of small businesses as subcontractors. In contrast, other

SBA officials believe that using desk reviews not only saves resources but

also increases the total amount of monitoring that CMRs can do. SBA

officials said they have never evaluated the effectiveness of the two types

of reviews.

SBA’s OIG observed the uneven workload distribution problem in October

1995.20 Noting the limited subcontracting resources and variable staffing

levels and workloads, the OIG concluded that the unequal distribution of

workload among CMRs was correlated with the uneven coverage of prime

contractors. Accordingly, the OIG recommended that SBA more evenly

distribute prime contractors among CMRs to improve coverage. However,

SBA officials told us that where CMRs are located is driven by factors

other than the location of prime contractors with subcontracting plans.

For example, they said that although they can request CMRs to relocate to

provide better coverage, they cannot require staff to relocate.

It is likely that the full extent of the uneven workload and coverage

problems has not yet been identified. SBA officials have estimated that as

many as 1,500 additional prime contractors with subcontracting plans are

not presently captured by SBA’s data systems. While SBA officials told us

they are working to improve the methods and databases for identifying

and tracking prime contractors, progress appears to be very slow. Again in

October 1995, the SBA OIG noted that the number of federal prime

contractors with subcontracting plans was unknown, complicating SBA’s

 20 See SBA’s Inspector General report Prime Contracts and Subcontracting Program,

October 1995.

Concerns about CMR

Workload and Prime

Contractor Coverage
Page 15 GAO-03-54 SBA Contracting Assistance

efforts to focus subcontracting program activities and likely resulting in

lost small business opportunities.21

Two primary factors have affected the CMR role: declines in resources and

an ad hoc, piecemeal response to resource challenges. Both staffing and

travel funds declined substantially over the past several years. With

downsizing and retirements taking place and no staff assigned to replace

lost personnel, the number of CMR FTEs declined significantly and

resulted in workload imbalances across and even within SBA’s Area

Offices. Travel fund reductions have meant fewer on-site visits and greater

reliance on desk reviews. Staff at all levels agreed that insufficient

resources—particularly staffing and travel funds—are the biggest

obstacles to greater CMR coverage of prime contractors.

SBA did not formulate a strategic plan for dealing with the impact of

resource reductions on the CMR role. Without such a plan, SBA

implemented ad hoc measures to deal piecemeal with resource declines.

Nonetheless, these measures collectively have redefined the CMR role.

SBA/OGC resources have declined substantially over the past few years.

From fiscal year 1991 through fiscal 2000,22 staff declined 52 percent, from

333 to 159. During this same period, travel funds declined 54 percent, from

$440,000 to $201,000. SBA officials agreed that these resource declines

have significantly affected the CMR role. For example, SBA Area Directors

told us that the need to assign multiple roles to field staff has increased

since SBA experienced significant budget and staff cuts in the mid-1990s.

Prior to these cuts, most field staff for both the prime and subcontracting

programs were hired as specialists for one program. Now most, including

CMRs, work on multiple programs. Similarly, the Subcontracting Task

Team report pointed out that the merging of the CMR/PCR positions was

workload driven and reflected the fact that positions were not being filled

when incumbents retired.23 Finally, several SBA officials told us that to

cope with the loss of staff and lack of travel funds, as well as the increased

 21 See SBA’s Inspector General report Prime Contracts and Subcontracting Program,

October 1995.

22 Fiscal year 2000 is the most recent year for which both staff and travel data were

available from SBA.

23 See SBA Subcontracting Task Team Draft Recommendations, May 1, 2001.

Factors Affecting the

CMR Role

Declining Resources
Page 16 GAO-03-54 SBA Contracting Assistance

number of special initiatives, the assignment of multiple roles to staff

became necessary and the desk review was created to replace the on-site

review, when necessary.

The decline in travel funds has especially affected on-site compliance

monitoring. The lack of travel funds has become a critical factor in

decisions about which prime contractors receive on-site reviews,

particularly in those Area Offices that cover large geographic areas. For

example, in one Area, one CMR said that one major factor determining

which contractors receive on-site visits was whether they could be

reached on a tank of gas, since travel funds are so limited. In another Area,

the Director said that travel funds have been a problem for a long time,

and that for many months of the fiscal year, CMRs do not have access to

any travel money. This prevents them from being able to effectively select

prime contractors for on-site review.

Our survey indicated that the lack of travel funds also affected on-site

reviews in fiscal year 2000. For example, 76 percent of the responding

CMRs rated their Area Office’s travel budget as very important in

determining which prime contractors to review on-site. In comparison,

fewer—66 percent—rated problems with contractor reports as very

important. Still fewer—58 percent and 50 percent, respectively—rated

poor/marginal ratings of the contractor during the last on-site review and

the fact that the contractor had never had an on-site review as very

important. Similarly, 78 percent rated the lack of travel funds as a

significant barrier to conducting on-site prime contractor reviews.

Finally, the Task Team’s report expressed concern that without the

requisite travel money and other resources, SBA will continue to monitor

(on-site) about 12 percent of the total prime contractor portfolio, thus

limiting the effectiveness of the Subcontracting Assistance Program.24

SBA’s response to these resource challenges has been largely ad hoc and

reactive. As resources have declined, the agency has struggled to keep up

with subcontracting program demands by making various piecemeal

adjustments to address specific problems, such as assigning multiple roles

to CMRs and instituting desk reviews to cover staffing shortages and travel

fund declines. SBA has not stepped back—at either the agency or program

 24 See SBA Subcontracting Task Team Draft Recommendations, May 1, 2001.

Ad Hoc, Piecemeal

Response to Resource

Challenges
Page 17 GAO-03-54 SBA Contracting Assistance

level—and taken a broader, more strategic look at the CMR role,

particularly in the context of today’s resource-constrained environment.

Strategic planning, assessment, and evaluation are essential elements of

good management. This has been recognized for federal agencies since

1993, when the Government Performance and Results Act25 became law.

Effective management requires the establishment of goals and objectives

as well as impact or outcome performance measures.

SBA has not extended such planning to the CMR role to help address the

difficult challenges that declining resources pose for the Subcontracting

Assistance Program. SBA’s agency-level plan does not address the CMR

role at all.26 Furthermore, SBA officials told us that SBA’s current strategicplanning process does not deal with the CMR role in subcontracting or

provide for assessments, evaluations, or planning for the CMR role. In

addition, they told us that neither OGC nor the Subcontracting Assistance

Program has conducted strategic assessments or planning for the CMR

role.

In sum, while regulations and operating procedures describe a variety of

duties and responsibilities that CMRs may perform,27 SBA has not

developed goals and objectives for the CMR role. For example, the agency

analyzed what might be desirable levels of prime contractor coverage or

subcontracting plan compliance in today’s environment and how CMRs

might contribute to achieving these goals. In addition, although SBA has

productivity measures (e.g., the number of on-site and desk reviews

conducted) to track CMRs’ performance, it does not have impact or

outcome measures—or even such expectations—for CMRs. Finally, SBA

has not strategically assessed, evaluated, or planned how best to address

critical CMR role issues that have emerged during the past few years, such

as the effect of multiple role assignments for CMRs, disagreements about

the focus of the CMR role, the relative merits of on-site and desk reviews,

and the impact of uneven distributions of CMRs and CMR workloads.

 25 See P.L. 103-62.

26 See SBA Strategic Plan FY 2001-2006.

27 See 13 C.F.R. Part 125, 3(c)(d), SBA SOP 60 03 5.
Page 18 GAO-03-54 SBA Contracting Assistance

Consequently, we do not know how effective the CMR role is.

Effectiveness cannot be assessed without outcome and impact measures

tied to program goals and objectives. These do not exist for the CMR role.

Subcontracting on federal contracts is a large and growing marketplace

for small businesses. CMRs have been long considered to be key to

fostering small business participation in such subcontracting. However,

the value of the CMR role and the effect of recent changes in it are

unknown. Unless steps are taken to better assess, evaluate, and plan for

the future of the CMR role, SBA will continue to lack an understanding of

CMR contributions to small business subcontracting. Moreover, its

approach to addressing challenges that CMRs face will continue to be ad

hoc and piecemeal.

We recommend that the Administrator of SBA

• assess, evaluate, and plan the CMR role, including addressing such

issues as the impact of assigning multiple roles to CMRs, the

appropriate CMR role focus, the effectiveness of compliancemonitoring methods, and the impact of uneven CMR workloads and

prime contractor coverage;

• develop specific outcome and impact measures for CMRs’

effectiveness; and

• clearly communicate the strategic plan and expectations for the CMR

role to both SBA staff and small businesses.

SBA provided us with written comments on a draft of this report. The

comments, along with our responses, appear in appendix I.

SBA neither concurred nor disagreed with our recommendations.

However, SBA said that our report will be extremely helpful as it seeks

ways to strengthen and improve its Subcontracting Assistance Program. In

addition, SBA agreed that it needs to rethink the CMR role in today’s

environment and noted that some aspects of the role may change in the

future. SBA also agreed that it needs to develop outcome or impact

measures to better assess the effectiveness of the CMR role. Furthermore,

SBA noted that it has changed its Web site to include compliance

monitoring as part of the CMR role.

Conclusions

Recommendations for

Executive Action

Agency Comments

and Our Evaluation
Page 19 GAO-03-54 SBA Contracting Assistance

SBA objected to some of our conclusions, particularly (1) that SBA’s

response to the challenges posed by declining resources has been ad hoc

and piecemeal; (2) that SBA lacks a clear, strategic vision of the CMR role;

and (3) that CMRs’ effectiveness is unknown. We continue to believe that

our conclusions are correct. They are based on evidence that SBA has not

strategically assessed, evaluated, or planned the CMR role in light of the

current environment, including developing goals and objectives for the

role and impact and outcome measures for CMRs.

SBA’s comments do not provide any new evidence to the contrary. For

example, the task force study that SBA cites as evidence of planning

identified some specific problems with the CMR role and recommended

some specific solutions. However, it did not strategically assess or plan the

CMR role, nor was it tied to any SBA strategic-planning effort. In addition,

the study did not use or establish measurable goals and objectives or

outcome and impact measures for the CMR role. Similarly, the regulations

and operating procedures that SBA references as evidence of vision are

not tied to measurable goals and objectives and associated outcome and

impact measures.28 Rather, they simply describe a variety of duties and

responsibilities that CMRs are required to perform. In addition, the

conditions that SBA cites as evidence of CMRs’ effectiveness may be the

result of many factors other than CMRs’ efforts alone. SBA has not

conducted the assessments and evaluations necessary to determine what

effect CMRs actually had on these conditions. Finally, SBA’s agreement

that it needs to rethink the CMR role and develop impact or outcome

measures further supports our conclusions.

To determine CMRs’ duties and responsibilities, we analyzed pertinent

legislation, regulations, and operating procedures and reviewed other

agency documentation, including staffing profiles and workload analyses.

We extracted information from the General Services Administration’s

Federal Procurement Data System database on prime and subcontractors.

We also interviewed officials at SBA headquarters and Area Directors and

CMRs located in all six SBA Area Offices. We interviewed all six Area

Directors and several Area Supervisors. We also interviewed 15 of the 39

current CMR staff, accounting for about 51 percent of the total CMR FTEs.

Finally, we analyzed data from a GAO survey of all 33 staff working as

CMRs in fiscal year 2000, who constitute 85 percent of the current CMR

 28 See13 C.F.R. Part 125, SBA SOP 60 03 5.

Scope and

Methodology
Page 20 GAO-03-54 SBA Contracting Assistance

population. Our overall response rate was 97 percent. On our survey, we

asked a variety of questions about CMRs’ roles and responsibilities.

To identify the factors affecting the CMR role, we reviewed pertinent

legislation, SBA staffing information, workload analyses, and travel budget

fund submissions. We also interviewed SBA headquarters and Area Office

personnel and reviewed agency audit reports and task force studies. We

also met with SBA officials responsible for strategic planning.

We conducted our work from November 2001 through July 2002 in

accordance with generally accepted government auditing standards.

We are sending copies of this report to interested congressional

committees; the Administrator, SBA; and the Director, Office of

Management and Budget. We will also make copies available to others

upon request. In addition, the report will be available at no charge on the

GAO Web site at http://www.gao.gov.

If you have any questions concerning this letter, please call me at (617)

565-7555. Key contributors to this review were Catherine Baltzell, Art Fine,

David Bennett, Christina Chaplain, and Sylvia Schatz.

David E. Cooper

Director, Acquisition and Sourcing Management
Appendix I: Comments from the U.S. Business

Administration

Page 21 GAO-03-54 SBA Contracting Assistance

Appendix I: Comments from the U.S.

Business Administration

Note: GAO’s comments

supplementing those in

the report’s text appear at

the end of this appendix.

See comment 2.

See comment 1.
Appendix I: Comments from the U.S. Business

Administration

Page 22 GAO-03-54 SBA Contracting Assistance

See comment 5.

See comment 5.

See comment 5.

See comment 4.

See comment 3.
Appendix I: Comments from the U.S. Business

Administration

Page 23 GAO-03-54 SBA Contracting Assistance

See comment 7.

See comment 6.
Appendix I: Comments from the U.S. Business

Administration

Page 24 GAO-03-54 SBA Contracting Assistance

See comment 10.

See comment 9.

See comment 8.
Appendix I: Comments from the U.S. Business

Administration

Page 25 GAO-03-54 SBA Contracting Assistance
Appendix I: Comments from the

U.S. Business Administration

Page 26 GAO-03-54 SBA Contracting Assistance

The following are GAO’s comments on the Small Business

Administration’s letter dated October 8, 2002.

1. We do not agree that 80-percent time is essentially equivalent to 100-

percent time. Four staff that work 80 percent of their time as

Commercial Marketing Representatives (CMRs) constitute about three

full-time equivalents (FTEs), not four FTEs. This is a difference of

about 20 percent. As we point out in our report, SBA’s use of part-time

CMRs for whom the CMR role is, as SBA comments, “a collateral duty,”

has not meant an increase in CMR staff resources. Rather, total CMR

FTEs declined 28 percent from fiscal year 1992 through fiscal 2001.

2. SBA’s task force study identified some specific problems with the CMR

role and recommended some specific solutions, and SBA’s efforts to

implement some of these solutions can possibly lead to some

incremental improvements. However, the task force study did not

strategically assess or plan the CMR role, nor was it tied to any SBA

strategic-planning effort. In addition, the study did not use or establish

measurable goals and objectives or outcome and impact measures for

the CMR role. In other words, the study did not address the larger

issues of CMR strategic role assessment and planning. In the absence

of such planning, SBA’s approach to addressing challenges that CMRs

face will continue to be ad hoc and piecemeal.

3. Delegating decisions about the focus of the CMR role to Area Directors

may be appropriate. However, SBA has not conducted any

assessments or evaluations that address what Area Office factors and

characteristics make such delegation essential or effective.

Furthermore, SBA has not evaluated the effectiveness of local

decisions regarding the balance between compliance monitoring and

marketing. The resource pressures on the CMR role heighten our

concern. It may be that local decisions about the focus of the CMR role

are more influenced by the realities of local resource constraints than

by local compliance monitoring and marketing needs. Without sound

assessment and evaluation, however, this and many other issues of

role focus will remain clouded.

4. The regulations and operating procedures that SBA references do not

constitute a strategic vision tied to measurable goals and objectives.

GAO’s Comments
Appendix I: Comments from the

U.S. Business Administration

Page 27 GAO-03-54 SBA Contracting Assistance

Rather, as we discuss in our report, they simply describe a variety of

duties and responsibilities that CMRs are required to perform.1

 Since

the regulations and guidance do not place a relative order of

importance on these duties, and the Small Business Act and the

Federal Acquisition Regulations do not mention CMRs, there is no law,

regulation, or guidance requiring or suggesting that CMRs prioritize

their work according to a strategic vision.

In contrast, a strategic vision is broader and more comprehensive. It is

expressed in an overall strategic plan that articulates a mission and

specific plans to fulfill that mission, including measurable goals and

objectives and associated outcome and impact measures. SBA also

appears to recognize at least to some degree the limitations of the

regulations and operating procedures as a strategic vision because it

agrees that it needs to rethink the CMR role and develop outcome or

impact measures.

5. SBA recognizes that on-site reviews are both more effective than and

preferable to desk reviews but asserts that they are “less costeffective” and “not always necessary.” However, SBA does not offer

persuasive evidence to support these assertions. During our review,

SBA officials told us that they had not conducted assessments or

evaluations of either of these compliance review methods or of their

comparative effectiveness. Furthermore, SBA has not identified the

criteria—that is, the strategic goals and objectives and associated

impact or outcome measures—necessary to guide such assessments

and evaluations.

SBA also says that it uses the results of desk reviews to determine

which prime contractors should receive on-site reviews. However, as

we discuss in our report, the lack of travel funds is the primary driver

of decisions about which prime contractors receive on-site reviews.

6. SBA observes that in fiscal year 2000, small businesses, in general;

small disadvantaged businesses; and women-owned small businesses

received “much higher” percentages of all subcontract awards than of

prime contract awards.2

 SBA also observes that the percentage of

 1

 See C.F.R. Part 125.3(c)(d), SBA SOP 60 03 5.

2

 SBA did not provide data on prime contract awards, so we were unable to assess the

magnitude of the differences between subcontract and prime contract awards to these

types of businesses.
Appendix I: Comments from the

U.S. Business Administration

Page 28 GAO-03-54 SBA Contracting Assistance

subcontract dollars awarded to small disadvantaged businesses has

improved steadily over the past two decades.3

 SBA then attributes both

of these conditions solely to CMR efforts.

SBA has not conducted the assessments and evaluations necessary to

support this conclusion. Moreover, while CMRs’ efforts may well have

contributed to these conditions, a number of other factors likely have

had a significant impact. As we note in our report, federal regulations

require a subcontracting plan for each contract or contract

modification that exceeds $500,000 ($1 million for construction

contracts) and has subcontracting possibilities.4

 Federal agencies are

independently responsible for complying with these regulations.

Agencies may even conduct their own subcontract-monitoring efforts.

For example, DOD reviews subcontracting plans for defense prime

contractors. In fact, SBA commented that it has delegated the primary

responsibility for monitoring the subcontracting plans of most DOD

contractors to the responsible DOD agency so that SBA can focus its

limited resources on monitoring civilian agencies’ plans. Since DOD

accounted for 65 percent of all subcontracted dollars awarded in 2001,

it is not likely that CMRs alone are responsible for all small business

subcontracting achievements.

There are also inherent business incentives for prime contractors to

subcontract voluntarily with small businesses. For example, small

business subcontractors can provide important specialized capabilities

that the prime contractor does not have or wish to invest in

developing. Small business subcontractors may also be able to provide

some general services faster and more economically, thus saving prime

contractor resources. Subcontracting also allows prime contractors to

avoid permanent staffing increases that may not be sustainable in the

face of market shifts. Finally, as we note in our report, the nature of

federal contracting has changed. The number of prime contracts is

shrinking, and many prime contracts have become so large that small

businesses find it difficult to compete for them. This change alone may

heavily influence the conditions that SBA cites as markers of CMRs’

effectiveness.

 3

 SBA did not provide data on subcontract dollars awarded over time to small businesses in

general or to women-owned businesses.

4

 See Federal Acquisition Regulation 19.702.
Appendix I: Comments from the

U.S. Business Administration

Page 29 GAO-03-54 SBA Contracting Assistance

7. We do not agree that our report leaves a mistaken impression with

regard to the goals and objectives assigned to CMRs. Rather, we state

clearly that SBA has productivity measures (such as the number of onsite and desk reviews conducted) to track CMRs’ performance but that

it does not have impact or outcome measures—or even such

expectations—for CMRs. SBA agrees that it needs to develop outcome

or impact measures to better measure CMR effectiveness.

8. We continue to believe that SBA’s development of its new database

appears to be slow. SBA began developing this new database in early

2001, after experiencing repeated problems with its original database.

In October 2001, the SBA officials we interviewed told us that the new

database would be operational in January 2002. In February 2002, SBA

told us that it would be operational by June. Now, in October 2002,

SBA says that it is only in test mode and acknowledges that it will not

have a complete list of prime contractors with subcontracting plans

until the end of the second quarter of fiscal year 2003.

9. While SBA’s original database does provide some useful information,

the SBA officials we interviewed told us that the data were not

complete. The database did not contain a complete list of prime

contractors with subcontracting plans.

10. We continue to have concerns about CMRs’ workload and prime

contractor coverage. As we discuss in our report, about 18 CMR FTEs

nationally monitor the subcontracting activities of the 2,029 prime

contractors currently identified. In addition, CMRs have various

marketing duties. (In fiscal year 2000, CMRs generally seemed to spend

slightly more time on marketing than on compliance monitoring.) CMR

compliance monitoring Area Office workloads currently range from 56

to 198 prime contractors per CMR FTE. There are wide variations in

CMR workloads both between Area Offices and within more than one

Area Office. This situation may be exacerbated when additional

contractors with subcontracts are identified and added to CMR

workloads.

(120113)
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