Small Business Contracting: Actions Needed to Demonstrate and Better Review Compliance with Select Requirements for Small Business Advocates
Published: 2017-08-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Section 15(k) of the Small Business Act requires federal agencies with procurement powers to establish an OSDBU to advocate for small businesses. The National Defense Authorization Act for Fiscal Year 2013 established additional requirements for OSDBUs and required SBPAC to review OSDBU compliance with section 15(k) requirements.
GAO was asked to review compliance with selected requirements of section 15(k). GAO examined (1) the extent to which selected federal agencies demonstrated compliance with 13 requirements for OSDBUs and (2) SBPAC review process results. GAO selected a sample of 10 agencies, based on contracting obligations, to review a reporting requirement for OSDBU directors. For the other 12 requirements, GAO surveyed OSDBU directors at 24 agencies, selected based on contracting obligations (100 percent response rate). To review and augment survey responses, GAO also analyzed guidance and documents and interviewed OSDBU directors.
section_title: What GAO Found
paragraphs: 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 OSDBU can 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.
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. 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.
section_title: What GAO Recommends
paragraphs: GAO makes 20 recommendations, including that agencies not demonstrating compliance with section 15(k) requirements comply or report to Congress on why they have not, and that SBA should provide more detailed guidance for the new SBPAC review process than exists for the current process. Agency responses to the recommendations varied. As discussed in the report, GAO maintains that implementation of its recommendations is warranted.

section_title: Letter
paragraphs: The Honorable Steve Chabot  Chairman  The Honorable Nydia Velá zquez  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.  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;   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. 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. 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.
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.
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. 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  Congress—we surveyed OSDBU directors at 24 agencies. 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.
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.
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.
subsections: section_title: Background
paragraphs: 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  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 Act for 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.
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).
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.
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  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  acquisition policy, acquisition career management, acquisition  resources planning, and conducting acquisition assessments.
section_title: Agencies Demonstrated High Levels of Compliance with Two OSDBU Director Requirements, but Three Other Requirements Had Lower Rates of Compliance
paragraphs: 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.
subsections: section_title: Not All OSDBU Directors Reported to the Head or Deputy Head of the Agency
paragraphs: 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. 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  Administration (SSA)—reported to chiefs of staff. At the Department of  Education, the OSDBU director reported to the senior policy adviser.
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. 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 OSDBU 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  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.
section_title: Twenty-three of 24 Agencies We Surveyed Demonstrated Compliance with Requirements for Director Qualifications and Supervisory Duties, but Five Directors Had Collateral Duties
paragraphs: 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.
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). 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.
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 time 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.
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  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.  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,  to monitor activities for the Asbestos and Small Business  Ombudsman Program.
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.
section_title: Most OSDBU Directors Demonstrated Compliance with Requirement for Compensation and Seniority
paragraphs: 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 the SES 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-level positions or  were executive schedule political appointees who were not in SES  positions.
USDA. At the time 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.
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.
section_title: Agency Compliance Varied by Functional Requirement
paragraphs: 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.
subsections: section_title: All OSDBUs Demonstrated Compliance with Certain Requirements
paragraphs: 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.
Demonstrated compliance with section 15(k)
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  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.
section_title: Nearly All OSDBUs Demonstrated Compliance with Requirements to Identify Significant Bundling and Provide Payment Assistance
paragraphs: 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  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.
section_title: Some OSDBUs Did Not Demonstrate Compliance for Assigning Small Business Technical Advisers, Advising on In- Sourcing, and Responding to Notifications of Undue Restrictions
paragraphs: 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.  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 all 46 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.
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  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, if 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  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.
section_title: SBA Has Begun to Collect OSDBU Training and Travel Reports for Consolidated Submission to Congress
paragraphs: 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.
section_title: Some SBPAC Compliance Review Scores Were Not Consistent with Our Compliance Determinations
paragraphs: 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. 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 with 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). 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 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. 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.  Additionally, these standards state that management should design  control activities to achieve objectives.
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.
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. 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 current 10 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.
section_title: Conclusions
paragraphs: 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  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.
section_title: Recommendations for Executive Action
paragraphs: 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  flexibilities 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 flexibilities 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.
The Secretary of Defense should comply with sections 15(k)(5) and  (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 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)(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 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)(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 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)(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 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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  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 time 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  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  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 that the 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  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 in- sourcing 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,  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  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  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 that the 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 Center- level 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.
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  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 in- sourcing based on the analysis would be discussed with 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  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 stated that our report will help inform  the structure of the new peer review checklist being developed.
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  / www.gao.gov.  available at no charge on the GAO website at http:/ 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. K ey contributors to this report are  listed in appendix XII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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. 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.
subsections: section_title: Identification of Federal Agencies in Our Review
paragraphs: 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. 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.
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 Security 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.
section_title: Selection of Section 15(k) Requirements for Review and Information on Demonstrated Compliance
paragraphs: 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
15(k)(13): Provide training
15(k)(14): Receive unsolicited proposals and forward them when
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  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.
section_title: Assessment of Demonstrated Compliance with Section 15(k)(3) of the Small Business Act
paragraphs: 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;
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).
subsections: section_title: Assessment of Compliance with Other Selected Section 15(k) Requirements
paragraphs: 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.
section_title: Survey of OSDBU Directors
paragraphs: 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.
subsections: section_title: Survey Design and Administration
paragraphs: 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.
section_title: Small Business Procurement Scorecard and Peer Review Process of Small Business Procurement Advisory Council
paragraphs: 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  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.
section_title: Appendix II: Select Statutory Requirements for Office of Small and Disadvantaged Business Utilization
paragraphs: 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.
section_title: Appendix III: Overall Agencies’ Demonstrated Compliance with Select Section 15(k) Requirements
paragraphs: Listed below are the section 15(k) requirements we assessed to  determine the extent to which the 24 agencies in this review  demonstrated compliance.
Appendix  I Compliance with Select Section 15 Requirements :  Overall Agencies’  Demonstrated  )
section_title: Appendix IV: Demonstrated Compliance with Section 15(k), Defense Logistics Agency
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which DLA Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.  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 competition unless there is a  need to change an agency practice.
section_title: Appendix V: Demonstrated Compliance with Section 15(k), Department of Agriculture
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which USDA Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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. 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-15 level). The officials explained that the position was temporary (6  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.
section_title: Appendix VI: Demonstrated Compliance with Section 15(k), Department of the Air Force
paragraphs: 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 all 13 of the 13 section 15(k) requirements within our  review (see table 7). For more information about our methodology, see  appendix I. For more information about each statutory provision, see  appendix II.
section_title: Appendix VII: Demonstrated Compliance with Section 15(k), Department of the Army
paragraphs: 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.
subsections: section_title: Agency Response Relating to Area in Which Army Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix VIII: Demonstrated Compliance with Section 15(k), Department of Commerce
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which Commerce Did Not Demonstrate Section 15(k) Compliance
paragraphs: 15(k)(2), compensation/seniority: The survey response indicated that  the OSDBU director held a General Schedule position (GS-15 level) 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.  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.
section_title: Appendix IX: Demonstrated Compliance with Section 15(k), Department of Defense – Office of the Secretary
paragraphs: 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 10). 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.
subsections: section_title: Agency Response Relating to Areas in Which DOD – Office of the Secretary Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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  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.
section_title: Appendix X: Demonstrated Compliance with Section 15(k), Department of Education
paragraphs: 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 11). 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.
subsections: section_title: Agency Response Relating to Areas in Which Education Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XI: Demonstrated Compliance with Section 15(k), Department of Energy
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which Energy Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XII: Demonstrated Compliance with Section 15(k), Department of Homeland Security
paragraphs: 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 I. For more information about each statutory  provision, see appendix II.
section_title: Appendix XIII: Demonstrated Compliance with Section 15(k), Department of Housing and Urban Development
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which HUD Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XIV: Demonstrated Compliance with Section 15(k), Department of the Interior
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which Interior Did Not Demonstrate Section 15(k) Compliance
paragraphs: 15(k)(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 in- sourcing 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.
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.
section_title: Appendix XV: Demonstrated Compliance with Section 15(k), Department of Justice
paragraphs: 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 all 12 of the 12 section 15(k) requirements within our  review (see table 16). For more information about our methodology, see  appendix I. For more information about each statutory provision, see  appendix II.
section_title: Appendix XVI: Demonstrated Compliance with Section 15(k), Department of Labor
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which Labor Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XVII: Demonstrated Compliance with Section 15(k), Department of the Navy
paragraphs: 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 I. For more  information about each statutory provision, see appendix II.
subsections: section_title: Agency Response Relating to Area in Which Navy Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XVIII: Demonstrated Compliance with Section 15(k), Department of State
paragraphs: 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 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.
subsections: section_title: Agency Response Relating to Areas in Which State Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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 OSDBU  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 OSDBU to inform the agency’s advocate  for competition because the situation the small business raised was  resolved at lower levels in the acquisition process.
section_title: Appendix XIX: Demonstrated Compliance with Section 15(k), Department of Transportation
paragraphs: 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 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.
section_title: Appendix XX: Demonstrated Compliance with Section 15(k), Department of the Treasury
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which Treasury Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
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.
section_title: Appendix XXI: Demonstrated Compliance with Section 15(k), Department of Veterans Affairs
paragraphs: 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 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.
subsections: section_title: Agency Response Relating to Areas in Which VA Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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  performance 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 performance 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  perform this role. VA has 46 small business liaison officers (the term VA  uses for personnel performing 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 in- sourcing.
section_title: Appendix XXII: Demonstrated Compliance with Section 15(k), Environmental Protection Agency
paragraphs: 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.
subsections: section_title: Agency Response Relating to Area in Which EPA Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XXIII: Demonstrated Compliance with Section 15(k), General Services Administration
paragraphs: 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 all 12 of the 12 section 15(k) requirements within our  review (see table 24). For more information about our methodology, see  appendix I. For more information about each statutory provision, see  appendix II.
section_title: Appendix XXIV: Demonstrated Compliance with Section 15(k), National Aeronautics and Space Administration
paragraphs: 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.
subsections: section_title: Agency Response Relating to Area in Which NASA Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XXV: Demonstrated Compliance with Section 15(k), Office of Personnel Management
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which OPM Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XXVI: Demonstrated Compliance with Section 15(k), Social Security Administration
paragraphs: 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 I. For more information about each statutory  provision, see appendix II.
subsections: section_title: Agency Response Relating to Areas in Which SSA Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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.
section_title: Appendix XXVII: Demonstrated Compliance with Section 15(k), U.S. Agency for International Development
paragraphs: 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.
subsections: section_title: Agency Response Relating to Areas in Which USAID Did Not Demonstrate Section 15(k) Compliance
paragraphs: 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).
section_title: Appendix XXVIII: Comments from the Department of Commerce
section_title: Appendix XXIX: Comments from the Department of Defense
section_title: Appendix XXX: Comments from the Department of Education
section_title: Appendix XXXI: Comments from the Department of Energy
section_title: Appendix XXXII: Comments from the Department of the Interior
section_title: Appendix XXXIII: Comments from the Department of Labor
section_title: Appendix XXXIV: Comments from the Department of State
section_title: Appendix XXXV: Comments from the Small Business Administration
section_title: Appendix XXXVI: Comments from the Department of Veterans Affairs
section_title: Appendix XXXVII: Comments from the Environmental Protection Agency
section_title: Appendix XXXVIII: Comments from the National Aeronautics and Space Administration
section_title: Appendix XXXIX Comments from the Office of Personnel Management
section_title: Appendix XXXX: Comments from the Social Security Administration
section_title: Appendix XXXXI: Comments from the U.S. Agency for International Development
section_title: Appendix XXXXII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Andy Pauline (Assistant  Director), Janet Fong and Meredith Graves (Analysts in Charge),  Benjamin Adrian, Pamela Davidson, Hannah Dodd, Ricki Gaber, Farrah  Graham, Barbara Roesmann, Jessica Sandler, Jena Sinkfield, and Tyler  Spunaugle made key contributions to this report.