Small Business Administration: Cosponsored Activities Can Benefit Small Businesses but Lack a Consistent Feedback Mechanism
Released: 2014-05-30T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: Section 4(h) of the Small Business Act authorizes SBA to provide assistance for the benefit of small businesses through activities the agency cosponsors with eligible for-profit and nonprofit entities, as well as federal, state, and local government entities. Cosponsored activities can provide information on SBA programs and services or on subjects of interest to small businesses, bring together government and private sector resources and small business owners (generally for government contracting or financing initiatives), or celebrate the contributions of small business owners. GAO was asked to study SBA's use of its cosponsorship authority.

This report (1) describes the roles and responsibilities of SBA and cosponsors in planning, funding, and conducting cosponsored activities, and (2) examines the benefits cosponsored activities provide to small businesses. GAO reviewed relevant laws and regulations and SBA procedures, guidance, and official cosponsorship files. GAO conducted eight focus groups with a total of 48 small business entrepreneurs in three cities to obtain feedback on their experiences with cosponsored activities. GAO also interviewed cosponsors and SBA officials.

section_title: What GAO Found
paragraphs: The Small Business Administration (SBA) and cosponsors share responsibilities for planning, funding, and conducting cosponsored activities. Before cosponsored activities take place, SBA field and program offices decide on the type and subject of the activity, solicit potential cosponsors, draft an agreement, agenda and budget, and designate a cosponsor as fiscal agent to collect, manage, and disburse any funds received. SBA's General Counsel or designee is responsible for reviewing draft cosponsorship agreements for legal sufficiency and determining whether any conflicts of interest exist with potential cosponsors. GAO's analysis of the official files for 132 cosponsored agreements SBA executed in fiscal year 2012 and other related materials showed that the activities were intended to provide training on a variety of topics, such as business planning and marketing, social media, and government contracting. SBA and cosponsors are both responsible for conducting the activity in accordance with the agreement. Following cosponsored activities, SBA field and program offices must submit a final cosponsorship report to SBA's Office of Strategic Alliances, which is responsible for maintaining the official files on these activities.

SBA does not consistently collect feedback related to the benefits that cosponsored activities provide to small businesses. Participants in focus groups that GAO held commented positively on the quality of the presentations and opportunities to network, among other things, offered by cosponsored activities. Participants also noted that they obtained information on topics useful to their small businesses, including financial management and the federal contracting process. SBA officials and representatives of cosponsors told GAO that the events provided attendees with access to services and resources from multiple organizations in a single venue and often included counseling and referrals to other resources. Although the Small Business Act specifies that SBA cosponsored activities provide benefits to small businesses, it does not specify how SBA should identify and measure benefits. Some SBA district office staff told GAO that they solicited participant feedback on cosponsored events through a survey, evaluation, or questionnaire. GAO also found that obtaining periodic participant feedback is an integral part of a 7-month training initiative, called the Emerging Leaders Initiative, conducted using cosponsorship authority. However, SBA officials told us that obtaining formal feedback was not required and that the agency did not have a policy on soliciting and using it. Cosponsors GAO met with noted the importance of obtaining participant feedback and entrepreneurs GAO spoke to also identified ways in which the cosponsored activities could have been improved. Federal internal control standards state that federal agencies should have appropriate policies, procedures, techniques, and mechanisms for each of their activities, including those to ensure compliance with key requirements. Obtaining feedback on cosponsored events would provide SBA with direct information from small business participants that could be used to help ensure that events are providing benefits to small businesses. Such information could also provide another way for SBA to evaluate the use of its cosponsorship authority.

section_title: What GAO Recommends
paragraphs: GAO recommends that SBA develop a mechanism to consistently obtain participant feedback on cosponsored activities. SBA generally agreed with this recommendation.

section_title: Letter
paragraphs: The Small Business Administration (SBA) helps Americans start, build,  and grow businesses by expanding access to capital, providing  counseling and training, taking actions to increase federal contracting and  subcontracting opportunities, and serving as a voice for small business.  SBA utilizes its network of field offices and partnerships with public and  private organizations to provide assistance to small businesses. SBA  enters into cosponsorship agreements when the agency seeks to provide  assistance (generally training, education, or dissemination of information)  to small businesses in partnership with for-profit and nonprofit entities and  other governmental entities or officials (federal, state, or local). According  to SBA, cosponsored activities allow the agency to leverage public and  private resources in order to provide a benefit to small businesses.  Section 4(h) of the Small Business Act (the act) provides SBA with the  authority to provide assistance for the benefit of small businesses through  cosponsored activities with eligible entities. Our analysis of the  information SBA maintains on cosponsorship agreements showed that  the agency executed 132 agreements in fiscal year 2012. The budgeted  direct costs of the activities conducted under these agreements totaled  $3.8 million, of which approximately $967,000 was to be funded by SBA.  SBA expected that the activities conducted under these agreements  would provide assistance to almost 50,000 small businesses. Examples  of activities SBA has conducted under cosponsorship agreements include  the annual National Small Business Week, which recognizes the  contributions and accomplishments of small business owners and those  that support small businesses, and the Emerging Leaders Initiative, which  provides executives from small businesses with resources and support to  build and sustain their businesses.

You requested that we study SBA’s use of its cosponsorship authority. In  this report, we (1) describe the roles and responsibilities of SBA and  cosponsors in planning, funding, and conducting cosponsored activities;  and (2) examine the benefits cosponsored activities provide to small  businesses.

To describe the roles and responsibilities of SBA and cosponsors in  planning, funding, and conducting cosponsored activities, we reviewed  Section 4(h) of the act, implementing regulations, and SBA’s standard  operating procedures and guidance related to its use of cosponsorship  authority. We also interviewed officials and staff from SBA’s Office of  Strategic Alliances and Office of General Counsel, officials from six  district offices and staff from five of those district offices, and  representatives from 10 entities that cosponsored activities during  calendar years 2012 or 2013 to gain an understanding of the roles and  responsibilities of SBA and cosponsors related to planning, funding, and  conducting cosponsored activities. We requested the official file for each  cosponsorship agreement SBA executed in fiscal year 2012 as listed in a  spreadsheet the agency maintains on the status of these agreements.  Based on our independent review of the information in the official file and  other materials, we identified the type of activity, subject matter, and  amount and type of budgeted direct costs of the activities for each  agreement, as well as whether each agreement included a responsibility  for SBA or a cosponsor to obtain participant feedback. In addition, we  identified the specific roles and responsibilities of SBA and cosponsors for  a nonprobability sample of cosponsorship agreements SBA executed in  fiscal year 2012. The selected agreements represented a variety of  eligible entities, allowable activities, expected number of businesses  assisted, and direct costs. We assessed the reliability of the spreadsheet  data SBA maintains on the status of cosponsorship agreements by  reviewing it for obvious errors and comparing the data for selected  agreements to SBA’s official files. We determined that the data were  sufficiently reliable for the purposes of determining the number of  executed cosponsorship agreements and the associated date of  execution and budgeted direct cost for these agreements.

To examine the benefits cosponsored activities provide to small  businesses, we conducted eight focus groups in three cities with 48  individuals (including prospective and current small business owners)  who had attended one of three SBA cosponsored activities conducted in  2012 and 2013 to obtain information about their experience including  benefits realized and suggestions for improving the activity. The results  of these focus groups are not generalizable, but do provide insights on  participants’ perceptions of the benefits received by attending a  cosponsored activity. In addition, we interviewed key officials at SBA  headquarters in Washington, D.C., and six SBA district offices and staff  from five of those district offices to obtain their perspectives on the  benefits small businesses receive from attending cosponsored events  and information on how the offices evaluate the results of these. We also  interviewed representatives from 10 entities that cosponsored activities  during calendar years 2012 and 2013 to obtain their perspectives on the  benefits cosponsored activities provide to small businesses.

We conducted this performance audit from January 2013 to May 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. See appendix I for more  details on our objectives, scope, and methodology.
subsections: section_title: Background
paragraphs: SBA’s standard operating procedures on outreach activities establish the  agency’s policy on cosponsored activities and are governed by the  cosponsorship authority provided to the agency under Section 4(h) of the  act, SBA’s regulations implementing cosponsorship authority, and Office  of Government Ethics regulations. SBA’s procedures define, among  other things, the entities SBA may enter into a cosponsorship agreement  with, certain activities that may and may not be performed as  cosponsored activities, and how cosponsored activities may be funded.  For example, SBA may enter into a cosponsorship agreement with any  eligible entity with whom such partnership would not create a conflict of  interest with the agency. Eligible entities can include for-profit or nonprofit  entities, or any federal, state, or local government official or entity.

SBA’s procedures on outreach activities also define certain activities that  may be performed as cosponsored activities, described by the following  examples:

Training: Activity must include delivery of an instructional program— either in person or on-line—that provides information on or  experiences with SBA programs or services or a business-related  subject.

Matchmaking: Activity (generally government contracting or financing  initiatives) that brings together government and private-sector  resources and small business owners. Matchmaking events are  permissible so long as the activities are not exclusive to any one  group or do not benefit only one entity. No business transactions (e.g.,  signing of contracts) can take place during the cosponsored activity.

Counseling: One-to-one counseling may be a part of an activity only if  the counseling is performed by an SBA employee or by an SBA  grantee that provides counseling services as part of its SBA-funded  activity.

Web pages or websites: A cosponsored web page or website can  refer to a variety of activities including (1) the actual cosponsored  activity itself; (2) a means to host the cosponsored activity (i.e., online  training, digital publication or podcast); or (3) a means to advertise or  register participants for the cosponsored activity. The web page or  website must include information or links to SBA programs and  services and cannot include commercial activity.

Recognition: Activity that celebrates the contributions of small  business, small business owners, or small business advocates.

In addition, SBA’s procedures define activities that may not be performed  as cosponsored activities, including political and fundraising activities,  and activities that are solely or primarily a networking or social reception  and do not provide a formal opportunity for SBA to make a presentation  on SBA programs and services.

Further, SBA’s procedures define the various ways cosponsored activities  may be funded. Cosponsors may provide cash or an in-kind contribution,  a cosponsor may charge a participant fee to cover the direct costs of  providing the cosponsored activity, or SBA may accept a gift under its gift  acceptance authority to support cosponsored activities. SBA also may  use appropriated funds to support a cosponsored activity. However SBA  must purchase the product or service directly (following the appropriate  procurement process) and provide that product or service to the  cosponsored activity as an in-kind contribution. Additionally, SBA’s  procedures note that funds to support a cosponsored activity may be  used for nearly any expense so long as that type of expense is approved  as part of the proposed cosponsorship budget, is a direct cost of the  activity, and is necessary and integral to the activity.

SBA district office officials and staff we spoke to said that they consider  various factors when making a decision to provide assistance to small  businesses under a cosponsorship agreement, including whether a  potential cosponsor has expertise in a particular area such as lending or  exporting, has resources necessary to conduct an event such as space,  or could provide funding to cover these and other event costs.

section_title: SBA and Cosponsors Jointly Plan, Fund, and Conduct Cosponsored Activities
paragraphs: SBA and cosponsors share responsibilities for planning, funding, and  conducting cosponsored activities. SBA’s procedures on outreach  activities generally describe the roles and responsibilities of the various  offices within SBA. In addition, cosponsorship agreements between SBA  and cosponsors describe each party’s specific responsibilities; the  division of responsibilities and the extent to which SBA and cosponsors  share responsibilities differed in the agreements we reviewed. Figure 1  illustrates the key responsibilities of SBA and cosponsors before, during,  and after cosponsored activities.

Before a cosponsored activity takes place, SBA and cosponsors have  several key responsibilities, as the following examples illustrate.

Determining type and subject of activity. SBA field and program  offices are responsible for originating cosponsored activities. As  previously stated, our analysis of the information SBA maintains  on cosponsorship agreements showed that the agency executed  132 cosponsorship agreements in fiscal year 2012. In addition,  our review of the official file for these agreements and other  related materials showed that more than 80 percent of them  included training activities, about 20 percent included recognition  activities, and about 17 percent included matchmaking activities.  Further, the subject matter of the activities conducted under these  agreements varied and included business planning and marketing,  social media, e-commerce, technology, franchising, employment  practices and employee benefits, tax planning and other legal  issues, and government contracting.

Making conflict-of-interest determinations. SBA field or program  offices that originate cosponsored activities are responsible for  vetting nonprofit and governmental entities; SBA’s Office of  Strategic Alliances is responsible for vetting for-profit entities and  upon request may assist originating offices in vetting nonprofit and  government entities. Vetting is the process of gathering  information to determine whether potential cosponsors have an  actual or apparent conflict of interest with SBA that would preclude  them from cosponsoring an activity. The information gathered  during the vetting process is submitted to SBA’s General Counsel  or designee to determine whether any conflicts of interest exist.  The SBA Form 1615 documents the conflict-of-interest  determination.

Preparing cosponsorship agreement, agenda and budget. Initially,  SBA will prepare a draft cosponsorship agreement and, with the  assistance of potential cosponsors as necessary, drafts an  agenda and budget. Cosponsorship agreements, among other  things, describe the purpose of the activity or event, provide the  dates and locations of the event and estimated number of  attendees, and include, as applicable, a draft agenda and budget  for the activity or event. After SBA’s General Counsel or their  designee determines that no conflicts of interest exist with  potential cosponsors and reviews the draft cosponsorship  agreement for legal sufficiency, SBA field and program offices— with assistance from cosponsors—will work to finalize the  agreement and develop a proposed budget for the activity that  lists the sources of income, such as cash and in-kind contributions  from cosponsors, in-kind contributions from SBA, and fees paid by  participants, and the estimated cost of conducting the  cosponsored activity. Some SBA district office officials told us that,  beyond available human resources and the district office’s own  space, they do not have an abundance of discretionary funds to  spend on cosponsored activities and they leverage the resources  of cosponsors because of this. SBA is responsible for designating  a cosponsor as fiscal agent when the cosponsored activity  expects to receive cash contributions from cosponsors or fees  from participants. The fiscal agent is responsible for collecting,  managing, and disbursing cosponsorship funds and establishing a  separate mechanism to account for all cosponsorship funds that  prevents commingling of cosponsorship funds with the fiscal  agent’s own funds.

Our review of the proposed budgets for all fiscal year 2012  cosponsorship agreements showed that SBA funded direct costs  in less than half of the agreements, and when it did it generally  funded costs for course materials and instructors, printing,  postage, marketing activities, and awards. Table 1 provides  information on the budgets for cosponsorship agreements SBA  executed in fiscal year 2012. The largest direct cost SBA funded  in fiscal year 2012 was $810,475 for the course materials and  instructors for the Emerging Leaders Initiative, a 7-month training  program provided to small business executives in more than 20  cities (under separate cosponsorship agreements) across the  country.

section_title: Collecting Feedback from Participants Would Help SBA Evaluate Cosponsored Activities and Its Use of Cosponsorship Authority
paragraphs: SBA does not systematically collect feedback on the benefits that  cosponsored activities provide to small businesses. However, participants  in all eight focus groups that GAO held described various benefits they  received from attending specific cosponsored activities. In addition,  according to SBA officials, cosponsored activities enable the agency to  combine public and private resources and provide assistance to small  businesses at little or no cost. SBA officials and cosponsors also said that  cosponsored activities provided participants with convenient access to  services and resources from multiple organizations in a single location  and often included counseling and training. Some SBA district office staff  we met with told us that they collected feedback from participants at  cosponsored activities—for instance, through a survey, evaluation, or  informal follow-up—and as previously noted some fiscal year 2012  cosponsorship agreements we reviewed included specific responsibilities  for SBA or cosponsors to collect participant feedback. However, SBA  officials told us that the agency did not have a formal policy that required  the collection of such information.
subsections: section_title: Focus Group Participants, SBA, and Cosponsors Generally Reported That Cosponsored Activities Benefited Small Businesses
paragraphs: Our focus groups participants identified benefits they received from  attending cosponsored activities and also noted that they obtained  information on topics useful to their small business (see fig. 2). For  example, participants from all eight focus groups commented positively  on the quality of the presentations and nearly all of the focus group  participants said that the opportunity to network was beneficial. In  addition, the focus group participants most often cited topics that provided  information on how to develop and implement a business expansion plan  (growth management) and information about the federal contracting  process as being useful to their business. Further, the benefits reported  were directly related to the type of cosponsored activity. For example,  those attending the Emerging Leaders Initiative, which emphasized  business management skills, reported obtaining information on topics  such as financial management, strategic planning, and marketing as  being useful. Likewise, those attending cosponsored activities focused  on federal contracting, such as the Doing Business with Federal  Procuring Agencies and the Small Business Talk series, reported  obtaining information on understanding the federal contracting process as  being useful.

Focus group participants also described their reasons for attending  certain cosponsored activities (see fig. 3). For example, focus group  participants told us that networking and partnering opportunities and  improved federal contracting opportunities were among the primary  reasons why they attended the cosponsored activity. In addition, the  participants noted in 6 of 8 focus groups that growth management,  business administration, and the federal contracting process were topics  of interest that led them to attend the cosponsored activity.

We also noted that the number of focus groups citing certain benefits  received from attending the cosponsored activity was higher than the  number of groups citing this benefit as a primary reason for attending the  cosponsored activity. For example, participants in all eight focus groups  cited the quality of the curriculum as a benefit received from attending the  cosponsored activity (see fig. 2); participants in four focus groups had  mentioned obtaining access to the training curriculum as a reason for  attending (see fig. 3). Similarly, participants in seven of eight focus groups  cited networking or relationship building as a benefit received from  attending the cosponsored activity, while participants in five focus groups  said that the possibility of identifying such opportunities had helped  motivate them to attend.

SBA officials told us that having cosponsorship authority allowed the  agency to benefit small businesses by combining public and private  resources to offer activities and that the events offered benefits that SBA  or the cosponsors alone could not provide. Both SBA officials and  cosponsors told us that the activities provided attendees with “one-stop  shopping,” including access to services and resources from multiple  organizations, counseling, and referrals. SBA officials added that when  multiple entities acted as cosponsors, small businesses gained a better  understanding of the services each entity offered and the way the entities  worked together to service small businesses. For example, a district office  official said that one Emerging Leaders Initiative cosponsor specialized in  business development and another in financing, allowing participants to  learn about both opportunities for expanding their businesses. Further,  many cosponsored events are offered for free, which an SBA official  noted was an important benefit to small businesses that might not be able  to spare money for attendance fees. Cosponsors generally shared SBA’s  views, with one cosponsor citing one-stop shopping as a benefit.

section_title: Some SBA District Offices Informally Collect Participant Feedback on Cosponsored Activities
paragraphs: Although the act specifies that SBA cosponsored activities provide  benefits to small businesses, it does not specify how SBA should identify  and measure benefits. Some SBA district office staff we met with told us  that they sought to obtain feedback from attendees at cosponsored  activities through various means, including surveys, evaluations, and  informal follow-up with participants and cosponsors. However, SBA  officials told us that the agency did not have a formal policy requiring the  collection and use of participant feedback on cosponsored activities. An  SBA official told us that the agency had at one time obtained feedback  from participants using an Office of Management and Budget approved  survey instrument, but added that SBA did not seek to renew the survey  instrument once it had expired. As previously noted, some fiscal year  2012 cosponsorship agreements we reviewed included specific  responsibilities for SBA or cosponsors to obtain feedback from  participants. SBA officials told us that obtaining participant feedback  was not a responsibility that cosponsorship agreements were required to  include. Although not required by the cosponsorship agreements,  obtaining periodic participant feedback is an integral part of the Emerging  Leaders Initiative course. The contractor that provides the curriculum and  instructors for the course summarize the participant feedback and provide  it to SBA. Further, SBA has reported that the Initiative has shown  significant employment growth among participating companies and  access to new financing since participants graduated from the program.

Cosponsors we met with noted the importance of obtaining participant  feedback. For example, three cosponsors told us that having a  mechanism to follow up after an activity would help assess its impact— that is, how the activity ultimately benefited participants. Further, small  businesses attending focus groups that we held provided us with  feedback on ways in which the cosponsored activity could have been  improved. As figure 4 shows, participants in seven of the eight focus  groups we held commented that they wanted additional follow-up after  attending a cosponsored activity. In addition, participants in five of the  eight focus groups commented that more time was need for the activity.

Standards for Internal Control in the Federal Government state that  federal agencies should have appropriate policies, procedures,  techniques, and mechanisms for each of their activities, including those to  ensure compliance with key requirements. Obtaining feedback on  cosponsored events could provide SBA with direct information from small  business participants that could be used to help ensure that the events  benefited small businesses. In addition, we found that participants had  suggestions for improving the events that could help SBA in designing  future activities. Further, evaluating participant feedback could help SBA  evaluate its use of cosponsorship authority—that is, whether SBA is most  effectively implementing the statutory authority to conduct cosponsored  events for the benefit of small businesses.

section_title: Conclusion
paragraphs: Cosponsored activities can allow the agency to leverage public and  private resources to benefit small businesses—generally in the form of  training, education, or dissemination of information. Various offices within  SBA and cosponsors have a shared responsibility for planning, funding,  and conducting cosponsored activities as required under SBA policies  and procedures and defined in cosponsorship agreements. Some  cosponsorship agreements we reviewed included an additional  responsibility for SBA or cosponsors to obtain the views of participants at  cosponsored events, but SBA does not have formal policies or  procedures for obtaining participant feedback. Federal internal control  standards state that federal agencies should have, among other things,  appropriate policies and mechanisms for each of their activities, including  those to ensure compliance with key requirements. Obtaining feedback  on cosponsored events would provide SBA with direct information from  small business participants that could be used to help ensure that events  are providing benefits to small businesses. Such information could also  provide another way for SBA to evaluate the use of its cosponsorship  authority.

section_title: Recommendation for Executive Action
paragraphs: To ensure that SBA most effectively implements the statutory authority to  conduct cosponsored events for the benefit of small businesses and to  enhance SBA’s ability to evaluate the use of its cosponsorship authority,  the Administrator of the SBA should develop a mechanism to consistently  obtain participant feedback on cosponsored activities.

section_title: Agency Comments
paragraphs: We requested comments from SBA on a draft of this report, and the  agency provided written comments that are presented in appendix V.  SBA generally agreed with our recommendation to develop a mechanism  to consistently obtain participant feedback on cosponsored activities. SBA  stated that it will evaluate the best means to obtain consistent feedback  from participants during cosponsored activities in a manner that is not  overly burdensome to the participant. In addition, SBA stated that it thinks  there are many ways to obtain feedback on events and activities and it  will look to provide a range of options for SBA program and district offices  to employ. SBA also provided technical comments, which we  incorporated as appropriate.

We will send copies of this report to SBA and interested congressional  committees. The report will also be available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  William B. Shear at (202) 512-8678 or shearw@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this report. GAO staff who made major  contributions to this report are listed in appendix VI.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report are to (1) describe the roles and  responsibilities of SBA and cosponsors in planning, funding, and  conducting cosponsored activities; and (2) examine the benefits  cosponsored activities provide to small businesses.

To describe the roles and responsibilities of SBA and cosponsors in  planning, funding, and conducting cosponsored activities, we reviewed  Section 4(h) of the Small Business Act, implementing regulations, and  SBA’s standard operating procedures and guidance related to the use of  cosponsorship authority. In addition, we identified the specific roles and  responsibilities of SBA and cosponsors for a nonprobability sample of 27  cosponsorship agreements SBA executed in fiscal year 2012. The results  of our analyses of the specific roles and responsibilities described in  these agreements cannot be generalized to all cosponsorship  agreements SBA executed in fiscal year 2012, but the agreements  represent a variety of eligible entities, eligible activities, expected number  of businesses assisted, direct costs, and locations and dates.

We interviewed officials and staff from SBA’s Office of Strategic Alliances  and Office of General Counsel, and officials from six district offices and  staff from five of those district offices to gain an understanding of the roles  and responsibilities of SBA and cosponsors related to planning, funding,  and conducting cosponsored activities. We selected four of the district  offices based primarily on the frequency with which the office conducted  cosponsored activities in fiscal years 2010 to 2012 and interviewed  officials and staff from the remaining two district offices that originated the  cosponsored activities we selected for our focus groups. The district  offices were located in California, Florida, Georgia, Michigan, North  Dakota, and New York. We also interviewed representatives from 10  entities that cosponsored an activity with SBA during calendar years 2012  or 2013 to understand their roles and responsibilities for the activities they  cosponsored and how and why they cosponsored them. Seven of these  entities had cosponsored the activities selected for our focus groups and  the other three entities had cosponsored National Small Business Week  activities in 2012 and 2013. Further, we attended two cosponsored events  and observed how information was delivered to and received by  participants. We also reviewed SBA’s Office of Inspector General (OIG)  report on its audit of SBA’s controls over cosponsored activities, which  assessed the adequacy of those controls, and discussed the audit with  the OIG. In addition, we requested the official file for the more than 132  cosponsorship agreements SBA executed in fiscal year 2012 as listed in  a spreadsheet the agency maintains on the status of these agreements.  Two analysts reviewed the cosponsorship documentation contained in the  files and other materials, including cosponsorship agreements, draft and  final agendas, marketing materials and final cosponsorship reports (SBA  form 2299). As a part of this review, the analysts independently coded the  documentation to identify the type of activity and subject matter. The  analysts also recorded the type of budgeted direct costs, whether each  agreement included a responsibility for SBA or the cosponsor to obtain  participant feedback, and compared the budgeted amount to that listed in  the spreadsheet data SBA maintains. Any disagreement between the  analysts on the coding of the cosponsorship documentation was resolved  through discussion. We assessed the reliability of the spreadsheet data  SBA maintains on the status of cosponsorship agreements by reviewing it  for obvious errors and comparing the data for selected agreements to  SBA’s official files. We clarified any discrepancies with SBA and corrected  the data accordingly. We determined that the data were sufficiently  reliable for the purposes of determining the number of executed  cosponsorship agreements and the associated date of execution and  budgeted direct cost for these agreements.

To examine the benefits cosponsored activities provide to small  businesses, we conducted eight focus groups in three cities (Atlanta, GA;  Detroit, MI; and Kalamazoo, MI) with 48 entrepreneurs that had attended  one of three SBA cosponsored activities conducted in 2012 and 2013— the Emerging Leaders Initiative, Doing Business with Federal Procuring  Agencies series, and Small Business Talk Series. We considered a  number of factors in selecting the three activities. For example, we  selected the Emerging Leaders Initiative because of the large amount of  direct costs SBA funded for the initiative. We selected the Doing Business  with Federal Procuring Agencies and Small Business Talk series because  the activities (1) took place in the same or nearby location where an  Emerging Leaders Initiative was taking place (2) included a significant  training component, (3) had a sizable number of expected attendees from  which to solicit 8 to12 people for a focus group, (4) had lists of  preregistered participants or attendee lists with contact information, and  (5) occurred within 12 months preceding the focus groups. We also  considered geographic diversity for the three activities we selected to  conduct focus groups. We sought to ensure that the activities we selected  to conduct focus groups took place in different regions of the country with  differing economic profiles. We determined that these activities would  provide us with sufficient information from participants on the benefits  participants received or expected to receive in the future from having  attended different types of cosponsored activities in different parts of the  country.

The entrepreneurs who participated in our focus groups included mostly  small business owners, but also individuals who were interested in  starting up their own small business and those who worked for a small  business. We limited our focus group participation to entrepreneurs with  recent experience attending a cosponsored activity to minimize recall bias  and to ensure that the most accurate account of participants’ experiences  could be obtained. To recruit volunteers to our focus groups, we obtained  from SBA a list of persons who attended the three activities in locations  we selected. We contacted each person by email, soliciting them to  participate in our focus groups and took the first volunteers for up to 12  persons per focus group. Our focus groups ranged in size from 3 to 11.  Attendees at our focus groups included women-owned and veteran- owned small businesses in a variety of industries including construction,  janitorial services, and health care (see app. IV, figs. 5 through 8, for  additional information about participant characteristics and focus group  responses on various themes).

The focus groups were structured small group discussions designed to  generate information on the participants’ experiences with SBA  cosponsored training, education, and counseling events.  Methodologically, information gathered from focus groups cannot be used  to make generalizations about a population or to demonstrate the extent  of an issue. Thus, while the information we gathered is not generalizable  to all participants in SBA cosponsored activities, it provides valuable  context regarding their perceptions of the benefits and challenges they  experienced when attending these events and this information is more in- depth than is possible using numerous individual interviews. Small  business owners and other participants who did not attend our focus  groups may have had different experiences.

A GAO facilitator guided the focus group participants using a structured  set of questions. In addition to the GAO facilitator, another team member  recorded notes of the proceedings. At the start of each discussion  session, ground rules were established encouraging participants to limit  their comments to their own personal experiences with the SBA  cosponsored event attended unless explicitly asked to respond more  broadly. The facilitator encouraged all participants to share their views  and react to the views of others. Using a GAO-developed discussion  guide, the facilitator asked the participants to give their perspectives on  (1) their decision to attend the SBA cosponsored event, (2) the perceived  benefits, (3) the challenges associated with their experience or  suggestions for improvements, (4) expectations about future uses of what  they learned, and (5) events they attended within 12 months preceding  the focus groups. We conducted the analysis of the focus group results in  three steps. First, two analysts developed a codebook to identify common  themes in the focus group notes and worked together to ensure  agreement. Second, two GAO analysts independently coded the  transcripts and then resolved any coding discrepancies. Third, the coders  noted how often a theme was expressed across each focus group and  focused on those that were mentioned frequently across the majority of  focus groups. The focus group results discussed in this report reflect the  range of views and perceptions expressed in a larger number of the focus  groups.

We also interviewed key officials at SBA headquarters in Washington,  D.C., including representatives from the agency’s Office of Strategic  Alliances and Office of General Counsel and six SBA district offices and  staff from five of those district offices to obtain testimonial information  about district office involvement and experiences with their use of SBA’s  cosponsorship authority, including how they evaluate the results of the  events. Finally, we interviewed representatives from 10 entities that  cosponsored an activity with SBA during calendar years 2012 or 2013 to  obtain their perspectives on benefits to small business arising from  cosponsored events. We analyzed the information obtained from the  interviews to determine what perceived benefits small businesses  received from attending or were expected to gain from the cosponsored  events, what would have improved the cosponsored event experience,  whether cosponsors sought feedback about a cosponsored event, and  whether SBA had any consistent practices for obtaining participant  feedback on cosponsored events.

We conducted this performance audit from November 2012 to May 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Factors SBA Considers in Deciding Whether to Utilize Cosponsorship Authority
paragraphs: SBA district office officials and staff we spoke to identified the following  factors that they consider in deciding whether to utilize cosponsorship  authority to conduct outreach activities:  1.  Whether a proposed activity would better meet the needs of small  businesses, and more of them, if conducted with other entities under a  cosponsorship agreement.  2.  Whether a potential cosponsor has expertise in a particular area, such  as lending or exporting, or has resources necessary to conduct an  event, such as space, or could provide funding to cover these and  other event costs.  3.  How much control SBA wants to have over the various aspects of an  event’s planning, content, and delivery, including setting the agenda,  identifying speakers, and selecting a suitable location, or whether it  would be helpful to share these responsibilities.  4.  Whether potential cosponsors could provide SBA with access to  groups that it does not have a well-established relationship with or  that might not be familiar with SBA or its programs and services.  5.  Whether cosponsorship authority provides SBA with an opportunity to  develop and strengthen long-term relationships with groups that  represent minority small businesses or those in particular geographic  areas that could help identify and target those businesses that might  benefit most from a particular event.  6.  Whether co-branding of a cosponsored activity—displaying SBA and  cosponsor logos on all marketing and event material—could attract  greater small business attendance, in part because of the appeal of  having multiple small business resources at a single event.  7.  What the costs would be in terms of time and SBA’s own resources.  8.  Whether potential cosponsors would be able to fulfill their  responsibilities under an agreement, including handling  cosponsorship funds while serving as a fiscal agent.

section_title: Appendix III: Summary of SBA Office of Inspector General Findings and Recommendations and SBA Required Procedures
paragraphs: The SBA Office of Inspector General issued Advisory Memorandum  Report No. 13-21, SBA Enterprise-wide Controls over Cosponsored  Activities, dated September 26, 2013, which presented the results of its  work on the adequacy of controls over SBA’s cosponsored activities. The  table below summarizes the findings and recommendations from that  report and the required procedures that the Office of Inspector General  found SBA had not complied with.

SBA agreed with some but not all of the OIG’s findings and  recommendations. SBA stated that the OIG’s findings about the failings of  SBA’s cosponsorship program as a whole are too broadly stated,  considering that the five agreements the OIG tested represent less than 1  percent of all the cosponsored activities that took place during the fiscal  years covered by their audit. SBA also responded to each specific  recommendation. For example, SBA agreed that vetting is important, but  disagreed with the recommendation because it believed that the OIG’s  audit did not demonstrate a deficiency with the vetting process, adding  that only one cosponsorship file did not contain the requisite vetting  information. Also, SBA agreed with the intent of the OIG’s  recommendation to modify the cosponsorship agreement template to  include the specific roles and responsibilities of fiscal agents but did not  agree with the recommendation itself, as SBA believes that providing staff  with supplemental guidance and more instruction would be a better  approach.

section_title: Appendix IV: Additional Focus Group Characteristics and Information
paragraphs: As discussed in this report, we conducted eight focus groups with 48  participants and obtained a variety of information about their experience  at certain cosponsored events. This appendix provides additional  information on the results of the focus groups including selected  characteristics of the participants, as shown in the following figures.

Figure 5 presents information on how the focus group participants thought  they might use the information and skills learned at the cosponsored  activity attended to improve their business management activities and  approaches.

As part of the focus group discussions, we asked participants whether  they owned a small business or what role they held in the small business  activity represented. Figure 6 describes the self-reported responses.

This report notes that SBA helps entrepreneurs start, build, and grow  businesses by, among other things, providing counseling and training as  well as actions to increase federal contracting and subcontracting  opportunities. As part of discussions, we asked the participants to  describe the ownership of the business they represented, including  ownership types that SBA has targeted for assistance. The responses  received are noted in figure 7.

Finally, the participants in the focus group discussions provided  information on the industry in which their businesses or planned  businesses operated (see fig. 8).

section_title: Appendix V: Comments from the Small Business Administration

section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Marshall Hamlett (Assistant  Director), Emily Chalmers, Pamela Davidson, Alexandra Martin-  Arseneau, John McGrail, Scott E. McNulty, and Jena Sinkfield made key  contributions to this report.


Question-summary annotations: questions: question: What are SBA's responsibilities?
answer: The Small Business Administration (SBA) and cosponsors share responsibilities for planning, funding, and conducting cosponsored activities.

question: What actions does SBA take before cosponsored activities occur?
answer: Before cosponsored activities take place, SBA field and program offices decide on the type and subject of the activity, solicit potential cosponsors, draft an agreement, agenda and budget, and designate a cosponsor as fiscal agent to collect, manage, and disburse any funds received. SBA and cosponsors are both responsible for conducting the activity in accordance with the agreement.
child_questions: question: How are cosponsors reviewed?
answer: SBA's General Counsel or designee is responsible for reviewing draft cosponsorship agreements for legal sufficiency and determining whether any conflicts of interest exist with potential cosponsors.

question: What action must the SBA take after cosponsored activities occur?
answer: Following cosponsored activities, SBA field and program offices must submit a final cosponsorship report to SBA's Office of Strategic Alliances, which is responsible for maintaining the official files on these activities.

question: What did the GAO review of SBA demonstrate?
answer: GAO's analysis of the official files for 132 cosponsored agreements SBA executed in fiscal year 2012 and other related materials showed that the activities were intended to provide training on a variety of topics, such as business planning and marketing, social media, and government contracting.

questions: question: How does the SBA handle feedback?
answer: SBA does not consistently collect feedback related to the benefits that cosponsored activities provide to small businesses.

question: How did stakeholders comment on cosponsored activities?
answer: Participants in focus groups that GAO held commented positively on the quality of the presentations and opportunities to network, among other things, offered by cosponsored activities. Participants also noted that they obtained information on topics useful to their small businesses, including financial management and the federal contracting process. SBA officials and representatives of cosponsors told GAO that the events provided attendees with access to services and resources from multiple organizations in a single venue and often included counseling and referrals to other resources.

question: What official guidance does SBA receive regarding assessment and measurement?
answer: Although the Small Business Act specifies that SBA cosponsored activities provide benefits to small businesses, it does not specify how SBA should identify and measure benefits.
child_questions: question: What are ways that SBA measures feedback?
answer: Some SBA district office staff told GAO that they solicited participant feedback on cosponsored events through a survey, evaluation, or questionnaire. GAO also found that obtaining periodic participant feedback is an integral part of a 7-month training initiative, called the Emerging Leaders Initiative, conducted using cosponsorship authority. However, SBA officials told us that obtaining formal feedback was not required and that the agency did not have a policy on soliciting and using it.

question: What did GAO find regarding participant feedback?
answer: Cosponsors GAO met with noted the importance of obtaining participant feedback and entrepreneurs GAO spoke to also identified ways in which the cosponsored activities could have been improved.

question: How are federal agencies' activities regulated?
answer: Federal internal control standards state that federal agencies should have appropriate policies, procedures, techniques, and mechanisms for each of their activities, including those to ensure compliance with key requirements.
child_questions: question: How could better feedback practices serve SBA?
answer: Federal internal control standards state that federal agencies should have appropriate policies, procedures, techniques, and mechanisms for each of their activities, including those to ensure compliance with key requirements. Obtaining feedback on cosponsored events would provide SBA with direct information from small business participants that could be used to help ensure that events are providing benefits to small businesses. Such information could also provide another way for SBA to evaluate the use of its cosponsorship authority.

questions: question: What is section 4(h) of the SBA?
answer: Section 4(h) of the Small Business Act authorizes SBA to provide assistance for the benefit of small businesses through activities the agency cosponsors with eligible for-profit and nonprofit entities, as well as federal, state, and local government entities.
child_questions: question: What are the benefits of cosponsored activities?
answer: Cosponsored activities can provide information on SBA programs and services or on subjects of interest to small businesses, bring together government and private sector resources and small business owners (generally for government contracting or financing initiatives), or celebrate the contributions of small business owners.

question: Why did GAO review SBA?
answer: GAO was asked to study SBA's use of its cosponsorship authority.

questions: question: What does this report cover?
answer: This report (1) describes the roles and responsibilities of SBA and cosponsors in planning, funding, and conducting cosponsored activities, and (2) examines the benefits cosponsored activities provide to small businesses.

question: What did GAO review for their report?
answer: GAO reviewed relevant laws and regulations and SBA procedures, guidance, and official cosponsorship files.

question: How did GAO collect interview data?
answer: GAO conducted eight focus groups with a total of 48 small business entrepreneurs in three cities to obtain feedback on their experiences with cosponsored activities. GAO also interviewed cosponsors and SBA officials.