Small Business Administration: Government Contracting and Business Development Processes and Rule-Making Activities
Released: 2017-06-30T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: SBA's OGCBD administers a business development program and further promotes small business participation in federal contracting through a variety of other programs.

A House Committee Report accompanying the National Defense Authorization Act for Fiscal Year 2017 included a provision for GAO to examine the operations of SBA's OGCBD. GAO examined (1) the field-office and reporting structure OGCBD uses to implement its government contracting and business development programs, (2) progress OGCBD has made to strengthen its processes for certifying small businesses as eligible to participate in its programs, and (3) the timeliness of SBA's rule-making process.

GAO reviewed documentation related to SBA's organizational structure and certification processes; relevant laws and regulations; SBA program guidance; and previous GAO reports. GAO interviewed SBA and OMB officials. GAO reviewed four statutorily mandated SBA rules, which were selected from 47 provisions in the National Defense Authorization Acts for fiscal years 2013, 2014, 2015, and 2016 as examples of mandatory rule making.

GAO makes no new recommendations in this report, and maintains that SBA should implement prior recommendations. SBA's technical comments on GAO's draft report are incorporated as appropriate.

section_title: What GAO Found
paragraphs: The Office of Government Contracting and Business Development (OGCBD) at Small Business Administration (SBA) headquarters sets policies for SBA's business development and government contracting programs, and SBA field office staff help to implement these programs at the local level. The reporting relationships between field staff and SBA headquarters vary depending on the program. For example, field staff who implement government contracting programs report to OGCBD, while most staff who implement the 8(a) business development program report to the Office of Field Operations (OFO), which oversees SBA's field offices. SBA officials told GAO that this reporting structure, in which some field staff implement OGCBD programs but report to OFO, offers some benefits—for example, it allows these staff to support the goals of OGCBD programs as well as those of the individual field offices. However, officials also said the reporting structure can result in inconsistent program delivery. They described recent steps to improve communication between OGCBD and field staff, but it is too soon to tell if these steps will be effective.

SBA has taken some steps to address weaknesses GAO and the SBA Office of Inspector General (OIG) have identified in its processes for certifying small businesses as eligible to participate in SBA programs, but some recommendations remain open. For example, GAO found in 2015 that SBA had not required firms seeking recertification for the Historically Underutilized Business Zone (HUBZone) program to submit any information to verify continued eligibility and instead relied on firms' attestations of continued eligibility. GAO recommended that SBA assess the HUBZone recertification process and add additional controls; SBA had not yet implemented this recommendation as of May 2017. SBA's OIG also found in 2016 that SBA managers overturned lower-level reviewers' decisions to deny firms admission to the 8(a) program without documenting in the information system how eligibility concerns were resolved. SBA's OIG recommended that SBA clearly document the justification for approving or denying firms. In response, SBA stated that managers are now required to document decisions in the system that differ from those of lower-level reviewers.

A number of legal requirements and the volume of required rule makings, among other factors, affect the timeliness of SBA's rule-making process. Certain stages of the rule-making process have mandated time periods, such as the required 90-day interagency review process for certain rules. Various approaches exist for measuring the length of time required to develop and issue final rules, but they have limitations. For example, in measuring the period from rule initiation to final publication, agencies may differ on when they mark initiation. For four finalized SBA rules GAO reviewed, the time from publication of the proposed rule to publication of the final rule varied from 7.5 months to 17.5 months. SBA officials noted that an increase in the number of statutorily mandated rules in recent years has contributed to delays in the agency's ability to promulgate rules in a more timely fashion. Office of Management and Budget (OMB) officials GAO spoke with stated that the length of time for SBA's rule makings is not unusual and has not raised any concerns.

section_title: Letter
paragraphs: The Office of Government Contracting and Business Development  (OGCBD) at the Small Business Administration (SBA) administers SBA’s  8(a) business development program and promotes small business  participation in federal contracting through a variety of other programs to  help ensure that at least 23 percent of all prime government contract  dollars go to small businesses. According to SBA, in fiscal year 2016  about $100 billion federal contracting dollars were awarded to small  businesses as prime contractors, of which about $82 billion was awarded  to small businesses in the socioeconomic categories of small  disadvantaged businesses, women-owned small businesses, service  disabled veteran-owned small businesses, and historically underutilized  business zone small businesses. Through a network of field offices and  partnerships with public and private organizations, SBA delivers its  services to businesses throughout the United States, Puerto Rico, the  U.S. Virgin Islands, and Guam.

We and SBA’s Office of Inspector General (OIG) have identified a number  of long-standing management challenges at SBA that have resulted in  inefficient program operations. Most recently, our September 2015 report  on SBA operations found that SBA’s organizational structure has created  complex overlapping relationships among offices that have contributed to  challenges in program oversight. Specifically, we found that SBA’s  organizational structure often results in working relationships between  headquarters and field offices that differ from reporting relationships,  potentially posing programmatic challenges. In addition, we have found  deficiencies related to two SBA contracting programs—the Historically  Underutilized Business Zone (HUBZone) and Women-Owned Small  Business (WOSB) programs—and made recommendations to help  ensure that only eligible small businesses are certified for these  programs.

A House Committee Report accompanying the National Defense  Authorization Act for Fiscal Year 2017 included a provision for us to  examine the operations of SBA’s Office of Government Contracting and  Business Development (OGCBD), including its reporting structure and  processes for certifying small businesses as eligible to participate in  programs that provide contracting preferences, as well as SBA’s rule- making process. This report examines (1) the field-office and reporting  structure OGCBD uses to implement government contracting and  business development programs; (2) progress OGCBD has made to  strengthen its certification processes; and (3) the timeliness of SBA’s rule- making process.

To examine SBA’s field-office and reporting structure, we reviewed SBA  documentation on its organizational structure and a study SBA obtained  from a consultant about its organizational structure. We also reviewed  academic literature on organizational theory to provide context for  understanding SBA’s organizational structure and leading practices for  implementing changes to organizational structure. In addition, we  interviewed SBA headquarters staff to obtain their perspectives on SBA’s  current organizational structure with respect to government contracting  and business development programming. To examine the progress SBA  has made to strengthen its processes for certifying small businesses as  eligible to obtain government contracts, we reviewed relevant laws,  regulations, and agency guidance. We also interviewed SBA staff to  understand the different certification processes. To examine the  timeliness of SBA’s rule making, we reviewed relevant laws, regulations,  and SBA guidance. We also reviewed four statutorily mandated SBA  rules, selected from 47 provisions in the National Defense Authorization  Act (NDAA) for fiscal years 2013, 2014, 2015, and 2016 to provide  examples of mandatory rule making. In addition, we interviewed SBA  staff and staff from the Federal Acquisition Regulatory Council (FAR  Council) within the Office of Management and Budget (OMB) to  understand SBA’s regulatory drafting process, the Federal Acquisition  Regulation process, and the coordination between SBA and the FAR  Council. Appendix I provides more detail on our scope and methodology.

We conducted this performance audit from August 2016 to June 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 that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: SBA’s organizational structure comprises headquarters and regional,  district, and area field offices. At the headquarters level, SBA is divided  into several key functional areas that manage and set policy for the  agency’s programs. Seventeen headquarters offices report to the Office  of the Administrator. SBA provides its services to small businesses  through a network of regional and district offices that are led by the Office  of Field Operations (OFO) and area offices, led by OGCBD, as discussed  in greater detail later in this report. Regional offices oversee the district  offices and promote the President’s and SBA Administrator’s messages  throughout the region. District offices serve as the point of delivery for  most SBA programs and services. Four program offices at the  headquarters level manage the agency’s programs that provide capital,  contracting, counseling, and disaster assistance services to small  businesses: the Office of Capital Access, the Office of Entrepreneurial  Development, the Office of Disaster Assistance, and OGCBD.

OGCBD promotes small business participation in federal contracting  through a variety of programs, including programs that provide small  businesses with contracting preferences based on socioeconomic  designations—the 8(a) Business Development (8(a)), Historically  Underutilized Business Zone (HUBZone), women-owned small business  (WOSB), and service-disabled veteran-owned small business (SDVOSB)  programs.

The 8(a) program provides business development assistance to  small, disadvantaged businesses and helps them participate in the  federal contracting market through sole-source and competitive 8(a)  set-aside contracts.

The HUBZone program aims to stimulate economic development in  economically distressed areas by helping urban and rural small  businesses that are located in designated economically distressed  areas to access federal procurement opportunities.

The SDVOSB program helps service-disabled veteran-owned small  businesses acquire federal contracts.

The WOSB Federal Contracting program helps women-owned  small businesses acquire federal contracts.

In addition, SBA administers a prime contracts program, subcontracting  assistance program, certificate of competency program, and size  determination program to increase federal contracting opportunities for  small businesses. These programs, among other things, seek to  maximize federal contracting opportunities for small businesses,  HUBZone small businesses, women-owned small businesses, and any  other firm participating in an OGCBD program.

OGCBD has four main offices at the headquarters level: Office of  Business Development (which includes the new All Small Mentor-Protégé  program), Office of Government Contracting, Office of HUBZone  Program, and Office of Policy, Planning and Liaison.

The Office of Business Development administers the 8(a) business  development program and includes the new Office of All Small  Mentor-Protégé which was established in summer 2016 to provide  mentor-protégé services to all eligible small businesses.

The Office of Government Contracting administers SBA’s prime  contracts, subcontracting assistance, WOSB Federal Contracting  program, certificate of competency, and size determination programs.

The Office of HUBZone Program administers the HUBZone program.

The Office of Policy, Planning, and Liaison is responsible for  implementing small business government contracting legislation and  policy through SBA regulations.

SBA’s field-office structure consists of 6 area offices, 68 district offices,  and 10 regional offices. Area offices may sometimes be co-located with  regional and district offices but differ in mission and function.

Area offices report to OGCBD and while headquartered in six cities  across the country, cover multiple SBA regional geographic areas  encompassing a number of states where contracting activity is most  prevalent. The primary function of these offices is to manage  government buying activities throughout the country, which includes  reviewing potential agency requirements and making  recommendations to agency contracting officers on the portion of  contracts to set aside for qualified small businesses. This also  includes working with federal agencies and small businesses after  contracts have been awarded to adjudicate size protests and conduct  subcontracting compliance reviews, among other functions.

District offices report to OFO and are located in at least one city for  each state. The primary functions of these offices are (1) to market  all SBA programs and services such as the aforementioned  contracting programs, entrepreneurial development programs, and  programs that facilitate loans from lenders to small business or capital  access; (2) to provide business development assistance to  entrepreneurs and small business owners; and (3) to support  compliance and oversight responsibilities across capital and economic  development programs. They also have geographic-specific  contracting compliance responsibilities for local businesses in their  portfolio. Branch offices and Alternative Work Sites serve as an  extension of district offices and are in areas where local business  needs require an additional SBA presence.

Regional offices report to OFO and are responsible for marketing  SBA and its programs to businesses and local government. Regional  offices provide oversight of all district offices in their region and are  often located in the same physical location as a district office.

OGCBD sets policy for SBA’s government contracting and 8(a) business  development programs and coordinates with OFO to implement its  programs in field offices. OGCBD creates policies for field staff  implementing its programs that include defining district office staff  responsibilities and identifying counseling procedures that govern how  district staff are to service firms. OGCBD also coordinates with OFO  through weekly management calls to exchange information and provide  updates on changes to policies and procedures. OGCBD has also  coordinated with OFO to evaluate and update position descriptions for  staff in field offices implementing its programs, most recently in 2016.
subsections: section_title: The Federal Rule-making Process
paragraphs: SBA’s Office of Policy, Planning and Liaison (OPPL) is responsible for  implementing small business government contracting laws and policy  through SBA regulations. Executive branch agencies involved in rule  making, including SBA, have authority and responsibility for developing  and issuing regulations to implement laws. Many laws, regulations, and  executive actions govern the federal rule-making process, including the  following:

Administrative Procedure Act (APA): The APA was enacted in  1946 and established the basic framework of administrative law  governing federal agency action, including rule making. The APA  governs “notice-and-comment” rule making, also referred to as  “informal” or “APA rule making.” This act generally requires (1)  publication of a notice of proposed rule making, (2) opportunity for  public participation in the rule making by submission of written  comments, and (3) publication of a final rule and accompanying  statement of basis and purpose not less than 30 days before the  rule’s effective date. Congresses and presidents have taken a number  of actions to refine and reform this regulatory process since the APA  was enacted.

Executive Order 12866. Under Executive Order 12866, the Office of  Information and Regulatory Affairs (OIRA), within OMB, reviews  agencies’ significant regulatory actions (including both proposed and  final rules) and is generally required to complete its review within 90  days after an agency formally submits a draft regulation. Each agency  is to provide OIRA a list of its planned regulatory actions, indicating  those that the agency believes are significant. For each rule identified  by the agency as, or determined by the Administrator of OIRA to be, a  significant regulatory action, the agency submits the rule to OIRA for  formal review—including the coordination of interagency review. After  receipt of this list, the Administrator of OIRA may also notify the  agency that OIRA has determined that a planned regulation is a  significant regulatory action within the meaning of the executive  order. The order defines significant regulatory actions as those that  are likely to result in a rule that may:  1.  have an annual effect on the economy of $100 million or more or  adversely affect in a material way the economy; a sector of the  economy; productivity; competition; jobs; the environment; public  health or safety; or state, local, or tribal governments or communities;  2.  create a serious inconsistency or otherwise interfere with an action  taken or planned by another agency;  3.  materially alter the budgetary effect of entitlements, grants, user fees,  or loan programs or the rights and obligations of recipients thereof; or  4.  raise novel legal or policy issues arising out of legal mandates, the  President’s priorities, or the principles set forth in Executive Order  12866.

Federal Acquisition Regulation (FAR). Certain acquisition  regulations must go through a separate OMB process after the final  rule has been published before being added to the FAR. The FAR is a  regulation that generally governs acquisitions of goods and services  by executive branch agencies. It addresses various aspects of the  acquisition process, from acquisition planning to contract formation to  contract management. Part 19 of the FAR governs small business  contracting programs. Federal Register notices proposing or  announcing amendments to the FAR are generally issued jointly by  the Department of Defense, General Services Administration, and  National Aeronautics and Space Administration (NASA), though these  items typically receive the concurrence of OMB’s FAR Council. After  receiving a memorandum from an agency proposing to amend the  FAR, the FAR Council refers potential changes to standing FAR  teams for review. The process of amending the FAR can take  anywhere from months to years.

There are three phases in the federal rule-making process: initiation of  rule-making actions, development of proposed rules, and development of  final rules.

During the initiation phase agency officials identify sources of potential  rule makings. Potential rule makings may result from statutory  requirements or issues identified through external sources (for  example, public hearings or petitions from the regulated community)  or internal sources (for example, management agendas). During this  phase, agencies gather information that would allow them to  determine whether a rule making is needed and to identify potential  regulatory options.

The second phase of the rule-making process starts when an agency  begins developing the proposed rule. During this phase, the agency  drafts the rule and begins to address analytical and procedural  requirements. Also built into this phase are opportunities for internal  and external deliberations and reviews, including official management  approval. OIRA may be involved informally at any point during the  process. After OIRA completes its review and the agency incorporates resulting changes, the agency publishes the proposed rule in the  Federal Register for public comments.

In the third phase of the process, the development of the final rule, the  agency receives and reviews public comments, finalizes the  language, and sends the rule through internal and external agency  reviews, among other things. Once the comment period closes, the  agency responds to the comments either by modifying the rule to  incorporate the comments or by otherwise addressing the comments  in the final rule. This phase also includes opportunities for internal and  external review. Again, if the agency determines that the rule is  significant or at OIRA’s request, the agency submits the rule to OIRA  for review before final publication. If OIRA’s review results in a change  to the final rule, the agency revises the rule before publication. After  all changes are made, the final rule as published in the Federal  Register includes the date that the rule becomes effective.

An agency has certain options to expedite the rule-making process, and  Congress has the ability to compel agencies to take action on a rule  making if it believes there have been unreasonable delays. The APA  includes exceptions to notice and comment procedures for certain  categories of rules, such as those dealing with military or foreign affairs  and agency management or personnel. Further, APA requirements to  publish a proposed rule generally do not apply when an agency finds, for  “good cause,” that those procedures are “impracticable, unnecessary, or  contrary to the public interest.” Agencies often invoke “good cause,” for  example, when Congress prescribes the content of a rule by law, such  that prior notice and public comment could not influence the agency’s  action and would serve no useful function. If an agency finds that notice  and comment would be “impracticable, unnecessary, or contrary to the  public interest,” the agency may issue a rule without prior notice and  comment and instead solicit public comments after the rule has been  promulgated. The agency may then choose to revise the rule in light of  these post-promulgation comments. An agency also has the option of  issuing an “interim final rule” to expedite the rule-making process. Other  sources of exceptions to notice-and-comment rule making exist, such as  specific statutory provisions that may direct agencies to expedite  issuance of final rules. While agencies could be compelled to take action  if they have “unreasonably delayed” a regulation or FAR amendment,  Congress has seldom, if ever, compelled an agency to do so.

section_title: Reporting Lines for Field Staff Who Implement Government Contracting and Business Development Programs Vary
paragraphs: OGCBD headquarters sets policies for SBA’s business development and  government contracting programs, and SBA staff in field offices and other  locations help to implement these programs at the local level. These field  staff perform a variety of activities, depending on the program they are  supporting. The reporting relationships between field staff and SBA  headquarters also vary depending on the program. For example, field  staff who implement government contracting programs report to OGCBD,  while staff who manage the local portfolio-driven 8(a) business  development program report to OFO, which oversees the field offices.

Prime contracts and subcontracting assistance programs. At the  headquarters level, the Office of Government Contracting within OGCBD  manages SBA’s prime contracts, subcontracting assistance, certificate of  competency, and size determination programs, which are implemented by  staff who report to six area offices across the country. The Office of  Government Contracting oversees the implementation of these programs  by area offices and monitors the performance of and develops training for  the staff who implement these programs.

In the field, staff known as procurement center representatives (PCR)  implement SBA’s prime contracts program, and these staff report through  area offices to OGCBD. As noted in SBA’s standard operating procedure  (SOP) for the prime contracts program, PCRs work to help ensure that  small businesses have a fair and equitable opportunity to compete for  federal procurement opportunities and that a fair proportion of the total  sales of federal government property is made to small business concerns.  PCRs recommend the set-aside of selected acquisitions, recommend  new qualified small business sources, appeal contracting officer’s  decisions which they deem adverse to small business, and provide advice  to large business concerns to facilitate maximum practicable  subcontracting opportunities for the small business community. Staff  known as commercial market representatives (CMR) implement SBA’s  subcontracting assistance program; CMRs also report through area  offices to OGCBD. CMRs, among other things, work to facilitate the  matching of large prime contractors with small business concerns,  counsel large prime contractors on their responsibilities to maximize  subcontracting opportunities for small business concerns, and counsel  small business concerns on how to market themselves to large prime  contractors. Staff known as Industrial Specialists are assigned to manage  the Certificate of Competency and the Size Protest determination  program cases. Certificate of Competency’s Industrial Specialists analyze  the responsibility and capability of small businesses that have been  tentatively selected for a contract, to help ensure that any of the  contracting officer’s concerns about the firm’s ability to successfully  perform can be overcome. Size Industrial Specialists analyze protests of  awards when there is a question as to whether the recipient is in fact a  small business. Both of these decisional responsibilities affect the  awarding of contracts to individual small businesses.  8(a) Business Development program. At the headquarters level, the  Office of Business Development within OGCBD is responsible for  administering services available through the 8(a) Business Development  program by issuing program policy and plans, evaluating program  implementation, and rendering final decisions on program eligibility,  among other responsibilities. The Office of Business Development is  comprised of three departments, which collectively support the 8(a)  program.

The Office of Certification and Eligibility (OCE) has staff at both  headquarters and two field offices who perform similar activities. OCE  staff process initial certifications of eligibility for the 8(a) program and  conduct continuing eligibility reviews for firms deemed to be high risk  or complex, among other duties. OCE staff in field offices report to  OGCBD via OCE.

The Office of Management and Technical Assistance administers  most services provided to 8(a) participants that are not provided by  the district offices, such as administering the 8(a) Mentor-Protégé  program, servicing sole-source, competitive, and multiple award  contracts; analyzing and processing termination waivers; reaching out  to prime contractors, federal agencies, and the 8(a) business  development community; and overseeing the execution of national  and local seminars and conferences, among other things.

The Office of Program Review supports headquarters and field office  staff administering the program by evaluating and responding to  external reviews, creating marketing products for the 8(a) program,  and preparing the annual report to Congress on program participation  and contracting, among other things.

At the local level, about 160 district office staff members known as  Business Opportunity Specialists support the 8(a) program by interacting  directly with small businesses. Business Opportunity Specialists are  responsible for implementing the 8(a) program within the geographical  area serviced by their district office, and each specialist has a portfolio of  firms that they are responsible for supporting throughout the firms’  participation in the 8(a) program. Their activities include assisting firms  as they prepare to apply to the program, hosting webinars about SBA’s  government contracting and business development programs, and  conducting training for firms on how to strengthen elements necessary for  participation in these programs, such as a creating a strong business  plan. Business Opportunity Specialists are also responsible for  conducting annual reviews, which assess a firm’s progress in the 8(a)  program. Further, they conduct continuing eligibility reviews, which help  ensure that firms are still eligible to participate in the program after initial  certification.

In contrast with the field staff in area offices who implement SBA’s  government contracting programs and report to OGCBD headquarters,  Business Opportunity Specialists in district offices report to OFO via the  district director, and their caseloads are determined by OFO. District  directors manage the district offices and prepare a comprehensive District  Office Strategic Plan outlining the methodology to achieve or exceed  district goals by fiscal year end. The plan is specific to the district’s  economic climate and encompasses goals related to OGCBD programs.  Business Opportunity Specialists are responsible for executing goals of  their district office’s plan that are specific to their position. In addition to  supporting OGCBD programs, Business Opportunity Specialists support  other SBA programs and assist with district office administration and local  market initiatives. According to agency officials, the time specialists spend  working on their 8(a) portfolios ranges from 55 percent to 100 percent. As  a result, specialists who do not support 8(a) full time may also support  other OGCBD programs, as discussed in the following sections, and assist with other district office activities, such as developing a marketing  and outreach plan specific to their district office.

HUBZone program. At the headquarters level, the Office of HUBZone  within OGCBD administers the HUBZone program by certifying  businesses as eligible to receive HUBZone contracts, maintaining a list of  qualified HUBZone small businesses that federal agencies can use to  locate vendors, adjudicating protests of HUBZone eligibility, decertifying  firms that no longer meet eligibility requirements, and conducting  marketing outreach and training. In the field, each district office has a  HUBZone liaison who serves as the program expert at the local level.  Because Business Opportunity Specialists are responsible for marketing  OGCBD’s other programs in addition to their 8(a) duties, some of them  also work with or serve as the HUBZone liaison to help ensure that the  HUBZone program is implemented according to internal operating  procedures and statute and help ensure that relevant HUBZone program  goals and objectives are accomplished. The HUBZone liaison is also  responsible for completing site visits or program examinations for firms,  and conducting program marketing outreach to and training for state and  local acquisition, economic development, and small business  communities.

WOSB and SDVOSB programs. At the headquarters level, the Office of  Government Contracting within OGCBD publishes regulations for the  WOSB program, conducts eligibility examinations of businesses that have  received contracts, decides protests related to eligibility for a WOSB  contract, conducts studies to determine eligible industries, and works with  other federal agencies in assisting participating firms. The Office of  Government Contracting also conducts SDVOSB eligibility protest  reviews to help ensure that only eligible SDVOSBs receive contracts set  aside for this group. The Office of Policy, Planning and Liaison issues  regulations for the SDVOSB program and reports progress on the  program’s set-aside goals. Because both programs are currently  functioning as self-certifying programs, in which firms attest to their own  eligibility to participate or obtain third-party certification, OGCBD does not  make any determinations regarding firms’ eligibility prior to firms’  receiving contract awards. In the field, Business Opportunity Specialist  responsibilities for these programs are largely limited to marketing these  programs to the community and working with local resource partners,  such as women’s business centers and veteran’s business centers, to  educate firms and contractors about the programs.

Figure 1 illustrates the lines of reporting for field staff who implement  SBA’s government contracting and business development programs.

SBA officials we spoke to in OFO and OGCBD described benefits of the  current field-office and reporting structure. For example, they told us that  the current field-office structure provides a national presence that allows  firms to engage with staff in district offices across the country. As  previously mentioned, at least one district office is located in each state,  with multiple offices in some states. In addition, OFO officials said the  reporting structure, in which Business Opportunity Specialists who  implement the 8(a) program report to OFO rather than to OGCBD, allows  for staff to also support the goals of their district office, which may require  them to support local market duties and other SBA programs, in addition  to supporting the firms in their 8(a) portfolio. Finally, SBA officials stated  that the current structure helps to ensure that staff know their local market  and can be responsive to local market needs as determined by their  district director.

However, OGCBD officials told us that the current reporting structure can  result in inconsistent program delivery for business development  programs. They described efforts taken recently to improve program  delivery by improving OGCBD’s communication with OFO and field staff,  including the following:

Weekly management calls now occur between headquarters-level  staff from OGCBD and OFO. These calls mostly address policy  changes or changes to OGCBD’s standard operating procedures.

Monthly conference calls including Business Opportunity Specialists  and OGCBD management have been instituted to address any  updates to the program.

Monthly training refresher calls sponsored by the Office of Business  Development have been implemented to provide training refreshers in  addition to an opportunity to discuss program concerns or  suggestions.

Monthly HUBZone calls occur to monitor site visits and discuss  complex fact patterns that may arise in connection with eligibility  compliance.

Business Opportunity Specialists were invited to attend a Department  of Defense government contracting training session alongside  OGCBD staff.

However, information from SBA’s 2015 and 2016 Field Accountability  Reviews indicate that communication issues may be ongoing. For  example, one deputy district director said that conference calls are  confusing, lack consistency, and do not provide up-to-date process  changes. This deputy district director also noted that the calls did not cover all OGCBD programs and said that district field office staff were  unaware of changes to WOSB and SDVOSB programs. Another district  director said that communication breakdowns can occur when program  offices schedule webinars, conference calls, and training activities that  conflict with one another. Because the communications changes were  implemented recently, it may be too soon to tell if they are having the  intended effect.

In September 2015, we issued a report that was based on a broad review  of management challenges at SBA, including OGCBD. In this 2015  report, we found that working relationships between headquarters and  field offices that differ from reporting relationships can potentially pose  programmatic challenges. At that time, SBA told us it had committed to  assessing its organizational structure but had not yet completed those  efforts. We recommended that SBA document the assessment of the  agency’s organizational structure, including any necessary changes to,  for example, better ensure that areas of authority, responsibility, and lines  of reporting are clear and defined. As of May 2017, SBA had not provided  documentation of such an assessment or of its decision making about the  need for changes to its organizational structure. We maintain that such an  assessment is needed to help ensure that SBA’s structure supports its  mission efficiently and effectively.

section_title: SBA Has Made Improvements to Its Certification Processes, but Some Weaknesses Remain
paragraphs: Over the past decade, we and SBA’s OIG have identified a number of  weaknesses in the processes SBA uses to certify and recertify  businesses as being eligible to participate in its HUBZone, 8(a), and  WOSB programs and have made recommendations to SBA to address  them. SBA has addressed a number of these recommendations;  however, some remain outstanding.
subsections: section_title: HUBZone Program
paragraphs: SBA has made some improvements to address problems we identified  with the HUBZone program’s certification and recertification processes.  For example, in June 2008 we reported that, for its HUBZone certification  process, SBA relied on data that firms entered in the online application system and performed limited verification of the self-reported  information. Although agency staff had the discretion to request  additional supporting documentation, SBA did not have specific guidance  or criteria for such requests. Consequently, we recommended that SBA  develop and implement guidance to more routinely and consistently  obtain supporting documentation upon application. In response to that  recommendation, SBA revised its certification process, and since 2009  has required firms to provide documentation, which SBA officials review  to determine the firms’ eligibility for the HUBZone program. SBA then  performs a full-document review on all applications as part of its initial  certification process to determine firms’ eligibility for the program. We  have closed this recommendation as implemented.

We have also identified a number of concerns with SBA’s HUBZone  recertification process. For example, in February 2015 we reported that  SBA relied on firms’ attestations of continued eligibility and generally did  not request supporting documentation as part of the recertification  process. SBA only required firms to submit a notarized recertification  form stating that their eligibility information was accurate. SBA officials did  not believe they needed to request supporting documentation from  recertifying firms because all firms in the program had undergone a full  document review, either at initial application or during SBA’s review of its  legacy portfolio in fiscal years 2010–2012. However, as we found, the  characteristics of firms and the status of HUBZone areas—the bases for  program eligibility—often can change and need to be monitored. As a  result, we concluded that SBA lacked reasonable assurance that only  qualified firms were allowed to continue in the HUBZone program and  receive preferential contracting treatment. We recommended that SBA  reassess the recertification process and implement additional controls,  such as developing criteria and guidance on using a risk-based approach  to requesting and verifying firm information.

In following up on this recommendation for our March 2016 report on  opportunities to improve HUBZone oversight, we found that SBA had not  yet implemented guidance for when to request supporting documents) for  the recertification process because SBA officials believed that any  potential risk of fraud would be mitigated by site visits to firms.  According to data that SBA provided, the agency visited a fraction of  certified firms each year during fiscal years 2013 through 2015. SBA’s  reliance on site visits alone did not mitigate the recertification weaknesses  that were the basis for our recommendation. The officials also cited  resource limitations. In recognition of SBA’s resource constraints, we  reiterated in our March 2016 report that SBA could apply a risk-based  approach to its recertification process to review and verify information  from firms that appear to pose the most risk to the program. In addition,  as of February 2017, SBA officials told us that the agency had begun  implementing a technology-based solution to address some of the  ongoing challenges with the recertification process. The officials  expected that the new solution would help them better assess firms and  implement risk-based controls by the end of calendar year 2017. As of  May 2017, this recommendation remains open.

We also found in June 2008 and again in February 2015 that the  recertification process was backlogged—that is, firms were not being  recertified within the required 3-year time frame. In 2015, we reported  that as of September 2014, SBA was recertifying firms that had been first  certified 4 years previously. While SBA initially eliminated the backlog  following our 2008 report, according to SBA officials the backlog recurred  due to limitations with the program’s computer system and resource  constraints. Consequently, in February 2015 we again recommended that  SBA take steps to ensure that significant backlogs would not recur. In  response to the recommendation, SBA made some changes to its  recertification process. For example, instead of manually identifying firms  for recertification twice a year, SBA automated the notification process,  enabling notices to be sent daily to firms (to respond to and attest that  they continued to meet the eligibility requirements for the program).  According to SBA officials, as of February 2017 this change had not yet  eliminated the backlog.

section_title: 8(a) Business Development Program
paragraphs: SBA has made improvements to address problems we identified with the  8(a) program’s process to help ensure firms’ continuing eligibility. In a  March 2010 report, we made six recommendations to improve SBA’s  monitoring of and procedures used in assessing the continuing eligibility  of firms to participate in and benefit from the 8(a) program. SBA has  taken steps to address the six recommendations, and we have closed all  six as implemented. For example, we recommended that SBA monitor  and provide additional guidance and training to district offices on the  procedures used to determine continuing eligibility. In response to this  recommendation, SBA issued revised regulations that provided additional  8(a) program eligibility requirements and criteria related to size standards,  indicators of economic disadvantage, and other thresholds businesses  must meet to maintain eligibility. In addition, SBA indicated that under its  Field Accountability Review program it conducts oversight of SBA district  offices using audit-like steps to measure performance and compliance  regarding federal statutory mandates, regulations, and SBA policy and  procedures. According to SBA, one of the areas covered by the Field  Accountability Review on-site visits is the 8(a) annual compliance reviews  of participating firms.

In April 2016, SBA’s OIG reported that SBA failed to properly document  that 8(a) firms admitted into the program met all eligibility criteria. SBA’s  OIG evaluated SBA’s eligibility determination process for admitting 48  applicants in the 8(a) program between January 1, 2015, and May 31,  2015, and found that 30 of the participants did not meet all of the eligibility  criteria. SBA’s OIG found that SBA managers had overturned lower-level  reviewers’ recommendations for denial without fully documenting how all  of the identified areas of eligibility concerns were resolved. SBA’s OIG  recommended that SBA (1) clearly document its justification for approving  or denying applicants into the 8(a) program, particularly when those  decisions differed from lower-level recommendations, and (2) provide  documentation showing how eligibility concerns raised by lower-level  reviewers were resolved for the 30 firms not documented. In response to  the first recommendation, SBA noted in a written response to us that it  had established a practice of noting a statement of difference in cases  where decisions differed; however, the SBA OIG had yet to close this  recommendation as of May 2017. According to the SBA OIG, this  recommendation will remain open until this practice is documented in an  SOP or desk guide for the program. In response to the second  recommendation, SBA’s OIG noted that SBA provided the SBA OIG with  documentation showing how the eligibility concerns were resolved for the  30 firms not documented, and this recommendation was closed as  implemented. SBA OIG officials told us that they plan to issue a report  that summarizes their analysis of the documentation provided by SBA in  June 2017.

section_title: Women-Owned Small Business Program
paragraphs: SBA considers WOSB a self-certification program because firms self- certify their eligibility to participate by uploading documentation into an  online repository or seeking approval from a third-party certifier. In  October 2014, we found that SBA performed minimal oversight of third- party certifiers for the WOSB program and had not developed procedures  that provide reasonable assurance that only eligible businesses obtain  WOSB set-aside contracts. As a result, we found that SBA cannot  provide reasonable assurance that certifiers fulfill the requirements of  their role and that firms that attest that they are eligible for the program  are actually eligible. We made two recommendations in this report:

SBA should establish and implement comprehensive procedures to  monitor and assess performance of certifiers in accord with the  requirements of the third-party certifier agreement and program  regulations; and

SBA should enhance examination of businesses that register to  participate in the WOSB program, including actions such as  developing and implementing procedures to conduct annual eligibility  examinations, analyzing examination results and individual  businesses found to be ineligible to better understand the cause of the  high rate of ineligibility in annual reviews, and implementing ongoing  reviews of a sample of all businesses that have represented their  eligibility to participate in the program.

In response to our recommendations, SBA has taken some actions. For  example, SBA created an SOP stating that third-party certifiers are  subject to a compliance review by SBA at any time, and SBA has  completed a review of the four authorized third-party certifiers. We  continue to monitor SBA actions to address our recommendations.

SBA’s OIG has also identified weaknesses in the WOSB program. In May  2015, SBA’s OIG reported that contract awards were made to potentially  ineligible firms based on documentation in the WOSB online repository.  SBA’s OIG reviewed 34 contract awards and found that 9 did not have  documentation in the repository. In addition, SBA’s OIG found that of the  25 awards that did have some documentation in the repository, a number  did not include all of the required documentation or sufficient  documentation to prove that the firm was controlled by women. SBA’s  OIG recommended that SBA perform eligibility examinations on the firms  identified in the report as potentially ineligible. According to SBA OIG  officials, SBA completed the eligibility examinations on the firms identified  as potentially ineligible and determined that 40 percent of these firms  were not eligible to receive contracts under the WOSB program at the  time of award. According to the SBA OIG, all recommendations from this  report were closed as implemented.

The National Defense Authorization Act for Fiscal Year 2015 eliminated  the self-certification process for the WOSB program and required SBA to  give more authority to contracting officers to award sole-source  contracts—that is, contracts that do not require competition. SBA  completed a rule-making process to allow the program to award sole- source contracts. Although SBA has provided an advanced notice of  proposed rule making for the certification program, it has not implemented  a process to eliminate self-certification as of May 2017. As a result of  inadequate monitoring and controls, such as not implementing a full  certification program, potentially ineligible businesses may continue to  incorrectly certify themselves as WOSBs, increasing the risk that they  may receive contracts for which they are not eligible. Even with this  change in the NDAA, we maintain that recommendations related to  strengthening oversight of third-party certifiers and enhancing  examinations of WOSB firms are needed to help ensure that only eligible  businesses participate in the WOSB program.

section_title: Legal Requirements and Volume, among Other Factors, Affect the Timeliness of SBA’s Rule-Making Actions
paragraphs: The timeliness of SBA’s rule-making process can vary due to the legal  requirements that govern this process, among other factors. While  agencies must adhere to the federal laws and executive actions that  govern the federal rule-making process, each agency also has its own  guidance and process for rule making. SBA relies on two SOP documents  that outline procedures and responsibilities for rule making at the agency.  One SOP on Federal Register documents identifies the procedures and  responsibilities for obtaining internal clearance (the agreement of various  offices within SBA and ultimately the signature of the Administrator)  before publishing documents to the Federal Register, and includes details  on how to format Federal Register proposed and final rules and the  offices involved in reviewing documents. This SOP does not include  specific information on required timelines for this process. The other SOP  on SBA’s Office of Executive Secretariat includes, in part, additional  information on clearance procedures before documents can be published  in the Federal Register. This SOP includes limited information on  internal deadlines, including that documents must be cleared by this office  within 15 days of being initiated in SBA’s internal tracking system, with  any documents needing re-clearance requiring an additional 5 days.

SBA’s Office of Policy, Planning and Liaison (OPPL) works with SBA’s  Office of General Counsel (OGC) and other internal subject-matter  experts to draft and promulgate rules. OPPL has one director and two  other staff members dedicated to rule making, and one of the two staff  members is solely responsible for working with OMB’s FAR Council. SBA  officials described their rule-making process as follows:

OPPL relies on staff from OGC to draft the rule and then prepares the  rule for OGCBD clearance and ultimately for agency-wide clearance  by the Administrator.

After receiving comments from SBA’s Office of Advocacy, SBA’s OIG,  and other offices, OPPL prepares a memorandum to the Administrator  for the Administrator’s review and clearance.

Then, if the rule is determined by OIRA to be a significant regulatory  action as defined by Executive Order 12866, the rule must go to OMB  for an interagency review process managed by OMB, in which other  federal agencies can provide comments and questions on SBA’s rule.  This interagency review period requires 90 days, but the actual  amount of time for this review varies. Sometimes the rule may be sent  back to SBA where the process starts over again. According to SBA  officials, if other agencies have no comments, the interagency review  period can take 4 to 5 months.

After the proposed rule passes interagency review, it goes back  through OGCBD clearance and agency-wide clearance by the  Administrator before being added to the Federal Register for public  comment. OGC summarizes the public comments and drafts the final  rule, and the final rule goes back to OGCBD and then the SBA  Administrator for review before it is again sent to OMB for an  additional review process. After these reviews are completed, the rule  is then published in the Federal Register.

Rules that only apply to SBA (and that do not need to go to OMB to  amend the FAR) have an effective date 30 days after issuance. For rules  that amend the FAR, a statement is drafted by OPPL and the FAR team  drafts proposed and final rules. It takes the FAR Council at least a year  between proposed and final rule to complete a FAR amendment,  according to SBA staff.

For SBA and the federal government more broadly, certain stages of the  rule-making process have mandated time periods, as shown in figure 2.  For example, the public comment period recommended by Executive  Order 12866 is 60 days. In addition, the interagency comment period  managed by OMB requires 90 days, and this review can occur prior to the  publishing of both the proposed rule and the final rule. Other stages have  no time requirements but also add to the overall length of the process,  such as the time required to research, analyze, and draft a proposed rule.

Timelines for promulgating rules varied across four finalized SBA rules we  reviewed. We selected four statutory provisions requiring SBA to  promulgate rules from the NDAAs for fiscal years 2013, 2014, 2015, and  2016 (out of a possible 47 provisions requiring rule making) for review to  better understand SBA’s rule-making process. All four of these rules have  been finalized by SBA. Table 1 identifies the four rules we reviewed and  some basic time frames for each rule.

For these four rules, the rule-making process resulted in longer time  frames than the required minimums along several metrics.

Interagency Review. Three of the four rules we reviewed were  identified as requiring the OMB interagency review process, which  lasted longer than 90 days in some cases. Of these three rules, one  (the Lower Tier Subcontracting rule) was under review with OMB for  less than the required 90 day review period (86 days); the other two  required 107 and 156 days for this review process. Further, these  three rules also underwent an additional interagency review process  after SBA had obtained public comments, which required an  additional 68 to 75 days each.

Public comment period. In addition, SBA officials noted that the  public comment period varied in some cases, with extended comment  periods being added as necessary. For example, for the All Small  Mentor-Protégé rule, SBA initially provided a 60-day comment period,  but extended it by an additional 30 days in response to public request.  Likewise, for the Limitations on Subcontracting rule, SBA reopened  the initial 60-day comment period for an additional 30 days starting  about a week after the initial comment period ended.

Statutory deadlines. Finally, three of the four rules arose from  statutes that required the final rule to be issued within a set period of  time. Both the All Small Mentor-Protégé rule and the Advisory Size  Decisions rule were required to be issued as final within 270 days of  the law’s enactment, while the Lower Tier Subcontracting rule  required a final rule to be issued by 18 months after the date of  enactment. The All Small Mentor-Protégé rule took 1,300 days from  the date of the law’s enactment to the issuance of the final rule, which  was 1,030 days past the statutory deadline. The Advisory Size  Decisions rule took 770 days, which was 500 days past the statutory  deadline. The Lower Tier Subcontracting rule took almost exactly 18  months longer than the statutory deadline.

SBA officials noted some factors that may have contributed to certain  rules taking longer than anticipated in recent years. They explained that  the volume of rule making required of SBA has increased in recent years.  Agency officials said they were used to receiving such legislation in  stand-alone bills every couple of years until Congress began including  rule-making requirements for SBA in NDAAs in fiscal year 2013. In written  responses to our questions on the four selected rules, SBA officials noted  that the three rules required by NDAA for Fiscal Year 2013 came at a  time when they were busy completing rules required by the Small  Business Jobs Act of 2010, thereby delaying the start of their work on the  new set of rules. In a congressional testimony in February 2016, the  Associate Administrator of OGCBD stated that SBA had implemented  over 25 provisions from the Small Business Jobs Act of 2010 and was  making progress on the remaining provisions. OMB officials stated that  the timeliness of SBA’s rule makings is not unusual and has not raised  any concerns.

Additionally, SBA officials noted that some of the rules contained other  statutory requirements that required additional work. Specifically, the All  Small Mentor-Protégé program and the Limitations on Subcontracting  rules included changes that affected Indian tribes, Alaska Native  corporations, and Native Hawaiian organizations, which required SBA to  consult with these groups in accordance with Executive Order 13175.  Also, the Lower Tier Subcontracting rule required SBA, the General  Services Administration, and the Department of Defense to submit a plan  for implementing the rule to both House and Senate committees; the  agencies were required to complete planned actions within 1 year after  enactment, and SBA was required to issue any regulations necessary,  including the completion of a FAR amendment, within 18 months after  enactment. However, SBA officials said that the FAR Council generally  will not open a FAR case until SBA has issued a final rule, making the  accomplishment of this statutory deadline impracticable. SBA officials  also cited some delays in rule making as a result of the recent  presidential administration transition.

Generalizing about time frames in the rule-making process is difficult  because the process varies from rule to rule. In an April 2009 report on  the effect of procedural and analytical requirements on federal agencies’  rule-making processes, we found variation in the length of time required  for the development and issuance of final rules, both within and across  agencies. We identified several factors, including the complexity of the  issues addressed; priorities set by agency management that can change;  and the amount of internal and external review required. Additionally,  SBA officials noted that some rules receive many more comments than  others, which can add significantly to the timeline.

Various approaches exist for measuring the length of time required to  develop and issue final rules, but they have limitations.

Initiation to final publication. The most complete measure of the  length of time for a rule making is to measure the period from initiation  of the rule to final publication, but this approach is limited by  disagreement as to when a rule-making process begins. According to  our prior work, while agency officials generally agreed that the  publication of a final rule marked the end of the rule-making process,  identifying when a rule making begins is less definite. Specifically,  while each agency identifies milestones that mark the initiation of a  rule making, they may not factor in the time spent researching the rule  makings or developing policy for the rule, as well as time spent  researching rule makings related to the rule in question.

Publication in Federal Register to final publication. Another  approach to measuring the time required for a rule making is to use  two rule-making milestones common among federal agencies: (1)  publication of a proposed rule in the Federal Register and (2)  publication of a final rule. However, this measurement is incomplete,  as it ignores the potentially substantial length of time necessary for  regulatory development, according to our April 2009 report. In that  report, our case study of 16 rules suggested that this time frame  ranged from approximately 6 months to 5 years, while the total rule- making time for the two rules on either end of that range varied from  slightly over 1 year to 13 years, respectively. For our current review of  four selected SBA rules, the time between the publication of proposed  and final rules ranged from 7.5 months to 17.5 months.

Mandated timeline. Finally, another approach is to evaluate each  rule against its mandated timeline, although this requirement does not  exist for all rules. However, the various factors that can affect rule- making timeliness can limit the meaningfulness of this analysis. For  example, although our April 2009 report found that rules that are a  management priority or that have a statutory or judicial deadline may  move more quickly through the rule-making process while other rules  are set aside, this analysis must factor in the overall volume of  required rule makings and the relative priorities and rule-making  caseload for the agency.

section_title: Agency Comments
paragraphs: We are not making new recommendations in this report and maintain that  SBA should implement our prior reports’ recommendations. We  provided a draft of this report to SBA for review and comment. The  agency provided technical comments that we incorporated as  appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Administrator of the Small Business Administration, and  the Director of the Office of Management and Budget. The report is also  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me 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. Major contributors to this report are listed in  appendix III.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examined (1) the field-office and reporting structure the Small  Business Administration (SBA) uses to implement government  contracting and business development and the benefits and challenges  posed by these structures; (2) progress SBA has made to strengthen its  certification processes; and (3) the timeliness of SBA’s rule-making  process.

To examine SBA’s field-office and reporting structure for implementing its  government contracting and business development programs, we  reviewed SBA documentation on its organizational structure. In addition,  we obtained and reviewed a March 2015 study on SBA’s organizational  structure conducted by a third-party consultant. We also reviewed  academic literature on organizational theory to provide context for  understanding SBA’s organizational structure and leading practices for  implementing changes to organizational structure. We conducted this  literature search on organizational structure and theory and reviewed  these articles to determine the extent to which they were relevant to our  engagement and appropriate as evidence for our purposes. We also  observed two online webinars hosted by SBA on government contracting  for small businesses to better understand SBA’s communications to firms  about its government contracting services. Further, we reviewed prior  GAO and SBA Office of Inspector General (OIG) reports from 2008  through 2016 for findings related to SBA’s organizational structure and  the benefits and challenges posed by its current structure. In addition,  we interviewed SBA staff from the following headquarters offices: Office  of Government Contracting and Business Development, Office of  Certification Eligibility, Office of Field Operations, Office of the Chief  Human Capital Officer, and Office of Policy, Planning, and Liaison, as  well as the Administrator’s Chief of Staff. We interviewed SBA staff to  obtain their perspectives on SBA’s current organizational structure with  respect to government contracting and business development  programming.

To examine the progress SBA has made to strengthen its processes for  certifying small businesses as eligible to participate in its programs, we  reviewed relevant laws, regulations, and agency guidance. We  specifically examined SBA’s certification processes for its 8(a) Business  Development and Historically Underutilized Business Zone (HUBZone)  programs, as well as its self-certification processes for the Women- Owned Small Business (WOSB) and Service-Disabled Veteran-Owned  Small Business (SDVOSB) programs. We also interviewed SBA  headquarters staff to understand these different certification processes  and to obtain their perspective on the progress that has been made to  strengthen these processes. In addition, we reviewed prior GAO and SBA  OIG work related to SBA’s certification processes to identify progress that  has been made as well as opportunities to further strengthen these  processes. See appendix II for more information on the status of selected  prior GAO recommendations to SBA.

To examine the timeliness of SBA’s rule making, we reviewed relevant  laws, regulations, executive actions, and SBA guidance. We also  reviewed four statutorily mandated SBA rules, selected from a possible  47 provisions in the National Defense Authorization Acts of fiscal years  2013, 2014, 2015, and 2016 that potentially required SBA to draft and  implement rules. We selected these rules as examples of mandatory rule  making. We reviewed the public documentation for each rule, including  any proposed or final rules, as well as the timelines associated with each  rule. We also interviewed SBA staff and staff from the Federal Acquisition  Regulatory (FAR) Council within the Office of Management and Budget  (OMB) to understand SBA’s regulatory drafting process, the Federal  Acquisition Regulation (FAR) process, and the coordination between SBA  and the FAR Council. Finally, we reviewed prior GAO reports on rule  making to understand the federal rule-making process and factors  affecting the timeliness of agency rule making.

We conducted this performance audit from August 2016 to June 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 that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Summary and Status of Previous GAO Recommendations
paragraphs: The following table summarizes the status of our recommendations from  HUBZone, 8(a), and WOSB performance audits and investigations as of  May 2017. We classify each recommendation as either open (the agency has not taken steps to implement the  closed, not implemented (the agency decided not to take action to  implement the recommendation).

The recommendations are listed by report.

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

section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Marshall Hamlett (Assistant  Director), Nathan Gottfried (Analyst In Charge), JoAnna Berry, Tim Bober,  Farrah Graham, Jennifer Kamara, Jessica Sandler, Jennifer Schwartz,  and Jena Sinkfield made major contributions to this report.


Question-summary annotations: questions: question: What is the OGCBD responsible for?
answer: The Office of Government Contracting and Business Development (OGCBD) at Small Business Administration (SBA) headquarters sets policies for SBA's business development and government contracting programs, and SBA field office staff help to implement these programs at the local level.

question: What is the relationship between field staff and SBA headquarters?
answer: The reporting relationships between field staff and SBA headquarters vary depending on the program. For example, field staff who implement government contracting programs report to OGCBD, while most staff who implement the 8(a) business development program report to the Office of Field Operations (OFO), which oversees SBA's field offices.
child_questions: question: How is this reporting structure beneficial?
answer: SBA officials told GAO that this reporting structure, in which some field staff implement OGCBD programs but report to OFO, offers some benefits—for example, it allows these staff to support the goals of OGCBD programs as well as those of the individual field offices.

question: What issues does this reporting structure have?
answer: However, officials also said the reporting structure can result in inconsistent program delivery.
child_questions: question: What steps have OGCBD staff taken to amend these issues?
answer: They described recent steps to improve communication between OGCBD and field staff, but it is too soon to tell if these steps will be effective.

questions: question: What steps has SBA taken to address weaknesses?
answer: SBA has taken some steps to address weaknesses GAO and the SBA Office of Inspector General (OIG) have identified in its processes for certifying small businesses as eligible to participate in SBA programs, but some recommendations remain open.
child_questions: question: What HUBZone-related issue still remains?
answer: For example, GAO found in 2015 that SBA had not required firms seeking recertification for the Historically Underutilized Business Zone (HUBZone) program to submit any information to verify continued eligibility and instead relied on firms' attestations of continued eligibility.
child_questions: question: What did GAO recommend SBA do to amend this issue?
answer: GAO recommended that SBA assess the HUBZone recertification process and add additional controls; SBA had not yet implemented this recommendation as of May 2017.

question: What issue regarding eligibility still remains?
answer: SBA's OIG also found in 2016 that SBA managers overturned lower-level reviewers' decisions to deny firms admission to the 8(a) program without documenting in the information system how eligibility concerns were resolved.
child_questions: question: According to SBA's OIG, how could this be amended?
answer: SBA's OIG recommended that SBA clearly document the justification for approving or denying firms.
child_questions: question: How did SBA respond to this recommendation?
answer: In response, SBA stated that managers are now required to document decisions in the system that differ from those of lower-level reviewers.

questions: question: What factors affect the timelines of SBA's rule-making process?
answer: A number of legal requirements and the volume of required rule makings, among other factors, affect the timeliness of SBA's rule-making process. Certain stages of the rule-making process have mandated time periods, such as the required 90-day interagency review process for certain rules.
child_questions: question: Why is it difficult to measure these timelines?
answer: Various approaches exist for measuring the length of time required to develop and issue final rules, but they have limitations. For example, in measuring the period from rule initiation to final publication, agencies may differ on when they mark initiation.
child_questions: question: How does the data GAO collected demonstrate this?
answer: For four finalized SBA rules GAO reviewed, the time from publication of the proposed rule to publication of the final rule varied from 7.5 months to 17.5 months.

question: What has contributed to delays in the rule-making process?
answer: SBA officials noted that an increase in the number of statutorily mandated rules in recent years has contributed to delays in the agency's ability to promulgate rules in a more timely fashion.

question: How did OMB officials respond to GAO's concerns about delays?
answer: Office of Management and Budget (OMB) officials GAO spoke with stated that the length of time for SBA's rule makings is not unusual and has not raised any concerns.

questions: question: What documents did GAO review?
answer: GAO reviewed documentation related to SBA's organizational structure and certification processes; relevant laws and regulations; SBA program guidance; and previous GAO reports.

question: What officials did GAO interview?
answer: GAO interviewed SBA and OMB officials.

question: What rules did GAO analyze?
answer: GAO reviewed four statutorily mandated SBA rules, which were selected from 47 provisions in the National Defense Authorization Acts for fiscal years 2013, 2014, 2015, and 2016 as examples of mandatory rule making.