GAO-23-105907: Tracking the Funds: Specific Fiscal Year 2022 Provisions for Small Business Administration
Summary
GAO report GAO-23-105907, "Tracking the Funds: Specific Fiscal Year 2022 Provisions for Small Business Administration," a report to congressional committees dated October 2022. It states that the Consolidated Appropriations Act, 2022 appropriated $83 million to SBA for 128 projects at the request of Members of Congress, called Congressionally Directed Spending in the Senate and Community Project Funding in the House. About 72 percent (92) of the projects go to higher education and other nonprofit organizations and about 28 percent (36) to tribal, territorial, state or local governments. Amounts range from $50,000 to $3 million, averaging about $650,000, and SBA officials said recipients of 120 of the 128 projects had not previously received agency funding.
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“GAO-23-105907: Tracking the Funds: Specific Fiscal Year 2022 Provisions for Small Business Administration.”
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U.S. Government Accountability Office
TRACKING THE FUNDS:
Specific Fiscal Year 2022 Provisions for
Small Business Administration
GAO-23-105907 · October 2022
Report to Congressional Committees
The Consolidated Appropriations Act, 2022 appropriated $83 million to the Small Business Administration (SBA) for 128
projects at the request of Members of Congress. The act includes specific provisions that designate an amount of funds
for a particular recipient, such as a nonprofit organization or a local government, to use for a specific project. These
provisions are called “Congressionally Directed Spending” in the U.S. Senate and “Community Project Funding” in the
House of Representatives. Members of Congress had to meet certain requirements under Senate and House rules in
order to have their requests included as provisions in the act. Such requirements included that Members post requests
online and certify that they had no financial interest in the projects. The House also required Members to demonstrate
community support for requests.
This report examines how SBA intends to identify the provisions, distribute the funds made available through these
provisions, and ensure the funds are spent for the purposes Congress intended. For more information on this report and
others in this series, including background and methodology, visit https://www.gao.gov/tracking-funds.
What are the intended The $83 million is intended to support small businesses through various projects,
uses of these funds? including business incubators and resource centers.
Small Business Administration: Fiscal Year 2022 Community Project Funding/Congressionally
Directed Spending Provisions
Based on total amount appropriated for this budget account for fiscal year 2022.
a
Who are the designated The designated recipients of about 72 percent (92) of the 128 projects are higher
recipients? education organizations and other nonprofit organizations and about 28 percent (36)
are tribal, territorial, state, or local governments.
Key Observations
• SBA officials told us that the recipients of 120 of the 128 projects had not
previously received funding from the agency.
• The amount designated for each project ranges from $50,000 to $3 million, with an
average amount of about $650,000. Of the 128 projects, 47 will receive $300,000
or less, 48 will receive more than $300,000 but less than $1 million, and 33 will
receive $1 million or more.
• The two largest projects, which will receive $3 million each, are to (1) support a
nonprofit organization in redeveloping a Vermont cheese factory into a
multipurpose food venture center and (2) establish a center at a Maryland
Page 1 GAO-23-105907 Tracking the Funds: Small Business Administration
university to expand a program that provides socially and economically
disadvantaged entrepreneurs with customized training, mentorship, and networking
opportunities.
• SBA officials said that the recipients of 97 of the 128 projects will use the funds
only for salaries and expenses such as travel and equipment costs, the recipients
for 18 projects will use the funds only for construction, and the recipients for 13
projects will use the funds for both.
Small Business Administration: Distribution of Fiscal Year 2022 Community Project
Funding/Congressionally Directed Spending Provisions
Who within the agency According to SBA officials, SBA’s Office of Grants Management will be responsible for
will be responsible for leading the agency’s efforts to identify, distribute, and monitor these funds. Other
offices within SBA such as the Offices of Congressional and Legislative Affairs,
identifying and General Counsel, and the Chief Financial Officer will help identify and track the funds.
monitoring these funds?
How does the agency SBA officials told us the agency would perform due diligence through its existing grant
intend to ensure process to ensure recipients are ready to receive and able to use these funds.
recipients are ready to For example, before distributing the funds, SBA plans to check the System for Award
receive and are able to Management—the system through which entities must register to receive federal
funds—to identify parties excluded from receiving federal contracts and funds. The
use these funds?
agency also plans to check the Department of the Treasury’s Do Not Pay working
system and GrantSolutions, a software platform that provides risk management
services to help federal staff detect potential fraud, waste, and abuse.
In addition, to determine if recipients are able to use the funds, SBA plans to check the
Federal Audit Clearinghouse, which maintains a public database of audits of entities
that expend $750,000 or more in federal awards in 1 year. The agency also plans to
request certain documents from recipients—such as a completed, standard application
and a project budget—that it would normally receive as part of a competitive grant
application.
SBA officials said that if they found a recipient did not have adequate capacity (such as
financial, human capital, or organizational capacity) to use the funds, officials would
take appropriate steps such as placing the entity on a corrective action plan.
Page 2 GAO-23-105907 Tracking the Funds: Small Business Administration
How does the agency SBA plans to use existing processes to ensure funds are spent properly. Specifically,
intend to ensure these SBA’s grant agreement with recipients requires each recipient to submit annual
performance and financial reports. SBA officials said they would also conduct site visits
funds are spent of the recipients. These efforts are intended to help SBA prevent fraud, waste, and
properly? abuse.
• SBA requires recipients to identify in their performance reports how they will track
their assistance to small businesses or entrepreneurs at the local, regional, or
national level. Specifically, recipients will be required to identify at least three key
performance metrics, such as the number of clients assisted, the number of
underserved clients assisted, or the number of jobs supported by the small
businesses assisted. For each metric, the recipient will be required to provide a
performance target and quarterly data detailing its progress toward that target.
Recipients will be required to file a performance report at the end of each year until
all the funds are expended.
• SBA requires recipients to provide in their financial reports information on, among
other things, their expenditures for the project, remaining unobligated funds, and
any related indirect expenses.
• SBA officials said that during site visits to recipients, SBA would review their
records and accomplishments, conduct interviews, and provide any necessary
technical assistance.
SBA officials said the agency would take action against recipients to enforce any award
requirements that were not being met, such as failure to submit financial and
performance reports. Such actions could include placing the recipient on a corrective
action plan, recovering misspent funds, or suspending or terminating all or part of the
award.
The actions SBA plans to take to ensure funds are properly spent can also help prevent
improper payments. In addition, the SBA Office of Inspector General (OIG) may decide
to review these funds as part of its oversight responsibilities.
When does the agency SBA officials told us they expected to sign grant agreements with all of the recipients by
expect recipients will the end of fiscal year 2022 and that recipients may request up to 5 years to spend the
funds.
have access to these
funds, and when might SBA must enter into a grant agreement with each recipient before providing access to
the funds. SBA officials said the agency had reached out to all the recipients by mid-
the funds be spent?
June 2022 to discuss the reporting requirements and required forms—such as the
standard application and budget—and to answer any questions. They told us they
expected the grant agreement process for these funds to take longer than the normal
process for competitive grants because SBA had to request some information from
each recipient that it normally would receive in advance as part of a grant application.
As of September 19, 2022, SBA officials said the agency had signed 84 grant
agreements.
According to SBA officials, recipients generally will have 1 year from the date the
agreement is signed to use the funds, but recipients can request up to 5 years to use
the funds. These longer periods likely will apply to projects that include construction.
SBA has until the end of fiscal year 2027 to fully disburse the funds appropriated in the
Consolidated Appropriations Act, 2022 to the designated recipients. For more
information on the time availability of these funds, see GAO-22-105467.
Page 3 GAO-23-105907 Tracking the Funds: Small Business Administration
Small Business Administration: Appropriations Life Cycle for Fiscal Year (FY) 2022 Community Project
Funding/Congressionally Directed Spending (CPF/CDS) Provisions
Note: The phases depicted in this figure serve as general limitations for the Small Business Administration’s use of funds. For more information about
the obligation and expenditure of these funds, see GAO-22-105467.
What risks and In October 2021, the SBA OIG identified the need for robust grants management
challenges may the oversight as one of the top management challenges facing the agency (Small Business
Administration, Office of Inspector General, Top Management and Performance
agency face distributing Challenges Facing the Small Business Administration in Fiscal Year 2022, Report 22-
and monitoring these 02, Washington, D.C.: Oct. 15, 2021). The OIG noted that SBA had relied on an
funds? inefficient and error-prone system to manage its grant awards, but recognized that the
agency had made substantial progress in modernizing its grants management system
while working to integrate the new system within its existing financial system. However,
the OIG concluded that until the two systems are fully integrated, SBA would continue
to use manual and burdensome processes to manage aspects of its grant programs,
which could continue to hinder the agency’s ability to effectively oversee and manage
its grant programs.
Additionally, as noted above, SBA will have to obtain documentation from and enter
into grant agreements with the recipients of all 128 projects, most of whom have not
previously received funding from SBA. To help manage the number of recipients, SBA
officials told us they hired a contractor for fiscal year 2022. According to the contract,
the contractor’s tasks include helping to (1) review each of the recipients before they
receive funds, (2) process the funds, and (3) monitor the recipients, such as by
ensuring that they submit their required performance- and financial-related documents.
Why GAO did this study The joint explanatory statement accompanying the Consolidated Appropriations Act,
2022 includes a provision for us to review agencies’ implementation of Community
Project Funding/Congressionally Directed Spending. In addition to issuing this and
other reports in this series, we will follow and review agencies’ efforts to distribute,
monitor, and audit these funds by sampling agencies and recipients and examining
whether funds were spent as intended.
Agency comments We provided SBA with a draft of this report. SBA did not provide comments on this
report.
GAO Contact We conducted this performance audit from March 2022 to
October 2022 in accordance with generally accepted
For more information, contact William B. Shear at (202) 512- government auditing standards. Those standards require that we
8678 or shearw@gao.gov. plan and perform the audit to obtain sufficient, appropriate
Staff Acknowledgments: Paige Smith (Assistant Director), evidence to provide a reasonable basis for our findings and
Daniel Newman (Analyst in Charge), Jeff Harner, Garrett Hillyer, conclusions based on our audit objectives. We believe that the
John McGrail, Nadine Raidbard, and Shannon Smith. evidence obtained provides a reasonable basis for our findings
This work of the United States may include copyrighted material, and conclusions based on our audit objectives.
details at https://www.gao.gov/copyright. Source (cover photo): olezzo/stock.adobe.com.
(105907)
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