SBA OIG 18-22: Oversight of 8(a) Continuing Eligibility
Archived source: SBA OIG Report 18 22 Pdf Ba1c117d5cff7f04. Captured from www.oversight.gov.
Cited in: Martin "Sparky" Conrey
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AUDIT REPORT
IMPROVEMENTS NEEDED IN SBA’S
OVERSIGHT OF 8(A) CONTINUING
ELIGIBILITY PROCESSES
SEPTEMBER 7, 2018 REPORT NUMBER 18-22
EXECUTIVE SUMMARY Report No.
18-22
IMPROVEMENTS NEEDED IN SBA’S OVERSIGHT September 7,
2018
OF 8(A) CONTINUING ELIGIBILITY PROCESSES
What OIG Reviewed OIG Recommendations
The Small Business Administration’s (SBA’s) We made 11 recommendations to improve the
8(a) Business Development Program (8(a) pro- overall management and effectiveness of 8(a)
gram) provides economically and socially program continuing eligibility processes.
disadvantaged small business owners with busi-
ness development assistance and greater access to Agency Response
Federal contracting opportunities.
SBA management agreed with 7 of the
Our objective was to determine whether SBA’s 11 recommendations and partially agreed with
oversight ensured 8(a) program participants met the other 4 recommendations. Management’s
continuing eligibility requirements. To answer our planned actions resolved five recommendations.
objective, we judgmentally selected two samples SBA plans to conduct continuing eligibility
for review. First, we reviewed 15 individually reviews for the firms that OIG identified as
owned 8(a) firms, with the highest 8(a) set-aside ineligible and take appropriate action.
contract dollars in FY 2016. The 15 firms received Additionally, SBA plans to include a module in
$461 million, or 3.96 percent, of the $11.6 billion Certify.SBA.gov to capture adverse actions and
in 8(a) set-aside contract dollars awarded to indi- voluntary withdrawals and develop and
vidually owned firms in FY 2016. Second, we implement a system to track received complaints
reviewed 10 individually owned 8(a) firms based regarding firms’ continuing eligibility and actions
on complaints that the OIG Hotline referred to SBA taken.
between October 1, 2015, and May 4, 2017,
regarding the continuing eligibility of We did not reach resolution on recommendations
8(a) participants to assess SBA’s complaint review 1, 2, 3, 4, 7, and 9. While SBA agreed or partially
process as part of its oversight of the program. agreed with the six recommendations, the
proposed actions did not fully address the
We also met with SBA officials to gain an under- recommendations.
standing of the current 8(a) program structure
and processes. Additionally, we reviewed docu-
ments associated with the firms’ annual and
continuing eligibility reviews, information in
SBA’s 8(a) information systems, and third-party
sources for indications of ineligibility.
What OIG Found
SBA did not consistently identify ineligible firms in
the 8(a) program and did not always act to
remove firms it determined were no longer
eligible for the program. In addition, SBA did not
perform required continuing eligibility reviews
when it received specific and credible complaints
regarding firms’ eligibility and did not log all
complaints. We found that 20 of 25 firms we
reviewed should have been removed from the
8(a) program. These firms received $126.8 million
in new 8(a) set-aside contract obligations in
FY 2017 at the expense of eligible disadvantaged
firms.
U.S. SMALL BUSINESS ADMINISTRATION
OFFICE OF INSPECTOR GENERAL
WASHI NGTON, D.C. 20416
Final Report Transmittal
Repo rt Number: 18-22
DATE: September 7, 2018
TO:
FROM:
Linda E. McMahon
Administrator
Hann ibal "Mike" War
@l- C
> ,1
Inspector General '(!
SUBJECT: Improvements Needed in SBA's Oversight of 8(a) Continuing Eligibility Processes
This report presents the results of our audit of the Small Business Adm inistration's (SBA's)
oversight of the 8(a) Business Development Program continuing eligibility processes. We
conducted this audit in accordance with generally accepted government auditing standards.
We considered management comments on the draft of this report when preparing the fina l r eport.
Management either agreed or partially agreed to address our 11 recommendations identified in the
report; however, 6 recommendations are pending resolution.
We appreciate the courtesies and cooperation extended to us during this audit. If you have any
questions, please contact me at (202) 205-6586 or Andrea Deadwyler, Assistant Inspector General
for Audits, at (202) 205-6616.
cc: Pradeep S. Belur, Chief of Staff
Robb N. Wong, Associate Adm inistrator, Office of Government Contracting and Business
Development
Jason Simmons, Associate Administrator, Office of Field Operations
Christopher M. Pilkerton, General Counsel
Martin Conrey, Attorney Advisor, Legislation a nd Appropriations
La Nae Twite, Director, Office of Internal Controls
Table of Contents
Introduction ............................................................................................................................................................................... 1
8(a) Program Oversight ................................................................................................................................................... 1
8(a) Program Eligibility ................................................................................................................................................... 1
8(a) Program Continuing Eligibility............................................................................................................................ 1
Annual Reviews ................................................................................................................................................................ 2
Continuing
ContinuingEligibility
EligibilityReviews
Reviews ................................................................................................................................... 2
Prior Work ............................................................................................................................................................................. 2
Objective ................................................................................................................................................................................. 3
Finding 1: SBA’s Reviews Did Not Consistently Identify Ineligible Firms in the 8(a) Program.............. 4
OCE Did Not Perform Continuing Eligibility Reviews for Most High Risk Firms ..................................... 4
OCE and District Office Reviews Did Not Consistently Identify Indications of Ineligibility ................ 4
Recommendations.............................................................................................................................................................. 5
Finding 2: SBA Did Not Remove Ineligible Firms in a Timely Manner From the 8(a) Program ............. 7
Requirements to Remove Ineligible Firms............................................................................................................... 7
Firms Identified as Ineligible Not Removed ............................................................................................................ 7
Internal Control Deficiencies Permit Ineligible Firms to Remain in the 8(a) Program ......................... 8
Recommendations.............................................................................................................................................................. 8
Finding 3: SBA Did Not Investigate or Log All Complaints Regarding 8(a) Firms’ Eligibility.................. 9
Requirements to Conduct Reviews in Response to Complaints...................................................................... 9
SBA Did Not Address Complaints................................................................................................................................. 9
SBA’s SOP Does Not Mandate the Required Review of Complaints ............................................................. 10
SBA Did Not Log All Complaints ................................................................................................................................. 10
Recommendations............................................................................................................................................................ 11
Analysis of Agency Response ....................................................................................................................................... 11
Summary of Actions Necessary to Resolve and Close Recommendations ................................................ 11
Appendix I: Objective, Scope, and Methodology ....................................................................................................... 14
Use of Computer-Processed Data............................................................................................................................... 15
Review of Internal Controls.......................................................................................................................................... 15
Appendix II: Questioned Costs ......................................................................................................................................... 16
Appendix III: Agency Comments ..................................................................................................................................... 17
Introduction
In 1978, Congress amended the Small Business Act of 1958 (the Act) to give the Small Business
Administration (SBA) statutory authority for its 8(a) Business Development Program
(8(a) program) for minority-owned businesses. The purpose of this program is to promote the
business development and competitive viability of small business concerns owned and controlled
by socially and economically disadvantaged people.
In fiscal year (FY) 2017, Federal agencies awarded $16.3 billion, or 3.7 percent, of total small
business eligible Federal contracting dollars, using 8(a) sole-source and set-aside contracts. As of
April 2018, the 8(a) program had 4,903 participants.
8(a) Program Oversight
Two SBA program offices—the Office of Government Contracting and Business Development
(GCBD) and the Office of Field Operations (OFO)—share responsibility for overseeing the
8(a) program.
GCBD works toward maximum participation by small, disadvantaged, and woman-owned
businesses in Federal contracting. Within GCBD, business opportunity specialists (BOSs) assigned
to the Office of Certification and Eligibility (OCE) evaluate all 8(a) program applications and
conduct continuing eligibility reviews of high risk 8(a) firms.
OFO is responsible for delivering SBA’s programs and services through 68 district offices spread
across the United States and territories. Within each district office, BOSs are responsible for
executing the 8(a) program by working directly with their assigned 8(a) firms, providing technical
assistance to the firms, and coordinating additional training and assistance. In addition, the district
offices BOSs conduct annual reviews of 8(a) firms’ business development progress and compliance
with continuing eligibility requirements.
8(a) Program Eligibility
A firm must meet several eligibility requirements to qualify for and remain in the 8(a) program.
Generally, a small business concern must be at least 51 percent owned and controlled by one or
more socially and economically disadvantaged individual(s) to qualify for the 8(a) program. 1
Furthermore, the individuals must be of good character, be citizens of and reside in the United
States, and demonstrate a potential for success. Firms participate in the 8(a) program for a 9-year
period, which may be shortened by termination, early graduation, or voluntary withdrawal.
8(a) Program Continuing Eligibility
In order to remain eligible for the 8(a) program, firms must continue to meet all eligibility criteria.
SBA may graduate a firm from the program before it completes its 9-year term if it has substantially
met the targets, objectives, and goals set forth in its business plan and has demonstrated the ability
to compete without the assistance of the 8(a) program. SBA can remove firms from the 8(a)
program if, among other things, one or more of the disadvantaged owners upon whom the
participants’ eligibility was based was no longer economically disadvantaged, or if a firm no longer
1 Firms owned by Indian tribes, Alaska Native Corporations, Native Hawaiian Organizations, and Community
Development Corporations have different ownership requirements.
1
met the other eligibility standards. SBA conducts two types of reviews each year to ensure that 8(a)
participants meet program targets and remain eligible for the 8(a) program.
Annual Reviews
SBA’s procedures require BOSs located in SBA’s district offices to conduct annual reviews of all 8(a)
program participants to assess each firm’s progress toward achieving the targets, objectives, and
goals set forth in its business plan. 2 BOSs also assess the overall competitive strength and viability
of an 8(a) participant by considering the participant’s degree of sustained profitability, sales trends,
capital, financial profiles, strength of management, and ability to operate successfully without 8(a)
set-aside contracts. As a part of the annual review, each 8(a) participant must review its business
plan with its BOS and modify the plan as appropriate.
Continuing Eligibility Reviews
The Act references OCE’s duty to ascertain an 8(a) participant’s continued eligibility for the 8(a)
program. 3 Continuing eligibility reviews determine if 8(a) participants continue to meet all
eligibility criteria listed in the regulations. In practice, district office BOSs and OCE BOSs both have
responsibilities for continuing eligibility reviews depending on the status of the firm. The standard
operating procedure (SOP) required that OCE conduct continuing eligibility reviews for “high risk”
or “complex” firms, including those firms with total 8(a) revenue over $10 million, joint ventures,
mentor-protégé agreements, and firms owned by entities such as Alaska Native Corporations. While
the SOP states that district office BOSs conduct continuing eligibility reviews for all other firms, in
practice, district offices BOSs continue to assess continuing eligibility as part of annual reviews for
all 8(a) firms, including high risk/complex firms.
SBA is also required to review the participant's eligibility for continued participation in the
program upon receipt of specific and credible information alleging that a participant no longer
meets the eligibility requirements. Generally, SBA receives this information from SBA OIG Hotline
complaints.
Prior Work
In 2016, we conducted an audit to determine whether SBA’s procedures ensured that only eligible
participants were admitted into the 8(a) program. 4 We found that the Associate Administrator for
Business Development (AA/BD) approved 30 firms into the 8(a) program without fully
documenting how all areas of concern raised by lower-level reviewers were resolved. We
recommended changes in SBA policy related to documenting justification for approving or denying
8(a) applications. In a 2017 follow-up audit of the 30 firms, we continued to question the eligibility
of 10 of the 30 firms because the AA/BD did not sufficiently establish that the 10 applicants met the
eligibility requirements of the 8(a) program. 5 Consequently, SBA had no assurance that only eligible
firms benefited from the 8(a) program.
In 2010, the Government Accountability Office (GAO) issued two reports related to the initial and
continuing eligibility for the 8(a) program. In the first report, GAO noted that 8(a) firms were able
2 SOP 80 05 5, Office of Business Development, effective September 23, 2016.
3 Section 7 (j)(11)(F)(iv).
4 SBA OIG Report 16-13, SBA’s 8(a) Business Development Program Eligibility (April 7, 2016).
5 SBA OIG Report 17-15, Reassessment of Eligibility Requirements for 30 Firms in SBA's 8(a) Business Development
Program (July 17, 2017).
2
to make false statements, such as underreporting income or assets, to qualify for or remain in the
8(a) program. 6 The report also noted substantial vulnerabilities in SBA’s monitoring of eligibility
for 8(a) program participants. Among other actions, GAO recommended that SBA assess the
workload of business development specialists, and evaluate the feasibility of increasing
independent verification of firm-reported data.
In the second report, GAO indicated that inconsistencies in annual review procedures limited
program oversight and that SBA’s program offices did not have a system to track complaints on the
eligibility of 8(a) firms. 7 Among other actions, GAO recommended that SBA monitor, and provide
additional guidance and training to, district offices on continuing eligibility procedures;
and implement a standard process for documenting and analyzing complaints.
Objective
Our objective was to determine whether SBA’s oversight ensured 8(a) Business Development
Program participants met continuing eligibility requirements.
6 GAO-10-425, 8(a) Program-Fourteen Ineligible Firms Received $325 Million in Sole-Source and Set-Aside Contracts
(March 30, 2010).
7 GAO-10-353, Steps Have Been Taken to Improve Administration of the 8(a) Program, but Key Controls for Continued
Eligibility Need Strengthening (March 30, 2010).
3
Finding 1: SBA’s Reviews Did Not Consistently Identify Ineligible Firms in
the 8(a) Program
SBA’s annual and continuing eligibility reviews of 8(a) program firms in FYs 2016 and 2017 did not
consistently identify ineligible firms enrolled in the program. Despite OCE and district offices
having shared responsibility for assessing 8(a) firms’ continuing eligibility, they did not detect that
4 of the 15 individually owned 8(a) firms we reviewed were ineligible for the 8(a) program. This
occurred because (1) OCE did not perform the required continuing eligibility reviews for most high
risk firms and (2) OCE and district offices did not detect indicators of ineligibility. As a result, these
firms remained in the 8(a) program and continued to receive set-aside contracts at the expense of
truly disadvantaged firms. For the four firms in our sample that SBA did not detect as ineligible, we
question $46.6 million in new 8(a) set-aside contract obligations that they received in FY 2017. (See
Appendix II for a schedule of our questioned costs.) Additionally, the indications of ineligibility
within the Agency’s files may present an obstacle to pursuing potential fraud cases against certain
ineligible parties.
OCE Did Not Perform Continuing Eligibility Reviews for Most High Risk Firms
OCE did not review most of the firms that it identified as high risk in FYs 2016 and 2017. For
FY 2016, OCE identified 859 of the 4,692 firms in the 8(a) program, or approximately 18 percent, as
high risk. Despite requirements to perform continuing eligibility reviews of all high risk firms, OCE
reported that it completed reviews for 352 of the identified high risk firms, or approximately 41
percent. 8 Similarly, for FY 2017, OCE identified 798 of the 5,028 firms in the program, or
approximately 16 percent, as high risk. OCE BOSs reviewed 350 firms, or approximately 44 percent,
of the identified high risk firms.
OCE program officials attributed the difficulties of conducting continuing eligibility reviews to
challenges in obtaining documents from the district offices and to a ransomware data loss incident
in May 2016. However, OCE program officials did not contact OFO officials to request assistance
regarding the difficulties they experienced obtaining documents from district offices. The 8(a) SOP
states that district offices upload documents from high risk firms into a GCBD shared drive. In
practice, firms’ lengthy hard copy documents require significant time for BOSs to scan, and OCE
requires 3 years of documents to assess some areas of continuing eligibility. In March 2018, SBA
officials implemented a new web-based portal to accept firms’ annual review submissions, which
they anticipated will streamline access to documents needed to assess continuing eligibility.
Additionally, OCE did not identify 5 of the 15 firms in our sample as high risk in FY 2016 or
FY 2017, although these 5 met the high risk criteria for both years. Specifically, OCE did not
consistently identify firms with joint venture agreements because district offices approved these
agreements but did not consistently forward this information to OCE. Further, the lists of high risk
firms prepared by OCE did not consistently include all firms with total 8(a) set-aside contract
dollars over $10 million.
OCE and District Office Reviews Did Not Consistently Identify Indications of Ineligibility
We found that OCE did not identify that 4 of the 15 firms in our sample were ineligible for the
8(a) program. OCE was responsible for conducting continuing eligibility reviews for these firms,
given their high risk status. However, OCE did not conduct continuing eligibility reviews for these
8 SOP 80 05 5, Office of Business Development, effective September 23, 2016.
4
four ineligible firms because it failed to identify one of them as high risk and did not receive
documents from the district offices needed to conduct continuing eligibility reviews for the other
three. While the district offices conducted annual reviews that included examining continuing
eligibility for the four firms, they did not detect any areas of ineligibility based on the documents
submitted by the firms.
Three of these firms had indicators of ineligibility in annual review documents that the firms
submitted to SBA. District office BOSs did not consistently detect indications of ineligibility present
in financial statements or tax returns. While we found information highlighting areas of ineligibility
in financial statements or tax returns submitted by the firms, the firms sometimes omitted this
information on SBA summary forms, such as SBA Form 413 Personal Financial Statements listing
income and assets. Additionally, reviewers did not always detect discrepancies in firms’ documents
regarding executives’ titles or compensation, which indicate concerns regarding who controls the
firms.
This occurred because the 8(a) SOP did not include a process for district offices to evaluate
continuing eligibility for firms not identified as high risk, and SBA did not have any other guidance
regarding the continuing eligibility portions of annual reviews. Further, the 8(a) SOP did not
provide guidance on financial calculations to determine continued eligibility for all firms. Although
the 8(a) SOP contains guidance on calculating adjusted personal gross income for initial eligibility,
it does not explain whether distributions from the firm should be included in SBA’s calculations of
adjusted personal gross income, particularly because distributions are not necessarily reported as
income under the Internal Revenue Service rules. The SOP also does not clarify how the finances of
an owner’s spouse should be considered when the owner’s spouse has a role in the business.
Further, district offices used different annual review forms to assess continuing eligibility, and
some of them did not include all of the continuing eligibility requirements. For example, one office’s
forms did not include average adjusted gross income. Although 9 out of 11 district offices in our
sample used different annual review forms, all district offices in our sample used the Risk
Management Association (RMA) Financial Calculator to assess economic disadvantage measures.
However, this financial calculator does not correspond with 8(a) regulatory requirements
regarding calculating adjusted gross income, personal net worth, and excessive withdrawals.
Overall, OCE was not involved in district offices’ efforts to assess continuing eligibility although the
Act identifies OCE as responsible for reviewing 8(a) continuing eligibility. OCE did not examine
district offices’ reviews of continuing eligibility unless there was a recommendation for adverse
action. OCE and district offices’ functions related to continuing eligibility were duplicative, without
adequate coordination between the two groups. Consequently, district offices had insufficient
guidance and tools to assess continuing eligibility, while OCE did not have documents and
information from district offices needed to assess continuing eligibility.
Recommendations
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to:
1. Coordinate with the Associate Administrator for the Office of Field Operations to improve
the transfer of continuing eligibility review documents for high risk firms from the district
offices to the Office of Certification and Eligibility.
5
2. Revise its current process to ensure that it accurately identifies all high risk firms to receive
continuing eligibility reviews from the Office of Certification and Eligibility.
3. Establish and implement clear policies and procedures for evaluating 8(a) continuing
eligibility, including ensuring that district offices use standardized analysis tools that
conform with 8(a) continuing eligibility requirements found in 13 CFR 124, and train
employees on these procedures.
4. Develop and implement a comprehensive oversight plan to ensure completion of continuing
eligibility reviews of all 8(a) firms, monitor the quality of continuing eligibility reviews, and
eliminate duplication between the Office of Certification and Eligibility and the district
offices.
5. Conduct continuing eligibility reviews for the firms that we identified as ineligible that are
still active in the 8(a) program, and take timely action to remove firms found to be
ineligible.
6
Finding 2: SBA Did Not Remove Ineligible Firms in a Timely Manner
From the 8(a) Program
Although SBA previously identified eligibility concerns as part of its annual reviews and/or
continuing eligibility reviews for 6 of the 15 firms we reviewed, it did not remove those firms or
document resolution of eligibility issues. This occurred because SBA had not established effective
internal controls to manage and guide the removal of ineligible 8(a) firms. As a result, we
questioned $47.8 million in new 8(a) contract obligations that these six ineligible firms received in
FY 2017. (See Appendix II for a schedule of our questioned costs.) Allowing ineligible firms to
remain in the 8(a) program undermines program integrity and diverts 8(a) contract opportunities
and business development assistance away from eligible firms.
Requirements to Remove Ineligible Firms
SBA’s 8(a) regulations state that the Agency may terminate a firm’s participation in the 8(a)
program for good cause, including the firm’s failure to maintain its 8(a) eligibility and submission of
false information to SBA. 9 The regulations also state that SBA may graduate a firm prior to the end
of its program term if it achieved its targets, objectives, and goals in its business plan; one or more
disadvantaged owners is no longer economically disadvantaged; or excessive funds have been
withdrawn from the firm. 10
Additionally, the 8(a) regulations state that SBA will send a Notice of Intent to Terminate or
Graduate Early to those firms it believes should be terminated or graduated early. Firms then have
30 calendar days to respond. 11 Ultimately, the Associate Administrator for Business Development
decides whether to remove the firms and communicates this decision to the firms in writing. 12
Firms Identified as Ineligible Not Removed
SBA had identified eligibility concerns through its annual reviews and/or continuing eligibility
reviews for 6 of the 15 firms we reviewed. However, SBA did not take timely action to remove these
firms from the 8(a) program or document resolution of eligibility issues. Of the six firms, SBA sent
Notices of Intent to Terminate or Graduate Early to four and did not document why it did not
initiate the process to remove the other two. The three firms that responded to the notices
provided insufficient information to resolve the eligibility concerns; however, SBA did not remove
those firms. For example, one of the three firms that responded did not address all issues cited in a
May 2016 Notice of Intent to Early Graduate, and SBA did not pursue early graduation.
Subsequently, in March 2017, SBA again found that the firm was ineligible and sent a Notice of
Intent to Terminate. Ultimately, the firm voluntarily withdrew in April 2017, 8 months before its
scheduled graduation date. The other five firms with identified eligibility concerns, including the
one firm that did not respond to the notice, either remained in the program or completed their
normal program term.
Further illustrating this reoccurring problem, in FY 2014, a district office’s annual review found
that a firm’s disadvantaged owner’s withdrawals and income exceeded 8(a) limits. However,
district office personnel did not take action to remove the firm from the 8(a) program, and did not
9 13 CFR 124.303.
10 13 CFR 124.302 (a) and (d).
11 13 CFR 124.304 (b) and (c).
12 SOP 80 05 5, Office of Business Development, effective September 23, 2016.
7
document whether the firm had resolved the concerns. Subsequently, in July 2017, as part of the
firm’s continuing eligibility review, OCE found the same issues with excessive withdrawals and
excessive income. Although SBA had first identified eligibility concerns in FY 2014, it did not issue a
Notice of Intent to Graduate Early to the firm until October 1, 2017. Ultimately, the firm did not exit
the 8(a) program until its scheduled graduation date on January 15, 2018. This firm received
$12.8 million in 8(a) contract obligations in FY 2017, diverting these 8(a) contract opportunities
from eligible firms.
Internal Control Deficiencies Permit Ineligible Firms to Remain in the 8(a) Program
We found internal control deficiencies that permitted firms to remain in the program after SBA
found them to be ineligible. Specifically, SBA did not have an adequate system to track the removal
of firms or the resolution of eligibility issues once district offices or OCE recommended removing
firms. While OCE has a tracking spreadsheet, it does not capture all recommendations from district
offices to remove firms. In addition, the 8(a) SOP does not include timelines for OCE or district
offices to send Notices of Intent to Terminate or to Graduate Early to firms after identifying an
eligibility issue.
Recommendations
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to:
6. Develop and implement a centralized process to track and document all adverse actions and
voluntary withdrawals from the 8(a) program, from recommendation through resolution.
7. Establish and implement clear policies and procedures that include timelines for sending
Notices of Intent to Terminate and to Graduate Early firms after eligibility issues are first
identified.
8. Conduct continuing eligibility reviews for the firms we identified as ineligible that are still
active in the 8(a) program, and take timely action to remove firms found to be ineligible.
8
Finding 3: SBA Did Not Investigate or Log All Complaints Regarding
8(a) Firms’ Eligibility
SBA did not conduct continuing eligibility reviews or log all complaints referred by the OIG Hotline
regarding 8(a) firms’ eligibility. 13 Our review of the 10 firms referred by the OIG Hotline revealed
that they were all ineligible for the 8(a) program, based on issues such as excessive income and lack
of good character. This occurred because SBA’s 8(a) SOP was not consistent with SBA’s
8(a) regulations’ requirement to conduct continuing eligibility reviews upon receipt of specific and
credible information regarding the eligibility of 8(a) firms. Furthermore, the SOP did not provide
guidance on logging, tracking, and disposition that should be completed to adequately address
complaints. We found that the 10 firms we reviewed from OIG Hotline complaints were ineligible
for the 8(a) program. As a result, we question $32.5 million in new 8(a) set-aside contract
obligations that these 10 ineligible firms received in FY 2017. (See Appendix II for a schedule of our
questioned costs.)
Requirements to Conduct Reviews in Response to Complaints
The 8(a) regulations state that upon receipt of specific and credible information alleging that a
participant no longer meets the eligibility requirements for continued program eligibility, SBA will
review the concern’s eligibility for continued participation in the program. 14 Similarly, SBA’s 8(a)
program SOP states that a district office BOS or OCE BOS can initiate a continuing eligibility review
upon receipt of specific and credible information alleging that a participant no longer meets the
8(a) program eligibility requirements or when anything else raises a question regarding a
participant’s eligibility.
SBA Did Not Address Complaints
During our audit, we found that SBA did not conduct continuing eligibility reviews for any of the
OIG Hotline complaints that were referred to GCBD. 15 Of the 44 complaints logged by GCBD from
October 7, 2015, through May 4, 2017, GCBD closed 42 based on “no merit,” labeled 1 as “in
progress,” and incorrectly described 1 as “under OIG investigation.” 16 Even though 8(a) regulations
require a review upon receipt of specific and credible information regarding a firm’s eligibility, the
SBA official responsible for reviewing and addressing OIG Hotline referrals reported that GCBD did
not conduct continuing eligibility reviews based on OIG Hotline complaints. The official mistakenly
stated that additional reviews were not within 8(a) regulations. In addition, GCBD did not inform
district office BOSs of complaints filed against firms within their purview, and therefore district
office BOSs took no action regarding the complaints.
We selected 10 OIG Hotline complaints with specific and credible information regarding the firms’
eligibility that OIG referred to GCBD for their review, and we found that GCBD did not conduct any
continuing eligibility reviews based on the complaints. We found information, using the firms’
annual review documents and third-party sources, that validated 9 of the 10 specific continuing
eligibility issue(s) alleged in the complaints and found additional eligibility concerns. For the
13 OIG’s Hotline frequently refers complaints to SBA program officials for review and any regulatory action SBA may deem
necessary. If program officials identify indications of fraud, they are directed to refer such matters back to OIG.
14 13 CFR 124.112(c).
15 The majority of the complaints referred to GCBD from October 7, 2015, through May 4, 2017 included specific and
credible information regarding the firms’ eligibility.
16 GCBD indicated that the final complaint was being investigated by SBA OIG; however, the Investigations Division of SBA
OIG reported that the firm was not under investigation.
9
remaining complaint, though we did not validate the specific allegation, we found other eligibility
concerns for the firm.
For example, on August 24, 2015, and February 23, 2016, GCBD received two complaints from the
OIG Hotline about a particular 8(a) participant. The complaints alleged that the participant’s owner
exceeded the 8(a) program limits for net worth (less than $750,000), gross income (less than
$350,000 averaged over the three preceding years) and total assets (less than $6 million). We found
that the participant’s owner exceeded the 8(a) program limits for net worth (the owner’s net worth
was at least $906,449), gross income, and total assets (the owner’s business equity alone, without
the inclusion of any other asset, was over $6 million). Besides confirming the allegations in the
complaint, we also found that the owner vastly exceeded the withdrawal limit of $400,000 (the
owner withdrew $1,144,618 in FY 2016) and that the firm exceeded the industry size standard each
year beginning in 2012. Based on this information, which was available in the firm’s annual review
documents, SBA should have begun termination proceedings before the complaints were made.
From the date that SBA received the first complaint the firm was awarded a total of $26.1 million in
8(a) set-aside contracts.
Table 1. Sampled Firms’ Continuing Eligibility Issues
Hotline Complaint Allegations Firm
A B C D E F G H I J
Size x x x
Ownership x
Control x
Economic Disadvantage x x
Good Character x x x x x
Other 8(a) Requirement x x x x x x x
Potential Size x x x x
Continuing Ownership x x
Eligibility Control x x x
Issues Economic Disadvantage x x x x x x
Found Good Character (including false
x x x x x x x x x x
statements to SBA)
Other 8(a) Requirement x x x x x x x x
Source: Generated by OIG based on audit analysis of 8(a) records and third-party sources.
SBA’s SOP Does Not Mandate the Required Review of Complaints
Despite the requirement that SBA complete a continuing eligibility review upon receipt of specific
and credible information that a participant is no longer eligible for the 8(a) program, SBA did not
conduct continuing eligibility reviews for OIG Hotline complaints that included specific and credible
information. Although SBA’s 8(a) program SOP allows for a continuing eligibility review in these
cases, the SOP does not require a continuing eligibility review, in conflict with the regulatory
mandate. Further, the SOP does not provide guidance, including timelines and communication with
district offices, on the tracking, action, and disposition that must be completed to adequately
address complaints.
SBA Did Not Log All Complaints
Additionally, we found that GCBD did not log all of the OIG Hotline complaints that were referred
for action. Of the 77 complaints that OIG Hotline sent to GCBD between October 7, 2015, and May 4,
10
2017, GCBD only logged 44, or 57 percent, of the complaints received. GCBD’s method for logging
complaints, namely an Excel spreadsheet developed, maintained, and reviewed by one person, was
inadequate to ensure that all complaints were acknowledged and entered into the tracking sheet.
Recommendations
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to:
9. Establish and implement clear policies and detailed procedures, consistent with 13 CFR
124.112(c), to timely and effectively review and address complaints regarding 8(a)
continuing eligibility, including communicating the content of the complaint to the district
office, and train employees implementing the 8(a) program on the updated procedures.
10. Develop a robust system for tracking complaints that are received regarding firms’
continuing eligibility for the 8(a) program, and tracking the actions taken to address the
complaints.
11. Conduct continuing eligibility reviews, including assessing the allegations in the 77 OIG
Hotline complaints, for the firms that were the subject of the complaints that are still active
in the 8(a) program, and for which the complainant provided specific and credible
information, and, if necessary, take appropriate action to remove ineligible firms from the
8(a) program.
Analysis of Agency Response
SBA management provided formal comments, which are included in their entirety in Appendix III.
SBA management concurred with recommendations 2, 3, 6, 7, 9, 10, and 11, and partially concurred
with recommendations 1, 4, 5, and 8. Management’s proposed corrective actions for five of the
recommendations were responsive; however, their proposed corrective actions for the remaining
six recommendations did not fully address the recommendations. In accordance with our audit
follow-up policy, we will attempt to reach agreement with SBA management on the unresolved
recommendations within 60 days after the date of this final report. If we do not reach agreement,
OIG will notify the audit follow-up official of the disputed issues.
Summary of Actions Necessary to Resolve and Close Recommendations
The following provides a status of the recommendations and the actions necessary to resolve and
close them.
1. Unresolved. SBA management partially concurred with this recommendation but did not
explain why it did not fully concur. Management stated that it will continue coordinating
and implementing Certify.SBA.gov as a single portal to transfer documents needed for
continuing eligibility reviews. Management asserted that it began implementing this
procedure in June 2018 and requested that this recommendation be closed. However,
management did not provide any documentation to demonstrate that it had initiated this
procedure or a date specifying when it would be fully implemented. This recommendation
can be closed when management provides evidence that it has implemented corrective
actions to improve the transfer of documents for continuing eligibility reviews for high risk
firms from the district offices to the Office of Certification and Eligibility.
11
2. Unresolved. SBA management concurred with this recommendation and stated that at the
beginning of each fiscal year, OCE will develop a list of high risk firms, including firms with
8(a) mentor-protégé agreements, joint ventures, or high contract dollars. Management
plans to complete final action on this recommendation by March 31, 2019. However,
management did not state how OCE will change the current process of identifying high risk
firms to address deficiencies noted in this audit report. This recommendation can be closed
when management demonstrates that it has implemented a revised process to accurately
identify all high risk firms, in accordance with its SOP definition, to receive OCE continuing
eligibility reviews.
3. Unresolved. SBA management concurred with this recommendation and stated that it is
working with OFO to develop standardized analysis tools and that OFO was leading the
implementation effort to train district office employees. Management plans to complete
final action on this recommendation by September 30, 2019. Management’s response did
not address parts of the recommendation pertaining to clear policies and procedures. This
recommendation can be closed when management provides evidence that it has
implemented clear policies and procedures for evaluating continuing eligibility, including
standardized analysis tools for district offices that conform to regulatory continuing
eligibility requirements, and training on these procedures for employees.
4. Unresolved. SBA management partially concurred with this recommendation but did not
explain why it did not fully concur. Management plans to provide OFO with a list of high risk
firms that will receive continuing eligibility reviews, and OCE and OFO will review their
respective SOPs to identify and eliminate any duplication of effort. Management plans to
complete final action on this recommendation by September 30, 2019. Management’s
response did not address parts of the recommendation pertaining to a comprehensive
oversight plan to ensure completion of continuing eligibility for all 8(a) firms and
monitoring the quality of continuing eligibility reviews. This recommendation can be closed
when management provides evidence that it has implemented a comprehensive oversight
plan to ensure completion of continuing eligibility reviews of all 8(a) firms, monitor the
quality of continuing eligibility reviews, and eliminate duplication.
5. Resolved. SBA management partially concurred with this recommendation but did not
explain why it did not fully concur. Management plans to conduct continuing eligibility
reviews for the firms that OIG identified as ineligible and to take action if it finds any
ineligible firms. Management plans to complete final action on this recommendation by
September 30, 2019. Management’s planned actions are responsive and sufficient to resolve
this recommendation. This recommendation can be closed when management provides
evidence that it has conducted continuing eligibility reviews for the firms we identified as
ineligible that are still active in the 8(a) program, takes timely action to remove any firms
found to be ineligible, and provides a determination of whether questioned costs should be
disallowed for the firms that it reviewed.
6. Resolved. SBA management concurred with this recommendation and stated that
Certify.SBA.gov will include a module to capture adverse actions and voluntary
withdrawals. Management plans to complete final action on this recommendation by
September 30, 2019. This recommendation can be closed when management provides
evidence that it fully implemented the Certify.SBA.gov module to track and document all
adverse actions and voluntary withdrawals.
12
7. Unresolved. SBA management concurred with this recommendation and stated that it will
establish and implement internal goals beginning with receipt from the OFO or district
offices. Management plans to complete final action on this recommendation by
September 30, 2019. However, management did not address establishing clear policies and
procedures to address the issues identified. This recommendation can be closed when
management provides evidence that it has implemented clear policies and procedures that
include timelines for sending Notices of Intent to Terminate and to Graduate Early to firms
after eligibility issues are first identified.
8. Resolved. SBA management partially concurred with this recommendation but did not
explain why it did not fully concur. Management plans to conduct continuing eligibility
reviews for the firms that OIG identified as ineligible and to take action if it finds any
ineligible firms. Management plans to complete final action on this recommendation by
September 30, 2019. Management’s planned actions are responsive and sufficient to resolve
this recommendation. This recommendation can be closed when management provides
evidence that it has conducted continuing eligibility reviews for the firms we identified as
ineligible that are still active in the 8(a) program, takes timely action to remove any firms
found to be ineligible, and provides a determination of whether questioned costs should be
disallowed for the firms that it reviewed.
9. Unresolved. SBA management concurred with this recommendation and stated that it will
develop a chapter in the 8(a) SOP on processing complaints about 8(a) continuing eligibility.
Management plans to complete final action on this recommendation by September 30,
2019. Management’s response did not address training employees on the updated
procedure. This recommendation can be closed when management provides evidence that
it has implemented clear policies and detailed procedures to timely and effectively review
and address complaints, including communicating the complaints to the district office and
training employees on the updated procedures.
10. Resolved. SBA management concurred with this recommendation and stated that it will
develop and implement a system to effectively and efficiently track complaints received and
actions taken. Management plans to complete final action on this recommendation by
September 30, 2019. This recommendation can be closed when management provides
evidence that it has implemented this tracking system.
11. Resolved. SBA management partially concurred with this recommendation but did not
explain why it did not fully concur. Management plans to conduct continuing eligibility
reviews for the firms that OIG identified as ineligible and to take action if it finds any
ineligible firms. Management plans to complete final action on this recommendation by
September 30, 2019. Management’s planned actions are responsive and sufficient to resolve
this recommendation. This recommendation can be closed when management provides
evidence that it has conducted continuing eligibility reviews for the firms we identified as
ineligible that are still active in the 8(a) program, takes timely action to remove any firms
found to be ineligible, and provides a determination of whether questioned costs should be
disallowed for the firms that it reviewed.
13
Appendix I: Objective, Scope, and Methodology
This report presents the results of our audit of SBA’s oversight of the 8(a) continuing eligibility
processes. Our objective was to determine whether SBA’s oversight ensured 8(a) program
participants met continuing eligibility requirements.
To answer our objective, we reviewed the sections of the Small Business Act and Federal
regulations pertinent to the 8(a) program and pending changes to the regulations in the Federal
Register. In addition, we reviewed SBA’s SOP 80 05 5 for the 8(a) program. Further, we met with
GCBD officials to discuss the history, structure, and implementation of the 8(a) program and the
processes for determining continuing eligibility. Additionally, we obtained lists of all 8(a) program
participants, 8(a) firms identified as high risk requiring OCE continuing eligibility reviews,
continuing eligibility reviews completed by OCE in FY 2016 and FY 2017, and 8(a) firms with
approved joint ventures and/or mentor-protégé agreements. We also obtained source documents
related to annual and continuing eligibility reviews. Further, we interviewed OFO employees to
understand the district level involvement with annual and continuing eligibility reviews. Finally, we
obtained and analyzed all OIG Hotline complaints sent to SBA related to the 8(a) program and SBA’s
8(a) complaint tracking spreadsheet.
We selected and reviewed a judgmental sample of 15 individually owned 8(a) firms with the
highest 8(a) contract dollars in FY 2016, that were scheduled to have continuing eligibility reviews
within the first half of FY 2017. The firms we sampled were selected from the universe of 8(a) firms
with an active status in FY 2017. The 15 firms in this sample received $461 million in 8(a) set-aside
contract obligations, or 3.96 percent of the $11.6 billion in 8(a) set-aside contract obligations
awarded to individually owned firms in FY 2016 according to data in the Federal Procurement Data
System-Next Generation. The $461 million that firms in our sample received in 8(a) set-aside
obligations in FY 2016 is 2.71 percent of the $17 billion in total 8(a) set-aside obligations in
FY 2016. We determined whether OCE completed continuing eligibility reviews in FY 2016 and
FY 2017 for the sample firms. We used a data collection tool, developed by the audit team, to assess
the continuing eligibility portion of the firm’s annual and continuing eligibility review. We reviewed
documents from these reviews and information in the Business Development Management
Information System and the Electronic 8(a) Review System for indications of ineligibility and
determined whether any indications of ineligibility resulted in a recommendation for adverse
action or a request for additional information which resolved the issue.
Additionally, we selected and reviewed a judgmental sample of 10 OIG Hotline complaints, with
specific and credible information regarding firms’ eligibility, sent to GCBD from October 1,
2015, through May 4, 2017. We compared the universe of complaints provided by SBA OIG Hotline
to the SBA complaint log to determine if GCBD was aware of all Hotline complaints that were
referred. Additionally, for our sample, we determined if GCBD conducted a continuing eligibility
review in response to the complaint. Finally, we used third-party sources to obtain information that
supported or refuted the allegations in the complaint.
We conducted this performance audit 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 objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.
14
Use of Computer-Processed Data
We relied on computer-processed data from GCBD’s 8(a) program information systems.
Specifically, we used data from the Business Development Management Information System and the
Electronic 8(a) Review System that included information about 8(a) firms’ eligibility. We compared
the information received from these sources to supporting documentation obtained from GCBD
officials and district offices and to information from CLEAR to assess data accuracy. 17 We believe
the information was reliable for the purposes of this audit. We also used data obtained from the
Federal Procurement Data System-Next Generation to select our sample and to calculate set-aside
contracts received by 8(a) participants. This was the best source of information on Federal
contracting, so for the purposes of our review, we deemed it sufficient.
Review of Internal Controls
SBA’s internal control systems SOP provides guidance on implementing and maintaining effective
internal control systems, as required by OMB Circular A-123. 18 OMB Circular A-123 provides
guidance to Federal managers on improving the accountability and effectiveness of Federal
programs and operations by establishing, assessing, correcting, and reporting on internal
controls. 19
We assessed the control environment in which SBA conducted annual and continuing eligibility
reviews as well as the control environment in which SBA tracked and evaluated public complaints
regarding the 8(a) program. We also interviewed SBA officials with the responsibility for 8(a)
program oversight, reviewed guidelines for conducting continuing eligibility and annual reviews,
reviewed information in SBA databases, and reviewed public complaints regarding 8(a) program
eligibility. We found weaknesses in SBA’s effectiveness and efficiency in assessing continuing
eligibility. Additionally, we found that SBA did not comply with regulations and SOPs related to
continuing eligibility reviews. Cumulatively, the weaknesses we identified diminished SBA’s ability
to effectively oversee 8(a) continuing eligibility. We made recommendations in this report to
address these deficiencies.
17 Thomson Reuters CLEAR is a collection of public and proprietary records related to people, businesses, assets and
affiliations.
18 SOP 00 02, Internal Control Systems (January 1986).
19 OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control (July 15,
2016).
15
Appendix II: Questioned Costs
Table 2. OIG Schedule of Questioned Costs for the 8(a) Program 20
Description Amount Explanation
Ineligible Costs $46,552,779 The Office of Certification and
Eligibility did not remove ineligible
firms from the 8(a) program.
Ineligible Costs $47,827,454 The Office of Certification and
Eligibility did not remove firms from
the 8(a) program that it identified as
having eligibility concerns through
8(a) annual or continuing eligibility
reviews.
Ineligible Costs $32,467,934 The Office of Certification and
Eligibility did not remove ineligible
firms from the 8(a) program
following specific and credible
Hotline complaints.
Total Questioned Costs $126,848,167
Source: Generated by OIG based on OIG’s analysis of 8(a) participants’ new 8(a) set-aside contract obligations in FY 2017.
20 Questioned costs are expenditures that are not supported by adequate documentation at the time of the audit or
otherwise do not comply with legal, regulatory, or contractual requirements.
16
Appendix III: Agency Comments
SBA
ASSOCIATE ADMINISTRATOR,
OFFICE OF GOVERNMENT CONTRACTING AND
BUSINESS DEVELOPMENT
RESPONSE TO AUDIT REPORT
17
DATE: August 24, 2018
TO: Hannibal M. Ware, Inspector General
Office of Inspector General (OIG)
FROM: Robb Wong, Associate Administrator
Office of Government Contracting & Business Development (GCBD)
Subject: OIG Project Number: 17002 “Improvements Needed in SBA’s Oversight of 8(a)
Continuing Eligibility Processes”
I appreciate the opportunity to respond to your draft report of July 9, 2018, on the subject noted
above. We take each recommendation seriously, and understand the importance of the work you do
to support risk mitigation for the Agency.
SBA Responses to OIG’s Recommendations
OIG Recommendation 1:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Coordinate with the Associate Administrator for the Office
of Field Operations to improve the transfer of continuing eligibility review documents for high risk
firms from the district offices to the Office of Certification and Eligibility.
GCBD’s Response to Recommendation 1:
BD concurs, in part, with this recommendation. The AA for BD will continue coordinating the
implementation of Certify.gov as the single portal for document transfer of Annual Review documents
required to conduct continuing eligibility reviews from District Offices (DO). BD began implementing
this procedure in June of 2018. GCBD is requesting closure of this recommendation.
Recommendation 2:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Revise its current process to ensure that it accurately
identifies all high risk firms to receive continuing eligibility reviews from the Office of Certification and
Eligibility.
1
GCBD’s Response to Recommendation 2:
BD concurs with this recommendation. At the beginning of each FY, OCE will develop a listing of high
risk firms, i.e., those firms having received a contract in excess of $10M; those firms having an
approved 8(a) MPP agreement and having formed a JV and having received a contract, to be vetted
through OFO.
OIG Recommendation 3:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Establish and implement clear policies and procedures for
evaluating 8(a) continuing eligibility, including ensuring that district offices use standardized analysis
tools that conform with 8(a) continuing eligibility requirements found in 13 CFR 124, and train
employees on these procedures.
GCBD’s Response to Recommendation 3:
BD concurs with this recommendation. BD is collaborating with OFO to develop standardized analysis
tools that conform with 8(a) continuing eligibility requirements found in 13 CFR 124. OFO is leading
the implementation effort to train DO employees.
OIG Recommendation 4:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Develop and implement a comprehensive oversight plan
to ensure completion of continuing eligibility reviews of all 8(a) firms, monitor the quality of
continuing eligibility reviews, and eliminate duplication between the Office of Certification and
Eligibility and the district offices.
GCBD’s Response to Recommendation 4:
BD partially concurs with this recommendation. BD will identify and provide, to OFO, a listing of
continuing eligibility reviews to be conducted on high risk firms, as identified by BD and will obtain
OFO concurrence. OCE will review its current SOP and will request OFO/DO to review their SOPs to
identify and eliminate any duplication of efforts.
OIG Recommendation 5:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Conduct continuing eligibility reviews for the firms that
we identified as ineligible that are still active in the 8(a) program, and take timely action to remove
firms found to be ineligible.
GCBD’s Response to Recommendation 5:
BD partially concurs with this recommendation. BD will conduct CE reviews of the firms identified as
ineligible by OIG. If BD then determines any one of the firms identified as ineligible by OIG, BD will
take the appropriate course of action.
2
OIG Recommendation 6:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Develop and implement a centralized process to track and
document all adverse actions and voluntary withdrawals from the 8(a) program, from
recommendation through resolution.
GCBD’s Response to Recommendation 6:
BD concurs with this recommendation. Currently, BD is utilizing an ad-hoc excel spreadsheet to
capture and track all adverse actions and voluntary withdrawals. However, Certify.gov is developing
a module to capture adverse actions and voluntary withdrawals in FY 19.
OIG Recommendation 7:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Establish and implement clear policies and procedures
that include timelines for sending Notices of Intent to Terminate and to Graduate Early firms after
eligibility issues are first identified.
GCBD’s Response to Recommendation 7:
BD concurs with this recommendation. BD will establish and implement internal goals beginning with
receipt from the OFO/DO.
OIG Recommendation 8:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Conduct continuing eligibility reviews for the firms we
identified as ineligible that are still active in the 8(a) program, and take timely action to remove firms
found to be ineligible.
GCBD’s Response to Recommendation 8:
BD partially concurs with this recommendation. BD will conduct CE reviews of the firms identified as
ineligible by OIG. If BD then determines any one of the firms identified as ineligible by OIG, BD will
take the appropriate course of action.
OIG Recommendation 9:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Establish and implement clear policies and detailed
procedures, consistent with 13 CFR 124.112(c), to timely and effectively review and address
complaints regarding 8(a) continuing eligibility, including communicating the content of the
complaint to the district office, and train employees implementing the 8(a) program on the updated
procedures.
3
GCBD’s Response to Recommendation :
BD concurs with this recommendation. BD will develop a chapter, to be included in its 8(a) Program
SOP, to specifically state how complaints regarding 8(a) continuing eligibility will be processed.
OIG Recommendation 10:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Develop a robust system for tracking complaints that are
received regarding firms’ continuing eligibility for the 8(a) program, and tracking the actions taken to
address the complaints.
GCBD’s Response to Recommendation :
BD concurs with this recommendation. BD will develop and implement a system to efficiently and
effectively track received complaints and actions taken.
OIG Recommendation 11:
We recommend that the Administrator require the Associate Administrator for Government
Contracting and Business Development to: Conduct continuing eligibility reviews, including assessing
the allegations in the 77 OIG Hotline complaints, for the firms that were the subject of the complaints
that are still active in the 8(a) program, and for which the complainant provided specific and credible
information, and, if necessary, take appropriate action to remove ineligible firms from the 8(a)
program.
GCBD’s Response to Recommendation :
BD concurs with this recommendation. BD will obtain the 77 OIG Hotline complaints from the IG and
identify those that are current in the 8(a) program, determine if the complaint had specificity. Those
complaints having specificity will be subject to a continuing eligibility review and based upon BD’s
finding, appropriate course of action will be taken.
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