Today, the Committee will examine the management and operations of SBA’s Office of Government Contracting and Business Development. The main purpose of this office- commonly known as GCBD- is to maximize small business participation in government contracting. We know that when a small business is awarded a federal contract, it spurs economic development and job growth in our communities.
One of the ways in which the SBA assists small firms is by ensuring that a fair share of Federal contracts and subcontracts are awarded to small firms. In 1953, when Congress authorized the SBA, it expressly recognized that doing so would advance competition, bring economic growth and allow the Federal Government to receive all the quality goods and services small firms have to offer.
To fulfill this mandate, the Small Business Act sets government-wide small business contracting goals and codifies a series of programs- like 8(a), HUBZone and WOSB- which provide contracting preferences based on socioeconomic categories. The proficient operation of these contracting programs is crucial for the achievement of the government-wide contracting goals.
Within SBA, GCBD is the umbrella office that oversees the Federal Government’s performance of these goals and administers the contracting programs. And so, today, our main objective is to discuss trends and administrative challenges within GCBD’s purview, especially in this era of economic uncertainty due to the COVID-19 pandemic.
Let me begin by saying, I have been concerned about the overall participation of small businesses in prime contracts, which has severely declined in the last decade. According to SBA’s scorecard, even though last year the Federal Government exceeded the goal of awarding 23 percent of all eligible prime contracting dollars to small businesses with a record high $132.9B, the small business base shrunk 9 percent in only one year. Clearly, this is not the direction we want to be trending towards.
Furthermore, the Federal Government failed yet again to meet the HUBZone set aside goal of 3 percent, with only 2.28 percent being awarded to these firms and the subcontracting goals for Small and Disadvantaged Businesses, SDVOSBs and HUBZones going unmet in FY 2019.
I am also concerned about the declining number of small businesses participating in the 8(a) program – the cornerstone of the contracting programs. In September 2019, there were only 4,450 firms participating in the 8(a) program, which is about one third less than the 7,000 companies that participated back in 2010. I would like to learn more of what GCBD is doing to increase participation, particularly now when this program could be a lifeline for many businesses who are in dire straits due to the pandemic.
Turning to the IT systems, which support the contracting programs, SBA spent 30 million dollars on certify.SBA.gov, a certification management IT system, as of last September. Yet, SBA’s Office of the Inspector General reported that SBA abandoned this system- which after 4 years of development still lacked critical capabilities- and plans to replace it with another IT platform. It is imperative to learn more about SBA’s strategy, the scope of this new IT system and the timelines and costs associated with it.
Another issue of concern is the WOSB formal certification process. It is my understanding that, while SBA already began intake of WOSB applications, decisions on certification applications will not be issued until October 15, 2020, the same day WOSB certifications will start being required governmentwide. Is SBA already reviewing applications and are there any challenges with these timelines or the IT systems that support the certification process?
Finally, we would like to know what SBA is doing to increase internal controls within programs, particularly within the All Small Mentor-Protégé Program and the HUBZone program.
With that, we look forward to hearing from the Associate Administrator of the Office of Government Contracting and Business Development, Dr. Francis Spampinato, regarding these matters, as well as ways in which we can work together to improve small business opportunities.
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