SBA watchdog warns of IT security risks, poor data in contracting goals

The Small Business Administration (SBA) has made solid headway in addressing most of its 10 major management and performance challenges, but took a step backward on information technology security, its inspector general reported.

SBA - IGSBA also falls short in verifying data and toughening enforcement to curb the number of large companies that improperly win contracts intended for small businesses, according to a report and score card released Oct. 15.

Noting that recent governmentwide security breaches have “heightened the importance of continuously monitoring networks and software applications,” the IG and an external auditor identified IT security “weaknesses when on-boarding and separating SBA personnel,” the report said. The agency lost ground over the past year in implementing such recommendations as reporting IT security weaknesses, segregating duty controls and assuring that “access controls are in place and operating effectively, and contractors are not granted system access until they have obtained the required background investigations and/or security clearances.”

On the SBA-led governmentwide effort to award 23 percent of all prime contracts to qualified small businesses, the score card provides ammunition to outside critics who argue that too many large firms are siphoning off contract set-asides.

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SBA rule authorizes sole source awards to WOSBs and EDWOSBs

The Small Business Administration (SBA) published a rule today (Sept. 14, 2015) allowing sole source awards to Women-Owned Small Businesses (WOSBs) or Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) in appropriate circumstances.


SBA sealThe new rule changes existing SBA regulations in order to conform to section 825 of the FY15 National Defense Authorization Act (NDAA).

The rule is effective October 14, 2015.  The Federal Acquisition Regulations (FAR) will need to be amended to include the sole source authority so that there is no conflict between the SBA’s rules and the FAR.

The sole source authority can only be used where a contracting officer (CO) conducts market research in an industry where a WOSB or EDWOSB set-aside is authorized, and the CO cannot identify two or more WOSBs or EDWOSBs that can perform at a fair and reasonable price, but identifies one WOSB or EDWOSB that can perform. In addition, the sole source authority for WOSBs and EDWOSBs is limited to contracts valued at $6.5 million or less for manufacturing contracts and $4 million or less for all other contracts.

The rule is published in the Federal Register at:



IG finds both agency implementation and SBA oversight of WOSB program to be flawed

Federal agencies’ contracting officers are awarding set-aside contracts without meeting the set-aside requirements associated with the Small Business Administration’s Woman-Owned Small Business (WOSB) program.

This finding, among others, appears in a report issued on May 14, 2015 by the SBA’s Office of Inspector General (OIG).

SBA - IGThe OIG report states that as much as $7.1 million worth of contracts received by WOSBs in fiscal year (FY) 2014 may be improper.  For example, 10 of 34 WOSB set-aside awards were for ineligible work, and 9 of these 34 were awarded to firms that did not provide required documentation to prove they were eligible WOSBs.

In addition to the 9 WOSB awards that did not have any ownership or control documentation in the SBA’s WOSB Repository, the OIG identified 13 of 25 firms in their audit sample that uploaded only some — but not all — of the required documentation to the Repository, thus also bringing their program eligibility into question.

Additionally, 12 businesses did not provide sufficient documentation to prove that a woman or women controlled the day-to-day operations of their firms.  These firms, which received $8 million in contracts, also may be ineligible for their WOSB set-aside awards.

The OIG report is critical not only of agencies’ implementation of the federal WOSB program but also of SBA’s lax oversight.  Accordingly, OIG made five recommendations to the SBA’s Associate Administrator for Government Contracting and Business Development calling for improvements in how SBA manages and administers the WOSB program.

It should be noted that even before the OIG’s report, the SBA’s WOSB program already was slated to undergo some major programmatic changes based on the National Defense Authorization Act (NDAA) for both FY 2013 and 2015.  The NDAAs stipulated considerable increases SBA’s oversight responsibilities.  Specifically, the FY 2015 Act will: 1) grant contracting officers the authority to award sole-source awards to WOSB firms, 2) remove firms’ ability to self-certify, and 3) require firms to be certified.  The SBA is still determining how it will implement these mandated changes.

The OIG’s full report can be downloaded here: Improvements_Needed_in_SBAs_Management_of_WOSB_Program-OIG_Report_15-10

Advocacy group accuses SBA of misapplying law on small business set-asides

As it celebrates National Small Business Week, the Small Business Administration is facing renewed accusations that its efforts to reserve work for small contractors have been distorted by accounting tricks and misapplication of the law that permits large companies to win the awards.

Public Citizen, the nonprofit that pushes an anti-corporate view of trade, the environment, campaign finance and product regulation issues, released a report on Wednesday saying SBA “may be flouting the law,” perhaps for political reasons.

public citizenThe study of controversies over the SBA-coordinated program to help federal agencies meet the goal of 23 percent of purchases from small businesses draws on the work of the Petaluma, Calif.,-based American Small Business League, which has long battled SBA and the Defense Department over the definition of a small business. But the league, Government Executive has learned, does not think Public Citizen’s conclusions go far enough.

The SBA’s claims “that the government has met or nearly met a requirement to make 23 percent of its purchases from small businesses are misleading and rely on methodologies that conflict with federal law and regulations,” argued the report by Taylor Lincoln, research director for Public Citizen’s Congress Watch division.

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Commerce’s innovation exec seeks to hire entrepreneurs

The chief of innovation in the Commerce Department’s Economic Development Administration wants to bring more entrepreneurs into government, perhaps as two-year fellows, she said on Wednesday.

Commerce Dept.“There is lots of entrepreneurial thinking in government—it’s surprising,” Julie Lenzer Kirk, director of Commerce’s Office of Innovation and Entrepreneurship, told small business owners at a conference of the American Council for Technology-Industry Advisory Council. But she added that when she ran the state of Maryland’s Center for Entrepreneurship, “I would tell business people, ‘You’re my tribe.’ When I got to government, I’m still trying to fit into the tribe.”

The EDA’s role, Kirk said in a pep talk to small business contractors titled “It Takes a Village,” is not direct investment like the Small Business Administration, but helping build capacity through partnerships, grants, and tools that bring people together. “Making sure state and local officials understand that small businesses are the job creators is essential,” she added. It’s “connecting the dots” on a regional basis because “what works in Detroit is not what is needed in Atlanta.”

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