On March 17, 2004, the OIG issued Audit Report 4-16, Audit of SBA’s Administration of the Procurement Activities of Asset Sale Due Diligence Contracts and Task Orders. The objectives of the audit were to determine if (1) the SBA followed proper pre-award procurement methods, (2) the SBA awarded contracts and task orders in accordance with policies and procedures, (3) the SBA performed post award duties in accordance with policies and procedures, (4) the SBA responded to Freedom of Information Act (FOIA) requests in accordance with policies and procedures, (5) the SBA’s use of the GSA Federal Supply Schedule (FSS) was in the SBA’s best interest, and (6) an allegation presented in a complaint was supported. This audit was limited to a review of SBA’s asset sale due diligence contracts and task orders awarded from FY 1999 through FY 2002.
The OIG issued 10 findings and made 30 recommendations as a result of this audit. The findings included: (1) The SBA did not follow proper procurement practices which resulted in asset sale due diligence contracts and task orders that did not benefit small businesses; (2) Contractors did not receive impartial, fair, and equitable treatment; (3) Discussions were not held for due diligence contracts and task orders; (4) SBA’s acquisition planning and monitoring requires improvement; (5) the Office of Procurement and Grants Management did not always comply with procurement policies and procedures; (6) Due diligence contracts and task orders were not properly reported to the Federal Procurement Data System; (7) The SBA did not follow proper procedures for FOIA requests; (8) An effective SOP is outdated (OPGM has been using a draft SOP as standard procedures for over five years because the effective SOP is outdated, and “draft SOP 00 11 2 was issued for clearance in August 1998, however, it never completed the clearance process”); (9) Use of the Federal Supply Schedule to procure due diligence services was not in the SBA’s best interest (e.g., the SBA “was overcharged between $1,690,838 and $4,577,261”); and (10) a complaint about the SBA was unsupported.
The OIG made 30 recommendations, the most significant of which related to Finding 1, and proper procurement practices. For example, some of the recommendations that the OIG provided to the Associate Deputy Administrator for Management and Administration included: (1a) Revise current procedures to require offerors for 8(a) and small business set-aside contracts, and offerors for task orders to small business set-aside FSS contracts, to provide information in their proposals to clearly support the amount of personnel costs to be subcontracted; (1B) Ensure that the amount of subcontracting is reviewed and documented in the contract file for awards of 8(a) and small business set-aside contracts and task orders to small business set-aside FSS contracts; (1G) Require FSS contractors classified as small businesses to certify their size for FSS task orders exceeding $500,000 to ensure the contractors fit within applicable size standards; (1I) Ensure all sole source requirements of the FAR are complied with when only one contractor is solicited; and (IK) Revise SBA guidelines to clarify what type of labor should be considered in determining compliance with the 50 percent rule and how interpretations of the 50 percent rule requirements should be requested.
Additional recommendations were made regarding acquisition and planning, to include (4A) Develop and implement planning procedures in accordance with FAR Part 7, and issue a procedural notice to ensure SBA program officials are aware of procurement planning requirements.
Likewise, further recommendations relating to Finding 6 included (6A) that the SBA determine the proper nature of funds in all future SBA asset sale contracts and task orders before issuing a solicitation for contracts and task orders; (6B) the SBA ensure that appropriate SBA officials are aware that the proceeds from SBA’s asset sales are appropriated funds and should be treated in accordance with rules and regulations applicable to appropriated funds; and (6D) that the Associate Deputy Administrator for Government Contracting and Business Development notify the Office of Federal Procurement Policy of the deficiency discussed above and recommend that periodic quality assurance reviews be conducted by GSA to ensure the accuracy and reliability of FPDS data.
With regard to Finding 8, An Effective SOP is outdated, the OIG made the following recommendation: (8A) that the Associate Deputy Administrator for Management and Administration issue draft SOP 0011 2 as soon as possible, incorporate policies to address the outstanding items described above within six months of the issuance of this report, and ensure future directives are cleared and issued within a reasonable timeframe.