On September 30, 2000, the OIG issued Audit Report 0-30, Audit of SBA’s Administration of the MBELDEF Cosponsorship. The purpose of this audit was to determine whether the SBA properly managed its cosponsorship agreement with the Minority Business Enterprise Legal Defense and Education Fund, Inc. (the Fund) for its Small Disadvantaged Business (SDB) program introduction and outreach tour. The SDB program provides procurement benefits to small disadvantaged businesses bidding on Federal contracts by giving them up to a 10 percent price preference on their bids. While the SDB program was initially a self-certification program, the SBA began certifying SDBs in 1998. In September 1998, the SBA entered into a cosponsorship agreement with the Fund to conduct a nationwide tour to explain details of various programs, including the SBA certification process.
The OIG found that the SBA did not take appropriate actions both before and after signing the cosponsorship agreement, which committed the SBA to disburse up to $900,000 in government funds to the Fund. Specifically, the SBA: (1) entered into the cosponsorship without determining its authority to disburse government funds through cosponsorship agreements; (2) entered into the cosponsorship without ensuring adequate safeguards over the Government’s interests; (3) lacked controls to assure appropriated funds were properly spent; (4) failed to raise known significant problems with the Fund’s handling of the cosponsorship to the appropriate levels, and (5) failed to enforce the terms of the cosponsorship when reviewing the Fund’s claimed expenses. The OIG issued five findings with seven recommendations.