Audit Report 13-08: The SBA Mismanaged Certain 8(a) Information Technology Contracts

This is the final Office of Inspector General (OIG) report in a series of three audit reports related to information technology (IT) hardware and software contracts awarded by the Small Business Administration (SBA) to Isika Technologies, Inc. (iTechnologies).  The objective of this audit was to determine whether the SBA effectively managed IT contracts awarded to iTechnologies.  Specifically, the OIG determined whether the prime contractor and its subcontractor performed contract requirements in accordance with 8(a) program policies, guidance, and statutory requirements.  The OIG also determined whether the SBA’s contracting personnel administered IT contracts in accordance with federal and SBA policies, guidance, and statutory requirements. 

The OIG found that the SBA did not adequately manage IT hardware and software contracts awarded to iTechnologies.  Specifically, the OIG determined that:

• Contractor misrepresentations and contracting personnel’s lack of due diligence cause the SBA to inappropriately award and administer 8(a) contracts to iTechnologies.
• Contracting personnel at the SBA did not properly administer the contracts, as they did not conduct price reasonableness analyses for contracts it awarded to iTechnologies.
• Deficiencies within the SBA’s invoicing procedures established an environment ripe for improper payments.

As a result, the SBA overpaid for IT hardware and software by approximately $343,854.  Further, the SBA improperly paid 100 percent of iTechnologies’ invoices.  To address these findings the audit team made 15 specific recommendations.