Audit Report 16-05: SBA Needs To Strengthen Its Information Technology Procurement Practices To Ensure Adequate Planning and Financial Oversight

OIG's Audit Report 16-05: SBA Needs To Strengthen Its Information Technology Procurement Practices To Ensure Adequate Planning and Financial Oversight, presents the results of our audit of the SBA’s procurement practices for contracts to acquire IT products and services.  For fiscal years (FY) 2013 and 2014, the Small Business Administration (SBA) obligated $161.7 million on new contract actions, of which $109 million (67 percent) were information technology (IT) product or service contracts.

We reviewed 12 contracts with estimated total contract values of $98.4 million.  Of these, six were awarded by SBA contracting officers and six were awarded by the Department of the Interior’s (DOI) Interior Business Center (IBC) on behalf of SBA.  Our objectives were to determine whether SBA’s procurement practices for contracts to acquire IT products and services: (1) followed Federal Acquisition Regulations (FAR) and SBA’s Acquisition Standard for ensuring fair and reasonable contract prices, (2) complied with Federal regulations when using interagency assisted acquisitions, and (3) ensured funds were used in compliance with Federal appropriations regulations.

We found that SBA personnel did not adequately plan for contracts and inconsistently evaluated vendor quotes while performing a best value determination for one contract.  If these problems persist, SBA will be unable to determine whether it is receiving its IT deliverables at fair and reasonable prices.  In addition, for the six contracts awarded by IBC, SBA did not comply with FAR requirements when determining whether using IBC was the best procurement approach.  As a result, SBA spent over $600,000 in service fees to use IBC for the six contracts we reviewed.  SBA could incur an additional $1.3 million in contract services fees if the six contracts are fully exercised.  We also found that SBA funded 8 of the 12 contracts—with a total estimated value of $64.3 million—using a variety of SBA appropriations that Congress authorized for specific purposes without providing justification or documentation.

OIG made 13 recommendations to improve the SBA’s planning and oversight of IT acquisitions.  SBA management’s planned actions resolve 9 of our 13 recommendations.