Audit of SBA’s Cooperative Agreement With Arsenal Business and Technology Partnership’s Veterans Business Outreach Center

This audit report presents the results of our audit of the Small Business Administration’s (SBA’s) oversight over the cooperative agreement with Arsenal Business and Technology Partnership’s Veterans Outreach Business Center. Our objectives were to determine whether SBA (1) awarded Arsenal’s 2016 and 2018 cooperative agreements in accordance with applicable federal laws, regulations, and other guidance, and (2) ensured that Arsenal complied with the 2018 cooperative agreement financial and performance requirements.

In 2016, SBA awarded Arsenal Business and Technology Partnership (Arsenal) a cooperative agreement for $180,000 to perform veterans outreach initiatives in New York and New Jersey. The following year, SBA extended Arsenal’s cooperative agreement and awarded $250,000 to continue its support of the VBOC program. Subsequently, in 2018, SBA awarded Arsenal another cooperative agreement for $300,000 for the initial year, with options to extend performance for four additional years. The 2018 cooperative agreement also expanded the coverage area to include Puerto Rico.

We found that SBA undermined the transparency of the award to Arsenal by not maintaining required pre-award documentation to justify their decision in awarding the 2016 and 2018 cooperative agreements to Arsenal. In addition, SBA did not adhere to its policy for selecting a Technical Evaluation Panel (TEP) member who participated in evaluating proposals for the 2016 funding opportunity announcement. Further, program officials did not ensure that Arsenal fully complied with the cooperative agreement performance requirements and did not enforce the performance reporting requirements. Further, SBA reimbursed Arsenal $300,000 in federal funds for the 2018 cooperative agreement and exercised the first option year of the agreement, despite the VBOC not having achieved its intended impact. Lastly, we questioned $10,168 of unallowable costs as a result of Arsenal reporting expenditures that exceeded budgeted cost categories.

We made nine recommendations to improve SBA’s oversight and management of Arsenal’s cooperative agreement. While SBA management agreed with all nine recommendations, its planned actions resolved six recommendations. We will work with SBA management to resolve the remaining three recommendations through the audit follow-up process.