8(a) Program improvements are needed to allow more disadvantaged firms to receive 8(a) contracts, according to a recent report issued by the SBA Office of Inspector General.

In its report, the SBA OIG credits the SBA with positive steps taken to improve the 8(a) Program, but says that more must be done to ensure that 8(a) business development assistance reaches more 8(a) Program participants.

The SBA OIG report states that previously, “the SBA did not place adequate emphasis on business development to enhance the ability of 8(a) firms to compete, and did not adequately ensure that only 8(a) firms with economically disadvantaged owners in need of business development remained in the program.”  Successful companies were allowed to remain in the 8(a) Program and continue to receive 8(a) contracts, “causing fewer companies to receive most of the 8(a) contract dollars and many to receive none.”

The SBA OIG writes that the SBA “has made progress toward addressing issues that hinder its ability to deliver an effective 8(a) BD Program.”  For example, the SBA has made better use of resource partners, such as PTACS and SBDCs.  The SBA also updated its 8(a) regulations in 2011 to ensure that highly successful 8(a) participants are graduated from the program.

Although these were positive steps, the SBA OIG says that more must be done:

However, for the second consecutive year, the SBA has not completed updating its [Standard Operating Procedure] for the 8(a) BD Program to reflect the March 2011 regulatory changes.  In addition, we continue to maintain that the SBA’s standards for determining economic disadvantaged are not justified or objective based on the absence of economic analysis.  In December 2011, the SBA awarded a contract to develop and deploy a new IT system by December 2012 to assist the SBA in monitoring 8(a) program participants.  However, the new system has not been deployed, and its delivery date and capabilities are undetermined at this time.

The SBA OIG report indicates that SBA officials “were not aware of any reliable sources of data to determine economic disadvantage,” suggesting that the SBA’s approach to determining economic disadvantage is unlikely to change any time soon.  The broader goal of helping more 8(a) participants secure 8(a) contracts is of course laudable, but it is unclear to me whether aggressively removing successful 8(a) program participants would do much to broaden the scope of 8(a) awards–or simply cause procuring agencies to forego 8(a) set-asides when viable candidates for award cannot be found.