Small businesses dissatisfied with SBA.

Study shows SBA not effective in securing contracts for 8(a) program participants

Relations between minority entrepreneurs and the federal programs designed to help them have always been rather prickly. One oft-heard complaint is that the federal programs simply do not do enough.

Take the Small Business Administration's 8(a) program, for example. Business owners join the program because they want federal contracts. But according to a report issued by the General Accounting Office, when it comes to securing those contracts, the SBA is not exactly taking care of business.

The title says it all: SBA Could Better Focus Its 8(a) Program to Help Firms Obtain Contracts. In response to a request from Sen. Christopher Bond (B-Missouri), chairman of the Senate Committee on Small Business, the GAO conducted a nationwide survey of 1,200 firms to determine how many 8(a) firms are getting federal contracts; how SBA tracks the training and assistance provided to companies; and how participants view the SBA.

According to the report, a small number of firms are receiving the biggest portion of contracts. In 1998, 209 firms received 50% of 8(a) contract dollars, which the GAO believes limits developmental opportunities for the other firms. The report also states that 86% of the surveyed firms joined the program to get contracts, and many business owners believe it should focus more on helping them accomplish that goal and less on business development. A majority of the firms are owned by people with more than 10 years' experience managing a business.

Maryland businessman Will Williams, whose Web-based technologies company Alpha Technology Systems Inc. entered the program in May 1999, is not surprised that a large number of contracts go to a small number of firms. He attributes this trend, in part, to fewer available contracts and the bundling of several jobs under one contract. But he also believes many entrepreneurs have misplaced expectations about the program. "They think the SBA [has] a portfolio of contracts just waiting to be handed out," says Williams. "It is not an agency that issues contracts, point blank, end of story. Use it as a marketing tool, not as a crutch."

Della Ford, associate administrator for 8(a) business development, agrees. "What we offer really is an opportunity to [compete for] contracts in a sheltered marketplace, but we are primarily a business development program," she says. "It's not a handout; it's an opportunity."

Are the wrong kinds of entrepreneurs joining the program? "If you've been in business for 10 years and are depending on 8(a) for survival, you've already missed the boat," says Williams. He does, however, believe that the SBA must fine-tune its awareness of the needs of 8(a) firms and its ability to meet them. "A key ingredient that the program needs is [SBA employees] who have successfully grown companies from the ground up" to work with 8(a) firms. "The agency needs to get more input from its constituency," Williams says. "It's almost like a factory. They just put programs out and hope someone catches."

According to the SBA's Ford, the agency tries to "track their participants' and development and provide counsel in areas they need to develop," something its 1-year-old mentor-protege program is also designed to do.

To Williams' charge that billion-dollar corporations cannot possibly relate to the needs of smaller companies, Ford counters that "much can be gained. The partnership depends on what the two entities want it to be." She does, however, concede that the program has shortcomings. "The GAO report was very even-handed and we will use it as a tool to improve the program."

To view the complete report visit www.gao.gov.

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