The federal government aims to award 23% of contracts to small and medium-sized businesses, including manufacturers. If there are no small manufacturers to carry the product, the agency can apply for an exemption from the Small Business Administration to allow manufacturers of any size to supply the product instead.
According to recent SBA data, agencies have submitted approximately 670 forgiveness applications, approximately 80% of which were approved by the SBA. However, that exemption data is incomplete, making it difficult to determine how the exemption will affect small business contracts.
Additionally, the SBA has not established a policy regarding how management reviews these decisions. We recommended that the SBA address these issues.
What GAO found
The Nonmanufacturer Rule allows federal agencies to award contracts to small business contractors to supply products manufactured by another small business if the contractor does not manufacture the products itself. There is. If there are no small business manufacturers, federal agencies can request from the Small Business Administration (SBA) an exemption from the nonmanufacturer rules that allow small businesses to supply products from manufacturers of any size. Yes (see diagram).
According to SBA data, from fiscal year 2017 to fiscal year 2022, the agency submitted approximately 670 applications for forgiveness, of which approximately 80% were approved. Given the relatively small number of NMR waiver applications that the SBA has approved in recent years, stakeholders believed the waiver would have limited effect. GAO was unable to determine the impact of these waivers because data in the SBA's electronic waiver log regarding the number of requests approved was inaccurate or incomplete. Some log entries did not match the underlying documentation, and some status fields did not accurately indicate denial or approval of a waiver request. SBA officials told GAO that they do not conduct systematic quality reviews of electronic exemption logs. By developing policies and procedures to regularly ensure the reliability of waiver application data, SBA will have greater reasonable assurance that it has reliable data to report and evaluate the operations of the NMR program. You can get
SBA’s Process for Reviewing Non-Manufacturer Rule Exemption Requests
Additionally, the SBA does not have policies or procedures that describe how management reviews analyst decisions. Although SBA guidance requires the SBA to review certain types of information in waiver requests, more than half of the 12 approved waiver requests analyzed by GAO included did not include evidence that the organization had reviewed each required component. The SBA said the analyst reviewed the component but may not have saved the document to the waiver request file. However, the SBA was unable to substantiate this claim. By developing policies and procedures to inform management reviews, including what documentation management should review to verify the validity of analyst decisions to request waivers, SBA will ensure that these decisions are sound. You can be more confident that your results are consistent.
Why GAO conducted this study
Congress established a reserve program that requires federal agencies to provide contracting opportunities to small businesses. Some policymakers have questioned whether nonmanufacturer rule exemptions reduce federal contracting opportunities for small manufacturers.
GAO was asked to examine SBA's recent review of nonmanufacturer regulatory exemption applications. Exemptions can be individual or class, and this report will focus on individual exemptions. This report examines (1) the number of individual exemption applications and their impact on small businesses, and (2) his SBA policies and procedures for considering individual exemption applications. GAO identified data from a non-generalizable sample of 67 exemption applications (selected to include a range of decision statuses for applications from selected institutions) in the SBA's electronic exemption log from fiscal years 2017 to 2022. We reviewed the reliability and analyzed the SBA's review process as documented in relevant files. A subset of these requests. GAO interviewed officials from the SBA and the Departments of Defense, Veterans Affairs, and the Department of the Interior (selected based on the volume and variety of outcomes of waiver requests). GAO also interviewed representatives from three of his industry associations with expertise in federal contracting.