GAO’s audit of Program 8(a) provides insight into how the SBA vets applicants claiming tribal associations

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In early January 2022, the Government Accountability Office (GAO) released a report on the Small Business Administration’s (SBA) 8(a) business development program procedures to verify whether tribes identified by program applicants were tribes. federally or state-recognized Indians.

As is known, the ability of a small business to participate in the 8(a) program can be very beneficial. For example, according to the GAO report:

  • In fiscal year 2020, 3,364 8(a) participants were awarded 8(a) federal contracts with program-wide 8(a) federal contractual obligations totaling approximately $19.7 billion; and
  • Each year, the federal government allocates about 10% of all federal contract dollars, or about $50 billion, to 8(a) participants.

The GAO report responded to a request to evaluate the SBA’s effectiveness in verifying tribal recognition of Associated Indian Tribes of 8(a) program applicants.

While the GAO reported that the SBA does not have formal procedures for verifying whether tribes listed on 8(a) applications are recognized, it nonetheless described how the SBA collects the necessary documentation to support tribal recognition. . As described in the GAO report:

  • Sole proprietorships are not required to provide proof of their tribe’s recognized status, but must submit a copy of the owner’s tribal membership card, which is used to verify whether the owner’s tribe has been federally recognized or by the state.
  • A tribally owned business must show proof of federal or state recognition of the tribe owning the business.

In either case, the SBA must verify that the Indian tribe is federally or state recognized. SBA’s Business Opportunity Specialists (BOS) handle the initial screening of 8(a) applications and, during this review, are the ones who verify that the tribe associated with the 8(a) application is recognized, as follows: :

  • For federally recognized Indian tribes, the SBA’s standard operating procedure (SOP) directs the BOS to the list of federally recognized tribes maintained by the Bureau of Indian Affairs (BIA). According to the SBA, BOS are supposed to cross-reference an applicant’s request for tribal recognition with the most recent listing published by the BIA in the Federal Register.
  • For state-recognized Indian tribes, the SOP refers the BOS to state websites. Although, depending on the state, the BOS may have to review legislation, resolutions and decisions of state executive bodies responsible for overseeing recognition or tribal affairs, or other sources that may reflect recognition of the ‘State. The BOS may rely on a statement from a state official with “appropriate authority” over the state’s recognition.

GAO also analyzed 8(a) application data for fiscal years 2018 through 2020. SBA reported to GAO that during this period, a total of 1,392 companies were admitted to the 8(a) program. Of these new businesses admitted to the program, 122 – about 9% – were either tribally owned or registered members of a federally or state-recognized Indian tribe (this total does not include Native Alaska or their affiliates). These were 133 claims claiming ownership by individual tribal members or tribal-owned businesses. The GAO found that of the approved applications, only one applicant’s associated tribe was not federally recognized as claimed. Although SBA provided the evidence on which it relied to reach this conclusion, in response to the evidence presented by the GAO investigation, SBA indicated that it would terminate the entity’s participation in the program 8(a).

These findings are consistent with those of the SBA’s Office of Inspector General (OIG), which also recently focused on SBA procedures for auditing federally and state-recognized tribes. The SBA OIG reported in March 2021 that of 108 of 110 requests from fiscal year 2015 to fiscal year 2018, it considered where the request claimed social disadvantage due to membership in federally recognized tribes or state, the SBA has adequately verified the Indian’s federal or state recognition. tribe.

(In addition to this analysis, the GAO also deployed criminal investigators in FY2021 to covertly test SBA checks to verify federal or state recognition by submitting applications for four purported sole proprietorships that claimed to be enrolled in a fictional Indian tribe.Documentation that should have shown that these applicants should be disqualified due to tribal recognition status.Ultimately, SBA BOS requested additional evidence of disadvantage status or determined, on the based on the information submitted, that the tribe was neither federally nor state recognized.)

The GAO has not made its own independent recommendations to the SBA. Instead, the GAO noted that the SBA OIG recommended that the SBA document its verification procedures, as the lack of documented verification procedures could result in varying recognition decisions depending on the SBA employee who reviews a candidate’s supporting information. The SBA agreed with the recommendation and indicated that it was finalizing this effort and planned to complete the implementation.

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