For the second time this week, an 11-year-old Small Business Administration program to help develop minority businesses is being criticized for straying from its intended purpose.
A General Accounting Office report released yesterday said the program lacks qualified managers and staff, offers minority firms too little help, does not spend money creatively enough, and pays too little attention to the needs of the firms it serves. The program, known as "8(a)" from the section of the law that created it, awards businesses owned by disadvantaged persons non-competive government contracts, in an attempt to help them grow to the point where they will be able to compete for contracts without special help.
It has given out 14,233 such contracts since 1967, totaling $1.6 billion, the GAO said.
But the GAO report, said most of the businesses don't get enough help from SBA to reach the point where they no longer need the program. That conclusion echoed the findings of a special SBA review committee which were issued Monday.
The GAO said of 3,704 businesses which have taken part in the program since 1967, only 139 "graduated" from it to compete on their own.
Some of the reasons, the GAO said, include contracts that don't match the needs of the firms, inadequate information in SBA files on what the firms need, inadequate staffing of the program by SBA, SBA staff members who are not committed to the program, inaccurate or missing records, and too little help from the Commerce Department's Office of Minority Business Enterprise.
The GAO report is one of a series that have been critical of the program over the years. Many of the same problems were cited in a 1975 GAO report.
Congressional hearings into abuses of the 8(a) program were held last summer, based on reports that under the Nixon administration, white businessmen shiphoned off millions of dollars by putting blacks in phony executive positions in companies the whites controlled.
One recurring problem, the GAO said, is SBA's failure to spend all of the business development funds which Congress allocates for the program.
Since 1972, $56 million has been allocated, but SBA spent only $44.3 million, the GAO said. Problems resulting from this, it said, include lower profit margins and fewer contracts for minority businesses.
One of the GAO recommendations - a larger, better trained staff - was similar to a recommendation made by the review committee in the critical report released Monday.
That committee was headed by Patricia M. Cloherty, deputy administrator of SBA.