SmallGovCon: GAO Tested SBA on its Tribal 8(a) Verification Process and Found It Mostly Held Up

“Federal and state-recognized Indian tribes and members of such tribes are presumptively socially disadvantaged, and if tribal association is verified, no further information is needed to verify social disadvantage for a Small Business Association (SBA) 8(a) program application. However, in 2021, the SBA Office of Inspector General (OIG) reported that, although the process for awarding 8(a) program status involves a multi-level eligibility review, the SBA does not have a formal verification procedure for verifying the federal or state-recognized status of Indian tribes associated with tribal applications. As such, GAO was asked to evaluate the SBA’s verification of 8(a) applications claiming federal or state-recognized tribal association. The following is a summary of those findings.

The GAO report provides a good summary of the 8(a) Program. As many of our readers know, the SBA 8(a) program is designed to assist eligible socially and economically disadvantaged owners of small businesses through business development opportunities. Assistance to approved participants involves management and technical assistance, business training, counseling, marketing assistance, and executive development. This assistance is designed to make the small businesses more competitive in the economy upon graduation from the program, which is generally a nine-year program. Many 8(a) program participants also benefit from federal government set asides, with roughly 10% of all federal government awards going to 8(a) participants. Between 2018 and 2020, there were 1,392 businesses admitted into the 8(a) program. Of those, 122, or approximately 9%, were owned by a federally or state-recognized Indian tribe or one of their members…”

“While looking at the certified applicants for 2018-2020, GAO compared the tribal name from SBA’s 8(a) online application system to the 2020 list of federally recognized Indian tribes and the state-recognized Indian tribes from a GAO report from 2012. Additionally, GAO “review[ed] relevant documentation, interview[ed] knowledgeable SBA officials, and perform[ed] electronic testing of relevant data fields.” In its review, GAO examined 133 8(a) program applications from 2018-2020 of businesses claiming to be owned by individual members of federally or state-recognized Indian tribes. Of those 133, 122 were admitted to the program. GAO found only one of the 122 admitted to the program was not federally recognized as the applicant had claimed. At the time of the report, SBA was taking steps to terminate the entity’s participation in the program.

For the covert testing, GAO created four fictitious applicants who claimed to be members of fictitious tribes that are not listed on any federal or state recognition list. To assess the efficacy of SBA’s tribal status verification, GAO looked at whether the SBA took steps to verify federal or state-recognition by submitting the four applications with fictitious tribal names via SBA’s online application process. Each application included information that would clearly disqualify application based on tribal recognition status such as copies of fake tribal membership cards with fictitious tribal names. Of the four applicants, three applicants were asked for more evidence that they met the socially disadvantaged requirement for 8(a) participation.  For the fourth applicant, BOS determined the fictitious Indian tribe was not federally or state recognized. In all four cases, SBA took the steps they had described during investigative stages of the study…” Read the full article here.

Source: GAO Tested SBA on its Tribal 8(a) Verification Process and Found It Mostly Held Up – By Stephanie Ellis, January 12, 2022. SmallGovCon.

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