Summary: The Small Business Reauthorization Act of 1997 directed the President to set a goal of awarding not less than 23 percent of the federal government's prime contracting dollars to small business for each fiscal year. The Small Business Administration (SBA) is charged with working with federal agencies to ensure that agency goals, in the aggregate, meet or exceed the overall goal. To help SBA determine if agency goals are being met, the Federal Procurement Data Center (FPDC)--part of the General Services Administration--collects data on all federal contract actions and calculates the government's annual small business achievements on the basis of procurement information received from the agencies. This report reviews (1) SBA's process for establishing annual small business prime contract goals and the reasons for recent changes to the process; (2) the types of contracts that are excluded when achievements are calculated, as well as SBA's rationale for excluding them; and (3) the dollar value of the excluded contracts. GAO found that in fiscal year 2000, SBA began assigning goals directly to individual agencies because the goals that agencies proposed did not in the aggregate reach the mandated 23-percent governmentwide goal. When calculating the percentage of federal procurements awarded to small businesses, FPDC must exclude (a) those contracts for which small businesses' chances to compete are limited or nonexistent, (b) those using non-appropriated funds, and (c) those made by agencies which are subject to the Federal Acquisition Regulation or are otherwise exempted by statute. The excluded contracts total about 10 percent of federal procurement dollars and are usually military contracts for foreign sales and contracts performed outside the United States. SBA's annual guidance is the only source of information to which federal agencies, the small business community, and Congress can turn for information on the contracts that are excluded from the small business baseline. However, the guidance is unclear and incomplete, precluding a clear picture of the universe of contracts reflected in FPDC's annual reports of small business achievements.
