GAO ..-. --__ ~-_- -.- - . -.. .January 1990 MINORITY BUSINESS Management Improvements Needed at Minority Business Development Agency Resources, Community, and Economic Development Division B-237606 January 19,199O The Honorable Pete Wilson United States Senate The Honorable Ernest F. Hollings Chairman, Committee on Commerce,Science, and Transportation United States Senate The Honorable John F. Kerry United States Senate This report responds to Senator Wilson’s request of July 13,19SS, and Chairman Hollings and Senator Kerry’s subsequentrequest of September 19,1988, to review certain aspectsof the Minority BusinessDevelopment Agency’s operations. Specifically, the report addresses (1) what problems in the competitive grant processwere causing grant awards to be delayed and services to be interrupted, (2) the staffing levels and work load at the agency’s headquarters and regional offices, and (3) client satisfaction with the services received from the Minority BusinessDevelopment Center Program. As agreed with your office, unless you publicly announceits contents earlier, we plan no further distribution of this report until 30 days from the date of this letter. At that time, we will send copies to the Secretary of Commerce;the Director, Office of Managementand Budget; and other interested parties. We will also make copies available to others upon request. Our work was conducted under the direction of John M. Ols, Jr., Director, Housing and Community Development Issues,(202) 275-5525.Other major contributors are listed in appendix VI. / J. Dexter Peach Assistant Comptroller General Executive Summary The Minority BusinessDevelopment Agency (MBDA) was established to Purpose develop the nation’s minority businesses.Becauseof specific congres- sional concernswith the effectiveness and availability of federal assis- tance to minority entrepreneurs, GAO reviewed certain aspectsof MBDA'S operations. These included (1) MBDA'S review and approval of competi- tive grant applications; (2) the staffing levels and work load at MBDA'S offices; and (3) client satisfaction with services received from MBDA'S Minority BusinessDevelopment Center (Center) program, which pro- vides management,marketing, and technical assistanceto clients nationwide. 4 MBDA was established in 1969 by the Department of Commerceto Background develop and increase opportunities for racial and ethnic minorities to participate in the free enterprise system. MBDA seeksto achieve that goal by assisting the formation and development of minority-owned and minority-managed firms-with emphasis on private sector involvement and entrepreneurial self-reliance. Although MBLM has developed a variety of programs in addition to advo- cacy, research, and information efforts, it has relied primarily upon the Center program to accomplish its goals. In fiscal year 1988, for example, MBDA used about $25 million of its approximately $27 million in program funds for the Center program. Under this program, MBDA funds- through a competitive grant process- a network of over 100 Centers throughout the country in areas with the largest minority populations, For a nominal fee, counselors at the Centers provide management,mar- keting, and technical assistanceto their clients, who are minority indi- viduals wishing to start, expand, or improve their businesses. Management problems related to delays in Center funding and the inef- Results in Brief fective use of agency staff have hindered MBDA'S ability to deliver ser- v&es. Despite these problems, GAO'S nationwide client survey found that, for the most part, clients who have received services(1) are gener- ally satisfied, (2) believe the serviceshave been useful, and (3) would seek assistancefrom Centers again if needed.However, GAO believes that if MBDA management is improved through a more timely grant review and approval processand a more effective use of staff, an even larger segment of the minority population could be served. GAO identified eight problems with Center grant applications that delayed their review and approval until the problems were resolved. Page 2 GAO/RcED9069 Improving the Minority Budneaa Development Agency Executive Summary Since Centers cannot be funded without an approved application, some Centers had to suspendoperations from 1 to over 4 months, thus dis- rupting services to clients. Although aware of these delays, MBDA man- agement, until recently, was not successfulin resolving these problems, due in part to an inability among MBDA and other Commerceofficials to agree on necessarycorrections. Over the last year, these officials devel- oped procedures aimed at correcting someof the problems with the applications; however, it is too early to tell if these procedures are effec- tive. In addition, MBDA has not been able to resolve other problems of quality control errors in the application packages.(Seech. 2.) Although MBDA'S program funds, and thus its programs, were reduced by about 43 percent between fiscal years 1980 and 1989, only minimal reductions in staff occurred. As a result, MBDA is currently overstaffed. ’ MBDA officials have told GAO that the operation of the Center program, the primary job responsibility of agency personnel, does not keep head- quarters or regional staff fully employed. In addition, in the past, action was not taken to redirect staff to alternative activities such as advocacy and outreach efforts or more comprehensiveprogram monitoring. These alternative serviceswould improve staff utilization and expand ser- vices. (Seech. 3.) MBDA'S new Director, appointed by the administration in April 1989, told GAO that he is aware of the problems the agency has had with the timely processingof grant applications and the effective use of agency staff. He is currently reevaluating ways to improve the agency’sdelivery of services and to better utilize personnel. Principal Findings Problems With Grant Errors and’inadequaciesdiscovered in grant applications during their Applications Result in review and approval delayed the approval and funding of 76, or 75 per- cent, of the 102 grants awarded in 1988. GAO reviewed about half (37) of Delays in Grant Approval the late awards and found the average processingtime to be 54 days and Disrupt Client longer than the 120 days provided for by MENM procedures. Eight of the Services 37 delayed awards resulted in suspendedCenter operations from about 1 to over 4 months. Overall, according to MBDAofficials, a total of 32 Centers suspendedoperations about 50 times from fiscal years 1986 through 1988 becauseof delays in funding resulting from problems with Page 3 GAO/RCED90-59Improving the Minority Business Development Agency Executive Summary grant applications. During periods when operations were suspended, minimal or no service was provided to minority businesses. For late awards, all of the applications GAO reviewed contained one or more of eight problems. Two problems-applicants’ unresolved debt owed to the government and inclusion of unapproved indirect cost rates in grant applications- were present in over 50 percent of the packages reviewed. MBDA and Commerceofficials have recently agreed to proce- dures designedto allow the approval processto proceed while efforts are taken to correct these problems. Specifically, the grant applications will continue to be processed,in the caseof delinquent debts, if appli- cants agree to repayment schedules.Regarding disputed debts, Com- merce officials have established an appeal processintended to reduce the number of late awards. Applications with unapproved indirect costs will now be processedwith a protective clause in the grants. However, it is too early to determine if these procedures will be effective. The remaining problems that delayed the reviewing and awarding of Center grants generally involved quality control errors such as missing docu- ments in the application packagesand miscalculations in budget data. Despite attempts by MBJM managementto correct these problems, they are still occurring, according to agency officials. MBDA'S new Director told GAO he is reevaluating the grant approval pro- cessand is taking action to ensure that grants are prepared, reviewed, processed,and awarded on time and that delivery of services to clients is not disrupted. Staffing Levels, Roles, and On the basis of current work load needs,overstaffing exists throughout MBIM,according to headquarters, regional, and Commerce’sOffice of Responsibilities Should Inspector General (OIG) officials. Although MBDA'S total program funding Better Reflect Agency was reduced by about 43 percent between fiscal years 1980 and 1989, Mission from about $44 million to about $25 million, only minimal reductions in staff have occurred, and MBDA managementdid not reevaluate staffing needs,roles, and responsibilities. During that period, the staff at MBDA was reduced by only 12 positions, or 6 percent. MBDA officials told GAO that staff reductions could be made throughout the agency becausethe current staffing levels are not justified by work load needs.For exam- ple, according to MBDA officials, the current major function of most head- quarters and regional personnel is to implement and monitor the Center program, a responsibility that does not keep the staff fully employed. Although program funding was cut, according to MBDA officials, staff could have been better utilized and clients better served if staff had P8ge 4 GAO/RCEJh904gImpnwing the Minority BuaineaaDevelopment Agency Executive Summary been given additional duties such as advocacy, outreach, and/or more comprehensiveprogram monitoring. MBDA'S new Director told GAO that he is reevaluating the agency’sstaff- ing and hopes to more fully utilize staff. Center Clients Satisfied GAO conducted a nationwide survey of Center clients to assesstheir With Services opinions of services received. GAO'S survey did not assessthe effective- nessof the Center program. Clients, in general, have been satisfied with the services received; and over 83 percent said they definitely or proba- bly would contact a Center in the future if they would need similar assistance.Lessthan 10 percent said they probably or definitely would not seek assistancein the future. Over 50 percent of all clients found the services useful, and a majority had favorable opinions of Center person- nel and services. GAO believes the Secretary of Commerceneedsto ensure that MBDA man- Recommendations agement is improved to enhanceservicesto minority businessesand entrepreneurs. Toward this end, GAO recommendsthat the Secretary of Commerceinstruct the Director, MBDA, to incorporate the following as part of his redirection of the agency: l Determine, in cooperation with other pertinent Commerceofficials, whether actions taken to correct problems that have delayed the processingof grant applications are effective, and if not, develop alter- native solutions. In addition, develop solutions for other quality control problems that exist with grant applications-problems that continue to contribute to delays in the funding of Centers. . Determine how to either (1) better utilize existing staff resources through the expansion of their roles and responsibilities or (2) reduce staff to realistically reflect the agency’swork load. MBDA officials,including the Director, and other Commerceofficials Agency Comments reviewed a copy of GAO'S draft report, and their comments have been incorporated throughout the report where appropriate. They acknowl- edged the existence of problems resulting in grant-processingdelays and in current overstaffing. The Director, MBDA, pointed to efforts underway to correct most of these problems. As requested, GAO did not obtain for- mal written comments on the report. Page S GAO/RCED-go69Improving the Minority Business Developmrn t Agency Contents Executive Summary Chapter 1 8 Introduction MBDA Organization and Program Activity Minority BusinessDevelopment Center Program 8 9 Objectives, Scope,and Methodology 12 Chapter 2 14 Delays in Minority Most Center Grants Were Awarded Late in Fiscal Year 1988 14 Business Development Delays in Awarding Funds Force Centers to Shut Down 18 Center Grant Operations Approvals Disrupt Reactionsof New MBDA Director 19 19 Delivery Of Services to ~~~&io~ 19 Clients Chapter 3 21 Staffing Levels Should MBDA’s Program Funding Has Been ReducedWithout a 21 Corresponding Reduction in Staff Better Reflect Agency Personal Differences Between Former Director and 26 Mission and Work Former Deputy Director and Lack of Communication Load Cited as Past Problems by MBDA Officials Current MBDA ManagementViews on Past Problems, 28 Staffing, and Work Load Needs Conclusions 28 Recommendations 29 Chapter 4 30 Minority Business Center Clients and Assistance Received Overall Satisfaction 30 32 Development Center Impact of Assistance on Client Businessand Skills 34 Clients Are Satisfied Client Assessmentof Center Capabilities 36 ‘With Services Conclusions 38 Appendixes Appendix I: MBDA Funding Levels by Program for Fiscal 40 Years 1986-1988 Appendix II: Minority BusinessDevelopment Centers in 41 Operation as of December1988 Page 6 GAO- Improving the Minority Budnew Development Agency --- Content.9 Appendix III: MBDA’s Application and Review Processfor 43 Special Projects Appendix IV: Minority BusinessDevelopment Centers 48 That SuspendedOperations Becauseof Delays in the Grant Process(Fiscal Years 1986-1988) Appendix V: Description of MBDA Headquarters Offices’ 49 Functions Appendix VI: Major Contributors to This Report 52 Tables Table 2.1: Problems Found in 37 Fiscal Year 1988 Grant 15 Applications That Were Awarded Late Table 2.2: Number of SuspendedOperations and Days 18 SuspendedDuring Fiscal Years 1986-1988 Table 3.1: Number of Projects Monitored Per Staff Person 24 Table III. 1: Special Projects Funded With Discretionary 45 Funds From Fiscal Year 1985 Through Fiscal Year 1988 Table V.l: Authorized and Actual Staffing Levels as of 51 September30,1988 Figures Figure 4.1: MBDA Regionsand Clients Served in Last 3 31 Months of 1988 Figure 4.2: Clients by Type of Assistance Received 32 Figure 4.3: Overall Client Satisfaction 33 Figure 4.4: Clients’ Likelihood to Contact Centers in the 34 Future Figure 4.5: Usefulness of Assistance in Meeting Business 35 Needs Figure 4.6: Impact on Client BusinessSkills and 36 Knowledge Figure 4.7: Client Opinion of Center Expertise 37 Figure 4.8: Client Assessmentof Services’Worth 38 Abbreviations GAO General Accounting Office MBDA Minority BusinessDevelopment Agency OFF'A Office of Finance and Federal Assistance OIG Office of Inspector General OMB Office of Managementand Budget Page7 GAO/RCDW Improving the Minority BIM~ Development Agency Chapter 1 Introduction The Department of Commerceestablished the Office of Minority Busi- nessEnterprise in 1969 in responseto Executive Order 11458 to assist in the establishment of new minority enterprises and the expansion of existing ones.The Office was renamed the Minority BusinessDevelop- ment Agency (MBDA) by Executive Order 11625. MBDA'S goal is to increase opportunities for racial and ethnic minorities to participate in the free enterprise system through the formation and development of competitive minority-owned and minority-managed firms-with empha- sis on private sector involvement and entrepreneurial self-reliance. MBDA strives to accomplish this goal primarily by . coordinating the plans, programs, and operations of the federal govern- ment that affect or contribute to the strengthening of minority business enterprises; l promoting the activities and resourcesof state and local governments, businessand trade associations,professional organizations, and other groups that contribute to the growth of minority businessenterprises; l disseminating information that will help the establishment and success- ful operation of minority businessenterprises; and . providing financial assistanceto public and private organizations ren- dering technical and managementassistanceto minority business enterprises. MBDA Organization D.C.; six regional offices; and four district offices. As of September 30, and Program Activity 1988, MBDA had 198 permanent positions: 108 at headquarters and 90 in the regional and district offices. (Seech. 3.) To achieve its goals, MBDA developed a number of programs including the Minority BusinessDevelopment Center (Center) program. This program is designed to promote the creation, existence, and expansion of minor- ity businessesby providing businessdevelopment servicesto minority firms and entrepreneurs. From fiscal year 1986 through fiscal year 1988, this program accounted for 83 percent of all of MBDA'S program funds. (Seeapp. I.) In addition, MBDA developed public and private sector businessdevelopment programs; special projects designedto assist minority entrepreneurs; and minority businessadvocacy, research. and information efforts. Public sector programs are targeted to federal, state, and local govcrn- ments and are designedto provide a network of service centers and pro- fessional organizations dedicated to help and promote minority Page 8 Lmprovins GAO/RCED-SO-@ the Minority Bushesa Development Agency chapter 1 Intzoduction businesses.Private sector programs are designedto help minority busi- nessesthrough public/private partnerships, the development of man- agement techniques, and identification of financial resources. MBDA'S special projects are designedto provide or improve services to minorities or to assist a particular under-representedminority industry or business.Special projects are funded on a noncompetitive basis for 1 year and are approved for funding by the MBDA Director. These projects can be funded by redirecting other program funds from MBDA program costs that were disallowed or appropriated program funds that were not obligated and expended by the end of the fiscal year. Special projects are subject to a detailed review and approval process,and their per- formance is monitored. (Seeapp. III.) MBDA'S advocacy, research, and information efforts are designedto establish, collect, and maintain data on the characteristics of MBDA cli- ents and the general minority businesscommunity. The purpose of MBDA'S advocacy activities is to raise the level of awarenessof policy- makers and businessleaders regarding minority businessthrough speechesand conferencesand other similar activities. Researchis con- ducted to increase awarenessof trends, characteristics, and problems of minority businessesand to evaluate existing and develop new programs. Information about the minority businesscommunity is analyzed for use by MBDA program staff and interested parties outside the agency. Under the Center program, MBDA funds a network of Centers located Minority Business throughout the country and operated by private organizations or state Development Center and local governments in areas with the largest minority populations Program (see app. II). The grant applications of these public and private entities undergo a 120-day review processdivided between MBDA'S regional and headquarters offices and other offices within Commerce. The Center Network As of December 1988, MBLM was funding 101 Centers. Counselorsat the Centers provide management,marketing, and technical assistanceto minority individuals wishing to start, expand, or improve their busi- nesses.The Centers provide assistancein such areas as accounting, inventory control, bid estimation, bonding, personnel management,con- tract negotiations, and marketing. They also assist minority entrepre- neurs with the preparation of financial packagesand plans for submission to lenders for the purposes of financing businessventures. The Centers charge a fee of from $10.00 to $17.50 an hour dependent P8ge 9 GAO/BcEDgo69 Improving the Minorlt~ Btwheea Development Agency Chapter 1 Introduction upon the amount of client earnings. Centers can vary their fee structure depending on an individual client’s ability to pay. Centers cannot make or underwrite loans becauseMBDA has no loan-making authority. Centers also try to match minority-owned firms with new businessand contract opportunities in domestic and foreign markets. Centers Are Funded Centers are funded by MBDA grants, also known as cooperative agree- Through Competitive ments, that are obtained on a competitive basis. Applicants who com- pete for grants to operate the Centers may be individuals, nonprofit Grants organizations, private firms, state and local governments, American Indian tribes, or educational institutions. Grant agreementscover a 3- year period, but MBDA initially provides funds for only 1 year. If a grantee’s perfO~~CeiSSatiSfaCtO~,MB~ mayrenewitS~a,Mfora secondand third year on a noncompetitive basis. MBDA regional staff perform oversight of the activities of the Centers by monitoring their performance and reviewing Center reports of accomplishments.The maximum federal funding each Center can receive is 85 percent of its total operating cost. Each Center is expected to provide the other 15 percent. The average Center grant for those awards scheduled to be awarded in fiscal year 1988 was $234,000. Competitive Grant MBDA procedures require that applications for Center grants be reviewed Application and Review and awarded within 120 days. The first step of the application process begins 120 days prior to the planned award date, with a 30-day request- Process for-bid period. MBDA regional offices advertise for applications in the CommerceBusinessDaily and the Federal Register. Following the 30- day advertisement for bids, the regional offices review all applications within 30 days and recommend a single applicant to headquarters for each Center grant award. MBDA headquarters has 30 days to review award packagesand forward them to Commerce’sOffice of Finance and Federal Assistance (OFFA). OFFA has 30 days to review the applications and award the grants. RegionalOffice’s &view of After the 30-day request-for-bid period, all applications that are Grant Applications received undergo a regional panel review in the second30-day period of the review process.The panel scoresthe applications using evaluation criteria established by MBDA. The criteria include (1) the capability and experience of the firm/staff, (2) techniques of proposed assistance,(3) resourcesof applicant (such as financial resourcesand available staff), and (4) the costs of providing the services.Applicants who receive at Page 10 GAO/RCRLMO4@h~~provingthe Minority Businew Development Agency .-___ Chapter 1 Introduction least 70 percent of the points in all four categoriesoverall are consid- ered programmatically acceptable and competitive for the award. On the basis of the panel reviews, an MBDA regional director recommends a single applicant to headquarters for each Center grant award. A regional director usually recommendsthe applicant with the highest numerical ranking unless the applicant is found unacceptablebecauseof factors such as financial instability, unsatisfactory performance under other federal programs, or previous failure to adhere to administrative and programmatic objectives of other MBDA or Commerceprograms. MBDA Headquarters’Review of The third 30-day stage of the 120-day review begins in headquarters’ Grant Applications Office of Operations. A quality control review of the packagesis made to ensure that applicants have complied with MBDA'S procedures and submitted all required documentation in the package.Then the Office performs programmatic reviews of all award packagesand evaluates a Center’s proposed goals and plans for achieving them. Packagesare also forwarded to the Office of Administrative Manage- ment’s Financial ManagementDivision. There, reviewers determine if the proposed Center projects are on MBIIA'S funding plan to ensure that funds will be available upon final grant approval. If so, MBDA'S Office of Chief Counsel performs a legal review of the proposal. Following these reviews, the MBDA Director reviews the recommendedaward packages and approves them for submission to Commerce’sOFFA. Commerce’sReview of Grant OFFA performs the last stage of the review process-financial reviews of Applications Center grant applications-and assumesgrant administrative oversight responsibilities. Reviews by OFFA are made in conjunction with Com- merce’s Office of Inspector General (OIG), which provides assistance with resolution of any past audit findings that may have been directed to the applicant and with closeout activities on existing Center grants. (OIG audits the financial and programmatic performance of about 10 per- cent of the Centers each year. However, in 1987, OIG reviewed the opera- tions of all Centers.) A final review of the package is made by Commerce’sFinancial Assistance Review Board, which, at the time of GAO'S review of MBDA, was made up of the Department’s Associate Dep- uty Secretary, Assistant Secretary for Administration, and Deputy Gen- eral Counsel. The Board considers the agency’s proposed grant award to ensure that no administrative issuesare unresolved; and following the Board’s review and clearance,OFFA's grants office makes the actual award. Page 11 GAO/RCED90-68Improving the Minority Business Development Agency Chapter 1 Introduction On July 13, 1988, Senator Pete Wilson requested that we conduct an Objectives, Scope,and evaluation of certain aspectsof MBDA'S operations. On September 19, Methodology 1988, Senators Ernest F. Hollings and John F. Kerry notified us that they also supported Senator Wilson’s request. On the basis of subse- quent discussionswith the requesters’ staffs, we agreedto l determine what problems in the competitive grant processwere causing grant awards to be delayed and review how special projects are funded and approved; l review current staffing levels and work load at MBDA'S headquarters and regional offices with appropriate MBDA officials and discussprevious problems that resulted from staff conflicts; and l determine whether Center clients were satisfied with the servicesthey had received. To accomplish our objectives regarding the competitive grant process and special project proposals, we interviewed MBDA headquarters and regional officials in each of the six MBDA regions and officials of the Department of Commerce’sOFFA. At MBDA headquarters and at OFFA, we reviewed the competitive grant award processby examining the records and files on grants awarded in fiscal year 1988 becausethat was the most recent available data. To determine why grant applications were delayed, we reviewed 37, or about one-half, of the 76 late awards. The grant packageswe reviewed contained both new and renewal awards. To determine how special projects are funded and approved, we reviewed MBDA files on a selectednumber of projects that MBDA had funded, and we examined MB&I'S processfor reviewing, approving, and monitoring such projects at headquarters and regional offices. We also visited 11 Centers and reviewed Center records and files. Our discussion of MBDA'S application and review processfor special projects is discussed in appendix III. In reviewing MBDA’S staffing levels, we did not assessthe specific work ’ load requirements a.ndstaffing needsof MBDAstaff. However, we dis- cussedthe adequacy of staffing with officials knowledgeable of MBDA, its programs, and staff qualifications. Those individuals included manage- ment officials in MBDA headquarters, the directors of the six MBDA regional offices, and various membersof the headquarters and regional office professional staffs. To determine regional work load requirements for the Center program, we compared the number of Centers monitored per professional staff member for fiscal years 1986 through 1988 to the criteria MBDA established for the Center program. We also discussed P&ge 12 GAO/RcEDgoBb) Improving the Minority RuedneseDevelopment Agency Chapter 1 Introduction alleged conflicts among MBDA staff with both current and former head- quarters and regional office officials. In April 1989, MBDA’S new Director, Deputy Director, and other top managementofficials were appointed. As a result, the managementproblems discussedin chapter 3 pertain to MBDA’S former Director and former Deputy Director. To determine client satisfaction with services and assistancereceived at the Centers, we selecteda random sample of 197 Center clients to inter- view by telephone. This sample was selected from a universe of 4,140 clients that MBDA reported had been assistednationally during the period October-December1988. We selectedthese 3 months becausethey were the most current for which client data were available. We were able to contact and interview 156 of the 197 clients. Of these, seven did not meet our criteria for type of service received, leaving 149 clients in our interviewed sample. We were unable to contact 18 clients because neither the Center that assistedthem nor the telephone company could provide their telephone numbers. We were unable to contact an addi- tional 18 clients despite at least six attempts over a 2-week period. Three clients were unavailable becauseof illness or extended absence. Two refused to be interviewed. The 149 interviewed clients-76 percent of our sample-received assis- tance typical of that provided and received nationally, that is manage- ment/technical, financial, and contractual. As a result of using random sampling techniques, we can state with 95-percent confidence that the survey results we cite in the report represent the views of 3,130 clients in the universe who would have answered our questions had we tried to call everyone. Sampling errors for the proportions we report never exceeded9.79 percent. All reported proportions are greater than 0 per- cent. Our survey was limited to client opinions of the services received and did not assessthe effectiveness of the Center program. We coordinated our review with Commerce’sOIG and reviewed its reports on MBDA. OIG has reported on many of the issuesdiscussedin this report, including the grants review processand staffing. We have included findings from OIG work in appropriate sections of our report. We conducted our review between September 1988 and September 1989. Our work was done in accordancewith generally acceptedgovernment auditing standards. Page 13 GAO/RcEDw)69 Improving the Minority Business Development Agency Delays in Minority BusinessDevelopment Center Grant Approvals Disrupt Delivery of Servicesto Clients The Minority BusinessDevelopment Center program is MBDA'S primary program for developing minority businesses.However, problems found during MBDA'S review of grant applications have delayed the funding for someCenters. These delays have resulted in someCenters’ suspending operations from 1 to over 4 months, which disrupts servicesto minority clients. Specifically, 76 of the 102 grants, or 75 percent, scheduled to be awarded in fiscal year 1988 were awarded late. We reviewed 37 of the packagesthat were awarded late and identified eight problems; each grant application contained one or more of these problems. (Seetable 2.1.) Two frequently identified problems were unresolved debts owed to the government by the applicants and unapproved indirect cost rates. The six others ranged from missing documents to mathematical miscal- culations. These problems necessitatedMBRA’S delaying review of such grant applications until the problems were resolved. Although somecorrective actions have been taken, problems still remain. MBDA'S new Director told us he is giving top managementprior- ity to ensuring that applications for Center grants are prepared, reviewed, processed,and awarded on time so that the delivery of ser- vices to clients is not disrupted. To determine why 76 grant applications were delayed in fiscal year Most Center Grants 1988, we reviewed 37, or about one-half, of the late awards and found were Awarded Late in t he average processingtime was 174 days, 54 days longer than that Fiscal Year 1988 allowed by MBDA procedures. The grant packageswe reviewed involved both new and renewal awards from all six regional offices. During our review, we identified eight problems in the application packagesthat slowed MB&I’S review of the applications. All of the late awards in our review contained one or more of these problems. Two-applicant’s debts owed to the government and inclusion of unapproved indirect cost rates in the applications- were present in most late awards. Over the past year, MBLM, OFFA, and OIG agreedon grant processingprocedures related to these two problems. At the time of our review, these proce- dures had just been instituted and, thus, their effectiveness could not be determined. The remaining problems, which at the time of our review were still unresolved, included such errors as documents missing from the application package or miscalculations. Grant Package Problems We reviewed 37 grant packagesto determine what factors contributed to their delays. Although existing records were inconclusive as to which specific MBJIA office was responsible for delaying the grant application Page 14 GAO/ltCBD90-69 Improving the Minority Budneea Development Agency - _. Chapter 2 Delays in Minority Business Development Center Grant Approvals Disrupt Delivery of Services to Clients review process,we were able to determine the problems that neededres- olution before the review of the application could continue. Those prob- lems involved (1) unresolved debts owed to the government, (2) unapproved indirect cost rates, (3) programmatic problems, (4) missing documents, (5) revisions to applications due to budget cuts, (6) failure to adequately justify budget costs,(7) mathematical miscalculations, and (8) miscellaneousproblems. Table 2.1 shows the frequency of problems found in each category. Table 2.1: Problems Found in 37 Fiscal Year 1868 Grant Application8 That Were Frequency Awarded Late Problem of problem’ Debts owed to the government 21 Unapproved indirect cost rates 19 Programmatic problems 7 Missing documents 16 Revisions due to budget cuts 7 Budget cost questions 13 Miscalculations 5 Miscellaneous 12 aAn award package may involve more than one type of problem. We spoke with MBDA, OFFA, and OIG officials to discussour findings and to obtain their opinion on what were the major causesof delays in the Center grant application review process.These officials agreed that two major recurring problems-unresolved debts owed to the government and disallowed indirect cost rates-were present in most late grant awards. According to the officials, the remaining problems we identified, such as missing documents and miscalculations, usually resulted from MBDA’S poor quality control over the review of grant packages.In addi- tion, these quality control problems are still occurring and, in most cases,the grant review processis stopped until the problems are resolved. DebtsOwedto the Government Commerce’sdebt managementprocedures task MBDA with the primary responsibility for resolving questions involving debts owed to the gov- ernment. Once a debt to the government has been established, OFFA must notify the applicant that a debt is owed and payment is required within 30 days of receipt of the billing date. If the debt is not paid after 30 days, it is considered delinquent. OF'FAis to forward unresolved debts to a workout group within MBDA for further action. If MBIM and the appli- cant agree a debt is owed, MBDA must obtain written assurancethat pay- ment of the debt has been or is being made. If the applicant disputes a Page 15 GAO/IKXBM Improving the Minority Business Development Agency Ckpter 2 Delryr in Minority Budnesa Development Center OMt Approval Disrupt Delivery of Servlceato Clienta debt, which is established by Commerceas a result of an OIG audit report, MBDA can recommendthat a protective clause be included in the special terms and conditions of the grant award to either withhold the amount in question, terminate or suspendpayment, or propose making the award in spite of the debt becauseof special circumstances. Of the 37 awards we reviewed, 21 involved problems with unresolved debts owed to the government. Most of the debts in question were incurred under previous MBDA grant awards and were found by OIG in financial audits of the Centers. Several applicants in our sample dis- puted the debts found by OIG. However, in accordancewith Commerce and Office of Managementand Budget (OMB)policy, new awards were not made until the debt problems, as well as other problems we identi- fied, were resolved satisfactorily. According to OFTA officials, Commerce policy is basically that once a debt has been established, no further awards will be made to the indebted organization until the debt is paid, a repayment schedule has been agreed to, or other arrangements satisfac- tory to Commercehave been made. In addition, organizations such as nationwide accounting firms can operate a number of Centers through- out the country. However, if it is determined that the grantee has incurred debts at one Center, MBDA has delayed funding to all Centers operated by the firm. In April 1988, MBIX and Commerce’sFinancial Assistance Review Board agreed on a temporary measure, constituting an exception to depart- mental policy, to allow MBIM officials to review and make determina- tions on a backlog of disputed debts. This one-time agreement allowed a limited number of awards to be made where debts were owed. However, a special condition specifying how MBM will resolve the disputed debt was added to the grant. These officials also agreed that in the caseof delinquent debts, however, awards would not be made unless recipients would agree to repayment schedules.According to an MBDA official, these procedures were implemented around June 1988. In addition, according to OFTA officials, in December1988, Commerce published in the Federal Register a policy statement announcing the establishment of a formal appeals procedure for disputed debts result- ing from audits. The formal appeals procedure, developed by OIG, OFFA, and other Commerceofficials, should, according to OlTA officials, clarify any questions related to potential legal concernson handling disputed debts. OFFA officials told us that these procedures should alleviate cer- tain delays causedin the past as a result of legal questions related to disputed debts. P8ge 16 GAO/EED-W8g Imptwing the Minority BvleineeeDevelopment Agency Ch4pter 2 DdW9iIllbiiBOti~- Development Center Grant Approvals Disrupt Delivery of Service8 to Client.43 Unapproved Indirect Cost Rates Indirect costs are those not directly related to delivering servicesto minority businesses,such as administrative costs. OMB Circulars A-21, A-87, and A-122 and the award terms and conditions of a Center grant prescribe, however, which of these indirect costs are allowable under grant agreements.These documents state that such costs must be rea- sonable, allocable, allowable, and approved by the recipient’s cognizant audit agency. According to OFFA officials, the cognizant audit agency for most MJDAawards is Commerce’sOIG. If grant applicants do not have approved indirect cost rates, OMB guidelines allow them 90 days from the date of the award to submit documents necessaryto establish indi- rect cost rates. Nineteen of the award packageswe reviewed involved problems of unapproved indirect cost rates. According to OFFA officials, OIG delayed several awards during fiscal year 1988 as a result of its findings on audits of Center operations conducted in 1987. OIG found that a number of recipients of MBDA awards had been recovering costs through rates not approved by Commerce.OIG also found somerates were unreason- ably high. At the recommendation of OIG, MB~A withheld awarding new grants until MBDA and OIG resolved the problem. OIG agreed to let MBDA use special award conditions for those applicants where OIG had not established an indirect cost rate. Other ProblemsDelaying the Although MEWofficials have taken action to resolve someof the prob- Grant Approval procesS lems in the grant approval processregarding unresolved debts owed to the government and indirect costs, other problems still are occurring. According to MBDAand OFFA officials, grant reviews are still being delayed becauseof problems such as grant justifications not properly addressing programmatic goaIs, documents missing from the grant pack- ages,and budget data having mathematical and other errors/problems. Headquarters officials told us that they believe these errors/problems generally resulted from poor quality control in the preparation of the grant packagesby staff in the regional offices. Despite careful instruc- tions from headquarters and numerous training sessions,according to the officials, the grant packagesstill contain errors. According to MBLH headquarters officials, if the grant applications submitted to headquar- ters for review were prepared more carefully, the review processcould be completed in a timely manner. MBI~A regional officials we talked with stated that grant application packagesare thoroughly checked before being submitted to headquarters. Page 17 GAO/m Impnovins the Minority Business Development Agency Chapter 2 Delay0 ln Minority Bu14he66Development Center Grant Approvda LbisruptDelivery of Services to Client49 Becausethe records we reviewed were inconclusive, we could not deter- mine if headquarters or regional office staff were responsible for the quality control errors/problems. Failure to award Center grants in a timely manner resulted in lapses of Delays in Awarding service to minority businessenterprises. For example, in fiscal year Funds Force Centers 1988,8 of the 37 Center grantees in our sample whose awards had been to Shut Down late suspendedoperations while waiting for funding from MBDA. During fiscal years 1986-1988,32 Centers, located throughout all six MBDA Operations regions, suspendedoperations 60 times (see app. IV). Twenty-four of the 50 suspendedoperations lasted for a period of 1 month; someCenters did not provide services for over 4 months. During such periods minor- ity entrepreneurs are not being assisted by the Centers. Table 2.2 shows the number of suspendedoperations and days suspendedduring fiscal years 1986-1988. Table 2.2: Number of Suspended Dpemtions and Days Surpanded During Number of ruaPended operations FiscalYearalgW19(uI Total Day8 surpended FY1986 FY 1987 FY1988 suspenrions~ 01-31 days 7 6 11 24 32-62davs 2 0 4 6 63-93davs 2 2 2 6 94124days 3 1 0 4 Over 125 davs 6 0 4 10 Total 20 9 21 50 BThe suspensions total more than 32 because a number of the Centers suspended operations In more than 1 year. When Centers shut down operations becauseof funding delays, many negative impacts, such as reduced operations, can occur. At the end of a grant period, MEJDA advises operators that if funding is delayed, the agency will not be responsible for costs incurred if the Center remains open. As a result, someoperators have reduced operations by laying off staff and/or have cut back the number of clients they served. However, MBINoften recommendsto OFFA that pre-award costs be approved to make up for the delayed funding. As a result, someCenters continue operating becausethey believe funding will be forthcoming. According to one Center operator connectedwith a large accounting firm, it would be difficult for a small to medium-sized company to operate a Center Page 18 GAO/BtXlSgo6s Improving the Minority B4uhwaa Development Agency Chapter 2 Delays in Minority Business Development Center Grant Approvala Disrupt LIelivery of Services to Client5 without a continuing inflow of MBDA funds becausesuch operators can- not absorb operating costs, whereas, larger firms, which might have more resourcesavailable, can often incur such costs and remain open. In June and in October 1989 the new Director of MBDA told us he is giv- Reactions of New ing the Center grant application review processtop managementprior- MBDA Director ity. Preventing Centers from providing services to clients becauseof funding delays, according to the new Director, is the most discrediting action the agency can take. He is meeting with top officials in both MBDA and OFFA weekly to ensure grants are awarded on time and delivery of servicesto minorities is maintained. He also said he is evaluating the entire grant review processto assesswhere modifications are needed. mation of competitive minority-owned and minority-managed firms. MBDA has tried to achieve it goals primarily through its Center program, designedto assist minority entrepreneurs. However, during the past sev- eral years, Center operations have been hampered by funding delays causedby problems in MBDA'S grant approval process.Specifically, we identified eight types of problems in the processingof grant applications and the awarding of operating funds that resulted in Centers’ reducing or stopping services to clients for periods of 1 to over 4 months. MBDA, OFFA, and OIG officialshave recently taken action related to two of the most frequently occurring problems with the Center grant process. However, at the time of our review, it was too early to determine their effectiveness in solving the problems. Other problems related to quality control in processinggrant applications and awarding grants still remain. MBDA'S current Director told us that he is reevaluating the Center grant approval processto identify ways it can be streamlined and improved. Recommendations MBDA, toincorporate the following actions in his reevaluation of the grant process: l Determine, in cooperation with other pertinent Commerceofficials, whether actions taken to correct problems that have delayed the Page 19 GAO/RCED-9088Improving the Minority Bushesa Development Agency chapter 2 Delay0 in Minority Budnwe Development Center Gmnt Approvd8 Diampt Delivery of Service8 to clients processingof grant applications are effective, and if not, develop alter- native solutions. In addition, develop solutions for other quality control problems that exist with grant applications-problems that continue to contribute to delays in the funding of Centers. P8ge 20 GAO/RcEDgoB6) lmpmvlne the Mlnorlty Baulxme DewelopmentAgency Chapter 3 Staffing Levels Should Better Reflect Agency Mission and Work Load Although the work load has decreasedin MBDA’S headquarters, regional, and district offices, only a minimal reduction in staff has occurred. MBDA officials told us that the entire agency is overstaffed basedon its cur- rent work load. In addition, MBDA has had problems making adequate use of all personnel. MBDA’S former Deputy Director told us that becauseof personal differences with the then Director, he was relieved of most of his job responsibilities and as a result performed only minor tasks that contributed very little to minority businessdevelopment between 1985 and 1989. MBDA’S current Director, appointed in April 1989, told us that he was aware of the agency’sstaffing problems as well as the former Deputy Director’s lack of job responsibilities. He stated that he is reviewing not only MBRA’S staffing needs,but also attempting to find ways to utilize the staff more fully by having them perform activities such as outreach and advocacy, which are pertinent to MBDA’S goals. MBDA’s Program cent, from fiscal years 1980 to 1989, from about $44 million to about Funding Has Been $25 million, funding for MBDA staffing and staffing levels changed little. MBDA employed 198 permanent staff at the end of fiscal year 1988. ReducedWithout a About one-half of the staff were located in MBDA’S headquarters office, Corresponding with the remaining staff located in its six regional offices and four dis- Reduction in Staff trict offices.’ (Seetable V.1 in app. V.) MBDA Funding Although MBDA’S total program funding of $44 million in fiscal year 1980 had been reduced by $19 million, or 43 percent, by fiscal year 1989, funding for salaries and expensesfor the entire agency remained fairly constant, dropping by about 1 percent. Specifically, for fiscal years 1986 through 1988 (see app. I), the time covered by our review, . funding for the Center program was reduced by about $3.7 million, or about 13 percent; . funding for the public sector programs was reduced by about $1 million, or 82 percent; . funding for the private sector programs was reduced by about $4 mil- lion, or 64 percent; and ‘MBDA’ssix regional offices are locatedin Washington,DC.; New York, New York; Atlanta, Georgia; Chicago,Illinois; Dallas,Texas;and SanFrancisco,California. MBDA’sfour district offices are located in Boston,Massachusetts;Philadelphia, Pennsylvania;Miami, Florida; and Los Angeles,California. Page 21 GAO/ICED9069 Inqroving the Minority Bdness Development Agency chapter 3 Staffing Levels Should Better Reflect Agency Mlssion and Work Load l funding for advocacy, research, and information efforts decreasedby about $570,000, or 92 percent. Further, in fiscal year 1988, no funding was made available for research activities. From fiscal year 1986 through fiscal year 1988, headquarters’ staffing levels fell by only 4 staff positions, and regional staffing levels fell by only 8 staff positions for a total of 12 positions, or about 6 percent of MBDA'S September 1988 staffing level. MBDA Officials Be1ieve Although we did not assessthe specific work load requirements and staffing needsof MBJM headquarters’ staff, we did ask the top manage- Headquarters Is ment officials for their views on headquarters’ staffing needsbasedon Overstaffed the agency’s work load. According to several MBI~A officials-including the former Deputy Director, the former Assistant Director for External Affairs, the current Chief of the Operations Division, and OIG’S Director of Economic Affairs Division-significant staff reductions could be made in MBDA'S headquarters operations. These officials believed staff reductions were neededbecausethe head- quarters work load had decreased.At the time of our review, headquar- ters work load essentially entailed reviewing and processing applications for the Center program and other special projects (seeapp. V). They said that since MBDA'S public and private sector programs were being phased out, more effort should have been devoted to other activi- ties designedto advance minority businessdevelopment, such as advo- cacy and outreach efforts and more effective Center monitoring. In addition, four of the six regional directors told us that they believe headquarters is overstaffed. Work Load in MBDA Although the work load, primarily activities dealing with the Center program, of MBLIA'S regional offices dropped by about 27 percent from Regional Offices Has Also fiscal year 1986 through fiscal year 1988, regional staffing has been DecreasedOver the Years reduced by only 8 percent. Further, someregional directors have not filled vacant staff positions becausethey believe the positions were not needed.The current major function of the regional staff is to implement and monitor the Center program. According to two of MBDA'S regional directors, that job responsibility alone does not keep the staff fully employed. Role and Responsibilities of the During the 3-year period covered by our review, we determined that the Regional Staff role of the approximately 47 regional professional staff-the Business Pyle22 GAO/RCED3048 Imp~vbg the Minority Bubem Development Agency Chapter 3 Staffing Levels Should Better Reflect Agency Mission and Work Load Development Specialists-consists primarily of serving on Center grant award evaluation panels and then monitoring each Center’s performance under such awards.?Although the specialists are also responsible for engaging in advocacy work and outreach efforts, regional staff we spoke with generally told us that they spend a minimal amount of their work- day on these activities. Center grant evaluation panels are established by the regional offices as neededto evaluate grant award applications. During the evaluation pro- cesseach panel member reviews all applications for the grant under con- sideration. Generally, at least three specialists sit on a panel, and each takes 5 days to 2 weeks to complete the review and evaluation. The regional offices did not maintain records of the number of panels on which each staff member has served. However, many specialists told us that they generally serve on about 3 to 6 panels in a year’s time. After grants are awarded, the specialists are responsible for monitoring the grantees’ performance. Grantees are required to submit quarterly performance reports to MBDA. Regional staff are required to verify the information reported by the grantees and prepare an evaluation report on the performance. Regional staff monitoring consists essentially of desk reviews with a limited number of on-site visits to the Centers. The specialists are supposedto conduct an on-site review at the beginning of the 3-year grant award cycle if the grantee had not previously received an MBDA grant. The purpose of these initial visits is to check the grantee’s office facilities and confirm that the Center has begun opera- tions. Another on-site review is required at the end of the secondquar- ter of a Center’s operations. Additional on-site reviews may be conducted if a grantee’s performance is unsatisfactory. According to most of the specialists we interviewed, they generally made an initial on-site visit to new grantees within 30 days after the project start date and a mandatory visit at the end of the secondquarter to all new and renewed grantees. According to the staff interviewed, most on-site reviews do not last more than a week. The specialists told us that during their on-site visits they verify reported accomplishments, help grantees resolve performance problems, and conduct advocacy activities. They did not usually perform any other on-site visits during ?Asof September30, 1988,out of the 90 regionaloffice staff, 47 were BusinessDevelopmentSpecial- ists, 11 were regional directors and deputy directors(the SanFranciscoregionaldeputy director posi- tion was vacant), and 32 were administrative support staff. Page 23 GAO/RCRD-9989Improving the’hfinority Business Development Agency - Chapter 3 Staffhag Levels Shodd Better Reflect Agency Mbdon and Work Load the 3-year grant period unless a Center’s performance becomes unsatisfactory. When the Center program was implemented, MBDA determined that one specialist was neededto monitor five funded Centers. Using this crite- rion, we compared the regional work loads and actual professional staff levels and found that the number of Centers per staff person during fis- cal years 1986 through 1988 was below that standard in all six regions. Overall, the work load of the regions from fiscal year 1986 through fis- cal year 1988 fell by 27 percent. However, only a 4 percent reduction in regional professional staff occurred during the sameperiod. Table 3.1 shows how the number of projects per specialist changed from fiscal years 1986 through 1988. TaMa 3.1: Number of Projrcta Monitored Per 8taff Penon Proiwtahtaff for Noal year Region 1986 1987 1988 I New York 3.57 to 1 3.67 to1 2.00 to 1 II Washington, D.C. 4.00 to 1 3.00 to1 1.71 to I III Atlanta 2.60 to 1 3.22 to1 2.44 to 1 IV Chicago 3.50 to 1 3.00 to1 2.33 to 1 V Dallas 2.80 to 1 2.66 to1 2.67 to 1 VI San Francisco 3.30 to 1 3.33 to1 3.25 toi Regional Directors Believe Their Dallas, New York, and Washington, D.C., regional directors told us that Offices Are Overstaffed their regions are overstaffed. According to the Dallas Regional Director, the number of professional staff in Dallas could be reduced, although she did not specify by how many. The New York Regional Director said that overstaffing has resulted from a decreasein the number of Centers monitored while the number of staff has remained about the same. In addition, the regional offices of San Francisco, Chicago, New York, and Washington, DC., remain below their authorized professional and clerical staffing levels, in part, becausethe additional positions are deemedunnecessaryby the regional directors. (Seetable V.1 in app. V for authorized and actual staffing levels.) According to the San Fran- cisco Regional Director, the managementto professional staff ratio was too high, and the Deputy Director’s work was only duplicative of the Regional Director’s work. In that region the deputy’s position has been vacant since September 1988. The San Francisco Regional Director said he believed the positions of Deputy Director and Chief of Business Development should be merged. Page 24 GAO- Improvingthe bfinorky Bumine~ Development &encY Chapter 3 Staffing Levels Should Better Refkt Agency Mission and Work Load Not only have over half of the regions remained below their authorized staffing levels, but the Washington Regional Director recommendedthat the Washington Regional Office be eliminated. In 1982 he recommended to MBDA’S Director that the Washington Regional Office be abolished becausethe work load had continued to decreaseand it could be handled by the New York and Atlanta regional offices. In addition, in his opinion, no need existed to maintain any of MBDA’S four district offices. The New York Regional Director said that she had recommendedthat the Boston District Office be eliminated. She noted that although only one staff person was in the district office, the regional office had to send work to the staff person becausenot enough work was generated within the district. Currently, in the Boston District Office, the staff member is responsible for monitoring one Center and serving on evaluation panels in the regional office. The Regional Director said the work load at the Boston District Office has always been minimal, and there has never been more than one staff member assignedto the office. According to the Regional Director, neither the minority businesscommunity nor the Center would be affected if the Boston District Office were eliminated. The Center in the area would continue to provide services and could be monitored just as effectively from the New York Regional Office. Commerce’sOIG reported3 a similar overstaffing situation when in Janu- ary 1989 it stated that the regional staff levels were significantly higher than the work load justified. OIG reported that MBDA officials in both headquarters and regions confirmed that the MBDAwork load did not jus- tify the number of MBDA staff. OIG concluded that the work load available for the regional staff did not constitute a full-time job. OIG recommended that the regional staff be reduced by 16 positions and that MBDA deter- mine the need for existing vacant positions. MB&%officials did not respond to OIG concerning this recommendation. ‘Final Reporton Inspectionof the Minority BusinessDevelopmentAgency’sDistrict Offlw tkport 0. - , an. 1989>. Page 25 GAO/RCEiD-9949Improving the lKIno&y Business Development Agency Chapter 3 Stafllng Levels Should Better Refkct Agency Mimion and Work Load From 1984, when first appointed, until his replacement, the former Personal Differences Director, becauseof personal differences, relieved his Deputy Director Between Former of most responsibilities of the position. This resulted, according to Director and Former another former MBDA official, in no clear delegation of authority or responsibility throughout the agency. Agency officials also cited the Deputy Director and lack of communication between the former Director and the rest of the Lack of agency as a managementproblem. Communication Cited We asked MBDA officials to describe the type of staff problems that as Past Problems by existed within the agency and asked them their opinion regarding the MBDA Officials impact of these problems on the operation of the agency. We determined that a major problem existed between the former Director and the for- mer Deputy Director. According to the former Deputy Director, the for- mer Director relieved him of most of his job responsibilities, and as a result, he performed only minor tasks after the former Director’s appointment in 1984. The former Director’s action, according to the for- mer Deputy Director, was the result of personal differences that had developed between the two after they had both competed for the posi- tion of Director in 1984.4According to the former Deputy Director, one of the former Director’s first actions after being appointed was to try to fire him. However, since they were both political appointees, the Direc- tor was unsuccessful.The former Deputy Director said he was told by the former Director that he could do anything he wanted as long as it had nothing to do with the day-to-day operations of the agency. Further, the former Deputy Director told us that only once in 4 years did the former Director give him written instructions to do something. In a February 10, 1986, memorandum to MBDA’S Assistant Directors and Staff Office Chiefs, the Director restated the role of the Deputy Director: “The day-to-day direction and management of the Minority Business Development Agency operations will continue to be administered by me. . . . [The] Deputy Director . . . has been directed not to request, inquire, or demand from any MBDA employee the status of or any information relating to personnel actions, financial and budget matters, public affairs, grants and cooperative agreements, statistical data, and other operational activities without my prior approval.” As a result of the former Director’s actions, according to the former Dep- uty Director, he was excluded from the day-to-day managementopera- tions and often had no knowledge of what was going on in the agency. He said that he kept himself busy by traveling to various parts of the 41nOctober1988the Deputy Director had held that position for 7 years and was a memberof the SeniorExecutive Serviceat the 05 level. Page 26 GAO/RCEDBO-tI@ Improving the Minority BueinecwDevelopment Agency .--_. Chapter 3 Staffing Levels Should Better Reflect Agency Mission and Work Load country promoting MBDA at various meetings and conferencesrelated to minority businesses.He told us that at one conferencehe was presented with an award for promoting minority businessesbut felt so guilty about accepting it becauseof his lack of meaningful duties and responsi- bilities that he returned the award. According to the former Deputy Director, the dispute between him and the former Director was widely known inside and outside of the agency, and the infighting had negatively affected employee morale and per- formance. In addition, the former Deputy Director told us infighting was so bad at one point in 1984 that a member of the White Housepersonnel staff met with both him and the Director and told them to “get their act together.” Although both men agreed at that meeting to resolve their differences, the dispute continued. Our discussionswith the former Director and other agency officials con- firmed that this dispute did occur and was widely known. The former Director told us that he relieved the Deputy Director of his responsibili- ties becausethey were unable to establish a relationship basedon trust. Former Officials Cited According to the former Deputy Director and several other headquar- Lack of Communication ters officials and one regional official we spoke with, including the Assistant Director for Program Support, State and Local Programs, and and Delegation of the San Francisco Regional Director, a lack of communication also ham- Responsibilities as Major pered staff operations under the former Director. For example, the for- Problems mer Deputy Director told us that the former Director held only two executive staff meetings in 4 years. The former Assistant Director for Program Support, State and Local Programs, also told us that becauseof the poor relationship between the former Director and Deputy Director, there was no clear delegation of authority or responsibility throughout the agency. The former Director told us that he thought staff meetings were a waste of time and usually only served as a forum for complaints. He said he knew what was going on in the agency and therefore did not feel the need for more staff meetings. In a 1986 report, OIG also found that key executive positions were not being utilized effectively and that poor communication existed between Page 27 GAO/RCED-9049Improving the Minority Business Development Agency Chapter 3 Staffhg Levels ShouId Better RefIeet Agency Midon and Work Load the Director and his key operating managers in headquarters.” OIG rec- ommendedthat the Director take steps to utilize key staff positions and improve communication with all assistant directors and regional direc- tors to ensure effective agency operations. Although MBLU agreed with the OIG findings and stated in its responseto the report that it had taken actions to correct the problems, these problems still existed at the time of our review. Management views on that both the headquarters and regional offices were overstaffed in the Past Problems, past when compared to work load requirements. However, he told us that he is taking action to correct the problem. Specifically, he and his Staffing, and Work staff are developing a “redirection plan” that will evaluate staffing Load Needs needsand roles and responsibilities. He said that if MBDA’S staff both at headquarters and the regional offices were involved more actively in outreach-type activities, such as developing contacts with corporations and financial institutions to promote minority businessgrowth, they would be fully employed and MBM would not be considered overstaffed. The new Director was aware of the previous managementproblems between the former Director and the former Deputy Director, and he believes that the situation negatively affected employee morale and pro- ductivity. He also told us that he will not allow such a situation to occur under his leadership and plans to use effectively all key executive staff positions. In addition, according to the Director, since his appointment in April 1989, he has improved communication throughout the agency through regularly scheduledstaff meetings with headquarters’ officials and conferencecalls with regional management. Conclusions officials and an assessmentof the agency’s current work load, MBDA is overstaffed both at headquarters and at the regional and district office levels. While funding for MBDAprograms has been reduced or eliminated, commensurate increasesin other duties or staffing reductions have not occurred. As a result, MBIX’S present staffing levels exceedthat required by its present work load. However, the current Director of MBDA told us he is developing a “redirection plan” that will evaluate staffing needs Neededin the Minority BusinessDevelopmentAgency’sSupport Activities (Report 51mprovements 0. - -6-001,J-an.1986). Page 28 GAO/WED4WM I.mprovfng the Mimrity Buhew Development Agency Chapter 3 Staffing Levels Should Better Reflect Agency Mission and Work Load and roles and responsibilities, and he hopes to use more fully MBDA staff through increased outreach efforts. In addition, on the basis of comments of current and former MBDA offi- cials, we believe that an executive position, that of the former Deputy Director, was underutilized and that the situation was allowed to con- tinue for a number of years without corrective action. The former Dep- uty Director told us that this problem contributed to a lowering of employee morale and productivity throughout the agency. This situation appears to be corrected as a result of the appointment of the new Direc- tor in April 1989 and, if good managementpractices are followed, should not be allowed to recur. We recommend that the Secretary of Commercedirect the Director, Recommendations MBDA, as part of his effort to examine agency staffing, to determine how to either (1) better utilize existing staff resourcesthrough the expansion of their roles and responsibilities or (2) reduce staff to realistically reflect the agency’swork load. Page 29 GAO/RCmW Improving the Minority BusineaaDevelopment Agency -..,. Minority BusinessDevelopmentCenter Clients Are Satisfied With Services Generally, Center clients have been satisfied with the assistanceand services they have received, and about 83 percent would seek similar assistancein the future. Over 50 percent of all clients found the services to be useful in meeting their businessneedsand developing or improving their businessskills. In addition, a majority of Center clients expressed favorable opinions of Center personnel and the worth of the services received. To determine client satisfaction, we interviewed 149 clients randomly Center Clients and selected from clients in the six regions who MBCIAreported were served Assistance Received during the last 3 months of 1988. Cur survey results represent the views of 76 percent of all MBDA clients for that time period. Our survey was limited to an assessmentof client opinion. We did not assessprogram effectiveness. MBDA reported that it provided assistanceto a total of 4,140 clients during those 3 months through 101 Centers located throughout the United States. Figure 4.1 shows the geographic coverage of MBDA’S six regions and the number of clients served within those regions during October-December1988. P8ge 30 GAWmf@gg bplpvine the Miaorfty Badnew Development Agency Chapter 4 Minority Budnew Development Center Client8 Are !SatisfiedWith Services Figure 4.1: MBDA Regions and Clients Sewed in Last 3 Months of 1988 Number of MBDA ragion clients I New York 506 II Washinaton. D.C. ” 234 III Atlanta 979 IV Chicago 625 V Dallas 714 VI San Francisco 1,082 Total 4,140 Page 31 GAO/RCRD-0 Improving the Minority Business Development Agency Ch8pter 4 Minority BusineeaDevelopment Center Clienta Are Satidled With Service9 Basedon our random sample, the assistancereceived by 3,477 of the 4,140 clients was in the form of managementor technical assistance only. That is, clients were given advice on various businessactivities, such as, on how to develop computer programs or obtain a contractor’s license. Assistance in obtaining financial help (loans from lending insti- tutions) was given to 68 clients. Help in obtaining procurement contracts was given to 128 clients. The other 467 clients received a combination of these three types of assistance.Our sample mirrored the total clients in the types of assistancereceived and consistedof clients from all six regions. Figure 4.2: Clients by Type Of Assistance Received Combination Management8 Technical Over 55 percent of the clients receiving management and technical assis- tance received 5 or fewer hours of assistance.About 20 percent received only 1 hour. About 29 percent received 6 to 20 hours, and 16 percent received over 20 hours. Overall Satisfaction received and would seek assistancein the future. According to our sam- ple, about 72 percent of MBDA clients have a high or generalsatisfaction with the assistancethey received from a Center. Fourteen percent were Page 32 GAO/RCED-3O+Ub Improving the Minority Business Development Agency Chapter 4 Minority Business Development Center Clientu Are Sntidied With Services “generally” or “very unsatisfied.” We did not determine the basis for their satisfaction or unsatisfaction. Figure 4.3: Overall Client Satisfaction loo hMant 90’ 00 70 so so a 30 20 10 0 Over 83 percent of MBDA clients indicated a definite or probable likeli- hood of contacting a Center in the future if they would need similar assistance.Less than 10 percent “probably” or “definitely” would not seek assistancefrom a Center in the future. We did not determine why the clients would or would not contact the Centers in the future. P8ge 33 GAO/RCED-90-33Improving the Minority Business Development Agency Chapter 4 Minor&y BusineeaDevelopment Center Clients Are Satisfied With Services Figure 4.4: Clienta’ Likelihood to Contect Centers in the Future loo hwm Impact of Assistance management and technical assistance,i.e., businessadvice. Accordingly, on Client Business and we asked the clients how beneficial the services thev received were to ” their businessneedsand to themselves-to their skills-as business entrepreneurs. About 53 percent of MEWclients believed that the services they received were “very” or “extremely” useful in meeting their businessneeds. Roughly, another 30 percent believed that the services were “some- what” or “moderately” useful. The remainder believed that the services were “hardly” or “not at all useful.” P8ge 34 GAO/~W Jmproving the Minority B8dnew Development Agency chapter 4 Minority Bushesa Development Center Clienta Are S&idled With !Sewices Figure 4.5: Usefulness of Assistance in Meeting Business Needs loo hlcalt 90 so 70 Impact on the clients’ individual entrepreneurial skills was viewed as somewhat less but nevertheless substantial. About 36 percent of the cli- ents believed that their businessskills or knowledge had “greatly” or “very greatly” increased as a result of the assistance received from the Centers. About 36 percent indicated that their businessskills or knowl- edge had increased at least “somewhat” or “moderately.” The remaining 28 percent believed that their skills/knowledge increased little, if at all, as a result of a Center’s assistance. P83t?33 GAO/RcEDgo69 Improving the Minority Business kvelopmrnt Aww -- ---.-- cbpter 4 Minority Blldnes Development Center Clienta Are Satisfied With Services Figure 4.6: Impact on Client Business Skills and Knowledge During our client interviews, we also elicited opinions and assessments Client Assessment of of the capabilities of Center personnel and of the value or monetary Center Capabilities worth of the servicesor assistancereceived. Most clients regarded the capabilities of Center personnel quite favorably. About half of those who paid for the services received believed that those services were worth “somewhat more” or “a lot more” than the fees paid. In our survey, 66 percent of MEXNclients rated the expertise of Center personnel as “above average” or “excellent.” Eight percent described the expertise as “poor” or “below average.” These ratings were based on clients’ experienceswith Center personnel. Pyre 36 GAO/BCED-30-33Improving the Minority Business Development Agency Chapter 4 Minority Business Development Center Client.9Are !SatisfiedWith !kvices Figure 4.7: Client Opinion of Center Expertlse 90 so 70 Becausewhat individuals pay for a service is important in their assess- ment of the value of that service, we asked the clients in our sample to assessthe services that they received relative to the nominal fees that they had to pay. About 73 percent of our sample had paid fees for ser- vices. About 27 percent of our sample paid nothing. (Seech. 1.) The ser- vices were worth “somewhat more” to “a lot more” than the amounts paid, according to about 54 percent of the paying clients. They were worth “about what was paid,” according to about 32 percent of the pay- ing clients, and worth “somewhat less” or “a lot less” to the remaining 14 percent. Page 37 GAO/IWED~ Improving the Minority Business Development Agency Chapter 4 Minority Budneaa Development Center Clients Are s&idled With services Figure 4.8: Client Assessment of Wrvices’ Worth loo hmaa so 30 Despite MBDA’S problems with delayed grants and staff utilization, Conclusions Center clients generally appeared satisfied with the servicesthey received and would seek assistancefrom MBIMCenters again. However, if MBLIA management is improved through a more timely grant review and approval processand fuller staff utilization, perhaps an even larger segment of the minority population could be served. Page 33 GAO/RCBLbW Improving the Mhorky Bueine!w Development Agency Page 39 GAO/RCED-90439 Improving the Minority Business Development Agency MBDA F’unding Levels by Program for Fiscal Yem 1986-1988 Dollars in thousands Propram funds FYI996 FY1997 FY1998 Minority Business Development Center $28,452 $27,609 $24,728 Program Public/private sector programs 7,552 5,499 2,513 Advocacv. research. and information 617 456 48 Total $26,621 $33,564 $27,289 Note: Funding information by program activity was available for only fiscal years 1986 through 1988. Page 40 GAO/lKEB30-33 Improving the Minority BusineesDevelopment Agency Appendix II Minority BusinessDevelopmentCentersin Operation as of December1988 New York MBDA region Washington MBDA region i3;3;;ly&NY Baltimore, MD Pittsburgh, PA Nassau/Suffolk, NY Philadelphia, PA Manhattan, NY Norfolk, VA Queens, NY Newport News, VA Rochester, NY Washington, D.C. Williamsbur NY San Juan, PR Mayaguez, PR Ponce, PR Newark, NJ New Brunswick, NJ Hartford, CT St. Thomas, VI Atlanta MBDA region Chicago MBDA region Birmingham, AL ;$yl, IL (2) Montgomery, AL Mobile, AL Indianapolis, IN Cherokee Indian, NC Minneapolis, MN Charlotte, NC Minnesota Chippewa Tribe, MN Fayetteville, NC Cleveland, OH Raleigh/Durham, NC Cincinnati, OH Atlanta, GA Akron/Canton, OH Savannah, GA Kansas City, MO Augusta, GA St. Louis, MO Columbus, GA Detroit, Ml Greenville, SC Milwaukee, WI Charleston, SC Columbia, SC Orlando, FL Jacksonville, FL Tampa. FL Miami, FL West Palm Beach, FL Memphis, TN Louisville, KY Jackson, MS Dallas MBDA region San Francisco MBDA region Corpus Christi, TX Los Angeles (South), CA Corpus Christi (Rural), TX Los Angeles, CA (2) Houston, TX Anaheim, CA McAllen, TX Oxnard, CA Beaumont, TX Riverside, CA Austin, TX El Monte, CA Laredo, TX San Jose, CA San Antonio, TX Stockton, CA El Paso, TX Fresno, CA Dallas, TX Bakersfield, CA Brownsville, TX Salinas, CA Albuquerque, NM San Francisco, CA Baton Rouge, LA San Diego, CA Shreveport, LA Sacramento, CA New Orleans, LA Santa Barbara, CA Little Rock, AR Anchorage, AK Oklahoma City, OK Phoenix, AZ Tulsa, OK (2) Tucson, AZ Salt Lake City, UT Tempe, AZ Page 41 GAO/ItCED-9069 Improving the Minority Business Development Agency AQQendixII Minority RualneesDevelopment Centers in Operation aa of December19W Dallas MBDA region (continued) San Francisco MBDA region (continued) Bismarck, ND Portland, OR Las Vegas, NV Seattle, WA Honolulu, HI Page 42 GAO/RCED9069 lmprovlng the Minority Rushsa Development Agency Appendix III MBDA’s Application and Review Processfor SpecialProjects In addition to funding its Center program, MBDA funds special projects that are pilot and demonstration projects. The primary purposes of spe- cial projects are to (1) provide special servicesthat are not available through existing programs, (2) demonstrate or test unique.or innovative approaches and methods for helping minority entrepreneurs, and (3) promote minority businessformation. These awards are made to educa- tional institutions, various private organizations, minority businessand industry associations,and chambers of commerce. The purpose of special projects is to provide or improve services to minorities or to assist a particular industry or segmentof the minority businesspopulation that is underrepresented. Special project grants are awarded noncompetitively for a l-year period and should be original in concept and should not duplicate servicesof other MBDA programs. The types and purposes of special projects funded by MBDA vary. For example: l The Latin American Manufacturers Association, which has received funding for several years, has attempted to involve minority business enterprises in the construction of McDonnell-Douglasaircraft and identi- fication of subcontracting opportunities. . The National Association of Black and Minority Chambers of Commerce has received several grants to collect, evaluate, and disseminate rele- vant businessconvention, travel, and tourism information to minority businesses. . The Texas Association of Mexican-American Chambers of Commerce has received grants to motivate youth toward completion of education and encourageyouth toward entrepreneurship. Special project proposals are submitted either to regional offices, which Application and forward them to headquarters, or directly to headquarters by individu- Review Process als or organizations who believe they have an idea for promoting minor- ity businessdevelopment that is worthy of funding. The Office of Program Development and the appropriate regional office review and rate proposals to determine if they duplicate any other MBDA program and are consistent with MBDA'S minority businessdevelopment philoso- phy. According to the Chief of the BusinessDevelopment Division in the Office of Program Development, the office tries to assign special project proposals to programs that already exist. At this point in the review process,staff in the Office of Program Development sign off on the pro- posals and indicate whether or not they agree with the concept of the proposals. They do not review the scopeof work or the methodology Page 43 GAO/RCED-9989Improving the Minority Business Development .4gency becausethe proposals have not yet been developed into formal applica- tions, and in many cases,they are only ideas. According to MBDA policy and procedures, proposals are rated individually on their own merit. The proposals are then forwarded to the Director, MBDA, who makes the final decision whether the proposals should be developed into formal applications that will be processedfor funding. If any or all of the offices in the review and rating processrecommend a proposal not be funded, the Director can disregard the recommendations and decide to fund a proposal. If the Director decidesto fund a proposal, it is for- warded to the appropriate regional office for processing. The regional office works with proposers to develop formal application packages.After the regional director is satisfied that the package meets all MBDA requirements, the regional director prepares a memorandum stating whether or not the project is recommendedfor funding. Head- quarters officials stated that it is unusual for a regional director not to recommend a project at this point. The package is then forwarded to headquarters and is subjected to the samereview procedures as the competitive grants packagesunder the Center program. Special Project Proposals The former MB&I Director approved the expenditure of about $8.9 mil- Funded With lion of discretionary funds for 66 special projects during fiscal years 1985 through 1988. These funds were obtained by redirecting either Discretionary Funds other program funds from MBDA program costs that had been disallowed or appropriated program funds that had not been obligated and expended by the end of the fiscal year. Table III.1 lists the special projects funded with discretionary funds dur- ing fiscal years 1985 through 1988. Forty-four grantees received discre- tionary funds to carry out the 66 projects. We reviewed 8 of the 66 project files to ensure that other MBDA officials besidesthe Director had been involved in the review and approval of the projects and to ensure that the projects were being monitored after funding. We found that although only the Director can approve funding, several offices, such as the Office of Operations, the Office of Program Support, and the Office of Chief Counsel,reviewed the proposals and submitted their recommendations regarding funding. After funding was approved, MBDA'S Office of Counsel and Commerce’sOFFA conducted additional reviews. Our review of the special project files showed that Page44 GAO/RCED-9069hn~roving the Minority Bttsimsr, Development Agency MBM’r AQQkation and Review Prom68for Specify these projects received the samekind of monitoring as the grants under the Center program. (Seediscussion in ch. 2.) Table 111.1:Special Projects Funded With Discretionary Funds From Fiscal Year Grantee Purpose Amount 1gO5 Through Fiscal Year 1988 Golden State Business League, Develop small business incubator $525,000 Oakland, CA Chinatown Neighborhood, Promote minority use of public sector 500,000 New York, NY Asian-Pacific American Chamber of Stimulate/coordinate private sector 275,934 Commerce, initiatives Washinaton. D.C. National Council of Hispanic Women, Stimulate/coordinate private sector 20,000 Washington, DC. initiatives Texas Association of Mexican- Motivate youth toward completion of 490,000 American Chambers of Commerce, education, encourage youth toward Austin, TX entrepreneurship National Association of Black and Collect, evaluate, and disseminate 528,725 Minority Chambers of Commerce, relevant business, convention, travel, Oakland, CA and tourism information Mexican-American Foundation, Conduct seven forums for networking 520,347 San Dieao. CA and five procurement conferences University of Texas, Develop pilot training model 416,320 Austin, TX incorporating uniqueness of entrepreneur characters National Minority Suppliers Assist in providing affordable working 692,249 Development Council, capital to minorities in securing New York, NY contracts DYMA Associates, Inc., Develop export trading company/ 243,049 Washington, DC. merchant bank Florida A&M University, Develop, implement, coordinate 943,750 Tallahassee, FL national program for establishing, expanding, and saving minority business Oklahoma University, Assess problems of Indian-owned 30,397 Norman, OK businesses Interracial Council for Business Conduct in-depth broadcast training 200,000 Opportunity, program for Center staff New York, NY ;;im; Veeture Corporation, Educate minorities to identify 216,450 revitalization and financial assistance resources Disseminate bid opportunities, assist 200,000 state/local procurement goals Coalition of Minority Women, Develop/implement entrepreneurship 150,000 Washington, D.C. network for minority women -- National Association of Minority Develop a system to obtain, store, 223,459 Contractors, retrieve, and disseminate Washington, DC. construction industry data (continued) Page 46 GAO/RCRD99-69Improvins the Minority Ruhese Development Agency -- MBM’r Application and Review Procew for speeuprojecte Gmntee Purpose Amount National Association of Hispanic Increase Hispanic construction $225,000 Contractors, enterprise participation in the Surface Washington, D.C. Transportation Assistance Act Proaram U.S. Conference of Mayors, Develop profiles of USCM member 178,740 Washington, D.C. cities, minority business development Latin American Manufacturers Identify subcontracting opportunities 342,388 Association, in construction of McDonnell-Douglas Washington, DC. Cl 7 aircraft phw;r 7: Grande Municipalities, Provide training for elected officials to 200,000 develop economic development plans . San Juan, PR Assist San Juan in establishing an 95,000 Economic Development Department National Hispanic University, Promote awareness of business 300,000 Oakland, CA opportunities to Hispanic youth Fulton County, GA, Create and expand minority 50,oocl Atlanta, GA businesses International Consultant Services, Identify information/product needs 75,000 Inc., with foreign companies McLean, VA American Association of Community Support MBDA’s Partnership 840,000 and Junior Colleges, Program by establishing alliance Washington, DC. between education, business, and government through the community colleae network Albuquerque Hispanic Chamber of Expand small business membership 157,500 Commerce, in the Chamber and assist in the Albuquerque, NM development of business Federal Procurement Data, Publish a list of small and large 500 Arlington, VA minority-owned firms and 8(a) contractors Corliss. Inc., Conduct debt collection services 4995 Washington, D.C. Multnomah County, Description not available 2,512 Portland. OR Nevada Economic Development, Conduct 3rd annual private sector/ 38,898 Las Vegas, NV federal procurement conference Greater Washington Ibero-American Conduct membership expansion 139200 Chamber of Commerce, drives and provide business Washington, DC. information to members Chicago Economic Development Description not available 1,473 Corporation, Chicago, IL Uptown Chamber of Commerce, Conduct a conference to promote 9,100 Phoenix. AZ tourism obportunities Federal Marketplace Services, Determine federal procurement 8,500 Washington, DC. information needs and capabilities International Trade Administration, Publish a handbook of franchise 12,130 Washinoton, DC. opportunities (continued) Page 46 GAO- Improving the hiinorhy Bnsinem Development Agency Appendix Ill MBM’s Application and Review Processfor special Pmjecta Grantee Purpose Amount Social Policy Corporation, Cosponsor a planning assembly to $5,000 Washington, D.C. produce a publication on business development National Economrc Association, Conduct a review of the black 3,000 New York, NY political economy The Maxima Corporation, Description not available 9,000 Washinaton, D.C. E. H. White and Company, Provide operations and technical 119,610 San Francisco, CA support for MBDA information proaram U.S. Hispanic Chambers of Conduct four minority learning 38,000 Commerce, seminars Kansas Citv. KS EVKO Productions, Conduct public relations activities 22,233 Washington, DC. Garcia Lopez Consulting Agency, Conduct workshops 3,000 Washington, DC. Norfolk State University, Conduct a minority business 30,000 Norfolk, VA development conference TOM S8,886,45? Page 47 GAO/RcEDgo69 improving the Mlnorlty Business Development Agency Appendix IV Minority BusinessDevelopmentCentersThat I- SuspendedOperationsBecauseof Delays in the Grant Process@‘iscalYears 19864988) Dow sustmded Center location 1906 1987 1988 Anaheim, CA 30 Baltimore, MD 23 30 Brownsville, TX 214 31 30 El Monte, CA 30 Chicago, IL 51 Cincinnati/Dayton, OH 28 Hartford, CT 61 Denver, CO 245 31 243 El Paso, TX 214 31 30 Honolulu, HI 92 31 274 Laredo, TX 30 61 Little Rock, AR 92 Manhattan, NY 182 McAllen , TX 30 92 Minneapolis/St. Paul, MN 62 Mobile, AL 30 Montgomery, AL 30 Newport News, VA 12 7 57 Oklahoma City, OK 31 Philadelphia, PA 18 9 30 Phoenix, AZ 31 30 Pittsburgh, PA 13 33 Richmond, VA 8 92 Riverside, CA 91 Sacramento, CA 151 San Francisco, CA 122 San Jose, CA 31 92 Seattle, WA 61 Shreveport, LA 123 30 Tucson, AZ 212 Tulsa, OK 183 212 -___ 153 Washington, D.C. 91 20 31 Page 48 GAO/BcEDI)oBQ Improving the Minority BusinesaDevelopment Agency Appendix V Description of MESDAHeadquarters Offices’ ITunctions The Office of the Director includes the Director’s Office and the Deputy Director’s Office. The Director’s Office provides overall direction to the agency in developing and implementing agency policies, goals, objec- tives, and programs. The Director’s Office also determines the agency’s organizational structure and is responsible for financial and personnel resources.The Deputy Director’s Office provides assistanceto the Direc- tor and acts for the Director in his absence. The Office of Chief Counselprovides legal services and support to the Director and all componentsof the agency. Someof the principal respon- sibilities of this office are to prepare and review legislative proposals, executive orders, and legislative reports; identify and review legislation related to minority enterprise development; and review and recommend agency statements and testimony for congressionalor public hearings on legislation. The Office of External Affairs is responsible for coordinating activities relating to the advocacy of minority businessdevelopment. This office is divided into three divisions: CongressionalAffairs, Communications, and Advocacy. The CongressionalAffairs Division develops and maintains sound and effective relations with membersof the Congress,congressionalcommit- tees, and their staffs. The Communications Division serves as the focal point for all agency public affairs and public information activities. The Advocacy Division plays a leadership role in developing and implement- ing a program that effectively represents the concernsof minority busi- nessregarding minority businessdevelopment and MBDA. The Office of Administrative Managementis responsible for the man- agementof the agency’sbudget, managementsystems, and administra- tive support. This office includes the F’inancial Management Division and the ManagementDivision. The Financial ManagementDivision develops and maintains a comprehensivebudget and financial manage- ment service for the agency. The ManagementDivision functions as the agency advisor on all matters relating to managementsystems. The Office of Operations is responsible for grants administration and the financial review process.This office establishespriorities for the alloca- tion of program resourcesamong the regional offices. The office ensures that special and demonstration projects are logged and submitted to the Office of Program Development for review and funding. The office also coordinates policy objectives with Commerce’sOffice of Finance and P8ge 49 GAO/IK%MWW Improvlne the Minority v Development Agency Appendix V becrlption of MBM Headquarters ofnces’ Punctlons Federal Assistance to ensure the processingof grants and cooperative agreementsin a timely manner. The Office of Operations includes two divisions within headquarters: the Operations Division and the Field Coordination Division. In addition, all regional offices report to the Associate Director for Operations. The Office of Program Development is responsible for designing and developing all MBDA programs and identifying and coordinating private and public sector resources.The Program Development Office is divided into three divisions: Private Sector Division, Public Sector Division, and BusinessDevelopment Division. The Private Sector Division develops programs to encouragethe crea- tion and growth of minority businessopportunities within the private sector. The private sector delivery system provides management and technical assistanceto eligible firms and increasesminority-firm partici- pation in growth sectors of the economy and in emerging technologies. The Public Sector Division is responsible for program development, oversight, and implementation of federal, state, and local programs. The Business Development Division identifies the need for, develops, and maintains programs, policies, and priorities for the delivery of manage- ment and technical assistanceand other businessdevelopment services to client minority firms. The Office of Program Support is responsible for the operation and maintenance of the agency’sinformation support systems. The office operates the PROFILE National Minority Data Base and strategic sys- tems that support program and managementoperations. This office also managesagency-sponsoredresearch programs and analyzes research studies of economicconditions affecting minority businessdevelopment. The Office of Program Support is divided into three divisions: Research Division, Data ResourcesDivision, and Planning and Evaluation Division. The ResearchDivision gathers data and research information, sponsors research studies, and makes recommendationsfor future agency policy decisions.The Data ResourcesDivision is responsible for the collection and processingof data on agency performance and maintenance of agency information systems. The Planning and Evaluation Division interacts with agency units to develop strategies to meet goals and objectives. Page 50 GAO/RCEDgMB Improving the Minor&y Business Development Agency _- Appe* V Description of MBDA Headquartera omces’ Fbnctlons Table V.l: Authorized and Actual Staffing Levels a8 of September 30,1988 Authorized permanent Permanent rtaff Headquarters stir3! on board’ Office of the Director 9 5 Office of Chief Counsel 6 5 Office of External Affairs 19 16 Office of Administrative Manaaement 21 21 Off ice of Operations 19 19 Office of Program Development 21 19 Office of Program Support 26 23 Subtotal 121 108 Reaional offices New York (I) 16 15 Washington (II) 15 14 Atlanta (III) 17 16 Chicaao (IV) 14 13 Dallas (V) 16 16 San Francisco (VI) 17 16 subtotal 95 90 TOM 216 198 Turrent permanent on-board numbers do not include temporary employees Page 51 GAO/RCED-904gImproving the Minority Business Development Agency Appendix VI Major Contributors tg This Report - Resources, EugeneAloise, Assignment Manager Community, and Jacqueline Bell, Evaluator M. Jane Hunt, Reports Analyst Economic Development Division, Washington, DC. Detroit Regional Office Lawrence Charron, Site Senior Patricia Carlucci, Evaluator Pamela Brown, Evaluator Susan Mak, Site Senior San Francisco Amer Kayani, Evaluator Regional Office (077071) Page 52 GAO/RCED4O8B Improving the Minority BuelnessDevelopment Agency Requests for copies of GAO reports should be sent to: V.S. General Accounting Office Post Office Box 6015 Gaithwsburg, Maryland 20877 Telephone 202-275-6241 The first five copies of each report are free. Additional copies art’ $2.00 each. There is a 25’t discount on orders for 100 or more copies mailed to a single address. Orders must bth prepaid by cash or by check or money order ma& out to the Superintendent of Documents.
Minority Business: Management Improvements Needed at Minority Business Development Agency
Published by the Government Accountability Office on 1990-01-19.
Below is a raw (and likely hideous) rendition of the original report. (PDF)