Small Business Administration:

Office of Advocacy Needs to Improve Controls over Research, Regulatory, and Workforce Planning Activities

GAO-14-525: Published: Jul 22, 2014. Publicly Released: Jul 22, 2014.

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Cindy Brown Barnes
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brownbarnesc@gao.gov

 

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What GAO Found

The Office of Advocacy (Advocacy) within the Small Business Administration (SBA) fulfills its mission by researching small business issues and providing input into federal rulemaking and related regulatory activities. However, GAO identified key areas in Advocacy's system of internal control that could be improved.

  • Research. GAO found that Advocacy did not ensure that its staff monitored the quality of the information the office disseminated, as required. GAO reviewed 20 selected research products and found that in 16 cases a required quality review had not been documented. Advocacy recently established a review policy for its research, but it does not include procedures for selecting the reviewers or documenting that a review occurred and how reviewer comments are addressed. GAO also found that Advocacy staff had not followed federal information quality guidelines to retain data and could not substantiate the quality of information in two cost-estimation reports—a research product it has contracted for every 5 years. Without better controls over its quality review process and efforts to substantiate the information it disseminates, Advocacy cannot ensure the validity of one of its core activities—research in support of small businesses.
  • Regulatory activities. Advocacy recently updated procedures for its regulatory activities, but these could be strengthened. GAO found the extent to which individual staff maintained records varied, in part, because the procedures lacked policies for documentation. For instance, the procedures state that when staff decide to intervene in the rulemaking process, they must follow up as appropriate with the interested groups to ensure that Advocacy has sufficient information and data to support its case. However, there is no policy that these interactions be documented. Federal internal control standards state that documentation and records should be maintained. If key procedures are not being documented, managers do not have an institutional record that agency goals and objectives in this area are being met. GAO also found that the Federal Advisory Committee Act's transparency and other requirements do not apply to Advocacy's meetings with stakeholders to get input on regulations (roundtables).
  • Workforce planning. Advocacy's workforce efforts include training and mentoring for new staff, but do not include succession planning, which is recommended by the Office of Personnel Management. According to federal internal control standards, effective management of a workforce is essential to achieving program results. Officials told GAO that Advocacy was a small office and that additional staff were hired on an as-needed basis. However, some key staff have been with Advocacy for many years and their experience will be difficult to replace. If Advocacy does not incorporate succession planning strategies into its workforce planning efforts, it is at risk of not having the skills and expertise to meet its mission when key staff leave or retire.

Why GAO Did This Study

Congress created Advocacy within SBA in 1976 as an independent voice for small businesses. Questions have recently been raised about Advocacy's efforts to represent small businesses in regulatory activities and some of its research on small business issues. In light of these questions, GAO was asked to review Advocacy's activities.

This report examines Advocacy's (1) research, (2) regulatory activities, and (3) workforce planning efforts. GAO analyzed Advocacy's research, comment letters, and other regulatory information for fiscal years 2008-2013; assessed Advocacy's policies and procedures against federal standards for internal control and information quality; and interviewed agency officials, and small business and industry representatives. GAO also analyzed the applicability of the Federal Advisory Committee Act to Advocacy roundtables.

What GAO Recommends

GAO makes several recommendations to improve the Office of Advocacy's controls over the quality of its research, the documentation of its regulatory activities, and workforce planning. In commenting on a draft of this report, Advocacy agreed with our recommendations and noted some steps it will take to address them.

For more information, contact Cindy Brown Barnes at (202) 512-8678 or brownbarnesc@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In March 2015, Office of Advocacy (Advocacy) provided GAO with the "Office of Economic Research Additional Information Quality Guidelines and Peer Review Policies" (revised August 2014). The guidance formalizes criteria for determining the type and level of information review that should be assigned to each product. Specifically, the guidance includes criteria for selecting the reviewers of Advocacy research and further standardizes the method of evaluation with which peer reviewers are asked to comply. The guidance does not indicate a requirement for documenting all steps of the peer review process--whether a peer review occurred and how and to what extent peer reviewer comments were addressed.

    Recommendation: To improve Advocacy's system of internal control, and help to provide reasonable assurance that the office is meeting its mission, the Chief Counsel of Advocacy should strengthen the accountability of its research activities by enhancing its peer review policies and procedures by including written guidance on selecting peer reviewers and documenting all steps of the peer review process--whether a peer review occurred and how and to what extent peer reviewer comments were addressed.

    Agency Affected: Small Business Administration: Office of Advocacy

  2. Status: Open

    Comments: In March 2015, Office of Advocacy (Advocacy) provided GAO with the "Office of Economic Research Additional Information Quality Guidelines and Peer Review Policies" (revised August 2014). The document states that the internal guidelines are "intended to further clarify when and which information quality checks are needed under the OMB information Quality Guidelines. Furthermore, the Advocacy document states that among the factors Advocacy will take into consideration in implementing the OMB guidance is Reproducability. Citing the OMB guidance, it states, "With regard to original and supporting data related thereto, agency guidelines shall not require that all disseminated data be subjected to a reproducibility requirement." The OMB guidance also states, "In situations where public access to data and methods will not occur due to other compelling interests, agencies shall apply especially rigorous robustness checks to analytic results and document what checks were undertaken. Agency guidelines shall, however, in all cases, require a disclosure of the specific data sources that have been used and the specific quantitative methods and assumptions that have been employed." Advocacy's guidelines do not discuss procedures for robustness checks in those cases where Advocacy does not retain data.

    Recommendation: To improve Advocacy's system of internal control, and help to provide reasonable assurance that the office is meeting its mission, the Chief Counsel of Advocacy should strengthen the accountability of its research activities by developing policies and procedures that reflect the federal information quality guidelines on retaining data for influential studies, and when not retaining data, taking additional steps to substantiate the quality of information disseminated.

    Agency Affected: Small Business Administration: Office of Advocacy

  3. Status: Closed - Implemented

    Comments: On March 26, 2015 Office of Advocacy (Advocacy) officials provided GAO with excerpts of additions to its Interagency Procedures Manual (revised September 2014). These updated procedures state that Advocacy staff are required to maintain records of their small business contacts. Staff are to maintain the contacts in a Due Diligence memo that also details, for example, a description of the rule or policy, the genesis of Advocacy involvement, a plan for outreach to small businesses, small businesses affected, and the economic impact of the rule. The excerpts also detail that the Chief Counsel (the head of Advocacy) must approve proposed roundtable agendas, speakers, agency participants, and discussion topics and the approval must be documented before invitations are sent to participants. Finally, it states that Advocacy's Administrative Support Branch will compile a file that will include a copy of the signed comment letter, due diligence memo, list of small businesses spoke to (name, organization, etc.), roundtable agenda, roundtable invite list, and roundtable sign-in sheet.

    Recommendation: To improve Advocacy's system of internal control, and help to provide reasonable assurance that the office is meeting its mission, the Chief Counsel of Advocacy should strengthen the accountability of its regulatory activities by developing policies and procedures to ensure that key elements of that work--such as sources of input for comment letters and roundtable discussions--are consistently documented.

    Agency Affected: Small Business Administration: Office of Advocacy

  4. Status: Open

    Comments: In December 2014, Office of Advocacy (Advocacy) issued a succession plan aimed at strengthening current and future leadership capacity within the office. In the plan, Advocacy acknowledged that the Chief Counsel allows for funds to be spent on requested formal leadership development programs and time for employees to participate in various developmental opportunities while on duty. The plan also outlined high level descriptions of succession planning strategies including job rotations and personal business commitment plans between employees and managers to identify individual goals for employee growth. The plan also included current executive core qualifications and mission critical occupations, as well as internal and external talent pools to draw from for each identified leadership position. However, it is unclear whether Advocacy has a systematic process for identifying any gaps between its current and future workforce needs. For example, Advocacy's succession plan states that it "anticipated and planned for" retirements in fiscal year 2014 and that it includes "a constant assessment of Advocacy's needs" but it lacked sufficient detail on how it conducted these activities. How did Advocacy assess current and future workforce needs and determine there was a gap? How did it decide on the approach that was appropriate for addressing the gap? As we discuss in our report, a systematic process--one that is based on a long-term strategy rather than implemented on an as-needed basis--to identify such gaps can help management determine the type of training and other strategies that are needed to address factors such as projected retirements and succession planning.

    Recommendation: To improve Advocacy's system of internal control, and help to provide reasonable assurance that the office is meeting its mission, the Chief Counsel of Advocacy should improve its workforce planning efforts to be better prepared to meet its future workforce needs by incorporating succession planning.

    Agency Affected: Small Business Administration: Office of Advocacy

  5. Status: Closed - Implemented

    Comments: Office of Advocacy (Advocacy) created a public webpage in January 2015 that lists information about its roundtables. As of June 1, 2015, the webpage (https://www.sba.gov/category/advocacy-navigation-structure/regulatory-roundtables) has a link to past and upcoming roundtables (January 21, 2015 to June 10, 2015) and includes the meeting date and time, location, and agenda. In addition, the webpage states that Advocacy's roundtables are open to all interested persons, with the exception of the press, and provides an email address (advocacy@sba.gov) for anyone, including press, to submit a request to receive presentations made at the roundtable or be included in the regular distribution list.

    Recommendation: To improve Advocacy's system of internal control, and help to provide reasonable assurance that the office is meeting its mission, the Chief Counsel of Advocacy should coordinate with SBA officials who oversee website administration to comply with Advocacy's roundtable policy to make information on the events--agendas, presentation materials--publicly available on its website so that its regulatory activities are more transparent to the public.

    Agency Affected: Small Business Administration: Office of Advocacy

 

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