- Details
- By Brian Edwards
- Native Contracting
The Small Business Administration's sweeping audit of its 8(a) Business Development program has left Native-owned companies scrambling to meet a 30-day deadline that advisers say may be unreasonably tight and unclear.
The SBA's Office of General Counsel issued a data call on Dec. 5 requiring all 8(a) program participants to submit three years of financial records, employee lists, contract details and other documents by Jan. 5. The request affects tribal enterprises, Alaska Native corporations, Native Hawaiian organizations and individual-owned businesses across the program.
Matt Feinberg, an attorney at PilieroMazza who represents 8(a) firms, said his office has been fielding calls around the clock from companies seeking guidance. He said the SBA has not granted extension requests and business opportunity specialists were not informed before the audit was announced.
“We are basically 24/7 answering calls from the 8(a) community,” Feinberg said during an interview ahead of a Wednesday webinar his firm is hosting on the audit.
Feinberg said the audit appears designed to identify fraud and abuse in the program, which the current administration views as rampant despite limited evidence. He characterized the review as policy-driven rather than data-driven.
The most pressing issues involve ambiguous language in the SBA's requests. When the agency asks for information from "the last three full fiscal years," it remains unclear whether that means company fiscal years or government fiscal years. For businesses with Dec. 31 year-ends, the data would be more than a year old, while companies with Sept. 30 year-ends would provide more recent information.
Another confusing request asks for copies of “all 8(a) contracts on which the firm is currently working for the last three fiscal, full fiscal years.” Feinberg said companies cannot determine whether the SBA wants only active contracts, all contracts performed during the three-year period, or contracts awarded in that timeframe.
The request for bank reconciliations, payroll reconciliations and financial statement reconciliations has also created uncertainty. For large tribal enterprises with multiple contracts, a single month of payroll reconciliations could run 1,000 pages.
"Does the SBA really want thousands upon thousands of pages of payroll, or do they want a year end summary report?" Feinberg said.
Tribal Business News reached out to the SBA press office to ask for clarification on these and other questions about the audit, but the agency had not responded by publication time.
Feinberg said a 90-day timeline would be more reasonable, particularly given the audit's timing during year-end closing periods and the holiday season when many administrative staff take vacation.
“The timing is difficult,” Feinberg said. “You've got people working long hours at a difficult time.”
Feinberg has contacted multiple SBA officials seeking clarification but has not received responses. He said some business opportunity specialists have given companies contradictory guidance, with some incorrectly advising firms not to respond if they recently completed annual recertification.
“We believe absolutely everybody should be responding to this,” Feinberg said.
PilieroMazza's webinar, titled “Inside the SBA's Full-Scale 8(a) Audit: What Participants Need to Know Now,” is scheduled for Wednesday, Dec. 17 at 2 p.m. Eastern time.
