A mysterious Defense Department research project designed to test ways toencourage large contractors to hire small businesses earned a recommendationfor permanent reauthorization from the Government Accountability Office onMonday, a move that surprised some inside the Pentagon and the small businesscommunity.

The 25-year-old TestProgram for Negotiation of Comprehensive Small Business Subcontracting Plans,results for which the Pentagon has never reported to Congress or the public, in2013 helped 12 participating companies avoid "about $18.5 million in coststhrough the use of single comprehensive subcontracting plans rather thanmultiple individual subcontracting plans," the GAO said in a report mandated by thefiscal 2015 National Defense Reauthorization Act.

GAO found after reviewing contracting activities of a dozen firms, includingdefense giants Lockheed Martin Corp. and Northrop Grumman Corp., the companieshad made "acceptable progress" toward enhancing small business opportunities 87percent of the time, GAO found. "Participants also achieved a 72 percentsuccess rate in increasing small business subcontracts in areas such asintegrated circuits and information technology, thus addressing a concern amongsome small businesses that high-end technical work was not being subcontractedunder the program."

Interviews with company managers and DoD officials also showed that theprogram "resulted in non-financial benefits, including greater companywideawareness of small business subcontracting opportunities."

If the program were terminated—as some Defense officials have recommended—aone-time administrative cost of about $22 million could result, GAO said,adding that it had confirmed earlier Pentagon studies estimating that theprogram avoided $45 million in administrative costs in fiscal 2005. The numberof years in which the program has remained in "test" status "createsuncertainty and inhibits further expansion," the report added.

GAO acknowledged that little is known about the program's effectiveness. AndDoD officials balked at the auditor's recommendation that it draft legislationto make the program permanent, noting that it has provided GAO with a chart thedepartment said shows that small business opportunities under the program havedeclined.

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