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Today the Committee is holding an important oversight hearing, during which we will examine the most serious management and performance challenges facing the SBA.  We will also discuss the Office of Inspector General’s recommendations for addressing these challenges, as we seek to better understand their underlying causes.

The IG is a nonpartisan, independent watchdog tasked with auditing, investigating, and promoting efficiency at SBA.  Simply put, the IG plays a critical role in protecting taxpayer dollars and making sure the agency is fulfilling its mission. In fiscal year 2019 alone, the IG achieved more than $110 million in recoveries and savings—a fivefold return on investment to the taxpayers.

Every year, the IG is charged with reporting to this Committee on SBA’s top management and performance challenges.  This report not only helps with our oversight responsibilities, but also provides SBA with specific recommendations to address these challenges.  Unfortunately, many of these issues are long-standing problems.

One area of persistent concern is SBA’s small business contracting programs.  The IG continues to identify critical weaknesses in SBA’s oversight of its contracting programs, which exposes them to fraud and abuse. In fact, the IG found that ineligible 8(a) firms continue to compete with and receive federal awards intended to assist disadvantaged small businesses under the 8(a) program. Whether this is due to the streamlined application process meant to reduce burdens on applicants or poor management of continued eligibility reviews, it’s imperative for SBA to take corrective actions.

Another area of the report that troubles me is that SBA has not implemented a certification process for its women’s procurement program given that Congress passed a law in 2015 requiring it to do so. This delay is entirely unacceptable.  I look forward to hearing the ways in which SBA can improve its contracting programs, and accelerate the implementation of a WOSB certification process.

I am also concerned about SBA’s rollout of its “Certify.SBA.gov” online platform.  As of August 2019, SBA has spent approximately $27 million on this system, which was supposed to modernize the certification experience for 8(a) and other SBA contracting program participants, and offer comprehensive service delivery. 

But to date, SBA has implemented only limited functionalities, and it failed to make any progress in enhancing these functionalities during the last year. There are complaints of unreasonably long Help Desk delays and significant latent defects in this system. And now we are learning that SBA plans to develop an entirely separate system to monitor 8(a) participants’ business development.

SBA has invested a substantial amount of taxpayer dollars in this platform and I would expect by now to see results from this investment.  Unfortunately, it appears that SBA has failed to implement this platform effectively. It’s my goal for today’s hearing to shed light on what specific steps SBA is taking to address this serious finding and how SBA intends to deliver a more effective system. 

Another issue that requires this Committee’s close attention is SBA’s oversight of its grant programs. Last year, OIG identified “significant systemic deficiencies” in SBA’s grant management, including issues regarding the accuracy of grant data, ineffective oversight, and inadequate standard operating procedures.  While progress has been made in this area, SBA’s oversight of its grant programs remains a significant concern. 

Finally, I was pleased to see that SBA has made progress in developing methods to disclose and track loan agent activities on 7(a) program loans.  IG investigations have revealed an alarming pattern of fraud by loan agents in the 7(a) program, involving millions of dollars. While I am encouraged by SBA’s efforts to implement enhanced loan agent disclosure forms and controls over lender submissions, it is vital that the IG continue to monitor this area closely and identify areas where SBA can continue to improve.

Without a confirmed Administrator and even Deputy Administrator in place to take the reigns of the agency, it is now more critical than ever to ensure the SBA is operating effectively and performing its core goal of reaching and assisting entrepreneurs across this country. I am hopeful we can work together using the IG’s expertise and unique insight into the agency to improve the SBA.