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Today, the Committee will examine the management and performance of SBA’s field operations, which serve as SBA’s “boots on the ground” across the country and are vital in connecting small business owners with the resources they need to succeed. SBA’s programs and services are delivered through 68 district and 10 regional offices located across the United States and its territories.

At the top of the field structure is the Office of Field Operations (OFO), headed by today’s witness, Associate Administrator Michael Vallante. Welcome, Mr. Vallante. OFO serves as the representative for field offices at SBA headquarters in Washington, DC. Among other responsibilities, OFO establishes and monitors district offices’ performance goals, and provides policy guidance to help district offices implement the Administration’s priorities uniformly throughout the country.

District offices provide critical business development assistance to entrepreneurs and small-business owners. They also work with lenders to facilitate small businesses’ access to capital.  And they help ensure compliance with SBA program requirements, such as those for the 8(a) business development and HUBZone programs. Field staff regularly interact with small businesses in local communities to promote SBA’s mission. In recent years, district offices have conducted more than 20,000 outreach events annually, such as lender trainings, workshops, and career fairs.

I applaud the hard work of SBA’s field staff and their ability to do more with less, but they and their small business customers are currently facing a number of challenges. First, I am concerned over the reductions in FTEs over the years.  According to SBA, there are currently 687 employees in the Regional and District offices, compared to 813 in FY14 --- a 15 percent reduction.   While I understand the constraints the agency must be facing due to level funding of the salaries and expenses account over the past few years, I would like to learn more about how this reduction in force is affecting your operations and the services being provided to our small businesses. 

On another note, district offices are required to collect and report data on their outreach events and activities, so that SBA may track the performance of each office. However, SBA stopped using its reporting system in July 2019 due to budget constraints and began using a temporary reporting tool. I hope to hear more today about how OFO is currently capturing and evaluating this important data.

Relatedly, I was troubled to see a report from the Office of the Inspector General (OIG) that found SBA lacked sufficient controls over district offices’ performance data. The OIG concluded that District Directors did not use performance data to strategize where to target outreach initiatives, which may limit SBA’s ability to service under-served areas. The OIG also cautioned that OFO lacked an established process to evaluate customer feedback on the services provided by district offices.

Without assessing customer feedback regularly, capturing performance data accurately, or reporting outreach activities correctly, SBA will not be able to maximize its programs’ impact. We are also concerned over the lines of communication – or lack thereof – between headquarters and the district offices that was brought to our attention by a recent GAO review of SBA’s HBCU initiative. Troublingly, GAO found that SBA headquarters failed to communicate its fiscal year 2018 plan to promote HBCUs to district offices—including those with HBCUs in their service areas. As a result, field staff were unaware of SBA’s goals for engaging with HBCUs. The lack of communication about HBCU engagement is particularly troubling, and I hope to learn more about the steps OFO is taking to ensure this does not happen again. 

SBA’s field team serves on the front line of the effort to deliver high-quality services to small businesses and entrepreneurs. Simply put, a well-functioning field team is vital to the success of SBA’s mission.

It is, therefore, imperative that district offices receive the resources they need to succeed; that SBA’s field operation is structured logically; and that SBA headquarters communicates its goals and policies to the field team clearly. Mr. Vallante, I hope we hear more today about whether SBA leadership is satisfying each of these imperatives.