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In a hearing this week before the House Committee on Small Business, Democrats expressed alarm that internal issues in the Small Business Administration (SBA) have hindered services for small businesses.  In particular, SBA provided incentives for federal employees to retire early all while failing to properly restructure the agency, thereby depriving small businesses of necessary resources.

“When our small businesses and entrepreneurs have to wait in line while SBA sorts out internal issues, we know we have a problem on our hands,” said Ranking Member Nydia M. Velázquez (D-NY). “I am deeply concerned to learn that not only are government employees being prioritized over small businesses, but that these efforts are failing.” 

In 2012 and 2014, SBA requested to be a part of early retirement programs so they could incentivize employees to leave at will and restructure their workforce. However, a report from the Inspector General found that SBA spent at least $2.1 million on incentives for government employees while failing to outline a plan to restructure. 

The Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payment Program (VSIP) allows agencies like SBA to temporarily lower the age of retirement in order to perform strategic workplace restructuring. In both 2012 and 2014, SBA was authorized to provide early retirement for 300 employees. However, only 180 employees in 2012 and just 149 in 2014 left the agency. 

“The report shows how SBA failed to set even basic measurable goals,” said Velázquez. “This mess may have been avoided had SBA identified eligible employees, outlined a restructuring plan, conducted a skills gaps analysis and the list goes on. It is crucial that current SBA officials learn from this bureaucratic failure.” 

Democrats took the opportunity to press SBA officials including Joseph Loddo, Chief Operating Officer at SBA. Mr. Loddo admitted that the SBA had significant weaknesses in how it administered the program. Mr. Ware outlined the results of his office’s report.

In the future, Democrats stressed the importance of adequate oversight, transparency and accountability when it comes to SBA’s internal affairs. 

“One of the most important roles of this Committee is conducting vigorous oversight of the SBA and its activities,” said Velázquez. “Our duty is to help America’s entrepreneurs and small businesses thrive and that can only happen when SBA operates efficiently.”