When SBA embarked on this current transformation effort, it planned its  implementation in three phases. SBA Has Made Some Progress in Implementing Transformation, but Budget Constraints and Staffing Challenges Could Continue to Impede Progress

As part of the first phase of SBA’s transformation, the agency began  implementing pilot initiatives to test a new marketing focus for its district  offices and centralizing some of its loan functions. SBA’s centralization efforts could  also be impeded by the challenge of realigning staff from multiple field  offices so that it can operate its central locations with experienced  employees. SBA officials also told us that centralization results in  faster processing times. These practices and implementation steps are shown in table 1. The SBA  Administrator has provided a rationale behind the purpose of the agency  and the goals of the transformation by addressing district directors and  visiting field offices to discuss the importance and goals of  transformation—to increase awareness of SBA’s services and to make SBA  a better trained, better equipped, and more efficient organization. SBA has dedicated an  implementation team to manage the transformation process, but it has  experienced leadership changes that were not made apparent to employees  and stakeholders. As a result, the  scorecard may be limited in measuring success that could be directly  attributed to the pilot efforts for marketing and outreach. SBA did not communicate sufficiently with its employees. SBA stated that it clearly lays out its funding requests for  transformation in the Fiscal Year 2003 and Fiscal Year 2004 Budget Request  and Performance Plans. To determine SBA’s progress in implementing its transformation effort and  challenges that have or could impede progress, we analyzed planning,  budget, and implementation documents related to SBA’s transformation  and interviewed key officials at SBA headquarters involved in the  transformation planning and implementation processes. To assess whether SBA applied practices that are important to  organizational change and human capital management in the federal  government, we reviewed the literature and our previous work on  reorganizations, organizational change, and human capital management to  identify key practices that have been recognized as contributing to  successful organizational transformation.
Why GAO Did This Study

The Small Business Administration (SBA) has recognized that it needs to realign its current organizational structure and processes to improve its ability to fulfill its primary mission--supporting the nation's small businesses. In July 2002, SBA announced that it was initiating a transformation effort to increase the public's awareness of SBA's services and products and make its processes more efficient. GAO evaluated SBA's progress in implementing its transformation initiatives and challenges that have impeded or could impede implementation and whether SBA's transformation incorporates practices GAO has identified in previous work that are important to successful organizational change.

What GAO Found

SBA has made some progress in transforming its organization, although efforts could be impeded by budgetary and staffing challenges. SBA started three district office pilots to test marketing and outreach techniques and two pilots to centralize loan processes. However, SBA officials told us that their plans for expanding the pilots and implementing additional initiatives have changed because the agency did not receive any funding for transformation in fiscal year 2003 and may not receive any in fiscal year 2004. GAO found that SBA did not provide consistent, clear budget requests with a detailed plan for transformation results. The challenge of staffing its centralization initiatives, including relocating employees and avoiding undue disruptions to operations, could further complicate SBA's progress. When SBA initially planned and began implementing transformation, it gave some attention to practices important to successful organizational change. SBA drafted a plan and created an implementation team to manage the transformation. However, significant weaknesses in implementation could impede further progress and exacerbate the challenges noted above. The transformation could fail if practices and implementation steps focusing on transparency and communication are not given more attention.