SBA Has Not Resolved Many of Its Long-Standing Management Challenges

In the last 15 years, we and the SBA OIG have identified management  challenges at SBA, many of which are related to specific programs. To address SBA’s  challenges, we and the SBA OIG have made various recommendations. While SBA has made some progress in addressing these challenge  areas, many of our recommendations remain unimplemented. We  maintain that these recommendations continue to have merit and should  be fully implemented. Loan guarantee purchases. 8(a) business development program. For example, he stated that the  agency was considering how to expand SBA One—an initiative  designed to create a single application for most SBA loans and allow  borrowers and lenders to populate forms from secure information  storage—to include the 8(a) program. SBA generally agreed with our recommendation  and subsequently revised its review procedures. SBA has recently completed its LMAS projects. Disaster loan processing. SBA  generally agreed with the recommendations. SBA officials said that  the agency had also begun to update its SOP on internal control and  plans additional revisions after OMB has updated its Circular A-123,  which is expected to include guidance on implementing the new  standards. SBA has not resolved many of these long-standing management  challenges due to a lack of sustained priority attention over time. In a  September 2008 report, we noted that frequent turnover of political  leadership in the federal government, including at SBA, often made it  difficult to sustain and inspire attention to needed changes. Senior SBA  leaders have not prioritized long-term organizational transformation in  management challenge areas such as human capital and information  technology. Furthermore, in an April 2013 House committee hearing on SBA’s  proposed fiscal year 2014 budget, the committee Chairman stated that  SBA’s proposed budget focused on the agency’s priorities but ignored  some long-standing management deficits. These examples raise questions about  SBA’s sustained commitment to addressing management challenges that  could keep it from effectively assisting small businesses. Workforce plan. In addition, a senior  SBA official stated that improving human capital management was a  priority for the Administrator and that SBA was focused on developing  different ways to recruit a younger and more diverse workforce. Evaluation. Planning. Design and development. Evaluation. 6). In later reports, we and others—including SBA itself—identified  organizational challenges that affected SBA’s program oversight and  human capital management. Implementation and monitoring. Operational analysis of IT investments. SBA did  not agree nor disagree with our recommendations, but SBA officials  told us that as of May 2015, they had begun to take steps to address  them. 6. Appendix I: Objectives, Scope, and Methodology

This report examines the extent to which the U.S. Small Business  Administration (SBA) (1) has addressed previously identified  management challenges related to specific programs, including those  related to internal controls; (2) is following federal requirements for  strategic planning; (3) is following key principles or internal controls for  human capital management, organizational structure, enterprise risk  management, acquisition management, and procedural guidance; and (4)  is making progress in implementing the Office of Management and  Budget’s (OMB) high-priority management practices for information  technology. To review SBA’s organizational structure, we reviewed prior GAO and  SBA OIG reports that discussed, among other things, the effect of the  agency’s structure on its human capital management and program  oversight. Appendix IV: Results of the Small Business Administration’s Internal Review of Its Standard Operating Procedures, as of March 2015

In fiscal year 2014, the Small Business Administration’s (SBA) Office of  the Chief Operating Officer, Office of Administrative Services began a  review of the status of all standard operating procedures (SOP), working  with the program offices to determine whether any updates were needed.
Why GAO Did This Study

SBA has provided billions of dollars in loans and guarantees to small businesses. As of March 31, 2015, SBA’s total loan portfolio was about $116.9 billion, including $110.3 billion in direct and guaranteed loans and $6.6 billion in disaster loans. GAO has previously reported on management challenges at SBA. GAO was asked to review SBA management, including whether those challenges were ongoing. This report discusses SBA’s efforts to address management challenges related to specific programs and internal controls. It also looks at challenges in strategic planning, human capital, organizational structure, enterprise risk, procedural guidance, and IT. To do this work, GAO reviewed SBA policies and compared them with federal requirements, key principles for human capital management, and internal control standards. GAO also interviewed officials at SBA headquarters, all 10 regional offices, and 10 of 68 district offices selected on the basis of location and size.

What GAO Found

The Small Business Administration (SBA) has not resolved many of its long-standing management challenges due to a lack of sustained priority attention over time. Frequent turnover of political leadership in the federal government, including at SBA, has often made sustaining attention to needed changes difficult (see figure below). Senior SBA leaders have not prioritized long-term organizational transformation in areas such as human capital and information technology (IT). For example, at a 2013 hearing on SBA's budget, the committee Chairman stated that SBA's proposed budget focused on the agency's priorities but ignored some long-standing management deficits. This raises questions about SBA's sustained commitment to addressing management challenges that could keep it from effectively assisting small businesses.
Many of the management challenges that GAO and the SBA Office of Inspector General (OIG) have identified over the years remain, including some related to program implementation and oversight, contracting, human capital, and IT (see figure below). SBA has generally agreed with prior GAO recommendations that were designed to address these issues and other challenges related to the lack of program evaluations. The agency has made limited progress in addressing most of these recommendations but has recently begun taking some steps. A senior SBA official told us that improving human capital management, IT, and the 8(a) program (a business development program) were priorities for the new administrator. For example, he stated that SBA was exploring creative ways to recruit staff and plans to expand SBA One—a database currently used to process loan applications—to include the 8(a) program. Also, SBA has begun addressing some internal control weaknesses that GAO and the SBA OIG identified as contributing to the agency's management challenges. SBA officials noted that the agency had begun to update its standard operating procedure (SOP) on internal controls and planned more revisions after the Office of Management and Budget (OMB) updated its Circular A-123, which is expected to include guidance on implementing GAO's 2014 revisions to federal internal control standards. OMB issued a draft of the revised circular in June 2015 and is reviewing comments it received.

What GAO Recommends

GAO makes eight new recommendations designed to improve SBA's program evaluations, strategic and workforce planning, training, organizational structure, ERM, procedural guidance, and oversight of IT investments. SBA generally agreed with these recommendations and provided additional context. In response, GAO clarified one of its recommendations. GAO also maintains that 69 recommendations it made in prior work have merit and should be fully implemented.