2). SBA’s regional offices were established shortly  after the agency was created in 1953. These offices, which are managed  by politically appointed administrators, play a part in supervising the  district offices and promoting the President’s and SBA Administrator’s  messages throughout the region. SBA Faces Ongoing Organizational Challenges

Despite long-standing organizational challenges affecting program  oversight and human capital management that we and others have  identified, SBA has not documented an assessment of its overall  organizational structure, which could provide information on how best to  address these challenges. Since its last major reorganization in 2004, the  agency has continued to face long-standing organizational and workforce  challenges, including complex overlapping responsibilities among offices,  poor communication between headquarters and district offices in the  administration of programs, and persistent skill gaps, especially in field  offices. These challenges can affect SBA’s ability to deliver its programs  consistently and effectively, especially in a climate of resource  constraints. But its response has been limited to making incremental  (piecemeal) changes to some of its divisions to, among other things,  consolidate functions or change reporting relationships and offering  employees early retirement in an attempt to address skill gaps. SBA told  us that it has assessed its organizational structure but did not provide  documentation of the results of the assessment. In 2012, the agency committed to assessing and revising its  organizational structure to meet current and future SBA mission  objectives. SBA officials told us the contractor  completed its assessment in March 2015 and that SBA had completed its  assessment of the contractor’s work. These gaps were primarily  in district offices, which are supervised by regional offices. We also report on these issues in a related, soon-to-be-released report  on SBA’s management and make recommendations as appropriate. Closing Regional Offices Would Have a Limited Effect on SBA’s Budget, but the Impact on Operations Is Less Clear

Because regional office costs represent a relatively small part of SBA’s  overall costs, closing them would have a limited budgetary effect. However, it would be important to assess the feasibility of these options  and weigh the related costs and benefits before deciding on a course of  action. Given that these costs constituted less than 1  percent of SBA’s approximately $1 billion appropriation for that year,  closing the regional offices would have a limited budgetary effect. The  bulk of regional office costs went to compensation and benefits, which  totaled $4.5 million in fiscal year 2013. Closing Regional Offices Could Impact SBA Operations

Over half of the headquarters (Office of Field Operations), regional, and  district office managers (18 of 32) we interviewed cited challenges that  could result if regional offices were to close and their functions were  transferred to headquarters and district offices, but a few  nonmanagement staff (6 of the 28) offered different views. Thus, the managers were concerned that  without regional offices, district offices would be challenged to address  such workload issues. Fourth, six headquarters, regional, and district managers we interviewed  said that SBA would experience challenges in promoting SBA’s message  without the regional offices. Thirteen headquarters, regional, and district  officials emphasized that as political appointees, regional administrators  played a greater role than district directors, who are career officials, in  explaining and amplifying the President’s and SBA Administrator’s  message and priorities. Three district officials said that they could coordinate directly with  headquarters instead of coordinating with the regional offices. We recognize that the regional administrators and other staff in the  regional offices provide a number of services for SBA. However, if  closures were to occur, there are options available to address these  challenges. Appendix I: Objectives, Scope, and Methodology

This report (1) examines any challenges associated with the Small  Business Administration’s (SBA) organizational structure; (2) describes  the specific responsibilities of the regional offices; and (3) discusses the  budgetary effects of closing the regional offices and SBA managers’ and  staff’s views on other possible effects of closures. Specifically, to obtain perspectives from SBA district office officials, we  selected a nonrandom, purposive sample of 10 of the 68 district offices, 1  from each SBA region to provide national coverage. In conducting this review, we focused  on the role of regional offices. A related, soon-to-be-released GAO report  addresses a range of SBA management issues. We also examined documentation on changes to  SBA's organizational structure from fiscal year 2005 to 2014 (the period  after SBA’s last major reorganization in 2004).
Why GAO Did This Study

SBA was created in 1953, and its regional offices were established shortly thereafter. In the late 1990s and early 2000s, the agency downsized the staff and responsibilities of the regional offices. These offices, which are managed by politically appointed administrators, are currently responsible for supervising SBA's district offices and promoting the President's messages throughout the region. GAO was asked to review SBA's current organizational structure, with a focus on the regional offices. Among other objectives, this report (1) examines challenges related to SBA's organizational structure and (2) discusses the budgetary effects of closing the regional offices and SBA managers' and staff's views on other possible effects of closures.
GAO reviewed documentation on changes to SBA's organizational structure from fiscal years 2005-2014 (following SBA's last major reorganization in 2004); analyzed data on fiscal year 2013 regional budgets (the most recent data SBA provided); and interviewed a total of 60 SBA officials at headquarters, all 10 regional offices, and a nongeneralizable sample of 10 of the 68 district offices (one from each region reflecting a variety of sizes).

What GAO Found

While long-standing organizational challenges affected program oversight and human capital management, the Small Business Administration (SBA) has not documented an assessment of its overall organizational structure that could help determine how to address these challenges. SBA currently has a three-tiered organizational structure—headquarters offices, 10 regional offices, and 68 district offices. SBA's last major reorganization was in 2004, when it moved loan processing from district offices to specialized centers and assigned district offices new duties, such as small business counseling. But the agency has continued to face long-standing organizational and workforce challenges, including complex overlapping responsibilities among headquarters and regional offices and skill gaps in district offices (which are supervised by regional offices). These challenges can affect SBA's ability to deliver its programs consistently and effectively, especially in a climate of resource constraints. SBA's response has been limited to (1) making incremental changes to some of its divisions such as consolidating functions or changing reporting relationships and (2) offering employees early retirement. SBA committed to assessing and revising its organizational structure in 2012 but has not yet documented this effort. Although a contractor studied SBA's organizational structure in March 2015 and SBA stated it had completed its assessment of the contractor's work as of August 2015, it has not provided documentation of this assessment. In a related, soon-to-be-released report on SBA's management, GAO assesses the agency's organizational structure and makes recommendations as appropriate.
Closing SBA's 10 regional offices, as some have suggested, would have a limited effect on SBA's budget, but the impact on operations is less clear. Compensation and benefits—totaling $4.5 million in fiscal 2013—were the largest costs of regional offices, which together had other administrative costs totaling about $235,000 and were co-located with district offices. Because these costs constituted less than 1 percent of SBA's approximately $1 billion appropriation in 2013, closing the regional offices would have a limited budgetary effect. But over half of the SBA managers GAO interviewed (18 of 32) said that closing regional offices could pose operational challenges. First, headquarters, regional, and district managers said that eliminating the 10 regional administrators would require one headquarters office to supervise 68 district directors. Second, regional and district officials were concerned that SBA would lose the overall regional perspective and ability to balance workloads within regions. Third, headquarters, regional, and district managers explained that the agency would be challenged to promote SBA's message without regional offices. They emphasized the role that regional administrators play in explaining and amplifying the President's and SBA Administrator's messages and priorities. However, a few (6 of 28) nonmanagement staff GAO interviewed disputed the importance of regional administrators, some stating that district offices could coordinate directly with headquarters offices. GAO recognizes that regional administrators and offices provide a number of services for SBA. If closures were to occur, there are options available to address these challenges. However, it would be important to carefully assess the feasibility of these options and weigh the related costs and benefits before deciding on a course of action.

What GAO Recommends

GAO is not making recommendations in this report. However, in a related, soon-to-be-released report examining SBA management issues, GAO assesses organizational structure and makes recommendations as appropriate.