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What’s Up with the Small Business Administration (SBA)?

September 12, 2013

This is the main question within the veteran-owned small business community in light of recent events. Businesses with fewer than 500 employees account for:

·         99% of all employer firms,

·         jobs for over half of the nation’s private workforce,

·         nearly two-thirds of all new jobs, and

·         44% of total U.S. private payroll.


This is a huge part of the American economy, giving the Administrator of the SBA the potential to have major influence on American commerce. Surprisingly, the top SBA position has been vacant for some time now, leading me to believe that the Executive Branch does not view small business progress as a priority. Surely there are plenty of people with the talent and desire to have a key position like this to serve their country and thousands of small businesses across the country.

After appointing Karen Mills as the new SBA Administrator in 2009, President Obama elevated SBA to Cabinet-level status in January 2012. Small businesses across the country hailed this political advancement of small business a major victory.
Under Mills tenure, the SBA backed more than $106 billion in loans to small companies. This included record years of more than $30 billion worth of loan guarantees in both 2011 and 2012. Mills led a charge to make it easier for small businesses to apply for various government-backed loans and automated much of the application process.

Her tenure was also marred by allegations of widespread fraud and abuse of SBA programs, according to FOX Business News.

During Mills’ term at the SBA, the minimum 23 percent of federal contracts that should go to small business by law was never met. Federal contracting goals for woman-owned firms, Service Disabled Veteran-Owned small businesses, minority-owned and HUBZone small businesses were rarely – if ever — met.

Though one cannot say if the lack of meeting these small business ‘goals’ precipitated this change of course and Administrative action, rumor has it that SBA might be shifted to the Department of Commerce. No verifiable source has been identified to sustain this rumor.

At that time, the Pentagon was the driving force behind two failed campaigns to move SBS to Commerce.

However, interesting developments within SBA may give some indication of what may be in store for the Small Business Administration.

Lloyd Chapman writes in the Huffington Post:

“Senior Pentagon officials and some of the biggest names in the defense and aerospace industry have been lobbying for more than thirty years to close the SBA in order to cover up decades of rampant fraud in federal small business contracting programs by the DoD and its prime contractors. The excuses from the government that every year, for over a decade, small business contracts wind up in the hands of some of the nation’s largest defense contractors as a result of “miscoding, computer glitches, anomalies and simple human error” are starting to wear thin and are no longer believable or sustainable.

“ABC, CBS, NBC and CNN have all covered the story of the diversion of hundreds of billions of dollars in federal small business contracts to major Pentagon prime contractors.” Full article:

Terry SutherlandMajor media sources contend, however, that a senior Pentagon PR official, Retired Commander Terrance Sutherland, has taken over the SBA press office. Sutherland has tamped down some of the biggest flare-ups ever in DoD. What’s odd about this? DoD has never met of the minimum contract expenditures awarded to small business. The most recent years of the SBA ‘Scorecard’ indicates that DoD ranked among the worst government agencies to contract with small business. And the “Scorecard” is just another toothless, bureaucratic measurement that should be very easy to meet.

Some small business representatives, including many for service-disabled veteran owned small business (SDVOSB) and veteran owned small business (VOSB) regard Sutherland’s reassignment as a ruse to appease the small business community. His reassignment could accomplish several things:

·         Prop-up DoD’s flailing ‘Scorecard’ numbers to small business;

·         Redirect giant contracts that account for the massive cases of DoD contract fraud to small business;

·         Prepare the Commerce Department for incoming SBA functions;

·         Aid in dismantling the SBA;

·         De-rail HR 2882, a bill introduced last month by Mike Coffman (R-CO), to transfer SDVOSB/VOSB from VA to SBA;

·         Increase employment opportunities in both agencies for the huge influx of veterans returning from the Middle East. This accomplishment is the only positive economic result, but very unlikely. DoD and VA public relations offices (AND Sutherland) would have publicized the heck out of this weeks ago.

Sutherland, a retired Commander in the US Navy, was a career public relations professional handling controversial DoD situations such as cases of “rape, murder, downed spy planes, terrorist attacks, shootings by military personnel, Saddam Hussein and advanced weapons systems.

Sutherland has been on the front lines many times with great successes for DoD.

On another front, the Government Accountability Office’s (GAO) recently released Report 10-108, which indicated: “By failing to hold firms accountable, the SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud.” GAO also found that up to 25 percent of Pentagon expenditures cannot be accounted for.

Now THAT’S a major flare-up, but can Sutherland address this? I hope so, but what then with SBA? Does it lose its status as a Cabinet-level agency? Will it become a pawn in the Commerce Department? Just another wing in an invisible government building? If this turns out to be the case, small business will rank extremely low in the American economic landscape.