House committee rips SBA for unauthorized pilot programs, contracting woes


House committee rips SBA for unauthorized pilot programs, contracting woes

By J.D. Harrison
The Washington Post
March 26, 2014

Members of the House Small Business Committee on Tuesday votedunanimously in favor of several revisions to the Small BusinessAdministration's new budget proposal, with several lawmakers criticizing theagency for committing too much money to new, unproven programs and too little to fulfilling itsunderlying responsibilities to small employers.

"By necessity, budgets requirehard choices," Committee Chairman Sam Graves (R-Mo.) said during a brief markupof the budget on Tuesday. "To the extent that the SBA... budget request makeshard choices, they ultimately make them in the wrong place."

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Democratsand Republicans on the panel agreed on revisions that would trim $50 millionfrom the agency's $710 million budget proposal that was published earlier thismonth as part of the president's broader spending blueprint. The committee's recommendationsnow move to the House Budget Committee for review.

SBA officials maintain that theproposal would ensure that employers have the resources they need to start andgrow their businesses, and it would give the department the resources it needsto expand important exporting, capital access and other educational programs.On the agency's blog earlier this month, Marianne Markowitz, the agency'sacting administrator, said the plan "builds on SBA's proven track record ofassisting America's small businesses."

Quite the contrary, lawmakers onthe small business committee said. During the hearing, they identified severalareas in which they feel the agency's budget outline falls short of the department'scharter to assist small companies.

Namely, they worry that thebudget does not include enough resources to combat persistent fraud and abusein the agency's small-business contracting programs.

Several government oversight reports have shown that contractsintended for small firms are often awarded to large corporations, yet thosecontracts are sometimes still recorded as having gone to small businesses. Inan attempt to remedy that, Congress has in the past two years passedlegislation that requires the SBA to improve its contracting database and issuebetter guidelines to help other departments seek out legitimately smallbusinesses.

However, the agency, which hasbeen without a permanent leader for the past seven months, hasnot completed several of the tasks in those laws, some of which committee saysare now more than a year overdue.

"The Committee believes that theSBA undervalues the importance of its mission to ensure that small businesseshave a fair shot at winning government contracts," the panel wrote in a memoconcerning the budget request. Lawmakers also urge officials to hire more staffto oversee its procurement programs and combat contracting fraud.

So where would that additionalfunding come from? In large part, the panel thinks the department shouldshutter some pilot programs that it says are both unproven and unauthorized byCongress.

"While the SBA is ignoringmandates from Congress, it has the gall to request $39 million to continueentrepreneurial outreach initiatives of its own creation," Graves said, latercalling the agency's funding decisions "misguided."

Republicans weren't the only onesvoicing concerns. Rep. Nydia Velázquez of New York, the committee's top rankingDemocrat, called the agency's overall funding proposal "reasonable" but saidshe too takes issue with the way the money would be allocated.

"Similar to previous years, theSBA continues to support initiatives that lack a specific statutoryauthorization," Velázquez said.

Specifically, the panel advisedthe administration to take an axe to the agency's Boots to Business program,which targets military veterans-turned-entrepreneurs, Growth Accelerators program,which targets high-growth, early-stage companies, and its broadEntrepreneurship Education initiative. All the programs, lawmakers argued inthe memo, "have amorphous goals" and replicate existing programs within thefederal government.

"Simply put, this practice iswasteful and should not be allowed to continue," Velázquez said. She laterwarned that the agency is "squandering its limited resources."




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