Velazquez on Decreasing Duplication at SBA

WASHINGTON, May 25, 2011 /PRNewswire-USNewswire/ -- Rep. Nydia M. Velazquez (D-NY), the Ranking Member of the House Committee on Small Business, delivered the following statement today at a hearing entitled "Promoting Entrepreneurship and Job Creation by Decreasing Duplication at SBA":

"Thank you, Chairman Graves.  The SBA is charged with a broad mandate and fulfills it through various programs and initiatives.  In doing so, it undertakes a wide range of activities, running the gamut from providing seed capital for startups to helping mature companies gain access to foreign markets.  These initiatives have become essential to our nation's small businesses, which are responsible for creating two-thirds of new jobs.

"In administering these programs, it is critical that the SBA do so in a manner that maximizes efficiency and minimizes waste.  In practice, this means ensuring that rules and regulations are clearly articulated, that a framework for evaluation is in place, and that the initiatives are not duplicative of other agency efforts.  

"It's imperative that programs are continually evaluated – and it should not take a fiscal crisis to do so.  Democrats on this Committee have repeatedly pinpointed programs at the SBA that are wasteful and duplicative – irrespective of budgetary politics. Our Views and Estimates have annually identified tens of millions in wasteful spending that could be reinvested in other valuable programs.   But, as we do so, we have to mindful that the Bush Administration slashed the agency's budget by nearly 50 percent, taking it from just under a billion dollar agency during the Clinton Presidency and leaving it largely unable to meet the needs of entrepreneurs.

"The Committee has also done significant work with third-party evaluators such as GAO.  As a result, fraud in the HUBZone initiative has been exposed.  There were 108,000 HUBZone contract actions in 2010 and in 70 percent of these cases, the small business actually qualified for another SBA contracting program.   We have also asked GAO to review the agency's disaster program, as well as how its loan programs can be better coordinated with the USDA.  Eliminating waste and improving efficiency could enhance services for entrepreneurs.  

"Oversight is not only a responsibility of Congress, however, but also for the SBA.  Unfortunately, in this regard the agency has not met expectations.  According to GAO, it has not yet developed outcome measures for the HUBZone program that are linked to its mission.  Without them, the agency is unable to measure the program's effectiveness.  

"In addition, the agency has established unauthorized 'pilot programs' without any performance measures that provide the basis for such oversight.  While these initiatives cost taxpayers millions of dollars, the agency has repeatedly failed to use objective metrics to quantify their success or failure.  

It recently requested funds to operate seven pilots, including the Small Loan Advantage and Community Advantage program; the Impact Investing and Early Stage Innovation funds; Regional Clusters; the Distance Learning Portal; and the Emerging Lenders program.  

"The last three of these programs alone cost $15 million.  That's more than we spend on the Women's Business Centers, an initiative that is authorized and regularly overseen by Congress.   While the original intent may be admirable, once launched, these pilot programs often take on a life of their own, drawing funds away from proven initiatives.

"Even among programs that we know work, there is a need for better harmonization.    In its recent report, GAO found that SBA does not help its resource partners coordinate their services.  If it did, the SBA could lower administrative costs and leverage each program's unique strengths.  

Such steps must also be taken between agencies that operate similar programs, so that taxpayers are getting the biggest bang for their buck and, equally important, that small businesses' needs are met.  

"Today, reducing duplication and improving program performance are not just nebulous bureaucratic catch-phrases.  When applied, they mean better services for entrepreneurs, and greater job creation for the economy.  

"Everyone here recognizes the importance of entrepreneurship to our recovery.  As we seek ways to make economic development programs more efficient, we cannot afford to short change small businesses.  Instead, our goal should be ensuring these programs work in concert together, delivering small businesses the help they need. I look forward to today's testimony on this important topic and thank the witnesses for participating."  

CONTACT: Alex Haurek, +1-202-225-2361

SOURCE Representative Nydia M. Velazquez, Ranking Member, House Committee on Small Business