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December 29, 2016 By AMK

The Small Business Administration needs reforming

Long, lon ago, in an election year far, far away, President Obama had a pretty good idea for streamlining government. In 2012 he proposed consolidating six agencies that focus primarily on business and trade — including the Small Business Administration (SBA) — into one new department.

sba-logo-smallMr. Obama argued this would enable small businesses to navigate the dizzying array of programs supposedly designed to help them. Alas, the idea went nowhere, amid opposition from the small business lobby and the small business committees in the House and Senate with which that interest group enjoys a symbiotic relationship.

We recall this forgotten episode only to note that President-elect Donald Trump’s pick to head the SBA, former World Wrestling Entertainment chief executive Linda McMahon, supported Mr. Obama’s notion during her (unsuccessful) campaign for the Senate that year — and to point out that, given what little else is known about her policy views, this history is a modest point in her favor.

Keep reading this article at: https://www.washingtonpost.com/opinions/the-sba-needs-reforming/2016/12/18/b639fc4c-c159-11e6-8422-eac61c0ef74d_story.html

Filed Under: Government Contracting News Tagged With: bureaucracy, good government, loans, procurement reform, regulatory reform, SBA, small business

September 12, 2016 By AMK

The Small Business Administration picks losers over winners

The mission of the U.S. Small Business Administration (SBA) is to provide lending to “Mom and Pop” businesses on Main Street.
sba-loan-debt
A new study published by Forbes magazine reports on 160,000 failed SBA loans that have been charged-off since 2000 to the tune of $17.5 billion.

The recipients are supposed to be entrepreneurs with great ideas who just can’t find financing in the private marketplace. The public image is one of apple pie, baseball and the American Dream.

But the reality is that the SBA is economically costly for taxpayers, and it creates a painful human cost for the workers it dislocates.

In 2014, we documented at Forbes, SBA lending to the wealthy lifestyle: Lamborghini auto dealerships, Rolex jewelers, world-class golf courses, private country clubs and even $142 million lent to businesses in ZIP code 90210, Beverly Hills, CA.

Now, we’ve published our OpenTheBooks Snapshot Oversight Report – Truth in Lending: The U.S. Small Business Administration’s $24.2 Billion Bad Loan Portfolio. Analyzing the SBA portfolio since 2000, we discovered 160,000 failed loans were charged-off to the tune of $17.5 billion. In other words, taxpayers absorbed those costs. Meanwhile, 1.4 million workers were dislocated when they lost their jobs within these failed companies.

Keep reading this article at: http://www.forbes.com/sites/adamandrzejewski/2016/09/07/picking-losers-over-winners-at-the-u-s-small-business-administration

Filed Under: Government Contracting News Tagged With: financing, loans, SBA, small business

February 21, 2012 By AMK

SBA’s loan system troubles could complicate reorganization

The Small Business Administration is behind schedule on five of six planned improvements to its Loan Management and Accounting Systems and costs for the overall project have risen about 20 percent since 2010 to $28 million, a recent Government Accountability Office report said.

That’s a common story with federal information technology acquisitions, which often run behind schedule and over budget. President Obama’s planned consolidation of SBA with several other business and trade agencies inside the Commerce Department could throw another cog in the wheels.

Major government reorganizations have a mixed track record of success, but one common feature, experts told Nextgov, is while the reorganization is in process, uncertainty rises.

“Often the [reorganization] process takes a lengthy period of time and during that period it’s difficult to deal with real issues and challenges in the agencies,” said Alan Balutis, a former chief information officer at the Commerce Department and now a director at Cisco’s Internet Business Solutions Group.

“It’s almost like you bifurcate staff and resources,” Balutis said. “One group works on the reorganization and integration and another group goes along doing their daily business and waiting for the day when someone pulls the switch and everything changes.”

During that transition period problems that already exist with a project or system can “linger and fester,” he said, because employees managing the project are unsure where the system will fit in the new organizational structure. Often those staffers also are unsure where they’ll fit in the new structure and, as a result, hesitant to make major decisions, he said.

“They’re working under uncertainty about ‘Where am I going to end up? Who am I going to be working for? How is this going to affect my grade and responsibilities?’ ” Balutis said. “And all of that is a distraction when you’re trying to carry on your regular duties.”

That’s not to say all acquisitions and projects will fare equally poorly during a bureaucratic transition.

“If you have [information technology] systems that are more enterprisewide, that support an agency function like, say, supply chain management or finance, those are likely to be more affected by reorganization,” said Raj Sharma, president of the Federal Acquisition Innovation and Reform Institute and author of a report on IT acquisition reform.

“If you’re looking at a mission-specific system, something that supports a critical program but we know it won’t be affected by reorganization, then there’s a higher degree of certainty,” Sharma said.

Programs also are less likely to fall into reorganizational paralysis if they’re being closely monitored by government leaders or the public, Sharma said.

That may bode well for SBA as Obama and Republican House leaders have spoken at length about the importance of small businesses to an economic recovery.

GAO’s review of SBA’s loan system was performed from February 2011 through January 2012, almost entirely before Obama announced his reorganization plan, Jan. 13. That plan will require congressional approval to be enacted, which may be tough to come by. It also involved elevating SBA to a Cabinet-level agency while the transition is in process.

A GAO spokesman declined to comment Thursday on how the proposed reorganization would affect problems with SBA’s Loan Management System saying it was beyond the scope of what the agency had looked at.

In its report, GAO criticized SBA officials for failing to validate that certain technical requirements had been met and for not identifying potential risks or taking steps to mitigate them. The agency also didn’t identify skills gaps on the project teams and didn’t get firm baselines from all contractors for how long the projects would take, GAO said.

“These weaknesses in basic management practices make it less likely that SBA will be able to complete the projects within the time, budget and scope parameters originally planned,” GAO said.

While Balutis is skeptical that major problems will be solved during the proposed SBA-Commerce reorganization, he supports the reorganization itself, which he said has been discussed for years in different forms. If done right, he said, the reorganization could save money and create useful cooperation between SBA and some units of Commerce that do similar work, such as the Minority Business Development Agency.

Balutis is cautiously optimistic that the reorganization can win congressional approval.

“There certainly hasn’t been much the White House and the Republican-controlled House has been able to agree upon over this last year and a half and probably the range of issues on which they agree is only going to narrow as we roll up to the election in November,” he said. “On the other hand, this does seem to strike the right chord. One thing a number of people agree on today is that we ought to rationalize the government. We ought to make it smaller and tighter to achieve savings. And that was a major premise of the White House announcement.”

— by Joseph Marks – NextGov –  02/10/2012 at http://www.nextgov.com/nextgov/ng_20120210_9465.php?oref=rss.

Filed Under: Government Contracting News Tagged With: Commerce Dept., consolidation, GAO, loans, MBDA, reorganization, SBA, technology

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