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25–705 2017

A CAUTIONARY TALE: A REVIEW OF SBA’S FAILED 

2014 AGENCY RESTRUCTURE 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JUNE 14, 2017 

Small Business Committee Document Number 115–023 

Available via the GPO Website: www.fdsys.gov 

SBREP-219A with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RON ESTES, Kansas 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 3 

WITNESSES 

Mr. Hannibal ‘‘Mike’’ Ware, Acting Inspector General, United States Small 

Business Administration, Washington, DC ....................................................... 4 

Mr. Joseph Loddo, Chief Operating Officer, United States Small Business 

Administration, Washington, DC ........................................................................ 6 

APPENDIX 

Prepared Statements: 

Mr. Hannibal ‘‘Mike’’ Ware, Acting Inspector General, United States 

Small Business Administration, Washington, DC ..................................... 23 

Mr. Joseph Loddo, Chief Operating Officer, United States Small Business 

Administration, Washington, DC ................................................................ 27 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

SBA OIG Report ............................................................................................... 30 

SBREP-219A with DISTILLER

SBREP-219A with DISTILLER

(1) 

A CAUTIONARY TALE: A REVIEW OF SBA’S 

FAILED FISCAL YEAR 2014 AGENCY RESTRUCTURE 

WEDNESDAY, JUNE 14, 2017 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 12:50 p.m., in Room 

2360, Rayburn House Office Building. Hon. Steve Chabot [chairman of the Committee] presiding. 

Present: Representatives Chabot, Luetkemeyer, Kelly, Comer, 

Vela ́zquez, Lawson, and Espaillat. 

Chairman CHABOT. Good morning. The Committee will come to 

order. 

I would like to first address the tragedy that happened this 

morning. Our prayers and thoughts go out to all those who were 

affected, our colleagues, staff, and Capitol Police who were injured 

in the shooting this morning. Obviously, our colleague Steve 

Scalise, the Whip, who I understand has undergone surgery or is 

currently, and also Special Agent David Bailey and Crystal Griner, 

as well as a former staffer and a current staffer, Zachary Barth 

and Matt Mika. So we want to do everything we can within our 

powers to pull for them and keep them in our prayers. I think I 

speak for all of us when I say how grateful we are to the Capitol 

Police and the security detail, particularly that they were on the 

scene. With the Whip not there, I guess there would not have been 

security there and that is a very scary thought because unfortunately, the carnage which could have occurred is hard to imagine, 

or you just do not want to think about it. They are heroes and we 

should applaud them today, and our prayers will continue to out 

for those recovering and we hope that they are back on Capitol Hill 

as soon as possible. 

I will then move into my opening statement. 

The Committee is here today to examine how the Small Business 

Administration managed its fiscal year 2014 Voluntary Early Retirement Authority and Voluntary Separation Incentive Payment 

program. According to the SBA’s Office of Inspector General, the 

SBA failed to effectively manage and implement this program. 

Now, I would note that the shortcomings that I am about to highlight, obviously, occurred under the previous administration and 

the current administration should not necessarily, obviously, be responsible for what happened in the past but we are hoping that 

SBREP-219A with DISTILLER

2 

they will improve on what was there. That is obviously the goal 

and the purpose of this Committee and our oversight. 

The Voluntary Early Retirement Authority (VERA) allows federal agencies the option to offer voluntary early retirement to restructure and downsize an agency’s workforce. Usually combined 

with VERA, the Voluntary Separation Incentive Payment authority 

(VSIP) allows agencies to offer lump sum payments of up to 

$25,000 to employees who are in surplus positions or have skills 

that are no longer needed. 

In 2014, the SBA submitted a request to the Office of Personnel 

Management for VERA and VSIP authority. The SBA claimed that 

it wanted to: (1) address workforce competency and agency skills 

gaps; (2) decrease the average age of the agency’s workforce; and 

(3) address budgetary constraints to avoid a reduction in force. 

OPM granted SBA’s request. 

The Office of Inspector General conducted an audit of the SBA’s 

management of its VERA/VSIP program, and in its audit released 

just a couple of weeks ago the OIG determined that the SBA failed 

to achieve any of its goals. Let me repeat that. They did not meet 

any of the goals. Not one or two of them, but all of them. It did 

not address workforce competency and agency skills gaps. It did 

not decrease the average age of the agency’s workforce. It did not 

address budgetary constraints to avoid a reduction in force. In fact, 

apparently the agency was facing no real threat of a reduction in 

force. 

OIG’s audit uncovered a number of other troubling findings. The 

SBA did not complete a skills gap assessment until a year after the 

VERA/VSIP was implemented. SBA did not have a contingency 

plan to transfer institutional knowledge to younger employees. The 

SBA did not even have a tracking mechanism to determine which 

employees were taking advantage of the early-retirement buyouts. 

Further, the SBA gave inaccurate information in its plan submitted to OPM. The SBA claimed it had established a high-risk 

task force to examine the challenges necessitating the VERA/VSIP. 

No such task force ever existed. The SBA claimed a steering committee was established to review the agency workforce allotments. 

No steering committee existed. The VERA and VSIP options are 

supposed to help agencies restructure and reshape their 

workforces; yet, the SBA’s workforce was left almost completely unchanged. 

This hearing will hopefully pull out lessons learned from the 

SBA that they can use in the future. And more broadly, as other 

agencies potentially seek to restructure their workforces through 

the VERA/VSIP options, they can also learn from the SBA’s experience or lack thereof. 

To learn that, as with most things in life, preparation is key. We 

want to thank the Office of Inspector General for its work on this 

topic. The OIG’s work helps to improve the integrity, accountability, and performance of the SBA and its programs. This audit 

report is just one example of that. 

We want to thank our witnesses both for being here today. We 

look forward to your testimony. 

I would now like to yield to the Ranking Member, Ms. Vela ́zquez, 

for her opening statement. 

SBREP-219A with DISTILLER

3 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

And on behalf of the Democratic side, I, too, want to say that we 

stand united in praying for our colleagues, the staffers and the police injured, and we extend our profound thanks to the Capitol Police for their bravery in preventing this situation from being much, 

much worse. 

One of the benefits of serving on this committee is that even in 

times of political partisanship, this committee functions in a largely 

bipartisan manner. Given today’s events, I think we can all agree 

that setting partisanship aside a little more often and focusing on 

our commonalities as legislators seeking to improve our nation 

might behoove us. I know this committee does that with great frequency, and that is something for which I am thankful. On that 

note, let me turn to today’s hearing. 

SBA is the only agency in the federal government charged specifically with helping small businesses grow and succeed. The 

Small Business Administration is critical to our nation’s overall 

economic health. All its functions serve to strengthen and preserve 

the entrepreneurial foundation of our economy. For small businesses to fully reap the benefits of SBA programs, it is important 

for the agency to operate efficiently and effectively. As such, one of 

the most important roles of this committee is conducting vigorous 

oversight of the SBA and its activities. This allows us to know that 

the agency is serving small businesses well, while spending taxpayers’ dollars wisely. For example, as recently as last year, after 

a request to review the management of the SBA, GAO testified to 

this committee that the agency’s organizational structure was overly complex and that workforce planning was not up to date. Because such redundancies and deficiencies can ultimately lead to 

poor service to entrepreneurs, we must emphasize the importance 

of improved agency operations. 

As such, today’s hearing will focus on similar findings from the 

IG’s recently released report on SBA’s management of its fiscal 

year 2014 Voluntary Early Retirement Authority and Voluntary 

Separation Incentive Payment program. Specifically, I am greatly 

concerned about the lack of progress that SBA made in addressing 

its organizational structure through these programs. For instance, 

the IG found that because SBA did not achieve its goals, the agency paid over $2 million for early retirements for positions that were 

not restructured. Furthermore, former SBA administrator Maria 

Contreras-Sweet testified last year that 150 employees took early 

retirement under the VERA/VSIP program, allowing SBA to recruit 

candidates with specific competencies. Yet, no skills gap analysis 

was performed prior to the program and SBA failed to target such 

employees for the program based on those skills. 

These actions raise a number of questions that it is important we 

evaluate so we can ensure SBA is operating in the best way possible to assist our nation’s job creators. But to do so, SBA must 

take heed of the IG’s suggestions for better management of the 

VERA/VSIP authority. Effective implementation of organizational 

matters are critical to the agency’s ability to serve small businesses. 

In that vein, I think it is notable to mention that the use of the 

program occurred prior to our current SBA management’s arrival. 

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4 

And while there is still much work to do, I am pleased that steps 

are being taken to address the IG’s recommendation. 

I look forward to the witnesses’ testimonies and hearing how the 

agency can improve its structure and exercise of personnel authority. 

With that, I yield back, and I thank the witnesses. 

Chairman CHABOT. Thank you. The gentlelady yields back. 

I will take just a moment to explain our rules, and I would preface that with reminding Committee members that if they opening 

statements prepared, they can submit them for the record. 

We operate under the 5-minute rule as I am sure you know. 

Each of you will have 5 minutes to testify. There is a lighting system to assist you. The green light will be on for 4 minutes. The yellow light will come on and let you know you have got a minute to 

wrap up, and then the red light will come on and we would ask 

you as much as possible to stay within those time limits. And we 

also restrict ourselves to 5 minutes as well. 

I would now like to formally introduce our witnesses today. Our 

first witness, I think, has one of the coolest names in Washington, 

Hannibal Ware. And with a cool name like Hannibal, he goes by 

Mike. So, but great name. Mr. Ware serves as the Acting Inspector 

General for the Small Business Administration, Office of Inspector 

General. The OIG is responsible for the independent oversight of 

the SBA’s programs and operations. The OIG conducted the audit 

that is the subject of today’s hearing. We look forward to hearing 

Mr. Ware’s testimony today. 

And our second witness will be Mr. Joseph Loddo, who is the 

Chief Operating Officer at the Small Business Administration. Joseph is a cool name, too. It happens to be my middle name. In this 

role, Mr. Loddo works to improve overall agency performance by 

implementing innovative, effective, and more efficient processes 

throughout the agency. Mr. Loddo is a member of the Senior Executive Service with 30 years of experience in the Federal Government. Mr. Loddo also served as a captain in the U.S. Army, and 

thank you for your service. We welcome Mr. Loddo today and look 

forward to his testimony as well. 

Mr. Ware, you are recognized for 5 minutes. 

STATEMENTS OF HANNIBAL ‘‘MIKE’’ WARE, ACTING INSPECTOR GENERAL, UNITED STATES SMALL BUSINESS ADMINISTRATION; JOSEPH LODDO, CHIEF OPERATING OFFICER, 

UNITED STATES SMALL BUSINESS ADMINISTRATION 

STATEMENT OF HANNIBAL ‘‘MIKE’’ WARE 

Mr. WARE. Thank you very much. 

Chairman Chabot, Ranking Member Vela ́zquez, and distinguished members of the Committee. Thank you for the opportunity 

to be here today and for your continued support of the Office of Inspector General. 

We recently published the results of our audit of the Small Business Administration’s Management of the Voluntary Early Retirement Authority, also called VERA, and Voluntary Separation Incentive Payment, also called VSIP program. I am happy to discuss 

our findings with you today. 

SBREP-219A with DISTILLER

5 

According to the Office of Personnel Management, agencies may 

use VERA and VSIP to decrease the workforce when undergoing 

substantial organizational change, such as restructuring or 

downsizing. Both reorganization tools require approval from OPM. 

In fiscal year 2014, SBA requested and obtained VERA and VSIP 

authority from OPM. Within SBA’s fiscal year 2014 request and approval, only employees eligible for either full retirement or VERA 

were entitled to apply for the VSIP. In its request, SBA cited programmatic, demographic, and budgetary challenges as justification 

to use the VERA/VSIP authority to reshape its workforce to succeed in meeting its mission. 

To achieve this initiative, SBA drafted the VERA/VSIP plan with 

the purposes of: (1) addressing workforce competency and skills 

gaps; (2) increasing the population of early career employees and 

creating a pipeline of new leaders; and (3) addressing budgetary 

constraints to avoid a reduction in force. 

It should be noted, OIG was made aware of concerns regarding 

the manner in which SBA exercised its authority from OPM. As 

such, we conducted a review to determine whether SBA accomplished its fiscal year 2014 VERA/VSIP program goals. As a basis 

for our audit, we relied upon applicable laws, regulations, and 

OPM’s guidance on VERA and VSIP. 

Our office found that while SBA made limited progress in restructuring and reshaping the workforce, it did not accomplish its 

stated goals of the VERA/VSIP program. As a result, SBA paid $2.1 

million for early retirements for positions that were not restricted 

following VERA/VSIP. 

In context of goals stated to OPM, it was troubling to find SBA 

included inaccurate information in the VERA/VSIP plan. We also 

found in carrying out the VERA/VSIP plan, SBA did not make significant changes to its organizational structure. In fact, SBA did 

not have a restructuring plan in place before offering the VERA/ 

VSIP option, which, of course, made it difficult for SBA to achieve 

desired organizational structure changes. 

Overall, SBA may have been more successful in achieving its 

goals had it properly managed the VERA/VSIP program by developing specific and measurable VERA/VSIP goals, including accurate information in the plan making significant changes to its organizational structure and making substantial changes to job functions following VERA/VSIP. 

We provided two recommendations to improve SBA’s management of its VERA/VSIP program. We recommended that SBA conduct and document a lessons-learned review on the fiscal year 2014 

VERA/VSIP performance, including planning, implementation, results, and recommended improvements. We also recommended that 

SBA develop and issue procedural guidance to ensure that agency 

officials conduct future VERA/VSIP programs in accordance with 

VERA and VSIP regulations and OPM guidance. SBA officials 

agreed to implement corrective actions to resolve both of these recommendations. It is important to note the decisions and actions 

that underline our findings occurred in the past. As such, our recommendations are aimed at ensuring SBA learns from this most 

recent experience and strengthens internal controls to ensure any 

future exercise of VERA/VSIP authority achieves stated goals and 

SBREP-219A with DISTILLER

6 

objectives and to ensure the agency is a steward of the taxpayer’s 

dollars. 

I am proud of the work performed by our auditors to shine the 

light on this significant exercise of personnel authority by the SBA. 

Though the findings of our report are ascribed to SBA, it is a timely report in context of the March 13, 2017, presidential executive 

order on a comprehensive plan for reorganizing the executive 

branch. VERA/VSIP authority undoubtedly will be a tool that many 

agencies will consider as they seek to implement this order. In this 

regard, it is noted, OPM updated its VERA/VSIP guidance in 

March of 2017. 

Thank you for the opportunity to speak to you today, and I look 

forward to your questions. 

And if I may, I would like to publicly offer my concern and prayers for those affected by that outrageous act of violence this morning. Thank you very much. 

Chairman CHABOT. Thank you very much. We appreciate that 

greatly. 

Mr. Loddo, you are recognized for 5 minutes. 

STATEMENT OF JOSEPH LODDO 

Mr. LODDO. Chairman Chabot, Ranking Member Nydia 

Vela ́zquez, and distinguished members of the Committee. On behalf of Administrator Linda McMahon and the SBA family, we extend our sorrow and prayers for your colleagues and the staff who 

were impacted today. We hope for their rapid recovery. 

Chairman CHABOT. Thank you very much. We appreciate that. 

Mr. LODDO. Thank you for inviting me here to speak to you 

today. My name is Joe Loddo, and I am the Chief Operating Officer 

of the United States Small Business Administration. I am here to 

talk to you about SBA’s 2014 agency restructuring plan under the 

Voluntary Early Retirement Authority and the Voluntary Separation Incentive Program. 

VERA provides agencies the option to offer voluntary early retirement. VSIP, often combined with VERA, allows agencies to 

offer lump sum payments to employees as an incentive to separate. 

Both VERA and VSIP require OPM’s approval and are used along 

with careful strategic workforce planning to reshape the agency’s 

workforce when undergoing substantial organizational changes 

such as restructuring or reorganization. In SBA’s case, there was 

a large percentage of retirement-eligible employees at the time of 

the 2014 VERA/VSIP. Twenty-five percent of the current employees 

were eligible to retire immediately, including 50 percent of those in 

occupation series that cover most of the field office positions. Over 

1,000 SBA employees were eligible for VERA/VSIP at the time of 

approval. The average SBA employee’s age was 51, compared to the 

average age of 47 for the rest of the Federal Government. Because 

of the large number of employees eligible for the VERA/VSIP offering, there was a risk of putting SBA in a vulnerable position, and 

therefore, it was important to prepare for and manage these impending departures. 

SBA’s VERA/VSIP program was approved by OPM on August 12, 

2014, and announced to the agency’s employees on August 19, 

2014. All employees accepting the VERA/VSIP were required to 

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7 

separate from the agency by September 30, 2014. SBA’s management approved 300 positions as eligible for the VERA/VSIP; 149 

employees took the VERA/VSIP option. As the inspector general’s 

report indicates, SBA did not carry out the 2014 VERA/VSIP properly. As a result, SBA did not achieve the goals of the program. We 

agree with the OIG’s recommendation in the audit report dated 

May 30, 2017, and are conducting an analysis of the program. We 

will document the lessons learned, including the areas of planning, 

implementation, results, and recommended improvements. We will 

include all stakeholders in the process. 

Since I joined the Office of the Chief Operating Officer, first as 

the Deputy Chief Operating Officer and now as the COO, I have 

worked to ensure that all personnel hiring decisions are made on 

a sound basis. To begin to remedy some of the mistakes made with 

VERA/VSIP, I issued guidance on May 11, 2016, that all remaining 

2014 VERA/VSIP vacancies must be modified to conform to OPM’s 

guidelines. 

Under Administrator McMahon, SBA has created the Resource 

Management Board. The mission of the board is to ensure the best 

use of SBA’s limited resources by reviewing FTE allotments and 

determining the best use of resources to accomplish the agency’s 

mission. The board meets on a biweekly basis and it is comprised 

of four senior executive-level personnel. 

Further, SBA has determined that there is no need for the 

VERA/VSIP program during Fiscal Year 2017, and consequently, 

we will not be offering the program to employees this fiscal year. 

Administrator McMahon has made it very clear that SBA must operate efficiently and effectively. She is holding every senior management accountable for the results and expects to see them. I fully 

share her view. 

Thank you very much for the invitation to testify, and I welcome 

your questions. 

Chairman CHABOT. Thank you very much. 

I would first like to yield to my colleague, Mr. Kelly, who is 

Chairman of the Subcommittee on Investigations, Oversight, and 

Regulations, for his questions. I will take mine then after the 

Ranking Member. I would note that our colleague was on the ballfield this morning, and even though he served two tours in Iraq, 

that is a very stressful thing to go through. So God bless you, man. 

Mr. KELLY. Thank you, Mr. Chairman, and ranking member. 

I first want to say I thought it was important to be here today 

at this hearing. I, with the Congress, with the people of this great 

Nation, will not be intimated by cowards. We all, both parties, will 

continue to do the people’s work even in the face of these type of 

things. All involved are in my prayers. I want to echo the chairman 

and the ranking member’s thing. Let me tell you; I was there, and 

our Capitol Police, those two great officers, Officer Bailey or Agent 

Bailey and Agent Griner. Let me tell you; they are warriors and 

they are heroes, and they saved countless lives there this morning. 

And with that being said, let us get to work. 

On May 30, 2017, the SBA Office of the Inspector General released an audit which included that SBA failed to effectively manage its VERA/VSIP program. As a result, SBA wasted at least $2.1 

SBREP-219A with DISTILLER

8 

million in its attempt to restructure and reshape its agency’s workforce. 

And to Mr. Ware, your audit determined that SBA wasted $2.1 

million in its attempt to restructure. How did your office determine 

that dollar figure? 

Mr. WARE. Thanks, Congressman. The dollar figure was determined by our auditors. Let me start that because the agency did 

not have a tracking mechanism for those positions, our auditors 

had to basically go in and extrapolate this data from multiple 

sources to try to figure out which positions aligned with the ones 

that the people had left with. So they looked at whether or not the 

position was in the same place? Did it have the same title? The 

same area and everything like that? And from that, they were able 

to identify the 54 that came up with that. 

Mr. KELLY. And that number only represents the balance of 54, 

like you said—— 

Mr. WARE. Yes. 

Mr. KELLY. —that the SBA subsequently refilled without a sig- nificant change in the function of those. So that $2.1 million could 

even be a higher price tag than that; is that correct? 

Mr. WARE. That is correct. 

Mr. KELLY. Okay. And to Mr. Loddo, how were the buyouts 

funded? And what funding stream did the money come from? 

Mr. LODDO. The salary fund; the source was the salary and benefits line item in SBA’s appropriation. 

Mr. KELLY. I just, I want to make sure that we dig into this. 

This is the people’s money and you have people up here working 

in a bipartisan fashion. We cannot afford for these things to do 

that, and I know it was not necessarily on your watch, but that 

does not alleviate the responsibility going forward to make sure 

that it does not happy worse on your watch. And I want your 

assurement—not really you, Mr. Ware, because you have already 

done your work, but Mr. Loddo—that you will do all that you can 

to ensure that something like this does not happen and waste the 

taxpayers’ hard-earned dollars that they give to this Congress and 

to the SBA to do the people’s work. 

Mr. LODDO. My promise to the entire Committee is that that 

will never happen under my watch. I can add that the CHCO and 

the deputy CHCO are no longer with the agency; I hired a new 

CHCO that is very well qualified. In the interview process, I said 

to him that I want this agency’s HR department to be one of the 

best in two years, and the best in three years. Will you commit to 

that mission? He said, yes, sir; I will. We are very fortunate to 

have our CHCO, and I promise you that SBA will never allow 

something that happened in the past like this to ever occur, especially on my watch. 

Mr. KELLY. Thank you. And Ranking Member Vela ́zquez, thank 

you for your kind words, and Chairman Chabot. Let me tell you, 

we are a bipartisan Committee, and we are about the people’s 

work. And there is no greater honor than to be on this Committee 

with both of you all. And with that, I yield back, Mr. Chairman. 

Chairman CHABOT. Thank you very much. And I think we are 

both honored to have you on this Committee. So thank you very 

much. 

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I would now like to yield to the gentlelady from North Carolina, 

Ms. Adams, who is the Ranking Member of the Subcommittee on 

Investigations, Oversight, and Regulations. 

Ms. ADAMS. Thank you, Mr. Chair, and Ranking Member 

Vela ́zquez, for hosting today’s meeting. And thank you, gentlemen, 

for your testimony. 

I do want to identify with the remarks of both the chair and my 

colleague, as well as our ranking member about the really terrible, 

terrible situation this morning. And of course, we keep our colleague, as well as those others who were hurt, including Capitol 

Police, in our prayers and thank them for their support. 

I just want to take a second and introduce, if I can, Mr. Chair, 

my grandson, my youngest grandson, Aaron Lindsay, who is here 

working in my office this week. He is not getting paid but he is 

learning a lot. 

Chairman CHABOT. Welcome. All right. 

Ms. ADAMS. He is a rising junior. 

Chairman CHABOT. Would you mind standing up so we can see? 

All right. There we go. We want to make sure that Grandma embarrasses you enough. 

Ms. ADAMS. Thank you very much for your testimony. I do want 

to say that the SBA, in accordance with the inspector general’s recommendation, has indicated that they will provide written guidance outlining expectations for ensuring compliance with any OPM 

approved VERA/VSIP plan. 

Mr. Loddo, will the SBA include diversity goals in its guidance 

to ensure that the agency has a diverse staff concluding any future 

workforce restricting? 

Mr. LODDO. In any VERA/VSIP plan, as well as any plan that 

we are looking at in terms of restructuring or reorganizing the 

agency, that is a critical component in terms of making sure that 

the minority staff that is on board with SBA has an important role 

to play and that we take into consideration their role in any plan, 

particularly VERA/VSIP. 

Ms. ADAMS. Thank you. I am happy to hear that. 

The OIG report concluded that the SBA did not make significant 

changes to its organizational structure and that 54 of the 149 positions vacated were filled. 

Mr. Loddo, does the lack of organizational changes and the vacant positions mean that SBA is currently understaffed? 

Mr. LODDO. In the Fiscal Year 2018, we requested 2,100 employees, which is down 55. What we are currently doing as a result 

of a discussion with Administrator Linda McMahon, is we are restructuring and reorganizing the entire agency. I have the privilege 

tomorrow to present those recommendations to the Administrator. 

She allowed us to get all the senior executives together to make 

those recommendations in terms of improving the program and restructuring and reorganizing the agency. So that presentation will 

be tomorrow. 

Ms. ADAMS. Okay. Well, thank you very much. 

Mr. Ware, SBA has indicated that they will take steps to meet 

your recommendations; however, they need additional time to do 

so. Do you have plans to follow up on those actions later this fall? 

SBREP-219A with DISTILLER

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Mr. WARE. We definitely do have plans. And I have to say that 

Mr. Loddo and I spoke about the recommendations, and Mr. Loddo 

has assured us that they will even before the time that they requested. But we have a standard audit recommendation follow-up 

process that we work closely with the agency with, and we will 

definitely be carrying them all the way through to closure using 

that process. 

Ms. ADAMS. Thank you, sir. During your investigation, did SBA 

explain why it took them one year after VERA/VSIP was implemented to complete their skills gap analysis? 

Mr. WARE. I did not hear from them as to why it took that long, 

but it was not something that was at the forefront of the planning. 

Ms. ADAMS. Okay. 

Mr. WARE. So I would guess that they were trying to rectify that 

on the back end. 

Ms. ADAMS. Okay. So you did not ask the question? 

Mr. WARE. No, I did not. 

Ms. ADAMS. Okay. 

Mr. WARE. I am pretty sure the auditors asked the question 

though. I could get that answer for you. 

Ms. ADAMS. All right. Thank you. I would appreciate it if you 

would. 

Mr. WARE. Okay. 

Ms. ADAMS. And thank you both very much for your responses 

to my questions. And again, Mr. Chair, I thank you for yielding to 

me. I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

I will now recognize myself for 5 minutes, and I will begin with 

you, Mr. Ware. 

What prompted your office to conduct an audit of the 2014 

VERA/VSIP buyout process in the first place? And do you think 

that the SBA’s management of the VERA/VSIP rollout affected 

agency morale? 

Mr. WARE. What prompted us to look into this was that we received inquiries from our Congressional authorizing committee. 

And we also received hotline complaints. And these complaints 

were saying that this just was not being rolled out correctly. That 

there was not any planning. And we, in essence, went and found 

that. That was the reason why we went in there. 

And in terms of the effect on morale, our review did not focus 

on morale. But I would say this; that it was evident that at least 

some were affected enough to come forward, to go to their congressional representatives, to come to our office through the hotline, 

and some even went to the Office of Special Counsel. So in that regard I would definitely say. 

Chairman CHABOT. How about the morale issue? 

Mr. WARE. That is what I was saying. Our office did not take 

a look directly at the morale issue but it was evident that there 

was enough of a morale issue that the staff felt that they needed 

to come forward to talk about this. 

Chairman CHABOT. Thank you. 

Mr. Loddo, could you comment on the morale issue? 

SBREP-219A with DISTILLER

11 

Mr. LODDO. Yes. Two points. Two weeks after the VERA/VSIP 

was announced, the CHCO at that particular point in time, sent a 

letter to the rest of SBA, basically saying to ignore the guidelines 

of the OPM policy and the SBA plan for VERA/VSIP; any critical 

position could be filled without any restrictions. That is the first 

point that I would like to make. 

The second is that there was a tremendous morale problem within OHRS. As the Deputy Chief Operating Officer, I began day-today operations meetings within the Office of Human Resources because of a lack of leadership in OHRS; given that they had no chief 

human capital officer at that particular point in time. I remained 

with OHRS for about 4 months, at which point I discovered the letter written by the previous CHCO ignoring the OPM guidance. I 

rescinded the letter immediately so that the agency would follow 

the OPM guidelines implemented and promised in the agreement 

for the VERA/VSIP plan. 

Chairman CHABOT. Thank you very much. 

Let me ask you both a question before my next question. Are either one of you attorneys by any chance? 

Mr. WARE. I am not. 

Mr. LODDO. I am not. 

Chairman CHABOT. Okay. Well, I am, and I just had a question. 

It is somewhat of a legal question but it bothered me a little bit 

when I read that, you know, one of the purposes of this whole thing 

was to decrease the average age of the agency’s workforce. It 

sounds a little bit like age discrimination to me. And I do not know 

if the legal beagles at the department have looked into that? And 

perhaps this is rampant throughout the Federal Government. I am 

not quite sure. But do either one of you want to respond to that? 

Mr. LODDO. I will take the first observation. 

The Office of Personnel Management has certain criteria in 

terms of you have to be eligible in terms of length of service in the 

Federal Government. So basically, one option is 25 years. Another 

option is 20 years. So it is really based off of length of service in 

the Federal Government, not truly based off of the age, per se. 

Mr. WARE. Can I add to that? 

Chairman CHABOT. Yes, go ahead. 

Mr. WARE. That is actually one of the things that are covered 

under the use of VERA or VSIP. That was one of the approved 

things that OPM would approve in terms of trying to help to generate a younger workforce. 

Chairman CHABOT. Okay. It just seems instinctively bothersome to me, and I know it is number of years’ service, but that sort 

of goes with your age, too, over time. The two go hand in hand. So 

that bugs me a little bit. In Ohio, we have got, you know, judges 

have to retire, I believe it is at age 70. They can stay there but 

they cannot run for reelection after age 70. And it has gone to the 

Supreme Court and they have said it is okay. So I am assuming 

that I am not the first person or the first plaintiff’s attorney that 

has ever thought of this. And so I am guessing somebody there. 

But if you would not mind perhaps having your legal beagles get 

back to our legal beagles so we can make sure that we are covered 

there. 

SBREP-219A with DISTILLER

12 

I have run out of time so I cannot ask even more probing questions at this time, but I would now like to recognize the Ranking 

Member for 5 minutes. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. I guess at our age 

we are more sensitive to that issue. 

Mr. Ware, in your testimony you noted a number of ways that 

SBA might have been more successful in achieving its VERA/VSIP 

goals. What would you identify as the underlying cost of SBA’s 

failed VERA/VSIP? 

Mr. WARE. Thank you for that question. I would actually assign 

three causes to it. The first one would be the lack of any true level 

of planning that would have aligned with OPM’s requirements and 

SBA’s stated goals. That would be the first one. To add to the first 

one as well, it is almost as if they rushed to implement something 

they were not exactly ready for. Otherwise, the plan would have 

been done on the top. 

But the second one is the lack of tracking because they did not 

have a formal tracking mechanism to really track who left what 

and what positions would need to be restructured and all that. 

That was the second cause. 

And the last one—— 

Ms. VELA ́ ZQUEZ. So what are they doing about that in terms 

of tracking? 

Mr. WARE. We have not found, as of this date, and Mr. Loddo 

probably could speak about that some more, but at the time that 

we looked, that snapshot that we looked at, and even the followup past, the snapshot, we had not found that they were able to effectively track them even now. 

And then the third one was that what Mr. Loddo spoke about, 

that the former CHCO put out really poor guidance in the form of 

that memorandum that in essence told everybody in HR you could 

just simply backfill the positions. 

Ms. VELA ́ ZQUEZ. Thank you. 

Mr. Loddo, the IG reported that as a result of the VERA/VSIP, 

SBA experienced a loss of instructional knowledge in some program 

offices, including the Office of Capital Access. What action has SBA 

taken to rectify this? 

Mr. LODDO. Thank you for the question. There are two offices 

that were impacted severely by the VERA/VSIP. Twenty-six percent came from the field and—— 

Ms. VELA ́ ZQUEZ. Twenty-six percent came from the field? 

Mr. LODDO. Yes, from the District Offices in the field. And 16 

percent came from the Office of Capital Access. What was important for us knowing that that knowledge was leaving; we have the 

responsibility to transfer the knowledge that is within the agency 

to the future leaders and to the new people coming on board. We 

do that in four major ways. 

One is what we call the peer-to-peer hour. Every Thursday at 1 

o’clock, throughout the agency, we provide training on different 

subjects. 

Ms. VELA ́ ZQUEZ. Okay. 

Mr. LODDO. The second is mentoring. The third is lender-teacher. And the fourth is related to the employees actually do this 

themselves and then identifying areas that they want to study. 

SBREP-219A with DISTILLER

13 

Ms. VELA ́ ZQUEZ. Okay. 

Mr. Ware, in your report, you note that the Office of Human Resource Solutions, the division responsible for planning the VERA/ 

VSIP and the OPM justification, did not include the majorities of 

SBA leadership team in the planning of the VERA/VSIP. This did 

not occur until after the plan had been signed by the administrator 

and submitted to OPM. So please help me understand what effect 

did the leadership exclusion have on the entire process and the success of the program? 

Mr. WARE. Without the leadership, without the key members of 

the leadership team being at the table, these people would have 

been in the best position to ascertain how to most effectively restructure and reshape the agencies, in particular, their divisions. 

So not having them at the table meant that even if the plan was 

in place, the plan would have missed the type of insight that any 

of them could have brought to the table. And because of that as 

well, there was miscommunication and misinformation. They actually thought because they had done it before that they could simply 

backfill the positions. 

Ms. VELA ́ ZQUEZ. So what actions are you taking to correct the 

inefficiency of not having the leadership providing the input when 

they needed to do it? 

Mr. LODDO. The audit report done by the IG in Table 3 outlines 

14 steps for a program related to VERA/VSIP. Clearly, it is communications and leadership involvement. Every one of these items was 

skipped in that one month of planning under 2014 leadership. 

There was no transparency. There were no communications. It was 

implemented in 30 days. Ninety-five people were done by position; 

54 were done because of the employee. That is not the way you 

would do a VERA/VSIP. It would never happen under my watch. 

Chairman CHABOT. The gentlelady’s time is expired. Thank 

you. 

The gentleman from Kentucky, Mr. Comer is recognized for 5 

minutes. 

Mr. COMER. Thank you, Mr. Chairman. 

You all mentioned that the SBA did not develop any mechanism 

or designate any person to track who was taking advantage of the 

early retirement buyouts. And you also touched on the effect of not 

having any tracking mechanism. My question is do you know why 

the SBA did not track which employees were accepting these early 

retirement buyout packages? 

Mr. Loddo? 

Mr. LODDO. Thank you for the question. In large part it was 

due to the letter from the CHCO saying there are no restrictions 

in terms of your re-hiring, which is outside of the guidelines of the 

OPM policy. 

Mr. COMER. Okay. Mr. Ware, what do you think the most important improvements SBA should make to increase the effectiveness of any future VERA/VSIP buyouts? 

Mr. WARE. Well, definitely they need to sit and come up with 

a comprehensive plan that would get them to where they need to 

be in terms of their restructuring and reclassifying positions, anything they need to make them more streamlined and efficient. And 

of course, they could implement our recommendations, the two 

SBREP-219A with DISTILLER

14 

which they will do. And lastly, Mr. Loddo spoke about the best 

practices associated with the effective use of VERA/VSIP. That is 

something we offered in the report and that they are aware of. 

Mr. COMER. Okay. Mr. Ware, do you think the SBA’s mistakes 

are unique to the SBA? Or do you know whether other agencies 

have been committing the same or similar mistakes? 

Mr. WARE. In our audit, one of the things that the auditors 

looked for was had similar reports been done across government? 

And I believe if I am not mistaken, it was EPA OIG where they 

found that it had similar issues. Other than that, I have been in 

the Office of Inspector General community for going on 28 years, 

and this was my first foray into this. But I do know this; that experience tells me that if you do not start at the front in terms of putting together a proper plan that you can implement, this is the 

type of thing that happens in all kinds of programs across government. 

Mr. COMER. My last question to Mr. Loddo, you stated in your 

testimony that SBA will not be conducting early retirement 

buyouts this year. Since SBA will not be using VERA or VSIP, how 

does SBA plan to reform its agency workforce? 

Mr. LODDO. Thank you for the question. 

Having discussions with the administrator, she asked at the very 

beginning how can we restructure and reorganize the agency? She 

tasked the senior executives to come up with a plan to look at the 

programs and restructure the agency. We are presenting that plan 

tomorrow to her. It will streamline the agency. It will improve the 

programs and allow us to work within the 2,100 employee ceiling 

level that we requested for Fiscal Year 2018. 

Mr. COMER. Okay. 

Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. Thank you. The gentleman yields back. 

The gentleman from Florida, Mr. Lawson, who is the Ranking 

Member of the Subcommittee on Health and Technology, is recognized for 5 minutes. 

Mr. LAWSON. Thank you, Mr. Chairman. And welcome to the 

Committee. 

I am still trying to understand the skills gap, you know, and how 

the skills gap really occurred from 2004, I think. Now, with my relationship in dealing with employees with this VERA/VSIP option 

that they had, it appears that more emphasis is placed on the 

worker than it is the administration. Can you respond to that? 

With the skills gap? 

Mr. WARE. Well, with the skills gap analysis, that is supposed 

to really be done by the agency who is implementing the VERA/ 

VSIP. So what that does is one of the requirements that OPM has 

is in order to implement, in order to even get approval for this, you 

need to show that you have a real reason that you need to offer 

this to employees to help them to retire quickly. So the way that 

you do that is by restructuring. So you are saying we are on longer 

going to need these positions. We need a new type of skill in order 

to move the agency in whatever direction the agency thinks it 

needs to be going in. So that is what it meant by that. 

Mr. LAWSON. Okay. And I had one other question. It can go to 

either one of you. And you might have to a certain extent, but can 

SBREP-219A with DISTILLER

15 

you describe the current status of the health of SBA with regard 

to the capacity to guarantee loans and provide resources to small 

businesses? And has the skills gap that existed before this requirement on the VERA/VSIP been eliminated? 

Mr. LODDO. The skills gap will always be a continuous problem 

for SBA because of people retiring and new people coming on, and 

we have to train middle management to be the new leaders of tomorrow. To ensure that we do not lose that knowledge, we have 

specialized training for our staff, particularly in Capital Access, as 

it relates to our guarantee programs, our 504 programs, and our 

other lending programs. 

Mr. LAWSON. Okay. And this would be my last question here. 

And it is for either of you. The economic factors that result in the 

VERA/VSIP being implemented and is SBA immune to any of these 

factors? 

Mr. WARE. Congressman Lawson, could you please repeat that? 

I did not catch the first part of the question. 

Mr. LAWSON. It says that, and now I am seeing if it is here on 

his answer, what economic factors can result in VERA/VSIP being 

implemented and is SBA immune to any of these factors? 

Mr. WARE. Do you want me to go? I figure that is an agency 

question. 

Mr. LODDO. The agency works in an environment that is changing, where the economy is good, and sometimes less good. The wonderful programs that we offer are applicable whether there are bad 

times or good times, in terms of our lending programs, our contracting programs, and our counseling programs. We have the economic toolbox for the Nation’s small businesses to survive and 

thrive in an economy, particularly when the economy is on a downswing and lending seems to slow down. Our guarantee program is, 

as in the past and will in the future, continue to help and save our 

Nation’s small businesses, particularly on a downturn. 

Mr. LAWSON. Okay. Mr. Chairman, with that I yield back. 

Chairman CHABOT. Thank you. The gentleman yields back. 

The gentleman from Missouri, Mr. Luetkemeyer, who is the Vice 

Chairman of this Committee, is recognized for 5 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. And welcome, 

witnesses. 

I am kind of curious. We have a situation where we talked about 

there was not a skills gap analysis. Why was that not done prior 

to the OPM approval of the plan? It would seem to me that there 

would be documents and proposals and plans that would need to 

be in place and approved prior to their approval for the entire program and any money being released. Was that not done? 

Mr. LODDO. Your statement is absolutely correct; it was not 

done. 

Mr. LUETKEMEYER. Is that not part of the process? 

Mr. LODDO. It is very much—— 

Chairman CHABOT. Could you pull that mic a little closer so everybody can hear you? 

Mr. LODDO. I am sorry. 

Chairman CHABOT. Thank you. 

Mr. LODDO. It is very much a part of the process and it was not 

done. The entire plan was done in 30 days. It did not follow 12 of 

SBREP-219A with DISTILLER

16 

the 14 recommended approaches in terms of building out a VERA/ 

VSIP plan. This was meant primarily to help what turned out to 

be—— 

Chairman CHABOT. Not to interrupt you but that mic is still— 

you have got it over here. And if you could—there are people in the 

room—— 

Mr. LODDO. Like that? 

Chairman CHABOT. There you go. 

Mr. LODDO. The program was offered to 149 people. What is 

disappointing is that for 54 people, it was not about positions, it 

was about who they were, the employee. And the lack of that planning, the lack of communications, and the lack of leadership really 

caused that program to be a failure before it even started. 

Mr. LUETKEMEYER. What you are telling me is that OPM is 

the one that really screwed up here from the standpoint—they approved a plan without all of the doucumentation and everything in 

place, without checking all the boxes. Is that what you just said? 

Mr. LODDO. The Office of Personnel Management approved the 

plan. With little real diligence they should not have but they did. 

And we violated what we agreed to. 

Mr. LUETKEMEYER. Okay. To follow up on that, are there any 

processes in place? Now, Mr. Ware, you recall—I guess the first 

question is, today you indicated that there were some folks that 

contacted your office and that is why you instigated the 

investigationis that correct? 

Mr. LODDO. Yes. 

Mr. LUETKEMEYER. Are you normally, do you in a routine go 

through and audit programs like this or do you have to have a contact in order to be able to do that? 

Mr. WARE. Thank you for the question. 

Currently, we have a risk-based approach to the many programs 

that the SBA has in order to efficiently and effectively put our resources where they need to be to make sure that we are covering 

everything. 

Mr. LUETKEMEYER. Okay. So you do not have a routine that 

you go through? Like every 6 months, every year, every 5 years you 

go through and audit the program? You have to have some sort of 

a reason to go in. Is that what you are telling me? 

Mr. WARE. No, sir. True. 

Mr. LUETKEMEYER. Okay. 

Mr. WARE. We do for the major programs. 

Mr. LUETKEMEYER. Okay. So the OPM, do they have a review 

process? Is part of the process of allowing this to happen, approving 

the VERA/VSIP program, is part of that process for them to go 

back and periodically review? Or do they request reports, periodic 

reports, audits? 

Mr. WARE. Yes, they do. We found that that is part of it. 

Mr. LUETKEMEYER. Were you doing it? 

Mr. WARE. They—— 

Mr. LUETKEMEYER. Obviously, not. 

Mr. WARE. No. Actually, no. What we found was that a requirement was made that they had to do quarterly updates. But what 

we found was the agency reported to OPM that it was too preSBREP-219A with DISTILLER

17 

mature at that stage to provide the quarterly updates and there 

was no follow up. 

Mr. LUETKEMEYER. So OPM really dropped the ball on this 

one. 

Yes, sir. Mr. Loddo? 

Mr. LODDO. What SBA presented to OPM, some of the premises 

they used were false. 

Chairman CHABOT. Mr. Loddo, could you—— 

Mr. LODDO. What OPM received from SBA were some false 

premises. And as a result of those premises, they made a decision. 

Their decision, based off of false premises, is why we ended up with 

an approval. 

Mr. LUETKEMEYER. All right. Well, the point I am trying to 

make is we have got two bad actors here. We have got the SBA 

that did not fulfill the requirements of the plan that they requested 

be put in place and approved for, and you have got OPM that really approved a plan they should not have to begin with because 

none of the documentation was in place and did not do the audits 

that were necessary. Is that a fair statement? 

Mr. LODDO. I would say that they had limited documentation 

and some of the documentation was false. And as a result, they approved the plan. 

Mr. LUETKEMEYER. Okay. 

Mr. WARE. I would say this. 

Mr. LUETKEMEYER. I have one more question. Be quick. 

Mr. WARE. Okay. Be quick. What I would say is this; I think 

that the boxes, the necessary boxes were checked based on what 

SBA provided them and telling them that they were going to do. 

Mr. LUETKEMEYER. Okay. So we know we had a bad actor at 

SBA who wrote a letter that sort of said here is a get out of free 

jail card. Do what you want to do. Ignore the guidance from this 

plan. Has that person been prosecuted? Have any sort of charges 

been brought? Has any sort of punitive action been taken against 

that individual? 

Mr. LODDO. That CHCO is no longer with SBA. 

Mr. LUETKEMEYER. That is not my question. 

Mr. LODDO. There were no penalties other than she is no 

longer—— 

Mr. LUETKEMEYER. Did he get a VERA/VSIP exit package? 

Mr. LODDO. She did not apply for the VERA/VSIP. However, the 

COO who had oversight over this plan did and took the $25,000, 

which is also disappointing. 

Mr. LUETKEMEYER. Well, if I may—— 

Chairman CHABOT. The gentleman’s time has expired, but this 

is getting interesting so the chair will give you an additional 

minute. 

Mr. LUETKEMEYER. Okay. So we have someone here who basically violated the tenet of the approved plan. There is no punitive 

action being planned whatsoever? Is that what you are telling me? 

Mr. LODDO. The person no longer works for SBA and there are 

no punitive plans in place. What we are witnessing is the lack of 

integrity, the lack of vision, and the lack of execution. 

SBREP-219A with DISTILLER

18 

Mr. LUETKEMEYER. Okay. We have $2.1 million that was 

doled out apparently incorrectly. Is that what you are telling me, 

Mr. Ware? 

Mr. WARE. Yes. 

Mr. LUETKEMEYER. So therefore, is there any chance of getting that back because of this individual’s blatant disregard for the 

plan itself? 

Mr. WARE. It is important to understand this; that the $2.1 million, they were actually paid to folks who qualified for a program 

that SBA offered. 

Mr. LUETKEMEYER. Yes, but they were paid under false pretenses from the standpoint that we did not have a skills gap analysis done here to show that the people that they are replacing or 

would replace them, this is not the way that the program should 

be qualified. They should not be qualified; correct? 

Chairman CHABOT. The gentleman’s time is expired, but go 

ahead and answer the question. 

Mr. WARE. That is actually a part of the execution of the plan 

after these people have duly qualified to leave. The execution is 

what went wrong with the plan. But these people appropriately applied for and got what they applied for. 

Mr. LUETKEMEYER. I appreciate the chair’s indulgence. Thank 

you. 

Chairman CHABOT. The gentleman’s time is expired. 

The gentleman from Pennsylvania, Mr. Evans, who is the Ranking Member of the Subcommittee on Economic Growth, Tax, and 

Capital Access is recognized for 5 minutes. 

Mr. EVANS. Thank you, Mr. Chairman. 

Mr. Chairman and ranking member, before I ask my questions, 

there is a young lady I would like to introduce. She is a Girl Scout 

intern. She has been with me all week this week. Ms. Lindsay Rodgers from Centerville, Virginia. Could she—— 

Chairman CHABOT. Lindsay, if you could stand up. Thank you. 

Mr. EVANS. I think, Mr. Chair and ranking member, she is trying to measure what seat she would like to have up here. I think 

that is what she is doing. 

I would like to follow up to what my colleague was just raising 

some questions, particularly to the inspector general. And you have 

some experience on this. 

Based on your experience, do you feel the administration’s past 

history will tend towards compliance? So I know a lot of specific 

questions have been asked to you, but as you have gone through 

this process, do you think they will tend towards compliance? 

Mr. WARE. My work with Mr. Loddo has shown me that he is 

at face value at what he has said. This has been my experience 

with working with Joe for over a year. And he has moved quickly 

and swiftly when he heard about what was going on, and he has 

assured us that he is going to comply with our recommendations 

even before the date that we agreed to, and I have no reason to 

doubt that he will do as he said as long as he is in that position. 

Mr. EVANS. Okay. 

Mr. Loddo, are there any plans to attempt to privatize any of the 

jobs that currently exist in SBA? 

SBREP-219A with DISTILLER

19 

Mr. LODDO. In our plan that we are presenting to the Administrator tomorrow, it would be, I think, premature for me to make 

that conclusion because it is the Administrator’s decision. But generally speaking, we are looking to improve our programs. I have 

not identified any programs that would be outsourced at this particular point. 

Mr. EVANS. At this point, but is that on the table in the discussions? 

Mr. LODDO. Not to my knowledge. 

Mr. EVANS. I yield back the balance of my time. 

Chairman CHABOT. Thank you very much. The gentleman 

yields back. 

The gentleman from Iowa, Mr. Blum, who is the Chairman of the 

Subcommittee on Agriculture, Energy, and Trade, is recognized for 

5 minutes. 

Mr. BLUM. Thank you, Mr. Chairman. And thank you to the 

panelists for being here today. 

Mr. Loddo, my question is going to be directed toward you. I 

think you stated in your testimony that Administrator McMahon 

instructed senior level executives in the SBA to put together a plan 

to streamline the agency; is that correct? 

Mr. LODDO. Yes, that is correct. 

Mr. BLUM. When is the last time the agency was streamlined? 

Mr. LODDO. I joined the agency in 1991. This is the first time 

that I have witnessed where senior executives have come together 

to offer to the Administrator reorganizing, restructuring, and looking at programs to improve them to our Nation’s small businesses. 

Mr. BLUM. That is like 26 years ago. A long time ago? 

Mr. LODDO. That is correct. 

Mr. BLUM. I come from the private sector. I was CEO of a publicly-traded company. Does the agency need to be told to stream, 

to reorganize, to be more effective, efficient stewards of the taxpayers’ money? Please answer that. 

Mr. LODDO. The answer to that question is under the leadership 

of Administrator Linda McMahon, there is no need to tell her that. 

She is definitely interested—— 

Mr. BLUM. No. No, I said does the agency though, the first time 

in 25 years you have streamlined. Why would the management of 

the agency streamline the agency every other year? Every year? 

Every 5 years? Why is there 20 years in between? 

Mr. LODDO. I think we go through that in what I would call 

micro perks, a particular program, or a particular restructuring of 

a particular office. But what we are looking at and what will be 

presented to the administrator tomorrow is the restructuring and 

reorganizing of the entire agency. And she has a requirement to report to OMB by June 30th on those recommendations. 

Mr. BLUM. And she comes from the private sector so I am sure 

she has. I was just wondering why it took 26 years. I would think 

the management of the agency would want to do that on their own 

is my point. Are you familiar with best practices? Best practices in 

the private sector, are you familiar with that concept? 

Mr. LODDO. Absolutely, having owned two small businesses that 

grew very rapidly, we did it all the time because the markets were 

changing. 

SBREP-219A with DISTILLER

20 

Mr. BLUM. So do you stay abreast of best practices today in your 

job? 

Mr. LODDO. Yes; absolutely. I have to, particularly on the technology side and particularly as it relates to cyber security. 

Mr. BLUM. And do you think the agency is effective? Is efficient? 

Is a great steward of taxpayer money today? 

Mr. LODDO. It will be after Administrator Linda McMahon 

makes the decisions on the proposals submitted to her. 

Mr. BLUM. So it has not been? 

Mr. LODDO. There is room for improvement. Significant room 

for improvement. 

Mr. BLUM. In your compensation plan, is there incentives in 

your compensation plan to have the agency be streamlined and effective and efficient? 

Mr. LODDO. That would be a decision by the Administrator. 

There are funds that could be used to award people for performance outside of the normal routines. 

Mr. BLUM. That is good to hear because I think we need incentives, more incentives like they have in the private sector in the 

public sector so the employees of the Federal Government have an 

incentive to save taxpayers money. 

Mr. LODDO. If I could add? 

Mr. BLUM. Absolutely. 

Mr. LODDO. The Senior Executive Service of the Small Business 

Administration is absolutely committed to improving the efficiency 

and effectiveness of the agency under Administrator Linda 

McMahon. This is the first time we have had that option. 

Mr. BLUM. That is good to hear. Bad to hear about the past but 

good to hear that things are changing. 

As a Committee, how do we judge your performance? Do you 

have markers? Do you have performance goals, parameters that we 

are familiar with, that we are aware with, or is this like typical 

Federal agency, it just goes on and on and on forever without any 

real measurement, without anybody being held accountable? 

Mr. LODDO. Let me frame this answer in the words of Administrator Linda McMahon. We have performance plans, and in fact, 

my office overlooks those performance plans to make sure that they 

are done. When I reported to her that they were not in the best 

shape, this was her message to the supervisors and the leadership 

of SBA on her first week at SBA. In her opinion, it is intolerable 

that those performance plans are not perfect; that the communications between the supervisors and the staff must occur in person, 

when possible. Then she went on to say anything less than that 

she views as insubordination. 

Mr. BLUM. That is good to hear. I have confidence in Administrator McMahon. It is just I am concerned about the past. The past. 

But we cannot change that. All we can do is change the future. So 

thank you for your answers, and I yield back the time I do not 

have. 

Chairman CHABOT. Thank you. The gentleman’s time is expired. 

And the chair will just note for the record we are very encouraged to hear the words of the gentleman. So we will follow up down 

the road and see if it actually happened. We certainly hope it does, 

SBREP-219A with DISTILLER

21 

and the Committee is determined to do everything we can to work 

with you to make sure that does happen. 

And unless one other colleague would come, our final interrogator this afternoon will be the gentleman from New York, Mr. 

Espaillat, and then the Ranking Member has a question after that. 

Mr. ESPAILLAT. Thank you, Mr. Chairman, and Ranking Member Vela ́zquez. I will be brief. Much has been said already. 

Mr. Loddo, I want to know, what is the SBA doing to attract like 

more younger members, employees, the millennium types to fill 

these vacancies? What is your outreach to ensure that that kind of 

new employee comes in? 

Mr. LODDO. The agency is very fortunate to have 68 District Offices across the country. When we place an announcement for recruiting, it is required to go out onto USAJobs. In addition to that, 

our office, under the Office of Human Resources Solutions, reaches 

out to particular organizations in government as well as the CIO 

councils to look for people that could come on board with SBA. So 

we are looking at targeted communities. We are looking at the 

broad USAJobs. And we are looking at the specialty areas where 

we can find the people that are good in cyber, find the people that 

are good in HR, as well as the most important people that we have, 

the people in the field that work day in and day out with our Nation’s small businesses. 

Mr. ESPAILLAT. I will encourage that as technology continues 

to play a bigger role in small businesses that there is a full effort 

to try to engage those that are really knowledgeable in assisting 

small businesses in that endeavor. 

And what about diversity? How are you planning to make the 

agency be fully diverse? And what are you doing to recruit from different groups? 

Mr. LODDO. We have an office that reports to me under the Office of Diversity, Inclusion, and Civil Rights. They report to all senior management by office in terms of the makeup of the staff that 

we have, and where we have a disparity, we, in OHRS, need to resolve that issue. And that is why we target particular communities 

in order to be able to cause that gap to be removed. 

Mr. ESPAILLAT. Again, in this arena, also, many small businesses are owned by recent arrivals or first generation Americans 

that require, I think, daily access to the services that you provide 

but perhaps are not getting there through the front door because 

they may not be full effort with regards to having a healthy diversity within the agency that will get them there. So I encourage you 

to also do that. 

I yield my time. 

Chairman CHABOT. Thank you. The gentleman yields back. 

And the Ranking Member has a question. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Mr. Loddo, how long have you been at SBA? Working at SBA? 

Mr. LODDO. I have been at the Small Business Administration 

since 1991. I joined in the District Director candidate program. I 

was the first person hired outside of the agency from the private 

sector. 

SBREP-219A with DISTILLER

22 

Ms. VELA ́ ZQUEZ. So when they were working, the administration at SBA was working on the VERA/VSIP plan, what position 

did you hold? 

Mr. LODDO. I was the Deputy in the Disaster Assistance Program. 

Ms. VELA ́ ZQUEZ. So you were not working at the office that 

was in charge of overseeing and making—— 

Mr. LODDO. That is correct. And if I was, this would not have 

happened. 

Ms. VELA ́ ZQUEZ. Okay. Thank you. 

Chairman CHABOT. That was the right answer. 

That concludes the questions for today. We want to thank both 

of you for your testimony. It has been very important and clearly, 

the SBA needs to do better. I like what I am hearing. And as I 

said, sometime down the road, and our staff will work with your 

staff, we would like to hear what the results have been from the 

reforms and improvements that are being made there. 

I would remind members that they will have 5 days to extend 

their remarks or add supplemental materials. And if there is no 

further business to come before the Committee, we are adjourned. 

Thank you very much. 

[Whereupon, at 1:58 p.m., the Committee was adjourned.] 

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23 

A P P E N D I X 

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STATEMENT OF 

HANNIBAL "MIKE" WARE 

ACTING INSPECTOR GENERAL 

U.S. SMALL BUSINESS ADMINISTRATION 

BEFORE THE 

COMMITTEE ON SMALL BUSINESS 

U.S. HOUSE OF REPRESENTATIVES 

JUNE 14,2017 
24 

INTRODUCTION 

Chairman Chabot, Ranking Member Vela ́zquez, and distinguished members of the Committee, thank you for the opportunity 

to be here today and for your continued support of the Office of Inspector General (OIG). We recently published the results of our 

audit of the Small Business Administration’s (SBA’s) management 

of the Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payment (VSIP) program. I am happy 

to discuss our findings with you today. 

OIG’s ROLE 

OIG was established within SBA by statute to promote economy, 

efficiency, and effectiveness and to deter and detect waste, fraud, 

abuse, and mismanagement in the Agency’s programs and operations. During fiscal year (FY) 2016, OIG achieved nearly $145 million in monetary recoveries and savings—an almost 7-fold return 

on investment relative to our FY 2016 operating budget—and made 

81 recommendations for improving SBA’s operations and reducing 

fraud and unnecessary losses in the Agency’s programs. 

OIG audits are conducted in accordance with Federal audit 

standards established by the Comptroller General, and other reviews generally are conducted in accordance with standards established by the Council of the Inspectors General for Integrity and 

Efficiency (CIGIE). In addition, we coordinate with the Government 

Accountability Office to avoid duplicating Federal audits. We also 

establish criteria to ensure that the non-Federal auditors that OIG 

uses (typically, certified public accountant firms) comply with Federal audit standards. 

OIG’s FINDINGS PERTAINING TO SBA’s MANAGEMENT 

OF VERA AND VSIP 

OIG report 17-13, titled SBA’s Management of Voluntary Early 

Retirement Authority and Voluntary Separation Incentive Payment 

Program presents the results of our audit of SBA’s management of 

the VERA and VSIP program. VERA provides agencies the option 

to offer voluntary early retirement when restructuring as well as 

when downsizing. VSIP, often combined with VERA, allows agencies to offer lump-sum payments to employees who are in surplus 

positions or have skills that are no longer needed in the workforce, 

as an incentive to separate. SBA offered a VERA-VSIP option in 

fiscal year (FY) 2014. 

Our objective was to determine whether SBA accomplished its 

FY 2014 VERA-VSIP program goals. To accomplish this objective, 

we reviewed SBA’s VERA-VSIP plan, the Office of Personnel Management’s (OPM’s) approval letter, and SBA’s reports to OPM on 

the results of the VERA-VSIP program. We interviewed Office of 

Human Resources Solutions (OHRS) personnel, the individual at 

SBREP-219A with DISTILLER

25 

OPM who approved the plan, and other SBA officials to understand 

how SBA used the VERA-VSIP positions to restructure the agency. 

We reviewed the personnel records of the 149 employees who 

separated under the 2014 VERA-VSIP program, and we reviewed 

how SBA used these positions to accomplish its goals. We reviewed 

applicable laws, regulations, and OPM’s guidance on VERA and 

VSIP, as a basis for our audit. 

What OIG Found 

We found that while SBA made limited progress in restructuring 

and reshaping the workforce, it did not accomplish its stated goals 

of the VERA-VSIP program. As a result, SBA paid $2.1 million for 

early retirements for positions that were not restructured following 

VERA-VSIP. 

Overall, SBA may have been more successful in achieving its 

goals had it properly managed the VERA-VSIP program by developing specific and measureable VERA-VSIP goals, including accurate information in the VERA-VSIP plan, making significant 

changes to its organizational structure, and making substantial 

changes to job functions following VERA-VSIP. 

OIG Recommendations 

We provided two recommendations to improve SBA’s management of its VERA-VSIP program. We recommend that SBA conduct 

and document a lessons learned review on the FY 2014 VERAVSIP performance, including planning, implementation, results, 

and recommended improvements. We also recommend that SBA develop and issue procedural guidance to ensure Agency officials conduct future VERA-VSIP programs in accordance with VERA and 

VSIP regulations and OPM guidance. 

Agency Response 

SBA’s planned actions resolve the two recommendations. SBA 

will conduct an after action review on the FY 2014 VERA-VSIP 

performance that will address the components outlined in the recommendation. Additionally, SBA will provide written guidance outlining expectations and mitigation strategies for ensuring compliance with any OPM approved VERA-VSIP plan. 

CONCLUSION 

I am proud of the work performed by our auditors to shine the 

light on this significant exercise of personnel authority by the SBA. 

Though the findings of our report are ascribed to SBA, it is a timely report in context of the March 13, 2017 Presidential Executive 

Order on a Comprehensive Plan for Reorganizing the Executive 

Branch. VERA-VSIP authority undoubtedly will be a tool that 

many agencies will consider as they seek to implement this order. 

In this regard, it is noted OPM updated its VERA-VSIP guidance 

in March 2017. 

SBREP-219A with DISTILLER

26 

OIG will continue to provide independent, objective oversight to 

improve the integrity, accountability, and performance of the SBA 

and its programs for the benefit of the American people. Our focus 

is to keep SBA leadership, our congressional stakeholders, and the 

public currently and fully informed about the problems and deficiencies in the programs as identified through our work. We value 

our relationship with the Committee and the Congress at large, 

and we look forward to working together to address identified risks 

and the most pressing management challenges facing SBA. 

SBREP-219A with DISTILLER

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U.S. Small Business Administration 

TESTIMONY of 

JOSEPH LODDO 

Chief Operating Officer 

U.S. Small Business Administration 

House Small Business Committee 

Wednesday, June 14, 2017 
28 

Chairman Chabot, Ranking Member Velazquez, and other distinguished members of this Committee. Thank you for inviting me 

here to speak with you today. My name is Joe Loddo. I am the 

Chief Operating Officer of the US Small Business Administration 

(SBA). I am here today to talk about SBA’s 2014 Agency restructuring plan under the Voluntary Early Retirement Authority 

(VERA)/Voluntary Separation Incentive Program (VSIP). VERA 

provides agencies the option to offer voluntary early retirement. 

VSIP, often combined with VERA, allows agencies to offer lumpsum payments to employees as an incentive to separate. Both 

VERA and VSIP require OPM approval, and are used along with 

careful strategic workforce planning to reshape an agency’s workforce when undergoing substantial organizational changes, such as 

restructuring or reorganization. 

In SBA’s case, there were a large percentage of retirement eligible employees at the time of the 2014 VERA/VSIP: 25% of current 

employees were eligible to retire immediately, including 50% of 

those in the occupation series that covers most of the Field Office 

positions. Over 1,000 SBA employees were eligible for VERA/VSIP; 

at the time of approval, the average SBA employee’s age was 51, 

compared to the average age of 47 for the rest of the Federal Government. Because of the large number of employees eligible for the 

VERA/VSIP offering, there was a risk of putting SBA in a vulnerable position, and therefore it was important to prepare for and 

manage these impending departures. 

SBA’s VERA/VSIP program was approved by OPM on August 12, 

2014, and announced to Agency employees on August 19, 2014. All 

employees accepting VERA/VSIP were required to separate from 

the Agency by September 30, 2014. SBA management approved 

300 positions as eligible for VERA/VSIP; 149 employees took the 

VERA/VSIP. 

As the Inspector General’s audit report indicates, SBA did not 

carry out the 2014 VERA/VSIP properly. As a result, SBA did not 

achieve the goals of the program. We agree with the OIG’s recommendations in the audit report dated May 30, 2017 and are conducting an analysis of the program. We will document the lessons 

learned, including in the areas of planning, implementation, results 

and recommended improvements. We will include all stakeholders 

in the process. 

Since I joined the Office of the Chief Operating Officer—first as 

the Deputy COO, and now as the COO—a little over a year ago, 

I have worked to ensure that all personnel and hiring decisions are 

made on a sound basis. To begin to remedy some of the mistakes 

made with VERA/VSIP, I have issued guidance that all remaining 

2014 VERA/VSIP vacancies must be modified to conform to OPM 

guidelines. 

Under Administrator McMahon, SBA has created the Resource 

Management Board. The mission of the board is ensure the best 

use of SBA’s limited resources by reviewing FTE allotments and 

determining the best use of resources to accomplish the Agency’s 

mission. The board meets on a bi-weekly basis (more often as needed) and is comprised of SES-Level personnel. 

SBREP-219A with DISTILLER

29 

Further, SBA has determined that there is no need for a VERA/ 

VSIP program during FY2017 and, consequently, will not be offering the program to employees this fiscal year. 

Administrator McMahon has been very clear that the SBA must 

operate efficiently and effectively. She is holding every senior manager accountable for results and expects to see them. I fully support and share her view. Thank you very much for the invitation 

to testify and I welcome your questions. 

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AUDIT REPORT 

SBA'S MANAGEMENT OF VOLUNTARY 

EARLY RETIREMENT AUTHORITY AND 

VOLUNTARY SEPARATION INCENTIVE 

PAYMENT PROGRAM 
31 

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What OIG Reviewed 

This report presents the results of our audit of the 

Small Business Administration's (SBA's) 

management of the Voluntary Early Retirement 

Authority (VERA) and Voluntary Separation 

Incentive Payment (VSIP) program. VERA 

provides agencies the option to offer voluntary 

early retirement when restructuring as well as 

when downsizing. VSIP, often combined with 

VERA, allows agencies to offer lump-sum 

payments to employees who are in surplus 

positions or have skills that are no longer needed 

in the workforce, as an incentive to separate. SBA 

offered a VERA-VSIP option in fiscal year (FY) 

2014. 

Our objective was to determine whether SBA 

accomplished its FY 2014 VERA-VSIP program 

goals. To accomplish this objective, we reviewed 

SBA's VERA-VSIP plan, the Office of Personnel 

Management's (OPM's) approval letter, and SBA's 

reports to OPM on the results of the VERA-VSIP 

program. We interviewed Office of Human 

Resources Solutions (OHRS) personnel, the 

individual at OPM who approved the plan, and 

other SBA officials to understand how SBA used 

the VERA-VSIP positions to restructure the 

agency. 

We reviewed the personnel records of the 

149 employees who separated under the 2014 

VERA-VSIP program, and we reviewed how SBA 

used these positions to accomplish its goals. We 

reviewed applicable laws, regulations, and OPM's 

guidance on VERA and VSIP, as a basis for our 

audit 

What OIG Found 

We found that while SBA made limited progress in 

restructuring and reshaping the workforce, it did 

Report 

No.l7-13 

May 30.2017 

not accomplish its stated goals of the VERA-VSIP 

program. As a result, SBA paid $2.1 million for 

early retirements for positions that were not 

restructured following VERA· VSIP. 

Overall, SBA may have been more successful in 

achieving its goals had it properly managed the 

VERA-VSIP program by developing specific and 

measureable VERA-VSIP goals, including accurate 

information in the VERA-VSIP plan, making 

significant changes to its organizational structure, 

and making substantial changes to job functions 

following VERA-VSIP. 

OIG Recommendations 

We provided two recommendations to improve 

SBA's management of its VERA-VSIP program. We 

recommend that SBA conduct and document a 

lessons learned discussion on the FY 2014 VERAVSIP performance, including planning, 

implementation, results, and recommended 

improvements. We also recommend that SBA 

develop and implement policies and procedures to 

ensure that future VERA-VSIP programs are 

conducted in accordance with VERA and VSIP 

regulations and OPM guidance. 

Agency Response 

SBA's planned actions resolve the two 

recommendations. SBA will conduct an after 

action review on the FY 2014 VERA-VSIP 

performance that will address the components 

outlined in the recommendation. Additionally, 

SBA will provide written guidance outlining 

expectations and mitigation strategies for 

ensuring compliance with any OPM approved 

VERA-VSIP plan. 
32 

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DATE: 

TO: 

FROM: 

May 30,2017 

U.S. SMALL BUSINESS ADMINISTRATION 

OFFICE OF INSPECTOR GENERAL 

WASHINGTON, D.C. 20416 

Linda E. McMahon 

Administrator 

~ Hannibal "Mike" Ware 

Acting Inspector General 

Report Number: 17-13 

SUBJECT: SBA's Management of Voluntary Early Retirement Authority and Voluntary Separation 

Incentive Payment Program 

This report presents the results of our audit of SBA's management of the fiscal year 2014 VERAVSIP program. We conducted this audit in accordance with Generally Accepted Government 

Auditing Standards. 

We considered management comments on a draft of this report when preparing the final report. 

This report contains two recommendations that SBA agreed to implement. 

We appreciate the courtesies and cooperation that we received from your staff during our audit. 

Please contact me at (202) 205-6586 or Riccardo Buglisi, Director, Business Development 

Programs Group, at (202) 205-7489, if you would like to discuss this report or any related issues. 

cc: Mary Anne Bradfield, Chief of Staff 

joseph P. Loddo, Chief Operating Officer 

Elias Hernandez, Chief Human Capital Officer 

Eric S. Benderson, Acting General Counsel 

Timothy E. Gribben, Chief Financial Officer and Associate Administrator for 

Performance Management 

Martin Conrey, Attorney Advisor, Legislation and Appropriations 

LaNae Twite, Director, Office of Internal Controls 
33 

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Table of Contents 

Introduction ............................................................................................................................................................................... 1 

SBA's FY 2014 VERA-VSIP Program ........................................................................................................................... 1 

Objective ................................................................................................................................................................................. 2 

Finding: SBA Did Not Accomplish Its VERA-VSIP Program Goals ...................................................................... 3 

SBA Did Not Develop Specific and Measurable VERA-VSIP Goals .................................................................. 3 

SBA Included Inaccurate Information in the VERA-VSIP Plan ......................................................................... 4 

SBA Did Not Make Significant Changes to Its Organizational Structure ...................................................... 5 

SBA Did Not Make Substantial Changes to job Functions .................................................................................. 6 

Conclusion ............................................................................................................................................................................. 7 

Recommendations .............................................................................................................................................................. 8 

Analysis of Agency Response ......................................................................................................................................... 8 

Summary of Actions Necessary to Close the Report ............................................................................................ 8 

Appendix 1: Objective, Scope, and Methodology ........................................................................................................ 9 

Use of Computer-Processed Data ............................................................................................................................... lO 

Review of Internal Controls .......................................................................................................................................... lO 

Appendix I!: OIG Schedule of Questioned Costs ....................................................................................................... ll 

Appendix Ill: Best Practices Associated with the Effective Use ofVERA-VSJP ........................................... 12 

Appendix IV: Agency Comments .................................................................................................................................... 13 
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Introduction 

According to the Office of Personnel Management {OPM}, agencies may use Voluntary Early 

Retirement Authority {VERA) and Voluntary Separation Incentive Payment (VSIP) to decrease the 

workforce when undergoing substantial organizational change such as restructuring or downsizing. 

Both reorganization tools require approval from OPM. 

Agencies can use VERA to temporarily lower the age and years of service requirements for 

retirement to increase the number of employees who are eligible for retirement from the Federal 

Government. Employees must meet minimum age and service requirements to take advantage of 

VERAs. Under a VERA program, agencies offer early retirement annuity payments to employees 

age 50 and above with at least 20 years of service or to employees at any age with at least 25 years 

of service.' 

Similarly, with OPM approval, agencies can grant lump-sum payments of up to $25,000 as an 

incentive to voluntarily leave the Federal Government. VSIPs are available for employees who meet 

general eligibility requirements. To meet VSlP eligibility requirements, an employee must, among 

other things, be serving in an appointment without time limit, currently employed by the Executive 

Branch for a continuous period of at least 3 years, and serving in a position covered by the agency's 

VSIP plan.z In addition, the employee must apply for, and receive approval for, a VSlP and not be 

included in any of the ineligibility categories.3 

SBA's FY 2014 VERA-VSIP Program 

In fiscal year (FY) 2014, the Small Business Administration (SBA) requested and obtained VERA 

and VSIP authority from OPM. Within SBA's FY 2014 request and approval, only employees eligible 

for either full retirement or VERA were entitled to apply for VSIP. In its request, SBA cited 

programmatic, demographic, and budgetary challenges as justification to use the VERA-VSIP 

authority to reshape its workforce to succeed in meeting its mission. To achieve this initiative, SBA 

drafted the VERA-VSIP plan with the purposes of (1) addressing workforce competency and skill 

gaps, (2) increasing the population of early career employees and creating a pipeline of new 

leaders, and (3) addressing budgetary constraints to avoid a reduction in force (RIF). 

SBA's Office of Human Resources Solutions (OHRS) was responsible for planning the agency's 

VERA-VSIP program and preparing the VERA-VSIP justification submitted to OPM for approval. 

OHRS was also responsible for managing the implementation of the VERA-VSIP program and 

reporting progress to OPM. According to OHRS officials, SBA began planning for the FY 2014 VERAVSIP program in May 2014. In june 2014, the Chief Human Capital Officer (CHCO) briefed the 

newly appointed Administrator on SBA's workforce challenges, and informed her of the high 

percentage of retirement-eligible employees. The CHCO and the OHRS Chief of Strategy, Policy, and 

Accountability, in consultation with the Chief Operating Officer {COO) and a Financial Analyst, 

'5 U.S.C. §§ 8336(d)(2) and 8414(b)(1). 

2 5 U.S.C. § 3521(1) and (2)(A). 3 According to 5 U.S.C. § 3521(2)(8), VSIP ineligibility categories include: reemployed annuitants; having a disability such 

that the individual is or would be eligible for disability retirement; having a decision notice of involuntary separation for 

misconduct or poor performance; receipt of previous Federal Government VSIP; performing a service, during the 36-

month period preceding the date of separation, for which a student loan repayment benefit was or is to be paid; 

performing a service, during the 24-month period preceding the date of separation, for which a recruitment or relocation 

incentive was or is to be paid; and performing a service, during the 12-month period preceding the date of separation, for 

which a retention incentive was or is to be paid. 

1 
35 

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developed the VERA-VSIP plan, which the Administrator signed and OPM approved (see Figure 1). 

According to the VERA-VSIP plan, SBA was to complete restructuring efforts hy March 31, 2016. 

Figure 1: Timeline of Events for SBA's FY 2014 VERA-VSIP Program 

Source: OIG generated from interviews and supporting documentation. 

For the FY 2014 VERA-VSIP program, 149 employees voluntarily separated from the agency. All 

149 employees received an incentive payment in addition to their accrued annual leave payouts. In 

total, SBA spent $5.6 million on the incentivized separations. 

Objective 

Our objective was to determine whether SBA accomplished its FY 2014 VERA-VSIP program goals. 

2 
36 

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SBADidNot 

While SEA made limited progress in restructuring and reshaping the workforce, it did not 

accomplish its stated goals of the VERA-VSlP program. Specifically, SEA did not (1) address 

workforce competency and skill gaps, (2) increase the population of early career employees and 

create a pipeline of new leaders, or (3) address budgetary constraints to avoid a reduction in force 

(RlF). As a result, SEA's VERA-VSlP program achieved few, if any, ofits planned goals and paid 

$2.1 million that SEA could have used for other priorities. 

Overall, SEA may have been more successful in achieving its goals had it properly managed the 

VERA-VSIP program by 

developing specific and measurable VERA-VSIP goals, 

including accurate information in the VERA-VSlP plan, 

making significant changes to its organizational structure following VERA.YSIP 

implementation, and 

making substantial changes to job functions when filling positions, including mission critical 

and Senior Executive Service (SES) positions vacated through the VERA-VSIP program. 

SBA Did Not Develop Specific and Measurable VERA-VSIP Goals 

Although SEA cited programmatic, demographic, and budgetary challenges in its VERA-VSIP plan, 

SEA did not include specific or measureable goals to address these challenges. Specifically, we 

noted the following: 

SEA's programmatic challenge centered on competency and skills gaps in the workforce 

resulting from a significant change in SEA's service model. However, SEA's VERA-VS!P plan 

did not outline how the agency would reshape and restructure its workforce. To 

accomplish this goal, SEA could have developed new position descriptions to address new 

skills, or developed a new organizational structure to implement a change in the service 

model, or both. (See Appendix m for VERA-VSlP best practices.) 

SEA's demographic challenge highlighted the percentage of employees who would be 

eligible for full retirement in the following 5 years, the average age of SEA employees, and 

the difficulty in retaining and promoting talent without career growth. SEA neither 

identified a target percentage of employees who would be eligible for full retirement in the 

following 5 years nor developed a plan for adequate transfer of knowledge when an 

employee retired to promote career growth in remaining employees. SEA claimed that it 

partially met a demographic goal by hiring a younger workforce. However, 1 month after 

VERA-VSIP was implemented, SEA reported that the average age was unaffected. Likewise, 

2 years after VERA-VSIP was implemented, the average age of SEA employees remained at 

51. Further, some program offices, including the Office of Capital Access, experienced a loss 

of institutional knowledge because of the program. 

• SBA's budgetary challenge focused on economic circumstances that could have required 

SEA to take drastic measures such as a RIF. However, SEA did not articulate a fiscal aim for 

cost savings. Although SEA's VERA-VSIP plan stated that a RIF would be necessary if OPM 

did not approve the VERA-VSIP plan, the principal author of the VERA-VSlP plan later 

explained she added these claims to bolster the weight of the application when no threat of 

a RIF existed. 

3 
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While SBA did not include specific or measureable goals to address the various challenges, some 

program offices used the vacated full-time equivalents (FTEs) from the VERA-VSIP program to 

make positive programmatic and organizational changes. For example, the Deputy Associate 

Administrator for the Office of Field Operations asserted he redesigned some position descriptions 

to include new competencies and skills needed to perform higher-level tasks and trained various 

employees to perform the wide array of functions within the office. Similarly, Office of the Chief 

Financial Officer officials claimed they replaced some lower-graded positions vacated under the 

VERA-VSIP program with higher-graded positions with increased professional expectations. 

Additionally, Government Contracting and Business Development senior officials claimed they 

made some organizational changes, such as formally separating previously merged responsibilities 

within the Office of Government Contracting and the Office of Policy, Planning, and Liaison. Further, 

the SBA's Chief of Staff asserted SBA used some vacated FTEs to create new positions such as the 

Chief Learning Officer, the Chief Digital Officer, and an IDEA Lab team to support digital services. 

SBA Included Inaccurate Information in the VERA-VSIP Plan 

SBA's VERA-VSIP plan also contained inaccurate claims. For example, SBA's VERA-VSIP plan did 

not accurately portray the effect of the Federal Acquisition Certification requirement on mission 

critical positions. The plan stated that the National Defense Authorization Act for FY 2014 

mandated Business Opportunity Specialists to obtain Federal Acquisition Certification in 

Contracting as a prerequisite for employment. The VERA-VS!P plan did not mention the provision 

in the law that allows currently employed Business Opportunity Specialists, serving on or before 

january 2013, to obtain the credential by january 2018.4 The plan indicated that approximately 

43 percent of employees eligible to retire at the time of the VERA-VSIP implementation were in a 

series that required the Level I certification. Therefore, with a 2018 deadline for the certification, 

the employees in those positions at the time of the VERA-VSIP implementation had sufficient time 

to comply with the new mandate or could have retired under their own accord without the agency 

having to pay an incentive payment. 

The plan also identified that potentially 885 employees, in 14 position titles, did not possess the 

competencies or skills needed to perform their jobs. However, according to OHRS officials, SBA did 

not complete a skills gap analysis until February 2016, more than 1 year following the VERA-VSIP 

implementation. Additionally, the plan listed 49 other positions as affected by "organizational 

change," including Law Librarian, Paralegal Specialist, Lead Mail Clerk, and Audio Visual Production 

Specialists. Neither the plan, OPM reports, subsequent interviews, nor agency documentation 

indicated that these positions, or others, changed because of organizational reshaping. 

In addition, SBA reported to OPM, in the VERA-VSIP request, that it established a High-Risk Task 

Force to examine the outlined programmatic, demographic, and budgetary challenges. According to 

the request, one outcome of the High-Risk Task Force was to create an SBA-wide steering 

committee to review FTE allotments across the agency and to determine the best allocation of FTEs 

to accomplish the agency's mission. We found no evidence of a High-Risk Task Force or of a 

steering committee dedicated to the stated functions. While some ofSBA's senior officials we 

interviewed participated in committees with similar names, none participated in a steering 

committee formed to review VERA-VSIP FTEs, and none had heard of a High-Risk Task Force. 

4 National Defense Authorization Act for Fiscal Year 2013, H.R. 4310, Sec. 1622(c). 

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SBA Did Not Make Significant Changes to Its Organizational Structure 

SBA did not have a restructuring plan in place before offering the VERA-VSIP option, which made it 

difficult for SBA to achieve desired organizational structure changes. Additionally, OHRS did not 

include the majority ofSBA's leadership team in the planning of the VERA-VSIP program until after 

the plan had been signed by the Administrator and submitted to OPM. According to Government 

Accountability Office (GAO) findings, efforts to address key organizational issues, like strategic 

workforce planning, are most likely to succeed if, at their outset, agencies' top program and human 

capital leaders set the overall direction, pace, tone, and goals of the efforts 

SBA partially based its request for VERA-VSIP on the concept that the agency's new Administrator 

was reshaping the organization to align with her vision for SBA, including a new service delivery 

model to be executed by employees with heightened competencies and skills. Yet, SBA did not 

implement a new service delivery model and did not target employees for the VERA-VSIP program 

based on competencies and skills. Further, SBA did not develop a mechanism to track any 

reshaping efforts within the organization and provided inaccurate information to OPM regarding 

the agency's restructuring. 

Restructuring Plan for VERA-VSIP 

In the FY 2014 VERA-VSIP plan, SBA stated that it faced a skills gap in its workforce resulting 

primarily from a significant change in its service model. According to an OHRS official, 2 months 

after the VERA-VSIP employees had separated from the agency, SBA hired a consulting firm to 

prepare white papers to aid in the development of a new service model and recommend changes to 

the agency's organizational structure. 6 The consulting firm delivered the white papers to OHRS 

officials in March 2015.7 However, OHRS officials did not take any actions to implement the 

recommendations in the white papers. According to OHRS officials, the Administrator's office was 

reviewing the white papers and they were waiting on direction from senior officials before 

implementing the recommended organizational or service level model changes. Subsequently, in 

September 2016, the Chief of Staff told us that SBA would not implement the white paper 

recommendations. More than 2 years after the 2014 VERA-VSIP implementation, SBA has yet to 

implement a new service model. 

Methodology for Identifying Eligible VERA-VSlP Positions 

Although SBA's VERA-VSIP plan focused heavily on competencies and skills gaps resulting from a 

significant change in its service model indicating the need for the VERA-VSIP, SBA did not consider 

these factors when identifying the list of eligible positions. Instead, SBA OHRS officials created the 

list of eligible positions for the VERA-VSIP plan by identifying all SBA employees who met the age 

and service requirements for immediate retirement. In follow-up correspondence between SBA's 

OHRS officials and the OPM reviewing official, the OPM reviewing official questioned the method of 

identifying positions eligible for the VERA-VSIP. Specifically, the OPM reviewing official reminded 

OHRS officials that VERA and VSIP were position-based authorities, not employee-based 

authorities. OHRS officials responded by describing vast organizational changes within the agency 

to justify the broad universe of positions eligible for the VERA-VSIP. Although SBA crafted a 

5 GA0-04-39, Key Principles for Effective Strategic Workforce Planning (December 2003). 6 SBA employees who accepted the VERA-VSIP were required to separate from the Agency by September 30, 2014. SBA 

contracted with the consulting company 2 months later in November 2014. 7 SBA spent approximately $466K for the consulting firm's services. 

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compelling rationale to justify the list of eligible positions, there was no particular organizational 

change planned at the time the VERA-VSIP authority was requested. 

Mechanism to Track the VERA-VSIP Reshaping Efforts 

OHRS officials who planned the VERA-VSIP program did not design a tracking mechanism or 

designate an individual to track the agency's use of the VERA-VSIP program. As a result, SBA was 

not able to account for all of the positions vacated through VERA-VSIP. At the time of SBA's VERAVSIP program, OPM required agencies to report how VERA-VSIP affected the shape of the 

workforce and whether VERA-VSIP had the desired results, as well as other information. Although 

SBA did not track restructuring efforts, an OHRS official provided quarterly reports to OPM 

regarding VERA-VSIP, as required by VERA and VSIP regulations. a In the final report to OPM, SBA's 

OHRS official stated that it was, "too premature to determine the full impact ofVERA-VSIP offering," 

but noted several general changes to SBA. Additionally, the OHRS official reported that SBA made 

progress to reshaping the workforce by initiating evaluations of service models and creating white 

papers to determine the best course of action for reshaping. However, SBA's final report to OPM 

was submitted in january 2016 and, based on our analysis, SBA had already improperly filled more 

than 35 percent of the positions vacated through VERA-VSIP. 

SBA Did Not Make Substantial Changes to Job Functions 

According to OPM officials, a position vacated through a VERA-VSIP program should either be 

eliminated or restructured and not filled in the same manner. OHRS officials understood that 

restructuring positions required significant changes such as relocating, having a major duty added 

or restructured, implementing new standards, or changing the duties by 25 percent or more. The 

CHCO communicated these goals to agency officials, during a meeting held on September 4, 2014. 

However, on October 27, 2014, the CHCO issued a memorandum to OHRS staff that contained 

guidance that allowed filling positions deemed too critical to go vacant or not appropriate for 

restructuring or relocation without a significant change to the position. One week later, under the 

direction of the CHCO, an OHRS official provided detailed information to program office senior 

officials on how to submit recruitment requests to OHRS human resources staff to fill a VERA-VSIP 

vacancy deemed too critical to go vacant without any form of restructuring or reshaping. These 

actions were in direct conflict with SBA's distinct assurance to OPM that it would restructure every 

position vacated due to VSIP. 

In regards to theSES positions SBA included in the VERA-VSIP plan, OPM required SBA to describe 

"how specifically theSES positions will be restructured in the future (e.g., to reflect newly required 

skills, competencies, knowledge) if a VSIP is granted." SBA assured 0 PM that any vacated SES 

positions included in the VERA-VSIP would be reallocated to other places in the agency and not 

refilled unless restructured or re-described to address skill imbalances. The CHCO's October 27, 

2014, memorandum and the guidance to program offices explicitly contradicted the assurance 

provided to OPM following OPM's express concern that "SES positions are viewed as critical to the 

organization or 'continuing' positions that would need to be refilled." 

Because of the CHCO's guidance, OHRS human resources staff filled positions vacated under VERAVSIP without a significant change, contrary to the intent ofVSIP, OPM guidance, and SBA's 

guarantee to OPM.9 We found that 54 of the 149 positions vacated under the 2014 VERA-VSIP were 

filled without a significant change in function or other required change (see Appendix 1). Thus, SBA 

B 5 CFR§831.114and 5 CFR§ 842.213; 5 CFR§576. 

9 5 u.s.c. § 3522. 

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paid $2.1 million as an incentive for early retirement for positions it did not restructure following 

the VERA-VSIP implementation (see Appendix upo Most notably, SBA filled SES and other highlevel positions without consideration of the VERA-VSIP program requirements as follows: 

The COO, a contributor to the VERA-VSIP plan, retired and received an incentive payment, 

under the VERA-VSIP. An OHRS official claimed that converting the position from career 

SES to political appointment was a significant change to the position and therefore met the 

intent of the VERA-VSIP. However, neither the duties of the COO nor the organizational 

structure of the office significantly changed. In fact, the position description was identical 

for the politically appointed COO and the former career COO. 

The dual-titled Deputy Associate Deputy Administrator for GCBD and Deputy Assistant 

Administrator for Noncontiguous States and Territories retired and received an incentive 

payment under the VERA-VSIP. According to GCBD officials, this was a mission-critical 

position. This position was vacant for 20 months before SBA filled the position using a 

revised position description and a new title of Deputy Associate Administrator for GCBD. 

Not only was theSES position not reallocated, the responsibilities of the position were not 

significantly changed. 

Five District Directors retired and received incentive payments under the VERA-VSlP. SBA 

filled all five positions within 6 to 12 pay periods after the VERA-VSIP, using the same 

position descriptions and without any restructuring to the organization. 

During our audit, we met with SBA's COO and Deputy COO to discuss the preliminary findings of 

this report. Based on the information we provided, the Deputy COO issued a memorandum 

rescinding the provision in the October 27, 2014, guidance that allowed the agency to fill vacancies 

created by the FY 2014 VERA-VSIP program that SBA deemed critical or essential to key agency 

operations without a significant change to the position. The memorandum gave the direction, 

moving forward, for OHRS to reshape any position created by the VERA-VSIP program prior to 

filling the vacancy. 

Conclusion 

SBA did not develop specific and measureable goals, provide accurate information, significantly 

change the agency's organizational structure, or substantially change job functions to sufficiently 

address the programmatic, demographic, and budgetary challenges described in the FY 2014 VERAVSIP plan. SBA may have been more successful had OHRS officials included SBA's program offices' 

leadership teams in the planning of the VERA-VSIP program. However, OHRS did not involve these 

officials until after the Administrator had signed the plan and OHRS submitted it to OPM. In 

addition, OHRS officials may have been able to demonstrate program accomplishments had they 

developed a mechanism to track how the SBA used the vacated positions within the Agency. 

to Of the $2.1 million paid to the employees who voluntarily separated from SBA under the VERA·VSIP program, $1.3 

million was paid out in incentive payments and the remainder was for accrued annual leave payments. See scope and 

methodology section for additional information on how we identified these positions. 

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Recommendations 

We recommend that the Chief Operating Officer: 

1. Conduct and document a lessons learned on the FY 2014 VERA-VSIP performance, including 

planning, implementation, results, and recommended improvements. Include input from 

multiple stakeholders within the agency, specifically administrative and program office 

senior officials. 

2. Develop and issue procedural guidance to ensure that SBA officials conduct future VERAVSIP programs in accordance with VERA and VSJP regulations and OPM guidance. 

Analysis of Agency Response 

SBA management provided formal comments that are included in their entirety in Appendix IV. 

SBA management agreed to implement the recommendations by September 29, 2017. 

Summary of Actions Necessary to Close the Report 

The following provides the status of the recommendations and the necessary action to close them. 

1. Resolved. The Chief Operating Officer and the Chief Human Capital Officer concurred with 

our recommendation and plan to complete final action on this recommendation by 

September 29, 2017. The recommendation can be closed when SBA provides evidence that 

it conducted a "lessons learned" on the FY 2014 VERA-VSIP performance, including 

planning, implementation, results, and recommended improvements, with input from 

multiple stakeholders within the agency, specifically administrative and program office 

senior officials. 

2. Resolved. The Chief Operating Officer and the Chief Human Capital Officer concurred with 

our recommendation and plan to complete final action on this recommendation by 

September 29, 2017. The recommendation can be closed when SBA provides evidence that 

it developed and issued procedural guidance in accordance with VERA and VSIP regulations 

and OPM guidance. 

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Our audit objective was to determine whether SBA accomplished its FY 2014 VERA-VSIP program 

goals. 

To answer our objective we obtained SBA's VERA-VSIP plan, OPM's approval letter, and SBA's 

reports to OPM on the results of the VERA-VSIP. We interviewed OHRS personnel from the 

Strategy, Policy, and Accountability Division who managed the program, the Workforce Acquisition 

Division and the Executive Resources Team who filled VERA-VSIP vacated positions, and Payroll 

Processing Division who provided payroll support. We interviewed personnel in the Office of Chief 

Financial Officer Performance Management regarding the computation ofVSIP payment estimates 

included in the plan. We also spoke with the individual who approved the plan at OPM. We 

reviewed applicable laws and regulations, and OPM's guidance on VERA and VSIP, as a basis for our 

audit. 

One of the key individuals responsible for the majority of the decisions involved in the VERA-VSIP 

program planning and implementation process, the CHCO, left the agency in December 2015. 

Because the CHCO was no longer with the agency, we reviewed the VERA-VSIP program planning 

documentation, including meeting materials, workforce planning analyses, and financial analyses 

on the cost of the VERA-VSIP, in order to gain a better understanding of the intended goals of the 

program. 

In order to assess the extent SBA achieved its planned goals, we reviewed all hiring, promotion, 

demotion, and reassignment actions that occurred from October 2014 through December 2015 

including the audit universe of 149 employees who separated from the agency under the FY 2014 

VERA-VSIP program. We analyzed this information to assess how SBA filled the vacated VERA-VSIP 

positions. Additionally, we interviewed senior officials in GCBD, Office of Capital Access, Office of 

Field Operations, and Office of the Chief Financial Officer to understand the extent to which the 

program office achieved the VERA-VSIP program goals. We also interviewed the SBA's Chief of Staff 

for an Agency-wide perspective on the VERA-VSIP program performance. 

To determine whether a position was filled without a significant change, we reviewed the position 

description, the Request for Personnel Action (SF-52), and the Notice of Personnel Action (SF-50) 

for the filled position from information housed within the Workforce Acquisition Division in OHRS. 

Additionally, we reviewed the position description, SF-52 for the voluntary retirement as well as 

the VERA SF-SO, the VSIP SF-50 that identified the amount of the incentive payment, and the leave 

data for the VERA-VSIP employee who vacated the position housed within the Human Resource 

Systems and Payroll Processing Division. Since OHRS was unable to provide the resources to pull 

the requested information, the audit team accessed the personnel records in the electronic official 

personnel folder and retrieved the necessary documents. We also reviewed Record of Leave Data 

forms (SF-1150) to check annual leave totals to be paid. 

We conducted this audit in accordance with Generally Accepted Government Auditing Standards. 

Those standards require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

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Use of Computer-Processed Data 

We relied on data reported in the National Finance Center and OHRS systems; Recruitment, 

Assessment, Selection, Credentialing, and Onboarding Tracking System; and VERA-VSIP application 

database to develop our audit universe and audit sample. We relied on information obtained 

directly from OPM's electronic Official Personnel Folder. We verified that data recorded in the 

National Finance Center and OHRS systems matched the information contained in the personnel 

folder documentation that we reviewed. As a result, we believe the information is reliable for the 

purposes of this audit. 

Review of Internal Controls 

The Office of Management and Budget Circular A-123 provides guidance to Federal managers on 

improving the accountability and effectiveness of Federal programs and operations by establishing, 

assessing, correcting, and reporting on internal controls. According to OMB, agencies are 

responsible for establishing and maintaining internal controls to achieve the objectives of effective 

and efficient operations, reliable financial reporting, and compliance with applicable laws and 

regulations.H We reviewed SBA's VERA-VSIP program and determined SBA management did not 

design effective controls. We found that SBA did not establish roles or procedures for monitoring 

the implementation of the VERA-VSIP plan and could not provide reasonable assurance on the 

accomplishments of the VERA-VSIP goals. Compounding the lack of controls to track the 

accomplishments of the VERA-VSIP program, CHCO directed human resources and program office 

hiring officials to override controls designed by the OHRS policy official on filling VERA-VSIP 

vacated positions. Finally, we found that SBA provided inaccurate quarterly reports on the status of 

the VERA-VSIP implementation to OPM. 

11 OMB Circular A-123, Management's Responsibility for Internal Control (December 21, 2004). 

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II: OIG Schedule Costs 12 

Annual leave payments to 

VSIP employees who held positions that 

SBA subsequently filled without a 

significant change in function or other 

12 Questioned costs are expenditures that are not supported by adequate documentation at the time of the audit or 

otherwise do not comply with legal, regulatory, or contractual requirements. 

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Appendix HI: Best Practices Associated with the Effective Use of 

We used the following source documents to identify best practices when offering a VERA-VSIP 

option: (1) VERA regulations, (2) VSIP regulations, (3) OPM VERA Guide, (4) OPM VSIP Guide, (5) 

OPM Human Resources Flexibilities and Authorities in the Federal Government, (6) OPM Workforce 

Reshaping Handbook, (7) GAO March 2006 Report- Agencies Are Using Buyouts and Early Outs 

with Increasing Frequency to Help Reshape Their Workforces, and (8) SBA Human Capital Strategic 

Plan FY 2013-2016.13 

Document Performed 

11 

12 Prepare staff for increased and prepare to advise 

interested employees on the amount of their annuity and 

14 Establish an evaluation system to identify and report 5, 7 No 

1' (1) 5 CFR § 831.114 and 5 CFR § 842.213; (2) 5 CFR § 576; (3) OPM Guide to Voluntary Early Retirement Regulations 

(August 2006); (4) OPM Guide to Voluntary Separation Incentive Payments (August 2006); (5) OPM Human Resources 

Flexibilitiesand Authorities in the Federal Government Guide (August 2013); (6) OPM Workforce Reshaping Handbook (July 

2009); (7) GA0-06-324, Human Capital: Agencies Are Using Buyout> and Early Outs with Increasing Frequency to Help 

Reshape Their Workforces (March 2006); and (8) U.S. Small Business Administration Strategic Human Capital Plan 

FY 2013-2016. 

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Comments 

SBA 

CHIEF OPERATING OFFICER 

AND 

CHIEF HUMAN CAPITAL OFFICER 

RESPONSE TO AUDIT REPORT 

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